Endava plc — FY2022 Form 20-F
Reporting period: Fiscal year ended June 30, 2022. The request metadata says “2021 Q4,” but the filing is an annual report for FY2022, not a quarterly filing. Financial statements are prepared under IFRS and reported in British pounds (£).
Business context and reporting period
Endava provides technology consulting, design and engineering services, primarily to enterprise clients. Its work spans digital strategy, design, software development and ongoing services. The company reported one operating segment and 732 active clients at year-end.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | £654.8 million | £446.3 million |
| Revenue growth | 46.7% reported; 47.6% at constant currency | 27.2% reported; 29.6% at constant currency |
| Gross profit / margin | £217.9 million / 33.3% | £154.2 million / 34.5% |
| Operating profit / margin | £95.4 million / 14.6% | £63.6 million / 14.2% |
| Profit before tax / margin | £102.4 million / 15.6% | £54.4 million / 12.2% |
| Profit for the year | £83.1 million | £43.5 million |
| Basic / diluted EPS | £1.48 / £1.43 | £0.79 / £0.76 |
| Net cash from operating activities | £120.7 million | £87.7 million |
| Capital expenditure on non-current assets | £14.0 million | £5.4 million |
| Adjusted free cash flow (non-IFRS) | £107.2 million | £82.7 million |
Year-end cash and cash equivalents were £162.8 million, versus £69.9 million a year earlier. Net current assets were £199.8 million. The £200 million unsecured revolving credit facility was undrawn, except for £18.5 million used for bank guarantees; the company reported covenant compliance. Lease liabilities totaled £55.9 million, including £11.9 million current. Adjusted PBT margin, a non-IFRS measure, was 21.1%, compared with 20.6% in FY2021.
Material changes versus the prior year
- Revenue rose 46.7%, with growth across all reported geographies and verticals. North American revenue increased 62.8%; revenue from “Other” industry verticals increased 61.2%.
- Gross margin fell to 33.3% from 34.5%, as total cost of sales grew 49.5%, faster than revenue, reflecting higher delivery personnel costs and a larger delivery workforce. Average delivery headcount increased from 6,943 to 9,492.
- SG&A rose 34.4% to £121.8 million, but declined as a share of revenue to 18.6% from 20.3%.
- Net finance income was £7.0 million, compared with net finance expense of £9.2 million, mainly reflecting a £9.9 million foreign-exchange gain in FY2022; FX movements can be volatile.
- Operating cash flow increased to £120.7 million, while receivables and accrued income also grew. Working-capital changes used £21.8 million of cash.
- FY2021 and FY2020 comparatives were restated for the IFRIC decision on cloud configuration and customization costs; the FY2021 balance sheet also reflects final purchase accounting for Five and Levvel. The filing says the cloud-cost policy change was applied retrospectively.
Outlook, risks and unusual items
The filing gives no specific FY2023 revenue or earnings guidance. Management said demand for digital-transformation services remained strong and expected cash, operating cash generation and available facilities to cover needs for at least 12 months. Its going-concern stress tests modeled revenue 9% below baseline in a downside case and 20% below baseline in a severe but plausible case; cash remained positive in both, with no facility draw required. These are scenarios, not formal guidance.
Key risks include wage inflation and competition for skilled employees, client and industry concentration, limited long-term client commitments, pricing and utilization pressure, foreign-exchange exposure, economic weakness and recession, Russia-Ukraine conflict-related disruption, cybersecurity and privacy obligations, and acquisition integration. The ten largest clients generated 33.8% of FY2022 revenue; Payments and Financial Services and TMT together accounted for 75.7%.
In February 2022 Endava acquired Business Agility Consulting (BAC). The filing also reports a subsequent acquisition of Australian firm Lexicon on October 6, 2022, for stated total consideration of £55.0 million; this was after the reporting date. No material contingent liabilities were reported at June 30, 2022. Endava paid no dividends in FY2022 and said it did not anticipate paying dividends for the foreseeable future.
The annual report was delayed for additional audit work concerning KPMG Audit SRL’s role in the FY2020 audit; the filing says the procedures resulted in no amendments to previously issued statements. A material weakness identified in FY2021 related to the credit-loss allowance process was reported as remediated by June 30, 2022; management and the auditor concluded internal control over financial reporting was effective at year-end.
Most important facts for investors to verify
- Confirm the period: this is FY2022, ended June 30, 2022, despite the “2021 Q4” request metadata.
- Assess whether rapid growth can be sustained while margins face wage, hiring and utilization pressures; compare reported and constant-currency growth.
- Review receivables quality and collection trends: trade receivables and accrued income totaled £149.1 million gross, with a £4.0 million expected-credit-loss allowance.
- Track client and sector concentration, and the conversion and renewal of the £177.0 million of disclosed unsatisfied fixed-price performance obligations.
- Evaluate lease commitments and acquisition-related obligations alongside cash: undiscounted lease liabilities were £59.8 million, with additional contracted leases not yet commenced.
- Review the £9.9 million FX gain, non-IFRS adjusted metrics and the comparative restatements when evaluating underlying performance.
- Monitor Lexicon integration and consideration, including earn-out terms, and confirm continued remediation and effectiveness of financial-reporting controls.