REG - Kainos Group plc - Full year results
20/05/2024 07:00
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RNS Number : 0029P Kainos Group plc 20 May 2024
20 May 2024
Full year results for the year ended 31 March 2024
Kainos Group plc 'Kainos' or the 'Group'
Kainos Group plc (KNOS), a UK-headquartered provider of sophisticated IT
services with expertise across three divisions: Digital Services, Workday
Services, and Workday Products, is pleased to announce its results for the
year ended 31 March 2024.
Financial highlights
2024 2023 Change
Revenue £382.4m £374.8m +2%
Statutory profit before tax £64.8m £54.3m +19%
Adjusted pre-tax profit £77.2m £67.6m +14%
Cash(( 1 )) £126.0m £108.3m +16%
Bookings £424.5m £427.8m -1%
Product Annual Recurring Revenue (ARR) £60.5m £47.9m +26%
Contracted backlog £357.1m £322.9m +11%
Diluted earnings per share 38.6p 33.1p +17%
Adjusted diluted earnings per share 46.5p 42.5p +9%
Total dividend per share 27.3p 23.9p +14%
Operational highlights
We have recorded our 14th consecutive year of growth across a wide range of
key metrics, with our business performance demonstrating disciplined execution
against a backdrop of macro-economic uncertainty.
• Revenue increased by 2% (6% organic, 3% ccy) to £382.4 million
(2023: £374.8 million).
• Strong adjusted pre-tax profit growth of 14% (17% ccy) to £77.2
million (2023: £67.6 million), representing an adjusted profit margin of 20%
(2023: 18%).
• Overall bookings were £424.5 million (2023: £427.8 million).
• Strong contracted backlog growth of 11% to £357.1 million (2023:
£322.9 million).
• Strong year-end cash((1)) of £126.0 million (2023: £108.3 million);
with cash conversion at 98% (2023: 104%).
Our Workday-related products delivered very strong growth and we remain on
track to achieve our target of £100 million ARR by 2026.
· Revenue growth was 28% (23% organic, 33% ccy), with revenues now
£57.3 million (2023: £44.7 million), with the ARR increasing by 26% to
£60.5 million (2023: £47.9 million).
· Available since October 2023, our new Employee Document Management
product is our most successful product launch, with 26 clients already
contracted.
· We continued to invest in our products, increasing research &
development expenditure by 48%, to £13.5 million (2023: £9.1 million), which
was expensed in the year, and sales & marketing spend increased 16% to
£12.5 million (2023: £10.8 million).
In Digital Services, we continue to deliver major digital transformation
projects, with a solid performance in public sector offset by reductions in
healthcare and commercial sectors.
· Overall, Digital Services revenue decreased by 5% to £213.1
million (2023: £224.4 million).
· A solid performance within public sector generated revenue growth
of 1% to £138.2 million (2023: £137.0 million).
· Year-on-year healthcare sector revenues decreased by 11% to £44.2
million (2023: £49.7 million), although the previous year included
significant pandemic-related revenue. Excluding these revenues, our core
healthcare business levels increased by 23%.
· Commercial sector revenues were impacted by reduced customer
expenditure and decreased 19% to £30.8 million (2023: £37.8 million). The
majority of the impact resulted from project deferrals and scope reductions
together with some project cancellations.
We continue to be the leading pan-European Workday consulting specialist and
are a Phase 1 partner in both the US and Canadian markets.
· We recorded good revenue growth of 6% (9% ccy) to £112.0 million
(2023: £105.7 million), of which the majority (76%) are generated from
international customers((( 2 ))).
We continue to extend our footprint as a global business; with 39% of our
revenues now generated internationally.
· Strong international growth, with revenues up 13% to £149.8
million (2023: £132.0 million).
The commitment and engagement of our colleagues underpins our business
performance as we continue to grow a global, talented team.
• We have 2,995 people (2023: 2,990) based across 23 countries. We have
continued to reduce the number of contract staff (2024: 42 contractors; 2023:
209) in favour of long-term investment in permanent employees, an increase of
172 people over the year.
• Our employee retention improved to 93% (2023: 88%), and engagement
levels remained high, measuring 78% on our internal surveys, and we were again
awarded '50 Best Places To Work in the UK' by Glassdoor.
Excellent customer service drives customer satisfaction, retention and revenue
growth.
• Existing customer revenue increased by 2% to £345.8 million (2023:
£337.6 million) which represents a Net Revenue Retention of 102%.
• Our customers assessed our services as 'excellent' with a Net Promoter
Score of 58((( 3 ))).
• Customer numbers increased to 930 (2023: 821), an increase of 13%.
We are making rapid progress on our announced £10 million investment in
Generative AI to further enhance our leadership in Artificial Intelligence.
• We continue to see an increase in demand for broad AI expertise and
have delivered projects for Companies House, Defra, Royal London Asset
Management and Worldline.
• Generative AI remains largely experimental for our clients, often
delayed by the challenges of low data quality for their more complex,
organisation-specific use cases.
• Over 500 colleagues are now trained in the use of Generative AI and
over 30% of our projects are using co-pilots to assist in accelerating our
development pace.
We retained our carbon neutral status and remain on track to be carbon net
zero by 2025.
• Based upon our draft carbon footprint figures (provided May 2024) we
have achieved our SBTi near-term carbon reduction targets two years ahead of
schedule - reducing since 2020 Scope 1 and Scope 2 emissions by 70%, and Scope
3 by 45% per unit of value added.
We are maintaining a positive outlook as our key business segments are
positioned for further growth in the near and medium-term.
• Notwithstanding the global economic uncertainty, we believe that our
largest business areas, Workday Products, Workday Services, and the public
sector segment of Digital Services (together, 80% of revenue) will continue to
deliver growth, in both the near term and medium term.
• In the year ahead we expect a return to growth for our healthcare
business. This will be offset in the near term by further modest reductions in
revenues from our commercial sector customers within Digital Services, but we
expect a return to growth for our commercial sector customers in the medium
term.
• As demonstrated in these results, we remain well-positioned to deliver
strong margin and cash generation growth through the year as we continue to
benefit from our disciplined operational execution.
• We have a growing sense of excitement about some of our smaller,
high-growth activities, of which Workday Extend, Automation and Low Code,
international growth in Digital Services and, obviously, Data & AI are
showing significant promise.
Commenting on the results, CEO Russell Sloan said:
"Our latest results, record our 14th consecutive year of growth with
disciplined execution in the current macro-economic climate.
We have been focused on our operational performance, maintaining the
appropriate balance between growth, international expansion, investment for
the future and profitability.
We are grateful for the support and trust that our customers continue to place
in Kainos to deliver their critical projects. Customer satisfaction levels are
high, and one of the best measures of that satisfaction is the high level of
repeat business which we receive from our customers.
Our excitement is increasing about our Workday Products division. This year's
excellent performance is another significant step towards our goal of £100
million ARR by 2026. We are further delighted that our fourth and latest
product, Employee Document Management, has been our most successful product
launch to date, with 26 international clients already signed up. We remain
confident there will be further opportunities to develop new, innovative
products as we continue to engage closely with Workday and with our customers.
Our Digital Services division has seen a solid performance with consistent
demand from public sector clients, strong growth in our core healthcare
business (excluding pandemic-related revenue) despite a reduction in our
commercial business. Meanwhile, there has been good growth in our Workday
Services division where we continue to be the leading Workday partner in
Europe and have Phase 1 partner status in both the US and Canada.
Despite the ongoing global economic uncertainty, we believe that our largest
business areas, Workday Products, Workday Services and the public sector
segment of Digital Services, will continue to be resilient and will offer
substantial growth opportunities in both the near term and medium term. We are
well positioned within these markets, both locally and, increasingly,
internationally, and we remain confident in our strategy.
What underpins that confidence is the talent and ability of our people. We
continue to invest in their development and can rely on their expertise and
energy to drive our success."
For further information, please contact:
Kainos
via
FTI Consulting LLP
Russell Sloan, Chief Executive Officer
Richard McCann, Chief Financial Officer
Investec Bank
plc
+44 20 7597 5970
Patrick Robb / Ben Griffiths / Nick Prowting
FTI Consulting
LLP +44
20 3727 1000
Matt Dixon / Dwight Burden / Kwaku Aning
About Kainos Group plc
Kainos Group plc is a UK-headquartered provider of sophisticated IT services
to major public sector, commercial and healthcare customers. Our expertise
spans three divisions: Digital Services, Workday Services, and Workday
Products.
Digital Services: We develop and support custom digital service platforms that
transform service delivery in public, commercial, and healthcare sectors. Our
solutions ensure security, accessibility, cost-effectiveness, and improved
user outcomes.
Workday Services: Specialising in deploying Workday, Inc.'s Finance, HR, and
Planning products, we are a respected partner in Europe and North America.
Experienced in complex deployments, we are trusted to launch, test, expand,
and support Workday systems.
Workday Products: Our established product suite, incorporating Smart Test,
Smart Audit, and Smart Shield, complements Workday by enhancing system
security and compliance. Our Employee Document Management product, launched in
October 2023, improves document generation and storage within Workday while
supporting an organisation's global compliance requirements. Over 450 global
customers use one or more of our products.
Our people are central to our success. We have more than 2,900 people in 23
countries across Europe, Asia, and the Americas.
We are listed on the London Stock Exchange (LSE: KNOS) and you can discover
more about us at www.kainos.com (http://www.kainos.com) .
Definition of terms
We use the following definitions for our key metrics:
Active customer: a customer who has paid us to deliver a product or service
within the current financial year.
Adjusted EBITDA: calculated as being adjusted pre-tax profit excluding
interest, tax, depreciation of property, plant and equipment and right-of-use
assets, and amortisation of intangible assets.
