Positioned to capture the DX opportunity€¦ · Data-driven Digital marketing Agency. Pillar...

Positioned to capture the DX opportunity

Half Year Results 2020

PROPRIETARY AND CONFIDENTIAL

Agenda

2

Highlights

New Positioning

Financial Results

Operational Update

Progress on Strategic Priorities

Questions

Half year highlights

• Net revenue +3% including c. £2m of Spire

Digital

• Innovation on track

• Strategy restructuring showing improved

results

• Communications, whilst profitable, taking

longer to turnaround. Further restructuring and

strategic review underway

• Continued positive revenue shift into

Innovation, US and Strategic sectors

• Operating profit of £5.4m includes investments

setting foundation for growth ramping in H2

3PROPRIETARY AND CONFIDENTIAL

• Launched new global go-to-market brands

Advise, Create and Connect in another

significant step towards our Connective

integrated consultancy model

• Spire Digital acquisition trading and integrating

well, validating acquisition model. Further

Innovation acquisitions targeted

• Strategic review underway of

underperforming and non-strategic areas of

the business

• On track for FY expectations; No impact from

COVID-19 to date, but continuing to assess

risks

Embedding of growth investments


new positioning

4

Proprietary and Confidential

PurposeAt Kin+Carta, we’re not here to talk about changing the world. We’re here to make it work better.

5


Structured to attract the best digital talent in the world.

Kin+Carta is uniquely designed to address today’s challenges.

Digitally-native management Consultancy.

Modern software engineering and emerging technology Studio.

Data-driven Digital marketing Agency.

Strategic Brands Venture BrandsPillar

Strategy

Innovation

Communications

6


Transformation takes a village. We call ours The Connective.

7


financial results

8


Financial highlights

9

Net revenue of £76.0m; up 3%

including c.£2m of Spire, with attractive shift into strategic areas:

• Innovation grew double-digits, now

comprising 60% of total net revenue

• US 51% driven by Innovation growth

• Strategic sector concentration higher

at 83% compared to 77%

• Client longevity 80% of clients have 3

years or more tenure

Acquired Spire Digital via equity

placing of 15.3m shares

Employees Across 11 Offices on 4 Continents

NET REVENUE BY CAPABILITY NET REVENUE BY REGION *

NET REVENUE BY SECTOR

1600

24%

60%

16%

StrategyInnovationCommunication

7%

42% 51%

USUKRest of World

17%

15%

10%15%

13%

29%

Financial ServicesRetail and DistributionIndustrials and AgricultureTransportationHealthcareNon Strategic

(30%)

(54%)

(16%)

(44%)(48%)

(8%)

*PY net revenue is pro-rated from gross revenue


Financial highlights

10

Net revenue of £76.0m; up 3%

including c.£2m of Spire, with attractive shift into strategic areas:

• Innovation grew double-digits, now

comprising 60% of total net revenue

• US 51% driven by Innovation growth

• Strategic sector concentration higher

at 83% compared to 77%

• Client longevity 80% of clients have 3

years or more tenure

Acquired Spire Digital via equity

placing of 15.3m shares

*PY net revenue is pro-rated from gross revenue

Valu

e A

xis

0%

15%

30%

45%

60%

Innovation % of Net revenue US % of Net revenue

51%60%

46%56%

40%48%

27%38%

FY17 FY18 FY19 H120


Longevity, stability and predictability Our offerings and client base drive repeat business that underpins our long term growth

11

Client spend (%)

2018

2019

2020

0% 23% 45% 68% 90%

Top30 Top100

Client Longevity

less than 2 years

2 years or more

4 years or more

6 years or more

Top 100 Clients

38

23

18

21

Revenue predictability (%)

£'m

0.0

15.0

30.0

45.0

60.0

12710

60

Total Revenue £’m

Annual Clients 3+ Years

Annual Clients 2+ Years

Potential Annual/ Repeats

Project

67%

11%8%

14%

(% of total revenue base)


Financial summary

PBT of £5.4m includes • c.£2m of the previously

announced £3m growth investments - no change to £3m total for FY

• Lower Communications earnings

Adjusting items up primarily due to the Spire acquisition, partially offset by a decrease in DB pension scheme cost

Net revenue continued to shift to Innovation and the US

Spire c. £2m in net revenue

INCOME STATEMENT £M HY 2020 HY 2019%

CHANGE

Revenue 89.6 87.2 3%

Net revenue* 76.0 73.6 3%

Operating profit* 7.2 9.2 (22)%

Profit before tax* 5.4 8.0 (33)%

Adjusting items (11.3) (9.6) -

Statutory loss before tax (5.9) (1.6) -

Earnings per share* 2.75p 4.21p (35)%

Interim year dividend 0.65p 0.65p -

*Adjusted Results, including IFRS16 effects: c.£0.5m favorable OP c.£0.6m unfavorable interest expense to PBT

