Kainos Group Plc · LSE:KNOS
Kainos — H1 2018 Earnings Presentation
27 slides from Kainos's earnings presentation, Nov 27, 2017
Slide 1: Interim Results
Interim Results 6 months ended 30 September 2017 Brendan Mooney, CEO Richard McCann, CFO 27 November 2017
Slide 2: First half highlights
First half Very strong sales performance. highlights • Sales orders up 94% to £63.4m, driving backlog up 43% to £97.1m. £41.4m REVENUE UP 2% Strong revenue diversification. • International up 38% to £10.6m. • Commercial up 35% to £15.0m. Performance in-line A number of firsts. • First UK Public Sect
Slide 3: Group overview
DIGITAL SERVICES DIGITAL PLATFORMS(1) Group overview £80m £20m £60m £15m £40m £10m Digital services: we £20m £5m are a key partner to UK government and £0m £0m FY13 FY14 FY15 FY16 FY17 the leading European FY13 FY14 FY15 FY16 FY17 boutique partner for • Digital Transformation: Online digital • Smart
Slide 4: Financial Summary
REVENUE Financial Financial Metrics • Very strong, organic revenue growth; 29.3% 5-year £100m Summary CAGR. • Good revenue visibility: £97.1m backlog £75m (H1 2017: £68.0m). £42.9m £39.4m • Strong, sustainable adjusted pre-tax profit(1) margin: £50m £31.9m 17% (H1 2017: 17%). £22.5m • Cash balan
Slide 5: People
Talent development and retention is a key focus. People • 4,588 training days completed, or 4.5 days per person • 110 promotions completed. 1,019 PEOPLE, UP 5% • High levels of engagement, although attrition has increased (12%), but below UK average (17%). Number of people increased by 5% to 1,019.
Slide 6: Customers
Commercial is the fastest growing segment. H1 SECTORAL REVENUE Customers • Revenue increased by 35%: £15.0m (H1 2017: £11.1m). Healthcare Strong growth in recurring revenue. 12% • Recurring revenue: 23% (H1 2017: 18%). • Existing customer revenue: 92% (H1 2017: 97%). Commercial Government 36% 52% Be
Slide 7: Digital Services
kaines: Digital Services
Slide 8: Digital Services
Very strong sales order performance in both digital REVENUE Digital transformation and Workday services. Services • Sales orders up 94% to £54.9m (H1 2017: £28.3m). • Digital transformation sales orders increased 83% to £32.7m £47.3m (H1 2017: £25.8m). UP 5% • Workday services sales orders up 204% t
Slide 9: The Workday opportunity
Existing Activity Planned Activity 2011 2014 2017 2021 The Workday opportunity Implementations EUROPE Smart SaaS Subscriptions 2011: UK Post Deployment Services 2015: BENELUX 2017: DACH, NORDICS Our ambition is to be Workday PaaS the #1 boutique partner globally. Smart SaaS Subscriptions Post Deploy
Slide 10: Workday Services
Strengthened our position as leading European partner. MARKET SIZE Workday • Strong sales closure: 16 deals signed (H1 2017: 5). Services • High customer satisfaction levels. Breakthrough in UK Public Sector. £105m UK & NORTHERN EUROPE • Leveraging Kainos reputation within UK public sector. • First
Slide 11: Case Studies: Workday Services
Raiffeisen Bank Higher Education Funding Council for Case Studies: England Workday Services 11,026 employees 260 employees 955 Raiffeisen Group With over 95 Distribute £3.5 billion locations worldwide, HQ in of public funds engagements Switzerland completed, our focus on delivering customer 317 prov
Slide 12: Digital Transformation
Digital Transformation • MOT Replacement • Assisted Prison Visits • View Driver Records • Digital Mortgage • Mobile IT • Workload Management Tool • View Vehicle Records • Student Finance • Cloud hosting migration • Digital Prisons Cloud and • Online Enforcement • Local Land Charges IdAM Platform Pay
Slide 13: Digital Transformation
Brexit: no impact. MARKET SIZE Digital • Clear, unwavering commitment to deliver key digital Transformation programmes. • Reflected in strong sales order closure: £47.3m (H1 2017: £25.8m). £885m UK PUBLIC SECTOR FY18 SPEND Commercial activity continues to make substantive progress. COMPETITIVE LANDS