Adjusted pre-tax profit: profit before tax excluding the effect of share-based
payment expense, acquisition-related expenses including amortisation of
acquired intangible assets and post-combination remuneration expense (relating
to contingent deferred consideration subject to future service
conditions). Our adjusted results in the period also exclude one-off gains
recognised on sale of property, plant and equipment and changes in fair value
of our investment property.
Adjusted profit margin: adjusted profit as a percentage of revenue for the
period.
Annual recurring revenue (ARR): the value at the end of the accounting period
of the software and subscription recurring revenue annualised.
Bookings: the total value of sales contracted during the period.
Carbon net zero: any CO(2), released into the atmosphere from a company's
entire value chain is reduced as much as possible and the rest is removed.
Carbon neutral: any CO(2) released into the atmosphere from a company's entire
value chain activities is balanced by an equivalent amount being removed.
Cash conversion: cash generated from operating activities as a percentage of
adjusted EBITDA.
Constant currency (ccy): Excludes the effect of foreign currency exchange rate
fluctuations on year-on-year performance by translating the relevant prior
year figure at current year average exchange rates.
Contracted backlog: the value of contracted revenue that has yet to be
recognised.
Compound annual growth rate (CAGR): annual growth rate over a specified period
of time.
Existing customer revenue: total revenue recognised from customers in the
current period who were also customers in the preceding year.
Net Promoter Score (NPS): a metric that organisations use to measure customer
loyalty toward their brand, product or service, and can range from -100 to
+100. Bain & Co, the creators of the metric, held that a score above 0 is
good; 20+ is favourable; 50+ is excellent and 80+ is world class.
Net revenue retention (NRR): is the percentage of recurring revenue from
existing customers we retained over the year. This considers increases or
reductions in customer spending and those customers where the engagement has
ended; it does not include revenue from new customers. NRR therefore shows how
our business could continue to grow solely from our current customer base
alone, without acquiring any new customers.
Organic revenue: our revenues excluding revenue from acquisitions completed in
the current and comparative reporting periods.
Software as a service (SaaS): is a software distribution model that delivers
application programs over the internet, with users typically accessing the
program through a web browser. Users pay an ongoing subscription to use the
software rather than purchasing it once and installing it.
Science Based Targets initiative (SBTi): a target for reducing greenhouse
gases and CO(2) emissions which is aligned with the global effort to limit
global warming to 1.5(O)C.
Kainos at a glance
We are a UK-headquartered provider of sophisticated IT services to major
public sector, commercial and healthcare customers. Our expertise is organised
across three divisions: Digital Services, Workday Services, and Workday
Products.
Purpose
Our purpose is to help our customers with their most challenging projects and,
together with our partners, help them build the capability to succeed in the
digital age.
Our operating divisions
Digital Services
FY24 revenue: £213.1 million, 56% of Group total, 5-year growth: 15% CAGR.
Our Digital Services division helps our customers to solve their business
problems by using technology, enabling them and their users to work smarter,
faster and better.
Working collaboratively with customers, our innovative and transformative
solutions are secure, accessible, cost-effective, and take a user-first
approach. We leverage the benefits of public cloud and enable customers to
utilise their data to drive better decision-making.
In the public sector, we have delivered projects helping more than 60 million
users, while saving our customers hundreds of millions of pounds.
In the commercial sector, customers trust us to provide digital transformation
programmes that evolve their services, deliver efficiencies, increase their
capabilities and future-proof their businesses.
In healthcare, we help providers deliver a service that is faster, more
cost-effective and patient centric.
We deliver services to over 150 clients, including existing clients such Irish
Life Assurance plc, the Government of Ontario, and HM Passport Office, and new
clients including the Crown Prosecution Service, Royal London Asset Management
and Arqiva.
Workday Services
FY24 revenue: £112.0 million, 29% of Group total, 5-year growth: 32% CAGR.
In our Workday Services division we provide a comprehensive range of services
to support customers in their adoption and utilisation of Workday's software
suite. Our expertise spans consulting, project management, integration and
post-deployment services.
Kainos first engaged with Workday in 2009 and, appointed as a partner in 2011,
we are one of the most experienced participants in Workday's partner
ecosystem. We remain the only specialist Workday partner headquartered in the
UK, but our reach has grown to be global, with over 75% of our projects being
undertaken for clients in Central Europe and North America.
With over 300 international clients, we are proud to work with customers such
as Kion Group (Germany), Wealthsimple (Canada), Novozymes (Denmark), Kone
(Finland), ASOS plc (UK), Takeaway.com (Netherlands) and Match.com (USA).
Workday Products
FY24 revenue: £57.3 million, 15% of Group total, 5-year growth: 32% CAGR.
We have developed four proprietary software tools, Smart Test, Smart Audit and
Smart Shield (collectively, our Smart Suite) and Employee Document Management
(EDM).
Smart Test allows Workday customers to automatically test and verify their
unique Workday configuration. Smart Audit is our compliance-monitoring tool
that allows customers to maintain operational controls over their Workday
environments. Smart Shield is a data-masking tool that can easily and
seamlessly mask sensitive data without impacting the Workday user experience.
EDM improves the experience of generating and storing employee-related
documents in Workday while supporting an organisation's global compliance
requirements.
These tools are implemented as cloud-based Software as a Service (SaaS)
solutions and customers utilise them on a subscription basis.
Reflecting our longevity in the Workday ecosystem, we released Smart Test in
2014, but have been increasing the pace of our product launches, with Smart
Audit in 2021, Smart Shield in 2022 and EDM in 2023.
Over 450 customers use at least one of our products, including AT&T
(USA), State of Oregon (USA), Booking.com (Netherlands), Whole Foods (USA)
and Netflix (USA).
Our competitive environment
The competitive environment in our markets is largely stable, with few
companies either entering or exiting. A strong track record of delivery is
vital for success in all our divisions -Digital Services, Workday Services and
Workday Products - providing very important credibility with potential
customers and creating a meaningful barrier to entry.
Digital Services
• Addressable market((( 4 ))): £3,096 million (2023: £2,706 million).
• Example competitors: Deloitte, Capgemini, BJSS, Atos, Equal Experts,
NTT Data.
Workday Services
• Addressable market((( 5 ))): £1,100 million (2023: £1,100 million).
• Example competitors: Alight, Cognizant, CrossVue.
Workday Products
• Smart suite addressable market(()(( 6 ))()): £650 million (2023:
£625 million).
• EDM addressable market((( 7 ))): £415 million (2023: no research).
• Example competitors: Worksoft, Turnkey, Opkey.
Our people and customers
People
• Number of staff and contractors: 2,995 (2023: 2,990).
· Number of employed staff: 2,953 (2023: 2,781).
• Employee retention: 93% (2023: 88%).
• People by region:
· UK & Ireland (68%),
· Central Europe (15%),
· Americas (13%), and
· Rest of World (4%).
• People by division:
· Digital Services (51%),
· Workday Services (25%),
· Workday Products (17%), and
· Central Services (7%).
• Offices: (14) Antwerp, Atlanta, Belfast, Birmingham, Buenos Aires,
Copenhagen, Derry, Dublin, Gdańsk, Helsinki, Indianapolis, London, Paris, and
Toronto.
Customers
• Active customers: 930 (2023: 821).
• Net Promoter Score: 58 (2023: alternate measure used).
• Revenue from existing customers: 90% (2023: 90%).
• Our customers by sector (revenue):
· Commercial sector: 52% (2023: 50%),
· Public sector: 36% (2023: 37%), and
· Healthcare: 12% (2023: 13%).
• Our customers by region (revenue):
· UK & Ireland; 61% (2023: 65%),
· North America: 28% (2023: 25%),
· Central Europe: 11% (2023: 9%), and
· Rest of World: <1% (2023: 1%).
CEO statement
Being agile in supporting our customers
We work closely with over 900 customers, most of them global organisations.
For many of our customers, it has been another challenging year, often
operating in uncertain and changeable markets conditions.
As their partners, it is our role to support them as they deal with these
changing circumstances. For many customers it has been about maintaining
investment in critical transformation programmes; for some it has resulted in
reductions in their technology expenditure as they deal with more volatile
business conditions.
Changes for our customers can sometimes require us to be agile in how we
manage our own business. In reviewing the year, we believe that we have
maintained the appropriate balance between growth, profitability,
international expansion and investing for the future.
To achieve that balance has required us to be disciplined in our execution
throughout the year and we believe that we have delivered a robust financial
performance while maintaining high customer satisfaction and employee
engagement levels.
A disciplined business performance
Overall, our revenues have grown to £382.4 million, a 2% increase, and our
adjusted pre-tax profit grew 14% to £77.2 million. This strong profit
increase in a more subdued growth environment is a demonstration of our
business discipline.
This robust performance has been achieved while also investing in the future -
our international business grew 13% to £149.8 million and we increased our
investments in AI and in our product development, in total increasing 48% to
£13.5 million.
Our biggest investment remains in our people, in developing the careers of our
existing team members as well as attracting new recruits. While our staff
complement, of 2,995 people, remained constant over the year, we reduced the
number of contractors in favour of long-term investment in permanent
employees, an increase of 172 people over the year.
Digital Services
Our Digital Services division recorded a reduction in revenue of 5% to £213.1
million. This was a combination of a solid performance in public sector,
offset by post-pandemic related reductions in healthcare and significantly
lower business levels in commercial sector where our banking, insurance and
payments customers reduced expenditure.
The demand for digital transformation in the UK remains high, despite some
short-term, sector-specific challenges. This demand is driven by the need to
replace ageing, inefficient legacy systems or by organisations striving for
greater agility, to allow them to react more quickly to business changes,
whether addressing challenges or securing new opportunities.
