Kainos Group plc

Good morning, everyone. Thank you very much for taking the time to join Richard and I, who are joining this call from our office here in Belfast before heading over to London for the rest of the week on the Roadshow. So before we start, some very quick housekeeping points. The presentation from Richard and I today will be about 35 minutes in length. Over the last couple of iterations, we've noticed that our presentation has been getting slightly longer. So today we're going to skip over some of the more high level slides around our business background and allow more time for Q&A. During our presentation, your connection will be muted. And at the end of the presentation, FTI will moderate our Q&A session. We are recording this broadcast and we will publish the recording to our website later today. In terms of what we'll cover I'll give the first part of the presentation so the group overview and divisional performance will be done by myself. Richard will take you through the detailed financial performance. I'll finish off with a view about our outlook and we'll head into the Q&A session.

As you will have seen already we're publishing a very strong set of results this morning.

I know that our very positive trading update back in August gave a hint of these results but it is great to be able to share the underlying details today. So we think of today's results very much as a continuation of the updates we've been giving over the last 18 months about a return to growth so it's pleasing to see that the messages come through today so strongly in the results. To pick up some of the key data points, so very strong revenue growth at 37%, a great performance across all three of our divisions. That revenue growth has been the driver of our adjusted profit increase, which is up 30%, and we've maintained our very strong sales performance up a further 27% in the first six months of fiscal 2017. Without doubt, my favourite number on this slide is our competitive backlog figure at £853 million, up 26%. And as we'll cover later in the presentation, that will increase further in the next couple of months. That level of backlog gives us great visibility in our business over the next couple of years. Not mentioned on this slide, but just to note that we continue to evolve our commercial arrangements, time and material arrangements continue to reduce and account for about 60% of our total revenues as a group. We saw a strong revenue growth across all three divisions. As I say, digital services up 57%, workday services up 9% and workday products saw an ARR increase of 24%. And as a company, we're very excited about the passing the £100 million ARR milestone in the next few weeks. Our very strong revenue growth has required us to increase the use of contractors, which is slightly moderated our margin growth. And Richard will take you through the moving parts around that later in the presentation. And in terms of AI, we continue to see traction with our customers for AI and data projects with related revenues up 40% to 29 million pounds. So in summary, from our perspective, a really strong set of results and a great performance by the team. Looking at our customers, we use these charts three to underscore how we think about our business, the durability of our revenues, the balance across sectors and the global nature of our business. On the left is the breakdown of our existing versus new customer revenues. And I have to say to have 82% of our revenues from existing customers is just brilliant, giving us a high degree of visibility and predictability in our business. We're able to generate that level of repeat business and we do believe it can be higher because of the value we deliver to our customers and the excellent customer satisfaction levels that we achieve. And as we add new customers, we unlock future revenue streams as well. And just to highlight for those not familiar with it, a net score of 61 is defined as excellent customer service. In the middle chart we have the sector balance and balance I think really is the correct term. That's balance across all three of our sectors but also across clients as well. We now work with over 1,300 customers across the business. And in the chart on the right we break down revenues across the regions. With the larger contracts that we won in the UK over the last six months, we've seen the strongest growth in the UK, just over 50% of growth there. In North America, it grew by 23% over the last six months, and Central Europe grew by 6%.