Slide 14: Case Studies: Digital Transformation
DVSA – Get MOT Reminders Service HM Land Registry – Local Land Charges Case Studies: Digital Transformation 200,000 subscriptions to date 26 million records We have developed 29.5 million vehicles 326 local authorities underwent MOT 2015/16 leading digital services in partnership with government £1,
Slide 15: Digital Platforms
kaines: Digital Platforms
Slide 16: Digital Platforms Overview
Digital Revenues increased by 1% to £7.6m, (H1 2017: £7.5m) REVENUE TREND(1) representing 19% of total Group revenue(1). Platforms • Complements Digital Services, providing long-term £16m Overview revenue visibility, with backlog at £32.8m(2). £12m £2.5m £4.7m • All investment expensed: £2.6m (H1 20
Slide 17: Smart for Workday
Over 100 global customers using Smart. REVENUE TREND Smart for • Further 11 signed in H1 including United Technologies £4m Workday Group, Cancer Research UK, Telia and Centrica. £0.6m Financial performance underlines strength of product £2m £0.5m £3.0m and market opportunity. £1.4m • Revenue: up 89%
Slide 18: Case Studies: Smart for Workday
Finning Dentsu Aegis Network Case Studies: Smart for Workday 14,500 employees 40,000 employees Smart is a cloud- $5.6 billion in revenues 145 countries across 5 continents based SaaS solution licensed on a subscription basis to World’s largest Caterpillar YEN 838,359 million customers. dealer revenu
Slide 19: Evolve EMR
Evolve continues to lead this market, with over 50% REVENUE TREND Evolve EMR market share. £6m £5m £2.1m NHS funding headwinds still a challenge. £4m • Funding for new projects remains limited despite £3m £0.7m £1.7m announcements about investment to accelerate the £2m £0.8m adoption of technology.
Slide 20: Evolve IC
Focus over the past period has been on delivery REVENUE TREND Evolve IC commitments in the UK and US. £0.6m IC operational in 45 hospitals in the US. £0.4m • In conjunction with partner InTouch Health, now £0.5m operational in 45 hospitals (H1 2017: nil) in a Telehealth £0.2m setting. £0.1m £0.0m NH
Slide 21: Case Studies: Evolve EMR and Evolve IC
NHS Gloucestershire Clinical Case Studies: Saolta University Health Care Group, Galway University Hospitals Commissioning Group - JUYI Evolve EMR CCG’s Annual budget Evolve IC Catchment population of over 1 million people 2016/17 £839m 3,000 member clinical 16 Services including GP’s, Evolve has an
Slide 22: Financial Performance
kaines: Financial Performance
Slide 23: Financials: Income Statement
INCOME STATEMENT Financials: Commentary • Revenue: H1 H1 FY Income - Digital Services growth driven by Workday services of 28%. £m 2018 2017 2017 Change Statement - Digital Platform • Growth ex 3rd party: 1%. Digital Services 32.7 31.2 64.5 5% Digital Platforms 8.7 9.4 19.0 (7%) • Smart growth: 89%.
Slide 24: Financials: Balance Sheet and Cashflow
Financials: Commentary • Balance Sheet: BALANCE SHEET At at 30 September (£m) H1 2018 H1 2017 Balance Sheet - Limited fixed assets; IT, office equipment. Fixed assets and investments 2.9 3.1 and Cashflow - Underlying trade debtors/WIP total 70 days (FY 2017: 75 days). Debtors and WIP 22.4 20.9 - Inc
Slide 25: Looking Ahead
kaines: Looking Ahead
Slide 26: Market Expansion
Market Expansion 2011 2014 2017 2021 PUBLIC Digital Transformation (UK) 52% OF GROUP REVENUE Workday (UK) Kainos remains on COMMERCIAL Workday Services (UK, DACH) track to meet full year 36% expectations. OF GROUP REVENUE Digital Transformation (UK) We are expanding our HEALTH Evolve (UK, US, Irelan
Slide 27: Legal and Confidentiality Statement
Legal and This document contains statements about Kainos Group plc that are or may be forward-looking statements. Forward-looking statements include statements relating to (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial Confiden