In the last year we have continued to make excellent progress in expanding our
digital services activity internationally. Our engagements in Central Europe
and North America are now delivering revenues of £12.3 million, an increase
of 28%. Whilst still a modest amount of our overall Digital Services revenues,
it is exciting to see the speed of progress.
Workday Services
As a Phase 1 Prime partner to Workday in Europe and North America, our Workday
Services team continues to build a truly international business. Our Workday
Services revenues have increased by 6% to £112.0 million and over
three-quarters of these revenues are derived from customers based outside the
UK, including forward-thinking organisations such as Kone (Finland), Kion
Group (Germany), Match.com (USA) and Takeaway.com (Netherlands).
We have launched Spark & Grow which utilises Generative AI technologies to
simplify, automate and streamline the implementation process of a Workday
deployment. Through Spark & Grow, we are able to achieve an 80%
reduction in deployment effort and timelines, allowing smaller organisations
access to Workday's HR and Finance systems.
Workday Products
Over the course of the year our Workday Product revenues grew 28% to £57.3
million, with the Annual Recurring Revenue (ARR) similarly increasing to
£60.5 million. This strong performance underscores our confidence in
achieving our target of £100 million ARR by 2026.
While the growth this year was, again, powered by our Smart product portfolio,
we are excited about our customers' positive response to the launch of latest
product, Employee Document Management (EDM). Available since October 2023, EDM
utilises Workday's Extend technology and improves the experience of generating
and storing documents inside Workday, while supporting an organisation's
global compliance requirements.
With this success, it is no surprise that we are continuing with our
investment in all our Workday Products. Over the past year we increased our
investment in product development by 48%, to £13.5 million, and in our sales
& marketing, which increased by 16% to £12.5 million.
Being a responsible business
Our climate journey, despite being essential, has not been easy. Our ambitious
goal to be carbon net zero by 2025 has placed us in the vanguard of changeable
policy, regulation, measurement and best practice.
It is therefore with a sense of achievement that our draft carbon footprint
figures indicate that we achieved our SBTi near-term reduction targets during
the year, significantly ahead of our 2025 timetable((( 8 (#_ftn8) ))). We are
grateful to those in Kainos who led on this initiative, and for the widespread
support provided by many of our colleagues.
While we have a wide range of diversity initiatives across Kainos we are
focused on improving the gender imbalance that exists across the industry,
where just 22% of roles are undertaken by women. During the year, the
proportion of women in Kainos increased from 34% to 35%, and we recognise that
a sustained effort is required to make further progress.
Changing the diversity of our industry is about inspiring the next generation
of digital talent from a broad range of backgrounds. In the last year over
2,200 young people participated in our outreach programmes, where we had
targeted programmes aimed at improving gender diversity and social mobility
for young people, for students with special educational needs and financial
support for young people from backgrounds that are traditionally
under-represented at university.
Board changes
In September 2023 at our AGM, we completed the planned, four-year succession
process, with Brendan Mooney stepping down as CEO, at which point I assumed
the CEO role.
At our AGM in September 2024, and after serving as Non-Executive Directors for
nine years, our Chairperson Tom Burnet and our Senior Independent Director
Andy Malpass, will complete their term on the Kainos Board of Directors.
I would like to extend the thanks of the entire Kainos community to Tom, Andy
and Brendan for their commitment and contribution throughout their time as
Directors.
Our existing Non-Executive Directors Rosaleen Blair and James Kidd will,
respectively, assume the roles of Chairperson and Senior Independent Director
at our September AGM.
Maintaining a confident outlook
In an uncertain economic climate, it is understandable that the growth
opportunities in our markets may have reduced prominence. However, this lower
profile does not diminish the scale of the opportunities that exist - digital
transformation is a key foundation for organisations as they seek to reduce
their costs and increase their agility.
This has been, and will continue to be, a long-term trend as organisations
redirect their spending from inefficient legacy systems to agile, modern
systems. This momentum will be accelerated by the deployment of AI-enabled
systems where high data quality is a pre-requisite.
The execution of our strategy has placed us in leading positions within our
core markets, which allows us to look confidently to the future.
That confidence is underpinned by the strength of our relationships with our
customers and the talents of our colleagues.
Our customers continue to value the work that we do for them and how we work
together. In the past year, and despite the economic climate, our existing
customers did more business with us than in the year before, and at the same
time our customers record their satisfaction levels as 'excellent'.
We have always been proud of the expertise, energy and enthusiasm of our
colleagues and the exceptional work that they deliver to our customers. In the
past year their ability to be disciplined in how we operate our own business
has been equally impressive.
We recognise that while large and growing, our markets are never static.
In anticipation, we have been investing, appropriately, in the future - from
our fast-growing Workday Products, to enhancing our Workday consulting
services through the use of our own AI co-pilots, to establishing strong
services revenue streams in Workday Extend, AI, low-code, automation and data.
These initiatives have already made an impact and will continue to be
important in our future.
While it is sensible to be confident about our markets, our customers and our
abilities, it is equally sensible to recognise that the economic environment
for our customers remains uncertain, with no promise of immediate improvement.
Alongside our confidence, we need to maintain our already-proven disciplined
approach to operating our own business.
Thank you
I would like to extend my thanks to our customers and colleagues.
We are grateful for the trust and confidence that our customers continue to
place in Kainos, and thankful for the support and commitment that our
colleagues have demonstrated throughout the year.
Russell Sloan
Chief Executive Officer
Our strategy
We are a growth-orientated business and while we are always confident of
growing our market share in subdued markets, we naturally orientate towards
higher growth, dynamic markets. It is in these markets where the talents of
our people shine the brightest and opportunities for growth are the strongest.
Our ambition is to be a global, independent company operating towards the
disruptive end of technology, that will thrive not just today, but for
generations. In building for the long-term, we aspire to provide our people
with rewarding and fulfilling long-term careers.
As part of this ambition, we believe that we can achieve sustained growth in
terms of revenue, adjusted pre-tax profit and cash flow.
We have, deliberately, developed from a national to an international
organisation, both internally and in the customers and markets that we serve.
We expect our international presence to continue to expand in terms of
locations, people and customers.
It is our preference to grow organically; we will undertake acquisitions only
in exceptional circumstances, for instance, where we need to obtain unique
skills.
We also look to ensure that we have a well-balanced business, which is not
overly reliant on any one customer, market or sector. This occasionally
requires us to prioritise smaller, early-stage opportunities ahead of
established market growth. We are comfortable with taking this long term view.
People
The fundamental component of our strategy is our people. Our business is
successful because of the talent, skill and motivation of our colleagues as
they deliver on commitments to internal and external customers.
We will add to our existing talented workforce by recruiting high calibre
people from school, college and industry; we will continue to invest in
developing their skills and careers; and we will continue to strive to be a
great employer.
• Our staff complement is now 2,995 colleagues (2023: 2,990). This • Maintain high standards when recruiting new applicants.
includes 194 early careers colleagues.
• Ongoing investment in skills and career development of all colleagues in
• Invested over 12,000 days of technical and skills development in our Kainos.
people.
• Employee retention increased to 93%. • Maintain our high levels of employee retention (achieve over 85%).
• We were ranked in the '50 Best Places to Work in the UK' by Glassdoor. • Maintain or improve our scores for employee engagement, D&I and
wellbeing.
• As measured through Workday Peakon, we have maintained high levels of
employee engagement (78%), and high ratings for diversity and inclusion
(D&I) (83%) and wellbeing (77%).
• Involved over 2,200 young people and those from under-represented groups • Continue to inspire and educate young people and those from
in our outreach programmes. under-represented groups for potential careers in IT.
Customers
Our business model is based on the conviction that by delivering consistently
to our customers we will build long-lasting, mutually beneficial relationships
that will see us thrive as a business.
These relationships are built on our reputation for delivery and exemplary
customer service. By being responsive to and supportive of our customers'
complex and changing business needs, we reinforce the strength of our
relationships.
Therefore, our purpose is to help our customers with their most challenging
projects and, together with our partners, help them build the capability to
succeed in the digital age.
• Customer satisfaction level as measured by Net Promoter Score was 58 (H1 • Maintain high levels of customer satisfaction, resulting in high levels
2024: 62), which is regarded as 'excellent'. of net revenue retention.
• Net revenue retention recorded as 102% (2023: 126%).
Markets
Digital Services
Our focus is to:
• continue to grow within the public and healthcare sectors, being
engaged in ambitious transformation projects across UK Government and the NHS;
• repeat our digital transformation success within the UK commercial
sector, with a focus on financial services; and
• expand internationally, focused initially within Germany and Canada
where we already have established delivery teams, have built business
development expertise and have an existing Workday Services and Products
client base.
• Public sector revenues increased by 1% to £138.2 million (2023: £137.0 • Grow our business in both sectors, supporting existing clients and
million). projects, and adding new long-term clients in line with our delivery capacity.
• Following the easing of pandemic-related spending, healthcare revenues
decreased by 11% to £44.2 million (2023: £49.7 million).
• Reflecting the wider macro-economic environment, our commercial sector • Continue to build reputation and references in the sector to support a
revenues reduced by 19% to £30.8 million (2023: £37.8 million). return to growth as the UK economy recovers.
• International revenues from Central Europe and North America increased • Continue to build reputation and references within both regions.
by 28% to £12.3 million (2023: £9.6 million).
• Refine sales and marketing approach as market penetration increases.
• Build in-region delivery capability in line with success.
Workday Services
Our focus is to:
• continue to grow in our existing, established markets as Workday
continues to expand within these markets;
• gain market share, replacing incumbent providers to existing Workday
customers through a reputation for higher service levels; and
• expand internationally, establishing operations in countries with
large and growing numbers of Workday customers.
