Last checked at 20 Aug 2019 07:00
Pre-close Trading Update
Released : 20 August 2019 07:00
Kin and Carta plc
20th August 2019
Kin and Carta plc
('Kin + Carta' or the 'Company')
Pre-close Trading Update
Kin + Carta, the international digital transformation (DX) business, today provides a pre-close trading update ahead of the announcement of its results for the year to 31 July 2019, which will be released on 2 October 2019.
The Company's profit before tax is expected to be marginally lower than market expectations as the Company increased investment in its transformation agenda and continues to reposition the Communications and Strategy pillars for the fast growing DX market.
The Innovation Pillar continues to grow revenue at a double-digit percentage rate through new client wins and by further developing new capabilities in high demand areas such as Hybrid Cloud Transformation and Artificial Intelligence. Innovation contributes a majority of the Company's Net Revenue* and the Board is confident in the continuing growth of this pillar.
In the Communication and Strategy Pillars we continue to move away from lower margin work and streamline the businesses. The Board believes that the actions taken within these two pillars will enable them to return to growth in FY2020.
Given the continued strong growth in the Innovation Pillar, the Company accelerated the investment in its transformation agenda during the year from £2 million to £3 million to more effectively capture larger innovation centred opportunities. This investment in future growth includes geographic expansion, building central sales, marketing and partnerships functions, implementing global financial and delivery systems and restructuring the Strategy Pillar to form Kin + Carta Advisory https://kinandcarta.com/advisory.html, which has already produced early client wins. Given the initial progress and potential, the Board is continuing to invest at a similar level in the new year which is expected to drive Company double-digit underlying Net Revenue growth and double-digit operating margins in FY2020.
The Company has also made a number of significant Board and senior management appointments, strengthening its ability to pursue its growth plan. This growth plan includes a focus on acquisition opportunities in new markets, in line with our geographic expansion strategy. The Board believes the current financial year has been a further important step in the Company's transformation journey and that it is well positioned to accelerate growth in the second half of FY2020.
Going forward, the Company will additionally be reporting Net Revenue* as the Board believes it to be a more relevant growth metric for the business and more closely aligns with technology consulting peers as it moves away from media buying and other pass-through costs. Whilst Gross Revenue for FY2019 is expected to be marginally down, on a like-for-like basis**, Net Revenue* is expected to be up slightly compared to the prior year at approximately £149 million.
CEO, J Schwan said,
"Innovation continues to power ahead and is increasingly recognised for the market leading solutions it brings to its clients. The work to reposition our Strategy and Communications pillars, as well as the increased level of investment in the Connective growth platform will drive sustainable profitable growth in the new fiscal year."
Enquiries:
Kin and Carta plc J Schwan CEO Chris Kutsor CFO | 0207 928 8844 |
Numis Securities Limited Nick Westlake / Matt Lewis | 0207 260 1345 |
Powerscourt Elly Williamson / Jessica Hodgson | 020 3328 9386 |
* Net Revenue is defined as gross revenue excluding all direct costs and third party expenses passed to clients.
*\* The Company moved to calendar month reporting from August 2018; the previous reporting cycle comprised of 52/53 week years. The number of billable days in the current period was 258 against a comparator of 265 days. The comparator revenue has been adjusted to reflect a like-for-like number of billable days.
About Kin + Carta
Kin and Carta plc provides next-generation, digital transformation services that apply creativity, data, and technology to help clients invent, market, and operate new digital products and services. Kin + Carta operates across the United Kingdom, Europe, the United States of America, South America, and Asia and fuses three specialisms - strategy, innovation, and communications - under its organisational model called "The Connective".
The business serves the healthcare, financial services, transportation, industrial and agriculture, retail and distribution sectors, amongst others.
Kin and Carta plc's global team consists of c1,500 technologists, strategists and creatives across four continents, connected by culture and shared ways of working. The Company is headquartered in London, the United Kingdom.
Learn more at www.kinandcarta.com