2020 Annual Report and Accounts and Notice of AGM

RNS Number : 5111G

Kin and Carta PLC

25 November 2020

 

25 November 2020

Kin and Carta plc - 2020 Annual Report and Accounts and Notice of AGM

Kin and Carta plc (the 'Company') confirms that copies of:

a)  the Annual Report and Accounts 2020 for the year ended 31 July 2020 ('the Annual Report 2020'),

b)  the Notice of Annual General Meeting of the Company, and

c)  the Form of Proxy in relation to the Annual General Meeting

(together the 'Shareholder Documents')

have today been posted or made available to shareholders, submitted to the National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism .

The Shareholder Documents will shortly be available to download from the Company's investor website at https://investors.kinandcarta.com/ under Financials and Shareholder Information.

The Company's Annual General Meeting will be convened electronically as a closed meeting, in accordance with the provisions of the Corporate Insolvency and Governance Act 2020, at 11.00am on Wednesday, 23 December 2020.

For the purposes of complying with Disclosure Guidance and Transparency Rule 6.3.5R, we set out below in the Appendix the principal risks and uncertainties facing the Company.   The appendix has been extracted from the Annual Report 2020 in unedited full text  and the page numbers in the text refer to the page numbers in that document . This information should be read in conjunction with the Company's 2020 full year results announcement, released on 5 November 2020, which contained a condensed set of financial statements and which can be found at  https://investors.kinandcarta.com/   (the 'Full Year Results Announcement'). Together, the Annual Report 2020 and Full Year Results Announcement constitute the material required by DTR 6.3.5R to be communicated to the media in unedited full text through a Regulatory Information Service.

Daniel Fattal

Company Secretary

25 November 2020

Enquiries:

Daniel Fattal  020 7928 8844

APPENDIX

Principal Risks and Uncertainties

Risk	Risk description	Mitigating activities	Change in risk level in 2020
1. COVID-19 AND PANDEMIC SHOCKS	COVID-19 has dramatically impacted the global economy, our clients and the ways people live and work around the world. In addition to the immediate economic shocks, we expect these changes to lead to long-term shifts in consumer and employee expectations, and ultimately impact industries across society. Kin + Carta was able to quickly adapt and has been operating remotely during the pandemic, including pitching, winning and delivering solutions for our clients. Nonetheless, the pandemic has introduced risk in the form of: (i) clients deferring, scaling back or cancelling projects (see risk 6); (ii) a changed working environment for our people which increases the risk of individuals feeling more isolated whilst working remotely and potentially heightens data security risk as processes are adapted (see risk 11); (iii) a substantial economic decline (see risk 2); and (iv) needing to adapt appropriately to behavioural changes and evolving consumer demand (see risk 6). As well as posing risks, there are longer-term opportunities for a business like Kin + Carta since businesses are, in the longer term, likely to invest more in digital capability.	Our agile, digital ways of working enable Kin + Carta to adapt quickly to change. Cost management programmes in place across the Connective. Utilising government schemes such as the UK Coronavirus Job Retention Scheme and US Paycheck Protection Program. Maintain regular dialogue with employees and wellbeing initiatives. New business targets in industries that have not been negatively impacted by COVID-19.	New risk.
2. ECONOMY AND VOLATILITY	Challenging economic and political conditions may inhibit growth and create uncertainty. This could lead to volatility in earnings. Uncertainty in the economy, largely associated with COVID-19 and Brexit, could result in client projects being cancelled or deferred at short notice and new business opportunities contracting. While the Connective has long-term contracts with clients, the level of spend is predominantly at the client's discretion rather than being derived from guaranteed sales volumes. To a lesser extent, a worsening of the economic and political situation in Argentina could, in the short term, impact our cost base since Kin + Carta's nearshore resources that support the Connective are based there.	Diversification into markets that are capable of delivering profit growth with an increasing number of diverse companies. Diversification of client geography, including through growth in new US markets and other overseas locations. Investment in a wider range of services offered to clients, collaborating with strategic partners where appropriate. An ongoing review of the Connective's cost base and options to provide additional nearshore capability within Europe. Secure more long-term client relationships and contracts with a greater emphasis on recurring revenue. A regular review of performance of all businesses against their budgets, monthly forecasting and implementing remedial action, where needed.	Higher.
3. GROWTH	Growth is core to the Kin + Carta long-term strategy. This includes organic growth driven by strategic initiatives and inorganic growth driven by strategic acquisitions. Growth initiatives may be underinvested or not pursued in the right sectors or territories and may therefore fail to deliver growth.	Further investment in new business functions, including Partnerships. Establishing and embedding our market proposition, which launched the Advise, Create and Connect brands. Detailed budgets and three-year plans submitted to the Board for review. Stringent selection criteria for pursuing acquisitions that fit within the Connective's strategy and culture.	No change.
4. SCALABILITY	Achieving scalability is important in order to pursue a high growth strategy in a profitable way. While included as a risk, achieving greater scalability is also an opportunity for the Connective. Digital Transformation businesses may not have sufficient scale within their sectors to secure substantial customer contracts. Without sufficient scale, our businesses may find it more challenging to secure larger client contracts.	Collaboration across the business operationally such as working on joint pitches and delivering work efficiently across the Group. Organic growth of businesses through investment. Consolidating business units and centralising specific functions (such as Connective Digital Services, Finance and Legal) to provide an efficient operating platform and thus a scalable offering. Investment in high growth Digital Transformation businesses and greater focus on securing longer-term contracts with emphasis on recurring revenue.	No change.
5. ASSIMILATION	We recently launched a new regional operating model uniting Advise, Create and Connect under a singular management team in the Americas and Europe regions. This, coupled with our acquisition of Spire Digital, requires greater collaboration across our Pillars and operations. The Connective continues to identify areas for assimilation and integration to create a solid platform for growth. Short-term impacts from transitioning to this model could manifest in the form of temporary operating challenges as business cultures and ways of working are merged.	Appointment of a Chief Executive of Americas, Chief Executive of Europe, Global Chief Technology Officer and Global Chief Strategy Officer. Our responsible business initiatives encourage greater collaboration across our Pillars with a common goal, while our employee experience programmes foster an aligned culture with shared values across the Connective. A defined and structured plan for the integration of new acquisitions. Identifying and facilitating resource requirements to manage the changes. Office consolidation to accommodate and support our Pillars in the same location while enhancing the working environment.	No change.
6. CLIENTS	The Connective has a number of key clients in each of its specialisms. Competitive pressure may result in the loss of a key client. Should the Connective lose a number of its key customers, this could have a material impact on its finances. For the year ended 31 July 2020, no single customer accounted for more than 9% of revenue.	Our regional operating model and platform approach is already helping drive client wins where we are delivering a wider range of solutions that supports longer-term engagements. We encourage our clients to think strategically about their future direction and differentiation and how, together, we can make the world work better for their customers. This approach also distinguishes the Connective's offering from its competitors. Achieve or exceed service level agreements with clients. Broaden our capabilities, providing new innovating solutions in support of our clients' evolving technology needs. Avoid over reliance on any single client. Implement bespoke propositions for securing the renewal of key client contracts, providing Connective support where appropriate. Further investment in new business functions, including Partnerships.	No change.
7. OUR PEOPLE	The risk of not being able to attract and retain people is heightened due to the highly competitive environment for talent. Attracting and retaining talent is a key priority for the Connective as it continues to invest in new and innovative service orientated offerings. A misalignment between our current and prospective employees' values and our business model may result in difficulties to attract, develop and retain people with the necessary talent. This would impact the ability of the specialisms, and Connective as a whole, to deliver the services sought by our clients and support the growth of the business.	Emphasis on becoming a B Corp certified business, which is part of our corporate strategic initiative to become a globally recognised best place to work. This initiative is at the heart of our business. Support our people with training and development needs along with career development opportunities. Develop a collaborative culture across the Connective's Pillars. Provide competitive, equitable compensation including share-based incentive schemes, and other targeted benefits. Succession planning for senior management.	Higher.
8. BRAND AND CULTURE PERCEPTION	In February 2020, the Advise, Create and Connect brands were launched in line with our market proposition. It is vital that the brand architecture is cohesive and easily understood by current and prospective clients. Likewise, our culture must attract and retain our employees whilst fostering an environment for people to do their best work. If the brand and culture do not resonate with the Connective's stakeholders, business opportunities may be missed.	Developed a new purpose supported by the Connective's values and strategy. Strong leadership alignment throughout the Connective to demonstrate that Kin + Carta's purpose is to make the world work better for its stakeholders, including its people. Kin + Carta has a strong culture of servant leadership. Culture and Responsibility Platform that spans across the Connective covering employee experience, B Corp and IDEA initiatives, which are embedded into Kin + Carta's culture through grass roots participation across the Connective. Involving the operating businesses with the rebranding and its launch through undertaking a thorough consultation process.	No change.
9. FINANCE	The Company's ability to trade may be compromised by a lack of cash funds. Being able to finance working capital and carry out operations is fundamental to the Connective.	Conduct half-yearly 'going concern' reviews and longer-term viability assessments. Ongoing monitoring of Kin + Carta's performance against its banking covenants, which this year, in response to COVID-19, resulted in increasing the ceiling on the Company's quarterly leverage covenant to up to 5.0 times EBITDA (previously 2.5 times) for four quarters commencing with the quarter ended 31 July 2020. Undertake monthly reviews of working capital, cash forecasts and headroom on banking covenants. Periodically review the Connective's financial KPIs with its bankers.	No change.
10. PENSION SCHEME	The Company has a Defined Benefits Pension Scheme (the 'Scheme'), which is currently in a funding deficit. The volatility of the Scheme's deficit is impacted by the inflation rate, changes in the discount rate derived from gilt yields and changes in actuarial assumptions, such as mortality. An increase in the deficit could lead to higher contributions being made by the Company.	A new deficit recovery plan was agreed with the Scheme Trustee, which commenced in September 2020 and aligns the cash contributions with the Company's cash generation. Regularly engage the Trustee directors in discussions on the Connective's performance. Work with an external advisor and follow regulatory compliance.	No change.
11. DATA SECURITY AND GDPR	Failure to adequately protect, prevent or respond to a data breach or cyber attack would expose the Connective to non-compliance with the GDPR or other applicable global data protection laws, reputational damage, fines, compensation or damages, disruption to the business and/or the loss of information for our clients, employees or business. It is vital that we continue to educate our people, maintain vigilance across the Connective and scrutinise our existing capabilities to reduce the likelihood of attack or breach in a fast-changing environment with regularly evolving external threats such as changes resulting from the COVID-19 pandemic.	Our Connective Digital Services function has responsibility to protect data (e.g. encryption, firewalls, restricted access, SaaS tool management). Employee awareness drives and training regarding data protection and education on external threats and the changing environment of our workplace as a result of COVID-19. Periodic reviews by Internal Audit, utilising in-house Connective Digital Services expertise as well as specialist external consultants. Cyber security and Connective Digital Services questionnaire completed periodically by our specialisms to highlight areas of potential risk, together with any mitigating actions performed in order to address this risk. A Data Protection Officer assists the Connective with GDPR compliance and other applicable global data protection laws. The Data Protection Officer provides assistance and guidance to the Board with regular reporting covering GDPR audits and the rolling out of new policies, processes and procedures.	Higher.

 

END

 

 

NOABXBDBDDDDGGU