• Workday Services revenues increased by 6% to £112.0 million (2023: • Maintain growth trajectory in all regions, supporting existing clients
£105.7 million). and projects, and adding new long-term clients in line with capacity.
• We were appointed by 30+ customers where earlier phases of the project • Continue to excel in customer service.
were undertaken by a different partner.
• International revenues increased by 6% to £85.6 million (2023: £81.1 • Maintain growth trajectory in all regions, particularly the Phase 1
million). opportunity in the US market.
Workday Products
Our focus is to:
• increase the number of Workday's customers who use our software;
• ensure high levels of customer satisfaction driving strong Net Revenue
Retention (NRR); and
• invest in our existing products, and develop additional products
within the Workday ecosystem, where our blend of software skills and Workday
experience makes us uniquely positioned.
• Our customer numbers increased, with 450+ customers now using one or • Increase the total number of customers using our software.
more of our products.
• Increase the adoption of multiple products by each customer.
• Revenues increased by 28% to £57.3 million (2023: £44.7 million).
• Maintained a high level of NRR, driven by segment NPS of 68. • Maintain our high levels of customer satisfaction.
• We launched Employee Document Management (October 2023). • Ensure that customer adoption and revenues reflect the very strong
increase in investment.
• Overall investment, spanning product development and sales &
marketing, increased by 31% to £26.0 million (2023: £19.9 million). • Develop and launch one new product.
New opportunities
As noted in the previous section, we invest strongly in our Workday Products,
both in extending our existing products and developing new products. In
addition to these activities, we also look to develop new opportunities for
the others areas of Kainos.
Within Digital Services we have launched a series of practices - Cloud
(launched 2017), Data and Artificial Intelligence (2019) and Intelligent
Automation (2020) practices. These are now significant high growth
activities that are fully embedded within Digital Services.
In Workday Services, we have developed our Workday Extend professional
services and our Application Catalogue (these are described in more detail in
the Operational Review, Workday Extend) and we have launched our Spark &
Grow service which accelerates the deployment of Workday for smaller, scaling
companies (more details in the Operational Review, Innovation Case Study)
We have a structured innovation process which helps us identify and promote
new ideas that have the potential to become sizeable revenue streams in the
future.
• In total, 46 ideas were evaluated, with eight moving to the next stage • Maintain idea generation and evaluation activity levels.
of development.
• Develop current next-stage ideas, seeking to create at least one viable
business opportunity.
Operational review
Our overall performance
Our largest business areas, Workday Services, Workday Products and public
sector within Digital Services, together 80% of revenue, delivered excellent
growth, even when measured against a strong comparative period (combined
segment growth, 2024: 7%; 2023: 36%). Offsetting this growth, within Digital
Services, we experienced revenue reductions in our commercial sector, as a
result of the macro-economic environment, and in our healthcare sector as
there were no pandemic-related projects in the year.
In total, revenue for the year grew by 2% (6% organic, 3% ccy) to £382.4
million (2023: £374.8 million) with adjusted pre-tax profit((( 9 (#_ftn9)
))) increasing by 14% (17% ccy) to £77.2 million (2023: £67.6 million).
Our sales are a combination of extensions to existing contracts, new projects
placed by existing customers and winning new customers. Bookings in the year
were 1% lower at £424.5 million (2023: £427.8 million). Our contracted
backlog increased 11% to £357.1 million (2023: £322.9 million).
In line with our previous guidance, we have increased investment in our
software products, now representing a total of £26.0 million, an increase of
31%. Research & development investment increased to £13.5 million (2023:
£9.1 million) and our product-related sales & marketing investment
increased to £12.5 million (2023: £10.8 million).
As at 31 March 2024, we had a strong cash balance (including treasury
deposits) of £126.0 million (2023: £108.3 million), representing 98% cash
conversion (2023: 104%).
Our people
We are clear that our success is driven by the ability, energy and expertise
of the people in Kainos.
In the past 12 months, our headcount has remained stable at 2,995 people
(2023: 2,990). We have continued to reduce the number of contract staff in
favour of long-term investment in permanent employees and as a result
contractors represent 1% of our colleagues (2023: 7%). Correspondingly, over
the past year the number of permanent employees has increased by 6%.
By region, UK & Ireland reduced to 2,043 people (-4%), Central Europe
increased to 463 people (+4%) and the Americas has remained constant at 395
people. In Asia, the number of people increased to 94 (+76 people) as we
welcomed our new colleagues from the RapidIT-Cloudbera acquisition, which
completed in June 2023.
Our employee engagement levels remain high. We now utilise Workday Peakon to
continuously assess employee engagement and have achieved an engagement rating
of 78%. For the second consecutive year, we were awarded '50 Best Places To
Work For in the UK' by Glassdoor, the online career community.
In the past 12 months, 93% of our colleagues chose to continue to develop
their career at Kainos (2023: 88%). This improved retention is partially
because of our ongoing engagement efforts, but we also recognise that there is
increased job-changing caution within the sector.
Our customers
We believe that by delivering consistently to our customers we build long-term
relationships. The strength of our customer relationships is reflected in our
consistently high satisfaction scores. We have now migrated from our
proprietary customer satisfaction index to Net Promoter Score (NPS), and in
the last 12 months we achieved a NPS score of 58 (a score above 50 is viewed
as 'excellent').
Existing customers continue to trust us to deliver their most challenging
projects, and this is reflected in our revenues, with 90% of revenues coming
from our existing clients (2023: 90%). We have also gained new customers
during the year, and we now work with 930 customers (2023: 821).
From a sector perspective we have a well-diversified business, with 52% of our
revenues from commercial clients (2023: 50%), 36% from public sector
organisations (2023: 37%), and 12% from healthcare customers (2023: 13%).
Our international client base has also expanded and as a result our
international revenues have grown by 13% to £149.8 million (2023: £132.0
million). Regionally, UK & Ireland accounts for 61% of our business (2023:
65%), North America for 28% (2023: 25%), Central Europe for 11% (2023: 9%),
with the rest of the world representing <1% (2023: 1%).
Digital Services performance
Our Digital Services division builds solutions that are highly cost-effective
and make public-facing services more accessible and easier to use for the
citizen, patient and customer.
In the last 12 months performance has varied across sectors. Public sector
clients maintained their investment levels in digital transformation projects.
In contrast, and as anticipated, healthcare revenues declined, driven by
post-pandemic budget constraints and ongoing internal NHS reorganisation.
Within commercial sector we also recorded decreased revenue as clients
significantly reduced project expenditure.
As a result, Digital Services revenues declined by 5% to £213.1 million
(2023: £224.4 million). Bookings, at £228.1 million (2023: £238.2 million),
represented a reduction of 4%, while contracted backlog increased by 11% to
£156.6 million (2023: £140.9 million).
Overall, public sector now represents 65% of divisional revenues (2023: 61%),
healthcare 21% (2023: 22%) and commercial sector 14% (2023: 17%).
Public sector
Our public sector customers remain committed to their digital transformation
programmes, the importance of which are underlined in the 2025 Roadmap
published by the Central Data & Digital Office((( 10 (#_ftn10) ))) which
aims to create a more efficient digital government that provides better
outcomes for everyone. This continued digital adoption by government, and our
success in the market, has resulted in an increase in our revenues by 1% to
£138.2 million (2023: £137.0 million).
We continue to support our long-standing customers, including the Ministry of
Justice, the Department for Environment, of Food & Rural Affairs, the
Driver and Vehicle Standards Agency and HM Passport Office and are assisting
new customers such as the Crown Prosecution Service, the Water Services
Regulation Authority (OFWAT) and the Open University as they progress their
ambitious digital programmes. We have been awarded places on new digital
services frameworks with Ministry of Defence, HM Revenue and Customs and the
Financial Conduct Authority.
Commercial sector
In the UK, the commercial sector expenditure on IT is over three times that of
the public sector. While this represents significant long-term opportunity, to
increase our likelihood of success, we have initially chosen to focus our
activity on financial services customers.
While our customers recognise the need to increase their levels of investment
in digital transformation, the uncertain economic backdrop has resulted in a
cautious approach to embarking upon major transformation programmes and
limiting the scope of some in-flight projects.
Reflecting reduced activity levels, our commercial sector revenue was 19%
lower at £30.8 million (2023: £37.8 million).
Notwithstanding these short-term headwinds, we continue to deliver digital
services for our established customers, including Irish Life Assurance plc,
the United Nations International Organization for Migration and Nexi Group and
we are helping new customers including Royal London Asset Management and
Arqiva.
Healthcare sector
We have described in previous updates that our NHS customers are experiencing
post-pandemic budget constraints, combined with the disruption of the merger
of the NHS England and NHS Digital organisations; this remains the case.
While this may, in simple terms, explain the 11% reduction in our healthcare
revenues to £44.2 million (2023: £49.7 million), it overlooks the strong
performance in our core healthcare business. In defining our core healthcare
business, we remove all revenues relating to supporting the NHS pandemic
response. Using this definition, core healthcare revenues in the past 12
months have increased to £44.2 million (2023: £35.8 million), representing
an increase of 23%.
This year, our customers have included the Department for Health and Social
Care (DHSC), where we are leading the delivery of the new digital Health
Check, NHS Business Services Authority (NHSBSA) and their digital projects
portfolio, and the Department for Health and Care Wales, where we delivered
their Patient App.
International expansion outside of UK and Ireland
With the UK as an early adopter of digital transformation, the opportunity
exists to replicate our home market success in international jurisdictions. In
Europe, our initial focus is primarily on commercial customers in Germany and
Switzerland, with organisations such as Worldline, Nexi Group and GEA. In
North America, we are making progress across public sector, commercial sector
and the healthcare sector with organisations that include the Province of Nova
Scotia, WPP and the Government of Ontario.
