RNS Number : 0439S
Kin and Carta PLC
01 November 2019
 

 

1 November 2019

 

Kin and Carta plc

('Kin + Carta', the 'Group' or the 'Company')

 

2019 Annual Report and Accounts and Notice of AGM

 

Further to the Company's announcement of its annual results on 2 October 2019, copies of the Annual Report and Accounts 2019 for the period ended 31 July 2019 ('the Annual Report 2019'), the Notice of Annual General Meeting of the Company and the Form of Proxy in relation to the Annual General Meeting ('the Shareholder Documents') have today been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.morningstar.co.uk/uk/nsm/

 

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, respectively.

 

Copies of the above Shareholder Documents have today been posted or made available to shareholders.

 

The Company's Annual General Meeting will be held at 11.00 a.m. on Thursday, 5 December 2019 at One Tudor Street, London EC4Y 0AH.

 

Additional Information

 

The following information is extracted from the Annual Report 2019 and should be read in conjunction with the Company's announcement of its annual results issued on 2 October 2019.  Both documents can be found at https://investors.kinandcarta.com/ and together, constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the Annual Report 2019 in full.

 

Principal Risks and Uncertainties

 

Risk and description

Mitigating activities

GROWTH

The business continues to undertake a number of initiatives to support its strategy and growth model. It is important that our specialisms continue to identify new business opportunities and partnership channels to maximise potential growth.

 

Growth initiatives may be under invested or not pursued in the right sectors or territories and may therefore fail to deliver growth.

 

Change in risk level - no change

 

 

·    Further investment in new business functions.

·    Embedding the Connective proposition to encourage collaborative behaviour and growth opportunities, supported by the appointment of Charlie Wrench, our first Chief Connective Officer.

·    Detailed budgets and three year plans submitted to the Board for review.

·    Stringent selection criteria followed for pursuing acquisitions that fit within the Connective's strategy and culture.

SCALABILITY

Achieving scalability within our specialisms is important in order to pursue a high growth strategy. Whilst 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.

 

Change in risk level - no change

 

·    Collaboration between specialisms such as working on joint pitches.

·    Organic growth of businesses through recruitment drives and opening of new offices.

·    Bringing businesses and functions closer together under a single senior management team (such as in Data) to achieve a greater combined scalable offering.

·    Investment in high growth Digital Transformation businesses and greater focus on securing longer term contracts with a greater emphasis on recurring revenue.

 

ASSIMILATION  ═

During the prior period, six businesses were successfully merged into two specialisms, AmazeRealise and Edit. The Connective continues to identify areas for assimilation and integration to create a solid platform for growth.

 

Short-term impacts from integrating businesses and functions could manifest in the form of temporary challenges as cultures are merged and logistical considerations are managed.

 

Change in risk level - no change

 

 

·    Office moves to accommodate new specialisms in the same location while enhancing the working environment.

·    People focused initiatives and bonding to encourage a uniform culture with shared values across the Connective.

·    Developing processes and procedures to increase efficiency.

·    Identifying and facilitating resource requirements to manage the changes being implemented.

ECONOMY AND VOLATILITY

Challenging economic conditions may inhibit growth and create uncertainty. This could lead to volatility in earnings given the smaller size of the business following the disposal of the legacy print businesses.

 

Uncertainty in the economy largely associated with Brexit, could result in marketing campaigns or projects being cancelled or deferred at short notice. Whilst the Connective does have long term contracts with clients, the level of spend is predominantly at the client's discretion rather than being derived from guaranteed sales volumes.

 

Change in risk level - higher

 

·    Diversification into markets that are capable of delivering profit growth with an increasing range of marketing companies.

·    Diversification through growth in the US and other overseas locations, where client demand warrants it.

·    Investment in a wider range of services offered to clients.

·    A continual review of the Connective's cost base.

·    Secure more long-term client relationships and contracts with a greater emphasis on recurring revenue.

