THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
For immediate release
15 June 2021
Kin and Carta plc
Trading Update and Capital Markets Day
Kin and Carta plc (the "Company" or "Kin + Carta"), the international digital transformation ("DX") company, provides the following update.
In line with the improving trends reported at the Half Year, Kin + Carta is executing on a strong resumption of growth with accelerating demand for Digital Transformation continuing as the effects of the pandemic begin to abate. For the current financial year ending 31st July 2021, the Company now expects net revenue growth of circa 10% to approximately £150 million (£137.8m FY 2020) and growth in underlying profit before tax of circa 35-40% to approximately £14.5 million (£10.5m FY 2020), comfortably ahead of market expectations for the current financial year.
Based on current performance and backlog of orders, the Company anticipates accelerating growth in net revenue to circa 20% and improving underlying operating margin of 12-13% for the following financial year ending 31st July 2022. In the medium term, the Company anticipates continued organic net revenue growth of circa 15% compound annual growth rate along with increasing operating margins as the Company continues to scale.
As announced last week, Kin + Carta has been notified by the US government that a further £3.7 million of the £6.7 million Paycheck Protection Program ("PPP") loan has been forgiven as expected, in addition to the £0.8 million of forgiveness recognised in January 2021. This will be recorded as other operating income in H2. The remaining balance on the PPP loan of £1.8 million after adjusting for foreign exchange movements will be repaid in May 2022 as previously expected.
There has been a significant improvement in the value of the Company's legacy defined benefits pension scheme's portfolio of growth assets which, together with an increase in interest rates used to discount the value of the liability, means that the technical funding deficit, upon which the level of cash contributions by the Company is based, has decreased from £28.4 million at 6 April 2019 to £8.8 million at 31 May 2021. This actuarial update corresponds to a 98% technical funding level and a full technical funding valuation will be carried out in April 2022 which will also consider mortality experience of the scheme. The scheme had an accounting surplus under IAS19 at 31 January 2021 of £4.9 million, and the accounting surplus is likely to have increased since that date as a result of the changes in market conditions described above.
The Company's operating cash flow generation continues to improve with growth, and net debt at 31 July 2021 will be substantially lower than the prior year with a resulting net debt to EBITDA ratio of circa 1.0x. The Board does not intend to resume dividend payments in the near term, electing instead to prioritise the allocation of capital to the considerable organic and inorganic growth opportunities it sees ahead.
Kin + Carta is today hosting a virtual Capital Markets Day event with investors and equity analysts at 14:00 BST/08:00 CST details of which are on the Company's website. The Company's senior management team will be giving details of its operations and growth prospects. These presentations will be available subsequently on the Events & Presentations page of the Company's website.
Kin + Carta
J Schwan CEO
Chris Kutsor CFO
+44 (0) 207 928 8844
Elly Williamson / Jane Glover
+44 (0)7970 246 725
Numis Securities Limited
Nick Westlake / Matt Lewis
Peel Hunt LLP
Edward Knight/John Welch
+44 (0)207 260 1345
This announcement contains inside information and is issued on behalf of the Company by Daniel Fattal, Company Secretary.
Cautionary statement regarding forward-looking statements
This Announcement may contain "forward-looking statements" with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition, performance, strategic initiatives, objectives and results. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "seek", "may", "could", "outlook" or other words of similar meaning. By their nature, all forward-looking statements involve risk and uncertainty because they are based on numerous assumptions regarding the Company's present and future business strategies, relate to future events and depend on circumstances which are or may be beyond the control of the Company which could cause actual results or trends to differ materially from those made in or suggested by the forward-looking statements in this Announcement, including, but not limited to, domestic and global economic business conditions; market-related risks such as fluctuations in interest rates; the policies and actions of governmental and regulatory authorities; the effect of competition, inflation and deflation; the effect of legislative, fiscal, tax and regulatory developments in the jurisdictions in which the Company and its respective affiliates operate; the effect of volatility in the equity, capital and credit markets on profitability and ability to access capital and credit; a decline in credit ratings of the Company; the effect of operational and integration risks; an unexpected decline in sales for the Company; inability to realise anticipated synergies; any limitations of internal financial reporting controls; and the loss of key personnel. Any forward-looking statements made in this Announcement by or on behalf of the Company speak only as of the date they are made. Save as required by the Market Abuse Regulation, the Disclosure Guidance and Transparency Rules, the Listing Rules or by law, the Company undertakes no obligation to update these forward-looking statements and will not publicly release any revisions it may make to these forward-looking statements that may occur due to any change in its expectations or to reflect events or circumstances after the date of this Announcement.