Our international revenues are reported in the figures in the sectors listed
above, but for clarity, international revenues for the division have increased
by 28% to £12.3 million (2023: £9.6 million), representing 6% of total
Digital Services revenue (2023: 4%).
Workday Services performance
Revenue over the last 12 months recorded growth of 6% to £112.0 million
(2023: £105.7 million) however, as noted below, excluding revenues associated
with withdrawn services linked to the Blackline acquisition, revenue growth
was 10%. Sales bookings decreased by 4% to £116.5 million (2023: £121.7
million) while our contracted backlog remained constant at £73.0 million
(2023: £72.8 million).
Having first engaged with Workday Inc. in 2011, we are now one of their most
experienced partners and one of only 62 partners globally accredited to
implement Workday's innovative SaaS platform. From our initial strong base in
UK & Ireland, we expanded internationally - into Northern and Central
Europe from 2015 and into the North American market from 2018.
Within Europe, we are the leading Workday partner - this leadership position
is the result of high satisfaction levels within our customer base, coupled
with our geographic expansion in the region. A similar focus on customer
success in our North American market resulted in our appointment, in mid-2022,
as a Phase 1 Prime partner for the US market - which remains the largest
market globally for Workday Inc.
Regionally, our North American customers generated 49% of total divisional
revenue (2023: 53%), with our European customers responsible for 50% of
revenue (2023: 47%).
The number of accredited Workday consultants at Kainos is 798 (2023: 808).
Workday Extend
Alongside the typical consulting activities involved in deploying Workday's
SaaS platform, there is a growing opportunity linked to Workday Extend,
Workday's Platform-as-a-Service offering which became generally available in
May 2020. Kainos has been part of the Workday Extend early adopter programme
since 2017.
Workday Extend allows organisations to build additional, specialised
functionality on the Workday platform to further enhance customers' Workday
deployment. As experts and global leaders in Workday Extend, we have helped
more than 80 organisations including Home Depot, AES Corporation and Ferguson
Enterprises to build Workday Extend applications specific to their
requirements or to deploy one of our pre-built applications from our
45-application catalogue.
In September 2023, to coincide with the release of significant AWS-native AI
capabilities accessible through Extend, Workday announced the creation of
their AI Marketplace. This marketplace, expected to be available mid-2024,
will allow third-party developers to market Workday-approved, pre-built
applications to the 10,000+ Workday customer community.
In addition to the paid-for consulting services activity, engaging with
clients on Workday Extend projects provides us with insight into common
challenges that clients experience, and the potential to build products that
are embedded inside Workday.
Blackline Group
In January 2022 we announced the acquisition of Blackline Group, a 50-person
specialist business that focused on both advisory services linked to Workday
Strategic Sourcing and standalone procurement consulting services.
On review of the standalone procurement consulting activity, and in discussion
with our colleagues and customers, we decided to stop the provision of these
services during the financial year. This decision directly impacted 23 of our
colleagues based in the US and four customer contracts; the services that are
being withdrawn amounted to £5.5 million of revenue in the year (2023:
£8.6m, 2025 forecast: negligible).
As a result of this decision, we have recognised an amortisation charge of
£2.6 million relating to the customer relationship intangible asset, a
restructuring cost of £0.4 million and all post-combination remuneration.
Workday Products performance
Workday is a comprehensive SaaS platform, but we have identified opportunities
to develop our own software products that are complementary to the platform
and that enable customers to further increase the benefit that they can
realise from their investment in Workday.
Our Workday Products revenue increased 28% (23% organic, 33% ccy) to £57.3
million (2023: £44.7 million), driven by an 18% increase in bookings to
£79.9 million (2023: 67.9 million). The Annual Recurring Revenue was £60.5
million (2023: £47.9 million), an increase of 26% and backlog increased 17%
to £127.5 million (2023: £109.3 million).
In total, over 450 customers use one or more of our products.
Smart Suite
We have three products within the Smart Suite:
· Smart Test (launched in 2014) allows Workday customers to
automatically test and verify that their unique Workday configuration is
operating effectively, both during implementation and in live operation. Smart
Test is the leading automated testing platform specifically designed for
Workday and is used by over 400 global enterprise customers, including
Salesforce, Capital One and Whole Foods.
· Smart Audit (2021) has been deployed to over 100 customers including
Chanel, Arcbest and QBE Insurance. Smart Audit is a compliance-monitoring tool
that allows Workday customers to maintain operational security controls across
their Workday environments. Our pre-built controls focus on safeguarding
against Segregation of Duties conflicts, providing robust Privileged Access
Controls and protecting Personal and Sensitive employee data.
· Smart Shield (2022) is a data-masking tool that can easily and
seamlessly mask sensitive data without impacting the Workday user experience.
It ensures that sensitive data remains controlled when Workday environments
are made available to broader internal or external teams, for instance, during
support and maintenance activities, or for ongoing internal Workday training
and onboarding programmes. Smart Shield is now used by over 75 customers,
including Match.com and LKAB.
Employee Document Management (EDM)
In October 2023, our latest product, Employee Document Management (EDM),
became generally available. EDM utilises Workday Extend technology and
improves the experience of generating and storing documents inside Workday,
while supporting an organisation's global compliance requirements.
This has been our most successful product launch, with 26 customers already
contracted, of whom Hilti was the first customer to go live.
RapidIT-Cloudbera acquisition
In June 2023 we completed the acquisition of RapidIT-Cloudbera, the creators
of Genie, a Workday-focused automated testing product, headquartered in
Atlanta, US, and employing 101 staff in the US and India.
Since the completion of the acquisition, we have successfully combined our
testing and development teams, and have added the unique Genie functionality
to our Smart Test platform. All customers who were using Genie have now been
successfully migrated to our combined platform.
Innovation, research and development
Successful businesses continue to challenge themselves. We are keen to improve
our existing offerings, develop new business ideas and assess business and
technology concepts that are likely to impact us, or our clients, in the
future.
Including our product investment, our research and development expenditure for
the year amounted to £13.5 million (2023: £9.1 million), an increase of 48%,
which was fully expensed in the year.
Product innovation and incubation
The past year has seen us incubate, develop and launch two innovative products
in our Workday Product division.
Launched in October 2023, Employee Document Management (EDM) traces its roots
to a conversation in 2020 with our customer Hilti about an unmet need in
document generation and storage. We validated this idea with several other
customers and started our internal process of creating EDM. Based on a
combination of AWS and Workday Extend technologies, EDM offers a frictionless
way for Workday customers to create, manage, store and access employee
documents, such as contracts, offer letters, policies and compensation
statements, all inside Workday. Since launch, 26 organisations have become
customers.
Workday's core HR and Finance systems are typically deployed by medium-sized,
and larger, organisations. For ambitious smaller organisations, the elapsed
time to implement Workday, coupled with the internal effort and external
consulting time, often mean that they choose less comprehensive HR and finance
solutions. Focusing on reducing this 'time to value', our Workday Product
Division led the incubation and development of Spark & Grow, a unique
proposition based around automation which allows smaller organisations to get
live on Workday in four weeks. Spark & Grow extends Workday's addressable
market and featured in the most recent Workday, Inc earnings call.
Services innovation and incubation
In our services division, innovation has been pivotal in fostering growth and
enhancing our engagements with both new and longstanding clients.
In October 2023, after securing a contract to develop a modern digital
registration system for births, marriages, and deaths with the Home Office, we
utilised an Open Innovation process to help uncover innovative solutions. The
activity involved several hundred of our colleagues in a structured process to
help brainstorm novel solutions for the challenges that the Home Office were
seeking to overcome. This was highly successful, identifying new ways to use
cutting-edge technologies to efficiently support individual users.
Moreover, our commitment to innovation has strengthened our ongoing
relationships with key clients. For example, DVSA were considering the concept
of allowing the driving theory test to be undertaken from a home or remote
setting, thereby extending the accessibility of the service. They turned to
Kainos to create and deliver the concept of a secure, remote theory test.
Collaborating closely with the client, we engaged academic experts,
cutting-edge technology start-ups, and end users to design and prove a unique
solution that met the needs of all stakeholders.
Across our services division, innovation remains a key driver in adopting
generative AI solutions within and beyond Kainos. From instant jargon busting
to summarising hundreds of contracts in minutes, we have been at the forefront
of delivering effective generative AI-based services, demonstrating our
commitment to transformative growth and client satisfaction.
Technical and market research
To support innovation activities and strategic decision making across Kainos,
we have invested in a team dedicated to technical and market research. The
team's activities include providing foresight and research into emerging
technologies, interpreting developing trends and identifying market insights.
The team is continuing research into: the advances of machine learning and AI,
such as federated learning and synthetic data; advances in the development of
green software and sustainable approaches to innovation; uses of artificial
intelligence in automatic speech recognition and object detection; and a range
of other emerging concepts, with a goal of understanding when they should
approach a level of maturity and the impact they will have on our business and
clients.
Partnerships
In addition to internally sourced ideas, we nurture relationships with a broad
network of partner organisations across our global footprint, from hyperscale
partners such as Microsoft and Amazon Web Services, through to start-ups who
are developing cutting-edge solutions to some of the world's most complex
problems.
We also continue to work with academic research partners and leading industry
organisations, such as Ulster University AI Research Centre, and University of
Oxford's Responsible Technology Institute, as well as working with our
strategic partners on further-from market technology and research.
Founders
Our Founders Programme has been established to foster and support
intrapreneurship within Kainos. It serves as a platform for providing
guidance, advice, network access and resources to Founders engaged in
innovative projects within the Company.
