Positioned to capture the DX opportunity Half Year Results 2020 - PowerPoint PPT Presentation

Positioned to capture the DX opportunity Half Year Results 2020

Agenda Highlights New Positioning Financial Results Operational Update Progress on Strategic Priorities Questions 2 PROPRIETARY AND CONFIDENTIAL

Half year highlights Embedding of growth investments • Net revenue +3% including c. £2m of Spire • Launched new global go-to-market brands Digital Advise, Create and Connect in another significant step towards our Connective • Innovation on track integrated consultancy model • Strategy restructuring showing improved • Spire Digital acquisition trading and integrating results well, validating acquisition model. Further • Communications, whilst profitable, taking Innovation acquisitions targeted longer to turnaround. Further restructuring and • Strategic review underway of strategic review underway underperforming and non-strategic areas of • Continued positive revenue shift into the business Innovation, US and Strategic sectors • On track for FY expectations; No impact from • Operating profit of £5.4m includes investments COVID-19 to date, but continuing to assess setting foundation for growth ramping in H2 risks 3 PROPRIETARY AND CONFIDENTIAL

new positioning 4 PROPRIETARY AND CONFIDENTIAL

Purpose At Kin+Carta, we’re not here to talk about changing the world. We’re here to make it work better. 5 Proprietary and Confidential

Kin+Carta is uniquely designed to address today’s challenges. Structured to attract the best digital talent in the world. Strategic Brands Venture Brands Pillar Digitally-native management Strategy Consultancy . Modern software engineering and Innovation emerging technology Studio. Data-driven Digital marketing Communications Agency . 6 Proprietary and Confidential

Transformation takes a village. We call ours The Connective. 7 Proprietary and Confidential

financial results 8 PROPRIETARY AND CONFIDENTIAL

Financial highlights 1600 Employees Across 11 Offices on 4 Continents NET REVENUE BY NET REVENUE BY NET REVENUE BY CAPABILITY REGION * SECTOR (8%) Net revenue of £76.0m; up 3% (16%) 7% (30%) including c.£2m of Spire, with 16% 17% 24% 29% attractive shift into strategic areas: 15% 51% 42% • Innovation grew double-digits, now (44%) 13% (48%) 10% comprising 60% of total net revenue 60% 15% • US 51% driven by Innovation growth (54%) Financial Services • Strategic sector concentration higher US Strategy Retail and Distribution Innovation Industrials and Agriculture UK at 83% compared to 77% Communication Transportation Rest of World Healthcare • Client longevity 80% of clients have 3 Non Strategic years or more tenure Acquired Spire Digital via equity placing of 15.3m shares *PY net revenue is pro-rated from gross revenue 9 PROPRIETARY AND CONFIDENTIAL

Financial highlights FY17 FY18 FY19 H120 60% Net revenue of £76.0m; up 3% 45% including c.£2m of Spire, with attractive shift into strategic areas: Value Axis • Innovation grew double-digits, now 60% 30% 56% 51% comprising 60% of total net revenue 48% 46% 40% 38% • US 51% driven by Innovation growth 15% 27% • Strategic sector concentration higher at 83% compared to 77% 0% • Client longevity 80% of clients have 3 Innovation % of Net revenue US % of Net revenue years or more tenure Acquired Spire Digital via equity placing of 15.3m shares *PY net revenue is pro-rated from gross revenue 10 PROPRIETARY AND CONFIDENTIAL

Longevity, stability and predictability Our offerings and client base drive repeat business that underpins our long term growth Client spend (%) Client Longevity Revenue predictability (%) 67% 60.0 21 less than 2 years Total Revenue £’m 2018 (% of total revenue base) 45.0 18 2 years or more 2019 60 £'m 30.0 23 4 years or more 2020 14% 11% 15.0 8% 38 12 6 years or more 10 7 0% 23% 45% 68% 90% 0.0 Potential Annual Clients Annual Clients Top30 Top100 Annual/ Project Top 100 Clients 3+ Years 2+ Years Repeats 11 PROPRIETARY AND CONFIDENTIAL