12

PROPRIETARY AND CONFIDENTIAL 13

*EBITDA adjusted for non-cash items

Cash flow


Balance sheet

Pension surplus

Leverage ratio (pre-IFRS basis)

1.80

fy20fy21

£M HY 2020 FY 2019

Fixed Assets * 28.1 10.5

Goodwill and Intangibles 121.5 111.2

Working Capital 7.6 3.1

Pension 5.2 6.7

Lease liabilities * (23.2) -

Income Taxes (1.4) (2.0)

Net Debt (39.5) (38.4)

Deferred Tax (1.6) (1.3)

Deferred Consideration (8.8) (2.0)

Net Assets 87.9 88.0

fy22

* IFRS16 includes: £18.5m of fixed assets (£23.2m) Finance lease payable

Net debt£39.5m (FY19 £38.4m)

£6.3m£3.2m£5.9m

Deferred consideration (Spire)

£5.2m

Loan Facility / Covenant£85m / 2.75x

14


operational updates

15

Strategy

• Net revenue up 1% despite the anticipated disruption caused by the restructuring necessary to create Kin + Carta Advise

• Advise and Incite positive trends Q2 over Q1 in both the UK and the US; pipelines on track to deliver 2H growth

• Advise continuing to unlock sizeable Create and Connect implementation programs


Our new strategic brand, Kin + Carta Advise, is a digitally-native management consultancy. This offering targets our clients’ CEO buyers.

Our sector-focused, management consultants help our clients better understand the shifts in their market and how their products and services need to evolve.

Innovation

• Net revenue up 14%, including c. £2m of Spire Digital

• H1 organic growth hampered by several large UK projects delayed into H2 due to Brexit (subsequently started post election)

• US grew double digits

• Improved pipeline compared to a year ago

• Existing Solstice and TAB Innovation businesses combined to form Kin + Carta Create. Spire joining at end of calendar year

• Spire performing and integrating well

• Over £5m in new pipeline created through partnership and existing US sales channels

• Utilising K+C Argentina delivery center for client work; utilising Connective legal and finance services

• Global engineering team swelled to over 800, unlocking new opportunities in AI and Cloud for some of the largest companies


Our new strategic brand, Kin + Carta Create, is a next-generation modern software engineering studio. This offering targets our clients’ CIO buyers.

Our 800+ software engineers and designers utilise emerging technologies to create new products and services for our clients to bring to market.

Communications

• Net revenue down 15%; further restructuring and strategic review underway

• Continue to move focus away from low value projects to higher value MarTech platform work

• Kin + Carta Connect created through restructure of AmazeRealise

• Restructure includes new Managing Director, rebuilding sales function, lowering cost base, moving targeted capabilities to Argentina, adding flexible workforce

• Newly created Connect US business growing

• Ventures business Edit executing similar aggressive restructuring plan

• Restructuring and improved backlog and go get position expected to provide stabilisation in H2


Our new strategic brand, Kin + Carta Connect, is a data-driven marketing technology agency. This offering targets our clients’ CMO buyers.

Our digital marketing experts help our clients amplify their digital investments by finding new audiences and converting them into lifelong customers.


our clients

19


FINANCIAL SERVICES

RETAIL AND DISTRIBUTION

TRANSPORTATION HEALTHCARE INDUSTRIALS AND AGRICULTURE

New

DX

RE

MIT

S

Our expanding Blue Chip client base

20

+Sixth year of working with Ford's high profile Smart Mobility team

+Recently began a multi-year program to build the all new Fleet Commercial Services driver app

+The app utilises telemetry data from the vehicles to improve the experience for drivers and fleet managers

+This seven figure Create UK product development project has led to a Create US modernisation opportunity, based out of Detroit


Telematics and machine learning optimize fleet management for Ford

Key Partners:

+Global quick serve restaurant’s existing digital ordering channels (kiosk, mobile) take more effort than traditional alternatives

+Project involves automating the drive-thru experience using AI

+Partnering with Google leveraging their DialogFlow natural language platform (Google Assistant’s backbone)

+Currently going to market with Google on other voice enabled use cases


Using AI to voice enable the quick serve drive-thru experience

Key Partners:


progress against

strategic priorities

23


Growth

24

We will accelerate growth through

the continuous optimisation of a

highly measurable, integrated and

scalable demand generation machine.