Founders in Kainos are visionary leaders who challenge the status quo with
innovative alternatives, excel in developing strategies, and inspire trust
through integrity. They possess strong leadership, negotiation, and
communication skills, and are adept at turning ideas into commercially viable
businesses.
Innovation case study: AI-enabling Smart Test and Smart Audit
Adding AI capability to our Smart Suite has been a key focus for our
innovation efforts within our development activity.
In March 2024, we reached a significant milestone when we released the latest
version of Smart Audit to our 100+ customers. The AI-enabled functionality
assists in security access and permission audits within Workday by identifying
potential errors or inconsistencies in access rules, enabling more frequent
reviews and earlier detection of issues.
In addition, we have integrated AI tooling in our other products. Notably, we
invested in a new Copilot feature for Smart Test, which assesses customers'
Workday configuration and automatically builds test scenarios targeting the
highest risk areas.
These AI tools are designed to enhance our users' experience and aid
organisations in addressing complex business challenges, much faster than ever
before.
Innovation case study: Spark & Grow - using AI to optimise Workday
deployments
As we described above, ambitious, scaling organisations are often interested
in deploying Workday's innovative HR and Finance system but lack the internal
capacity and time to undertake the deployment.
This innovation project focused on using cutting-edge AI and Generative AI
technologies to simplify, automate and streamline the implementation process
of a Workday deployment. We were able to achieve an impressive 80% reduction
in effort and timelines, allowing smaller organisations to deploy Workday and
quickly attain value from their investment in Workday's HR and Finance
systems.
A key element of this initiative, which we called Spark & Grow, was the
establishment of a standalone unit, functioning with the agility of a
start-up, yet backed by the robust infrastructure of Kainos. This enabled
rapid prototyping and application of AI technologies without the constraints
of traditional corporate structures.
In a novel approach, the project employed AI to critique and refine its own
development processes, a method we refer to as 'AI for AI'. This not only
ensured that our methods and strategies were free from human biases but also
significantly enhanced decision-making efficiency.
Over a six-month period, the project successfully launched several AI-driven
tools, including AI-Generated Knowledge Bases, Sentiment Analysis systems, and
six other use cases in Phase 1, which collectively led to setting new
benchmarks for operational efficiency within the market.
Innovation case study: Working with academia
Kainos continues to support Ulster University's Artificial Intelligence
Research Centre (AIRC). This partnership between industry and academia is
dedicated to advancing research, innovation, and skills development in AI in
Northern Ireland. Our shared goal is to inspire the next generation to harness
the transformative power of AI for societal improvement.
The pillars of our work include knowledge sharing and strategic research and
our collaborative sessions have covered a wide variety of subjects including
data ethics, large language models and probabilistic programming. These
sessions provide a platform for Kainos staff to gain insight into emerging
technical concepts, share the practical challenges that industry is facing and
identify opportunities to work together.
This past year, within our strategic research focus, we have funded and
launched PhD research projects in both ethical AI and explainable AI where our
goal is to provide the knowledge and tools to ensure AI solutions are created
ethically, with transparency, accountability and explainability.
Financial review
FY24 was another year of solid financial performance.
In summary, we grew revenue by 2% (3% ccy) to £382.4 million (2023: £374.8
million). Digital Services revenue reduced by 5% to £213.1 million (2023:
£224.4 million), reflecting decreased customer expenditure across the
commercial sector and lack of pandemic-related revenues in the healthcare
sector. Workday Services revenue grew 6% (9% ccy) to £112.0 million (2023:
£105.7 million) driven mainly by growth in Central Europe. Workday Products
revenue increased to £57.3 million (2023: £44.7 million), representing
growth of 28% (33% ccy) (2023: 40%). The Operating Review provides more
information on our revenue performance.
Our overall gross margin was 49.0% (2023: 47.3%). Digital Services' gross
margin increased to 38.4% (2023: 38.1%) driven by lower contractor headcount.
Workday Services margin increased to 54.7% (2023: 54.2%) driven by higher
utilisation. Workday Products margin increased to 77.1% (2023: 76.6%).
Operating expenses
Operating expenses increased by 3% to £128.4 million (2023: £124.6 million)
and is largely consistent with revenue growth.
Our investment in product development increased to £13.5 million (2023: £9.1
million), all of which was expensed during the period. We recognised £5.2
million of Research & Development Expenditure Credit (RDEC) income during
the year (2023: £4.2 million).
Alternative performance measures
We use several alternative performance measures to monitor day-to-day
performance and to assist management make financial, strategic and operating
decisions.
Specifically, we exclude costs directly attributable to acquisitions. This
includes amortisation of acquired intangible assets, compensation for
post-combination services and acquisition-related expenses such as legal and
professional costs incurred mainly in the period of acquisition. These costs
can vary between periods depending on the timing and size of acquisitions, the
nature of intangible assets acquired and the structure of consideration.
We adjust for the cost of our share-based payment arrangements in our adjusted
measures also. Our arrangements consist of both equity-settled and
cash-settled schemes and the cost of each award will be influenced by the
share price at the date of grant. The cost of our cash-settled arrangements
will also be impacted by share price movements between reporting dates. Due to
these variables, we believe adjusting for such costs better represents our
underlying trading performance, providing a more meaningful comparison between
periods.
Furthermore, we also adjust for items which we consider significant and
non-recurring in nature. In the current period we excluded gains relating to
the sale of property, plant and equipment and fair value movements in our
investment property.
We adjust for the above items consistently across all our adjusted measures,
namely 'adjusted profit before tax', 'adjusted EBITDA', 'cash conversion' and
'adjusted diluted and basic earnings per share'. We believe our adjusted
measures are better indicators of trading performance, assist comparison
between periods and are useful measures for users of the financial statements.
The nature and type of items adjusted are also similar to comparable
companies.
The adjusted profit measures we use are not defined in UK-adopted
International Accounting Standards and our definitions may not be comparable
with similarly titled performance measures and disclosures in other entities.
As such, these measures should not be considered in isolation but as
supplementary information to the financial statements.
The adjusted profit measures reconcile to the reported numbers as follows:
Adjusted profit measures
2024 2023
(£000s) (£000s)
Profit before tax 64,772 54,338
Share-based payment expense and related costs 5,952 6,346
Amortisation of acquired intangible assets 4,190 2,642
Increase in fair value of investment property and gain on sale of property (2,154) -
Compensation for post-combination services 3,800 4,176
Acquisition-related expenses 626 57
Adjusted profit before tax 77,186 67,559
2024 2023
(£000s) (£000s)
Profit after tax 48,715 41,645
After tax impact of:
Share-based payment expense and related costs 4,464 4,886
Amortisation of acquired intangible assets 3,147 2,642
Increase in fair value of investment property and gain on sale of property (1,894) -
Compensation for post-combination services 3,746 4,176
Acquisition-related expenses 582 57
Adjusted profit after tax 58,760 53,406
Adjusted EBITDA
2024 2023
(£000s) (£000s)
Adjusted profit before tax 77,186 67,559
Depreciation of property, plant and equipment 2,886 2,249
Depreciation of right-of-use assets 1,152 1,163
Finance expense 334 71
Finance income (4,336) (1,463)
Adjusted EBITDA 77,222 69,579
Adjusted pre-tax profit increased by 14% to £77.2 million (2023: £67.6
million). Profit before tax increased by 19% to £64.8 million (2023: £54.3
million).
Corporation tax charge
The effective tax rate for the year was 25% (2023: 23%). The effective tax
rate for the period is in line with the UK corporation tax rate which
increased to 25% effective 1 April 2023. The rates at which our overseas
profits are taxed vary from jurisdiction to jurisdiction but on average have
been subject to a blended rate that is largely in line with 25%.
Financial position
We continue to have a strong financial position, with £126.0 million of cash
and treasury deposits (2023: £108.3 million), no debt and net assets of
£156.8 million (2023: £129.3 million).
The underlying trade receivables and accrued income balance has reduced to
£68.6 million (2023: £74.5 million), despite the growth in revenue, due to
strong cash conversion in the period.
Our deferred income balance at year end is £45.0 million (2023: £37.1
million). This increase of 21% is attributed mainly to the growth in our SaaS
revenue in the year to £54.8 million (2023: £43.1 million).
Within non-current assets our property, plant and equipment balance increased
to £12.3 million at the year end (2023: £9.5 million) due mainly to property
refurbishment costs incurred during the year. During the period we entered
into 4 new property leases increasing our right-of-use asset balance to £5.2
million at 31 March 2024 (2023: £1.3 million). A corresponding increase to
our lease liabilities was also recognised contributing to the increase in our
closing lease liability of £5.9 million (2023: £1.4 million).
In the prior year £5.2 million was transferred from property, plant and
equipment to investment property, reflecting our agreement to sell part of the
site acquired in 2019 for the development of our future headquarters in
Belfast. The sale was subject to planning permission which was obtained
subsequent to year end. An increase in fair value of £1.0 million was
recognised during the year.
During the period we completed the sale of property located in Belfast,
recognising a gain on disposal of £1.1 million. At 31 March 2023, the
carrying value of this property was £0.3 million and was recognised as assets
held for sale within current assets.
As noted within our Workday Products review, we completed the acquisition of
RapidIT-Cloudbera Inc. on 30 June 2023. The fair value of assets acquired and
liabilities assumed at acquisition date are detailed further in note 29.
Cash flow and cash conversion
Cash conversion, which is cash generated by operating activities as a
percentage of adjusted EBITDA, remained strong at 98% (2023: 104%).