·    Seek to increase market share by investing in sophisticated and targeted sales lead generation.

·    A regular review of performance of all businesses against their budgets, monthly forecasting and implementing remedial action, where needed.

 

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 or key suppliers, this could have a material impact on its finances. However, for the period ended 31 July 2019, no single customer accounted for more than 6% of revenue.

 

Change in risk level - no change

 

·    Encourage collaborative behaviour across the Connective's specialisms and create a commitment to cross-selling that will distinguish the Connective's marketing offering from its competitors.

·    Achieve or exceed service level agreements with clients. 

·    Broaden our capabilities, providing marketing solutions in support of our clients' marketing strategies.  

·    Avoid over reliance on any single client. 

·    Implement bespoke propositions for securing the renewal of key client contracts, providing Connective support where appropriate.

·    Conduct client satisfaction surveys.

 

OUR PEOPLE

Retaining and recruiting staff is a key priority for the Connective as it continues to invest in new and existing service orientated businesses.  Following the disposal of the legacy print businesses in the prior year, the Connective is now entirely a people focused business.

 

A failure to attract, develop and retain employees with the necessary talent 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.

 

Change in risk level - no change

 

 

·    Implement appraisals and fulfil training needs where identified.

·    Develop a collaborative culture across the Connective's specialisms.

·    Emphasis on becoming a triple bottom line business and enhancing employee experience.

·    Operate discretionary share-based incentive schemes, and other benefits.

·    Pay part of consideration in shares to vendor directors of acquired businesses, with 'lock-in' obligations.

·    Ability of people to second or transfer to different specialisms which is enabled by the makeup of the Connective.

BRAND AND CULTURE

In October 2018, the Company launched a rebrand. It is vital that the brand architecture is cohesive and easily understood by customers and top talent globally.

 

If the brand and culture do not resonate with the Connective's stakeholders, business opportunities may be missed to competition.

 

Change in risk level - no change

 

 

·    Involving the operating businesses with the rebranding and its launch through undertaking a thorough consultation process

·    Strong leadership alignment at the top of the organisation to demonstrate that the Connective's purpose is to serve its employees and not the other way around.

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.

 

Change in risk level - no change

 

·    Conduct half-yearly 'going concern' reviews and longer-term viability assessments.

·    Continually monitor the Connective's performance against its banking covenants.

·    Undertake monthly reviews of working capital, cash forecasts and headroom on banking covenants.

·    Periodically review the Connective's financial KPIs with its bankers.

 

PENSION SCHEME

The Company has a Defined Benefits Pension Scheme (the "Scheme"), which is currently in 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.

 

Change in risk level - no change

 

 

 

·    Agree deficit recovery plan with the Pension Scheme Trustee.

·    Regularly engage the Trustee directors in discussions on the Connective's performance.

·    Contribute to discussions on the Scheme's investment strategy.

·    Proactively seek to limit the growth in the pension liability.

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 General Data Protection Regulation ("GDPR"), reputational damage, fines, 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.

 

Change in risk level - higher

 

·    IT functions in place around the Connective with responsibility to protect data (e.g. encryption, firewalls, restricted access).

·    Employee awareness drives and training regarding data protection and education on external threats.

·    Periodic reviews by Internal Audit, utilising in-house IT as well as specialist external consultants. Cyber security and IT questionnaire completed periodically by subsidiaries to highlight areas of potential risk, together with any mitigating actions performed in order to address this risk.

·    The appointment of a Data Protection Officer for the Connective to assist with its GDPR compliance and to provide a report to the Board prior to each Board meeting.

·    GDPR audits and the rolling out of new policies, processes and procedures.

 

 

Signed in accordance with a resolution of the Board of Directors on 1 October 2019 on its behalf by J Schwan, Chief Executive Officer and Chris Kutsor, Chief Financial Officer.

 

 

 

 

 

Enquiries:

 

Daniel Fattal                020 7928 8844

Company Secretary

Kin and Carta plc


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