KEY KPI:

HY Net revenue of

£76m

STRATEGIC PRIORITY 01

Optimize central demand

around our key sectors

Scale partnership function

in both the US and the UK

Increase central demand

net revenue contribution

by > 50%.

HY20 PROGRESSFY20 GOALS

Scaling of partnership function delivering

£3.25Mn in wins and £11Mn in pipeline

across the US and UK

Google partnership progressing well across

AI, Search and Cloud service lines

Consolidated marketing muscle of Solstice,

TAB and AmazeRealise behind Kin + Carta

core brand

New central sales function delivering over

£5m in backlog, £23m in pipeline, 400 leads

in first half. (+3%)


Proposition

25

We will create and evolve a market

defining set of sector-focused,

technology-led business

transformation offerings.

KEY KPI:

Gross Margin

48.5%


Continue to invest in the

evolution of our holistic DX

proposition

Further simplify our brands to

make it easier for clients to

engage


Launched the new www.kinandcarta.com

repositioning firm around a more fluid,

end to end, software engineering centric

proposition

This has led to more cross-sell wins

including a seven figure K+C Connect US

eCommerce win for an existing strategic

K+C Create US agriculture client

Sector focus has continued to gain

traction, particularly with Healthcare, a

sector just beginning it’s DX journey,

growing from 8% to 15% of net revenue. (49.0%)

http://www.kinandcarta.com


People

26

We will create an industry leading

employee experience with a focus on the

growth potential of our talent and a

shared commitment to a triple bottom-

line (profits, people and planet).

KEY KPI: Employee Net Promoter Score

(updated at year end)


Certify first four specialisms as

B Corps

Rollout central HR system

across the Connective

Demonstrate continued

meaningful increase in eNPS

through coordinated employee

experience initiatives

FY20 GOALS HY20 PROGRESS

B Corp Certification of K+C

Advise, Create and Incite on

track for this fiscal year

Early returns being realized

through upticks in employee

engagement and positive

qualitative feedback on talent

attraction wins

27


People

27

We will create an industry leading

employee experience with a focus on the

growth potential of our talent and a

shared commitment to a triple bottom-

line (profits, people and planet).

KEY KPI: Employee Net Promoter Score

(updated at year end) 27



Platform

We will build an operational platform

made up of best-in-class operational

systems and seamless shared

services.

KEY KPI: Operating Margin on Net Revenue

9%


c.£2m of the £3m growth investments

On track to complete the roll out of

our PSA (professional service

automation) and CRM systems by

the end of the calendar year

New HRIS system nearing the final

stages of evaluation

Spire to be fully integrated onto this

Connective operating platform in

FY21

Increased leverage of K+C

operations in Argentina with Create

UK, Connect UK and the Central

Office.


Complete roll out FinancialForce

and SalesForce CRM

Rollout central HRIS system

Expand our shared services

platform across finance, HR, IT

and legal, to ensure we are taking

advantage of operational gearing

as we scale, while allowing our

specialisms to focus on what

makes them distinctly unique

A common platform and lower cost operating center will ensure we are taking advantage of operational gearing as we scale.

(12%)

28


Expansion

We will execute a purposeful and

intelligent expansion into new

regions domestically and

internationally.

KEY KPI:

US & Rest of World

60%


Increased attention on

acquisition opportunities for

DX services firms in the US and

Europe, with a near term focus

on unlocking growth in the

western and southern regions

of the United States.

FY20 GOALS HY20 PROGRESS

Successfully completed the

acquisition of Spire Digital,

leading our expansion into the

western United States

Seeing growth in our Connect

US and Create Edinburgh

investments

New potential acquisitions in

new regions of the US and

Europe targeted(54%)

29

Summary Shape of revenue changing in line with strategic intent (US,

Innovation, key sectors)

Launch of Advise, Create and Connect aligning go to market

muscle behind one powerful brand

Strategy and Innovation on track with further restructuring in

Communications driving stabilisation in H2

Spire Digital acquisition proving out regional expansion

strategy

Strategic priorities on track with DX market continuing to gain

steam


Outlook

Restructuring, improved positioning, growth investments and a stronger pipeline give the Board confidence in an improved second half

Trading at the start of the second half is in line with expectations, with optimism tempered by uncertainties caused by the effects of COVID-19

Currently expect to meet expectations for the year, as we have seen no impact from COVID-19 to date, but are maintaining a careful watch on external risks that could cause deterioration in our markets

Positioned to capture the DX opportunity€¦ · Data-driven Digital marketing Agency. Pillar...

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