Dividend
Our progressive dividend policy provides shareholder returns, while ensuring
we have sufficient funds to invest in long-term growth. The proposed final
dividend recommended by Directors is 19.1p and, if approved by shareholders,
will be paid on 25 October 2024 to shareholders on the register on 4 October
2024, with an ex-dividend date of 3 October 2024. This will make the total
dividend for the year 27.3p (2023: 23.9p) which will represent a distribution
of 58% of adjusted profit after taxation (2023: 56%).
Consolidated income statement for the year ended 31 March 2024
Continuing operations Note 2024 2023
(£000s) (£000s)
Revenue 2 382,393 374,807
Cost of sales 2 (195,079) (197,652)
Gross profit 2 187,314 177,155
Operating expenses (128,411) (124,597)
Impairment (loss)/gain (including amounts recovered) on trade receivables and (287) 388
accrued income
Gain on disposal of property, plant and equipment 1,114 -
Increase in fair value of investment property 1,040 -
Operating profit 3 60,770 52,946
Finance income 4,336 1,463
Finance expense (334) (71)
Profit before tax 64,772 54,338
Income tax expense 5 (16,057) (12,693)
Profit for the year 48,715 41,645
Earnings per share
Basic 7 39.0p 33.6p
Diluted 7 38.6p 33.1p
Consolidated statement of comprehensive income for the year ended 31 March
2024
2024 2023
(£000s) (£000s)
Profit for the year 48,715 41,645
Items that may be reclassified subsequently to profit or loss:
Foreign operations - foreign currency translation differences (1,065) 779
Total comprehensive income for the year 47,650 42,424
Consolidated statement of financial position as at 31 March 2024
Note 2024 2023
(£000s) (£000s)
Non-current assets
Goodwill 38,203 19,007
Other intangible assets 5,208 3,816
Investment property 6,200 5,160
Property, plant and equipment 12,285 9,509
Right-of-use assets 5,216 1,261
Investments in equity instruments 1,299 1,299
Deferred tax asset 5,147 3,103
73,558 43,155
Current assets
Trade and other receivables 8 41,832 38,970
Prepayments 8 4,268 3,656
Accrued income 8 33,225 38,808
Tax receivable - 400
Cash and cash equivalents 121,558 108,302
Treasury deposits 4,403 -
Assets held for sale - 310
205,286 190,446
Total assets 278,844 233,601
Current liabilities
Trade payables and accruals 9 (50,062) (52,348)
Deferred income 9 (44,954) (37,087)
Tax payable 9 (7,069) -
Lease liabilities (1,015) (794)
Provisions - (341)
Other tax and social security 9 (10,135) (12,068)
(113,235) (102,638)
Non-current liabilities
Provisions (1,542) (1,031)
Deferred tax liability (2,371) -
Lease liabilities (4,883) (585)
(8,796) (1,616)
Total liabilities (122,031) (104,254)
Net assets 156,813 129,347
Equity
Share capital 629 623
Share premium account 9,419 6,567
Capital reserve 3,548 3,548
Share-based payment reserve 31,228 23,394
Translation reserve (35) 1,030
Retained earnings 112,024 94,185
Total equity 156,813 129,347
These financial statements were approved by the Board of Directors and
authorised for issue on 17 May 2024. They were signed on its behalf by:
Richard McCann
Director
17 May 2024
Consolidated statement of changes in equity for the year ended 31 March 2024
Share Share Capital Share-based Translation reserve Retained Total
capital premium reserve payment earnings equity
reserve
(£000s) (£000s) (£000s) (£000s) (£000s)
(£000s) (£000s)
Balance at 31 March 2022 619 6,433 3,548 15,171 251 81,668 107,690
Profit for the year - - - - - 41,645 41,645
Other comprehensive income - - - - 779 - 779
Total comprehensive income for the year - - - - 779 41,645 42,424
Equity-settled share-based payment - - - 8,223 - - 8,223
Current tax for equity-settled share-based payments - - - - - 237 237
Deferred tax for equity-settled share-based payments - - - - - (931) (931)
Issue of share capital - share options exercised 4 134 - - - - 138
Dividends - - - - - (28,434) (28,434)
Balance at 31 March 2023 623 6,567 3,548 23,394 1,030 94,185 129,347
Profit for the year - - - - - 48,715 48,715
Other comprehensive income - - - - (1,065) - (1,065)
Total comprehensive income for the year - - - - (1,065) 48,715 47,650
Equity-settled share-based payment - - - 7,834 - - 7,834
Current tax for equity-settled share-based payments - - - - - 514 514
Deferred tax for equity-settled share-based payments - - - - - (968) (968)
Issue of share capital - share options exercised 6 2,852 - - - - 2,858
Dividends - - - - - (30,422) (30,422)
Balance at 31 March 2024 629 9,419 3,548 31,228 11 (#_ftn11) (35) 112,024 156,813
Consolidated statement of cash flows for the year ended 31 March 2024
Note 2024 2023
(£000s) (£000s)
Cash flows from operating activities
Profit for the year 48,715 41,645
Adjustments for:
Finance income (4,336) (1,463)
Finance expense 334 71
Tax expense 5 16,057 12,693
Share-based payment expense 5,952 6,346
Depreciation of property, plant and equipment 2,886 2,249
Depreciation of right-of-use assets 1,152 1,163
Amortisation of intangible assets 4,190 2,642
Gain on disposal of property, plant and equipment (1,114) -
Increase in fair value of investment property (1,040) -
Post-acquisition remuneration settled by shares 1,501 3,200
Increase/(decrease) in provisions 170 (758)
Operating cash flows before movements in working capital 74,467 67,788
Decrease/(increase) in trade and other receivables 2,337 (3,380)
(Decrease)/increase in trade and other payables (1,336) 8,076
Cash generated from operating activities 75,468 72,484
Income taxes paid (6,454) (10,585)
Net cash from operating activities 69,014 61,899
Cash flows from investing activities
Interest received 4,336 1,463
Purchases of property, plant and equipment (5,662) (2,499)
Proceeds from sale of property, plant and equipment 1,484 -
Amounts placed on treasury deposit (4,403) -
Acquisition of subsidiaries net of cash acquired (22,908) -
Net cash used in investing activities (27,153) (1,036)
Cash flows from financing activities
Dividends paid 6 (30,422) (28,434)
Interest paid (334) (71)
Repayment of lease liabilities (466) (1,075)
Proceeds on issue of shares 2,858 138
Net cash used in financing activities (28,364) (29,442)
Net increase in cash and cash equivalents 13,497 31,421
Cash and cash equivalents at beginning of year 108,302 76,609
Effect of exchange rate fluctuations on cash held (241) 272
Cash and cash equivalents at end of year 121,558 108,302
Notes to the consolidated financial information
1. General information and basis of preparation
Kainos Group plc ('the Company') is a public company limited by shares
incorporated in the United Kingdom under the Companies Act 2006 and is
registered in England and Wales (company registration number 09579188), having
its registered office at 21 Farringdon Road, 2nd Floor, London EC1M 3HA. The
Company is listed on the London Stock Exchange.
The Group financial statements consolidate those of the Company and its
subsidiaries (together referred to as the 'Group').
The Group financial statements have been prepared and approved by the
Directors in accordance with UK-adopted International Accounting Standards
('UK-Adopted IFRS'). The financial statements are presented in Pounds
Sterling, generally rounded to the nearest thousand.
The financial information set out in this document does not constitute the
statutory accounts of the Group for the years ended 31 March 2024 or 31 March
2023 but is derived from those accounts. Statutory accounts for the year ended
31 March 2023 have been delivered to the registrar of companies, and those for
2024 will be delivered in due course. The auditor has reported on those
accounts; their reports were (i) unqualified, (ii) did not include a reference
to any matters to which the auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
This financial information was authorised for issue by the Directors on 17 May
2024.
2. Segment reporting
All of the Group's revenue during the year ended 31 March 2024 and for the
year ended 31 March 2023 was derived from continuing operations.
The Group's Executive Directors are considered to be the Chief Operating
Decision Maker (CODM) of the Group. They use internal management reports to
assess both performance and strategy of the Group and the three specialist
business areas: Digital Services, Workday Services and Workday Products.
The following is an analysis of the Group's revenue and results by reportable
segment:
2024 Digital Workday Services Workday Products
12 months to 31 March Services (£000s) (£000s) Consolidated
(£000s) (£000s)
Revenue 213,097 112,044 57,252 382,393
Cost of sales (131,280) (50,717) (13,082) (195,079)
Gross profit 81,817 61,327 44,170 187,314
Direct expenses(( 12 (#_ftn12) )) (20,778) (35,889) (28,280) (84,947)
Contribution 61,039 25,438 15,890 102,367
Central overheads((12)) (29,183)
Net finance income 4,002
Adjusted pre-tax profit 77,186
Share-based payments expense and related costs (5,952)
Amortisation of acquired intangible assets (4,190)
Compensation for post-combination remuneration (3,800)
Acquisition-related expenses (626)
Increase in fair value of investment property and gain on sale of property 2,154
Profit before tax 64,772
2023 Digital Workday Services Workday Products
12 months to 31 March Services (£000s) (£000s) Consolidated
(£000s) (£000s)
Revenue 224,384 105,741 44,682 374,807
Cost of sales (138,798) (48,406) (10,448) (197,652)
Gross profit 85,586 57,335 34,234 177,155
Direct expenses((12)) (24,326) (36,439) (21,687) (82,452)
Contribution 61,260 20,896 12,547 94,703
Central overheads((12)) (28,536)
Net finance expense 1,392
Adjusted pre-tax profit 67,559
Share-based payments expense and related costs (6,346)
Amortisation of acquired intangible assets ( (2,642)
Compensation for post-combination remuneration (4,176)
Acquisition-related expenses (57)
Profit before tax 54,338
2024 2023
(£000s) (£000s)
United Kingdom & Ireland 232,557 242,787
North America 106,990 95,505
Central Europe 41,433 35,262
Rest of world 1,413 1,253
382,393 374,807
Digital Workday Workday
Services Services Products Total
2024 2024 2024 2024
(£000s) (£000s) (£000s) (£000s)
Type of revenue
Services 204,950 105,428 2,430 312,808
Subscriptions - - 54,822 54,822
Third party and other 8,147 6,616 - 14,763
213,097 112,044 57,252 382,393
Digital Workday Workday Total
Services Services Products 2023
2023 2023 2023
(£000s) (£000s) (£000s) (£000s)
Type of revenue
Services 217,490 98,961 1,625 318,076
Subscriptions - - 43,057 43,057
Third party and other 6,894 6,780 - 13,674
224,384 105,741 44,682 374,807
Disaggregation of revenue by sector
Digital Services 2024 2023
(£000s) (£000s)
Public 138,168 136,951
Commercial 30,749 37,782
Healthcare 44,180 49,651
213,097 224,384
Workday Services
Public 89 167
Commercial 111,949 105,423
Healthcare 6 151
112,044 105,741
Workday Products
Public - 891
Commercial 57,170 43,171
Healthcare 82 620
57,252 44,682
Group
Public 138,257 138,009
Commercial 199,868 186,376
Healthcare 44,268 50,422
Total 382,393 374,807
3. Profit for the year
Profit for the year has been arrived at after charging/(crediting):
2024 2023
(£000s) (£000s)
Total staff costs 261,430 232,033
Government grants (2,070) (12)
Research and development expensed as incurred 13,493 9,061
Research and Development Expenditure Credit (5,161) (4,230)
Depreciation of property, plant and equipment 2,886 2,249
Depreciation of right-of-use assets 1,152 1,163
Gain on disposal of property, plant and equipment (1,173) -
Net foreign exchange loss/(gain) 553 (873)
Amortisation of acquired intangibles 4,190 2,642
4. Staff numbers
The average number of employees during the year was:
2024 2023
Number Number
Technical 2,354 2,107
Administration 331 311
Sales 258 188
2,943 2,606
5. Tax expense
The following tax was recognised in recognised in the income statement:
2024 2023
(£000s) (£000s)
Current tax expense:
Current year (UK) 12,201 7,793
Current year (overseas) 6,456 5,271
Adjustments in respect of prior years (444) (385)
18,213 12,679
Deferred tax
Origination and reversal of temporary differences (1,439) (1,130)
Adjustments in respect of prior years (717) 1,144
(2,156) 14
Total tax expense 16,057 12,693
In addition to the amount charged to the statement of comprehensive income,
the following amounts relating to tax have been recognised directly in equity
in relation to share-based payments:
2024 2023
(£000s) (£000s)
Current tax
Permanent element of share-based payment deduction 514 237
Deferred tax
Deferred tax on share-based payments (968) (931)
Total tax recognised directly in equity (454) (694)
UK corporation tax has been calculated at 25% (2023: 19%) of the estimated
taxable profit for the year, the prevailing rate at the balance sheet date.
Taxation for other jurisdictions is calculated at the rates prevailing in the
respective jurisdictions.
The effective tax rate for the period is in line with the UK corporation tax
rate which increased to 25% effective 1 April 2023 (2023: 23%). The rates at
which our overseas profits have been subject to tax are also in line with 25%.
We envisage our future effective tax rates to be broadly in line with the main
UK corporation tax rate.
The Group's tax charge can be reconciled to the profit in the income statement
and effective tax rate as follows:
2024 2023
(£000s) (£000s)
Profit before tax on continuing operations 64,772 54,338
Tax at the UK corporation tax rate of 25% (2023: 19%) 16,193 10,324
Expenses not deductible for tax purposes 1,333 919
Tax exempt income (428) (3)
Effect of foreign exchange on consolidation - (92)
Effect of tax rates in foreign jurisdictions 120 740
Adjustments to tax charge in respect of prior years (1,161) 759
Change in UK tax rates - 46
Tax expense for the year 16,057 12,693
Effective tax rate 25% 23%
6. Dividend
2024 2023
(£000s) (£000s)
Amounts recognised as distributions to equity holders in the period:
Interim dividend for 2024 of 8.2p per share 10,287 -
Final dividend for 2023 of 16.1p per share 20,135 -
Interim dividend for 2023 of 7.8p per share - 9,702
Final dividend for 2022 of 15.1p per share - 18,732
30,422 28,434
The Board has proposed a final dividend in respect of the year ended 31 March
2024 subject to approval by shareholders at the Annual General Meeting. This
dividend has not been recognised as a liability in these financial statements
and there are no tax consequences. The proposed final dividend, if approved by
shareholders, will be 19.1p per share (£24.0 million in total) and payable on
25 October 2024 to all shareholders on the Register of Members on 4 October
2024, and with an ex-dividend date of 3 October 2024.
7. Earnings per share
Basic
The calculation of basic earnings per share (EPS) has been based on the
following profit attributable to ordinary shareholders and weighted average
number of ordinary shares outstanding.
2024 2023
(£000s) (£000s)
Profit attributable to ordinary shareholders 48,715 41,645
Thousands Thousands
Issued ordinary shares at 1 April 124,628 124,078
Effect of shares held in trust (790) (786)
Effect of share options vested and exercised 711 392
Effect of shares issued related to a business combination 113 18
Effect of shares issued related to free share awards 109 99
Weighted average number of ordinary shares at 31 March 124,771 123,801
Basic earnings per share 39.0p 33.6p
Diluted
The calculation of diluted EPS has been based on the following profit
attributable to ordinary shareholders and weighted-average number of ordinary
shares outstanding after adjustment for the effects of all dilutive potential
ordinary shares.
2024 2023
(£000s) (£000s)
Profit attributable to ordinary shareholders 48,715 41,645
Thousands Thousands
Weighted average number of ordinary shares (basic) 124,771 123,801
Effect of share options in issue 626 758
Effect of shares held in trust 790 786
Effect of potential shares to be issued related to a business combination 138 299
Weighted average number of ordinary shares (diluted) at 31 March 126,325 125,644
Diluted earnings per share 38.6p 33.1p
The average market value of the Company's shares for the purpose of
calculating the dilutive effect of share options was based on quoted market
prices for the year during which the options were outstanding.
At 31 March 2024 181,451 options (2023: 159,755) were excluded from the
diluted weighted average number of ordinary shares calculation because their
effect would have been anti-dilutive.
Adjusted (unaudited)
Adjusted basic and adjusted diluted earnings per share is calculated using the
adjusted profit for the year measure. The calculation of adjusted profit for
the year is detailed in the Financial Review section of the this Report.
2024 2023
(£000s) (£000s)
Adjusted profit for the year 58,760 53,406
Thousands Thousands
Weighted average number of ordinary shares for the purposes of basic earnings 124,771 123,801
per share
Weighted average number of ordinary shares for the purposes of diluted 126,325 125,644
earnings per share
Adjusted basic earnings per share 47.1p 43.1p
Adjusted diluted earnings per share 46.5p 42.5p
8. Trade and other receivables
2024 2023
(£000s) (£000s)
Trade receivables 35,368 35,693
Other receivables 6,464 3,277
41,832 38,970
Prepayments 4,268 3,656
Accrued income 33,225 38,808
79,325 81,434
9. Trade and other payables
2024 2023
(£000s) (£000s)
Trade payables 50,062 52,348
Deferred income 44,954 37,087
Current tax liabilities 7,069 -
Other tax and social security 10,135 12,068
112,220 101,503
(#_ftnref1) ( 1 ) Includes £4.4 million of treasury deposits which do not
meet the definition of cash and cash equivalents.
(#_ftnref2) ( 2 ) As noted in the Interim Report, we decided to stop providing
the standalone procurement services associated with our 2022 acquisition of
Blackline Group. Further detail, including associated expenses recognised in
the period, is contained within the Workday Services review.
(#_ftnref3) ( 3 ) We use the established industry measure, Net Promoter Score,
to measure customer satisfaction. Bain & Co, the creators of the metric,
held that a score above 0 is good; 20+ is favourable; 50+ is excellent and 80+
is world class.
(#_ftnref4) ( 4 ) The size of the digital solutions market in Central (£1,794
million), Health (£351 million), Defence (£807 million) and Police (£144
million) sectors for FY24 according to TechMarketView's Digital Evolution
Model.
(#_ftnref5) ( 5 ) This is an estimate of the services market where Kainos is a
Phase 1 partner.
(#_ftnref6) ( 6 ) Estimated global Workday automated testing market.
(#_ftnref7) ( 7 ) Estimated global Workday document management market, this is
the first iteration of research.
(#_ftnref8) ( 8 ) Our carbon emissions have already been verified by an
external third party and we are in communication with SBTi regarding
confirmation of these emissions figures.
(#_ftnref9) ( 9 ) The Financial review section includes reconciliations
between adjusted pre-tax profit and profit before tax numbers.
(#_ftnref10) ( 10 ) The report can be accessed via GOV.UK, or by using this
link
(https://www.gov.uk/government/publications/roadmap-for-digital-and-data-2022-to-2025/transforming-for-a-digital-future-2022-to-2025-roadmap-for-digital-and-data)
.
(#_ftnref11) ( 11 ) £21.7 million relates to exercised or lapsed options or
fully vested free share awards and is considered distributable.
(#_ftnref12) ( 12 ) Direct expenses plus central overheads plus balances below
adjusted profit equals the sum of operating expenses plus impairment losses
and reversals on trade receivables and accrued income. Direct expenses are
expenses that are directly attributable to each division.
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