Financial summary % INCOME STATEMENT £M HY 2019 CHANGE HY 2020 Revenue 89.6 87.2 3% Net revenue continued to shift Net revenue* 76.0 73.6 3% to Innovation and the US Operating profit* 7.2 9.2 (22)% Spire c. £2m in net revenue Profit before tax* 5.4 8.0 (33)% PBT of £5.4m includes • c.£2m of the previously Adjusting items (11.3) (9.6) - announced £3m growth investments - no change to Statutory loss before tax (5.9) (1.6) - £3m total for FY • Lower Communications Earnings per share* 2.75p 4.21p (35)% earnings Interim year dividend 0.65p 0.65p - Adjusting items up primarily due to the Spire acquisition, partially offset by a decrease in DB pension scheme cost *Adjusted Results, including IFRS16 effects: 12 PROPRIETARY AND CONFIDENTIAL c.£0.5m favorable OP c.£0.6m unfavorable interest expense to PBT

Cash flow *EBITDA adjusted for non-cash items 13 PROPRIETARY AND CONFIDENTIAL

Balance sheet HY 2020 FY 2019 £M Fixed Assets * 28.1 10.5 Goodwill and Intangibles 121.5 111.2 Pension surplus £5.2m Working Capital 7.6 3.1 Pension 5.2 6.7 Net debt £39.5m (FY19 £38.4m) Lease liabilities * (23.2) - Leverage ratio (pre-IFRS basis) Income Taxes (1.4) (2.0) 1.80 Net Debt (39.5) (38.4) Loan Facility / Covenant Deferred Tax (1.6) (1.3) £85m / 2.75x Deferred Consideration (8.8) (2.0) Deferred consideration (Spire) fy20 Net Assets 87.9 88.0 £6.3m fy21 £3.2m fy22 £5.9m * IFRS16 includes: 14 PROPRIETARY AND CONFIDENTIAL £18.5m of fixed assets (£23.2m) Finance lease payable

operational updates 15 PROPRIETARY AND CONFIDENTIAL

Strategy • Net revenue up 1% despite the anticipated disruption caused by the restructuring necessary to create Kin + Carta Advise Our new strategic brand, Kin + Carta • Advise and Incite positive trends Q2 over Q1 in both the UK and Advise, is a digitally-native management the US; pipelines on track to deliver 2H growth consultancy. This offering targets our • Advise continuing to unlock sizeable Create and Connect clients’ CEO buyers. implementation programs Our sector-focused, management consultants help our clients better understand the shifts in their market and how their products and services need to evolve. 16 PROPRIETARY AND CONFIDENTIAL

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 Our new strategic brand, Kin + Carta election) Create, is a next-generation modern • US grew double digits • Improved pipeline compared to a year ago software engineering studio. This offering targets our clients’ CIO buyers. • Existing Solstice and TAB Innovation businesses combined to form Kin + Carta Create. Spire joining at end of calendar year Our 800+ software engineers and • Spire performing and integrating well • Over £5m in new pipeline created through partnership and designers utilise emerging technologies existing US sales channels to create new products and services for • Utilising K+C Argentina delivery center for client work; utilising Connective legal and finance services our clients to bring to market. • Global engineering team swelled to over 800, unlocking new opportunities in AI and Cloud for some of the largest companies 17 PROPRIETARY AND CONFIDENTIAL

Communications • Net revenue down 15%; further restructuring and strategic review underway Our new strategic brand, Kin + Carta • Continue to move focus away from low value projects to higher value MarTech platform work Connect, is a data-driven marketing technology agency. This offering targets • Kin + Carta Connect created through restructure of AmazeRealise • Restructure includes new Managing Director, rebuilding sales our clients’ CMO buyers. function, lowering cost base, moving targeted capabilities to Argentina, adding flexible workforce • Newly created Connect US business growing Our digital marketing experts help our clients amplify their digital investments • Ventures business Edit executing similar aggressive restructuring plan by finding new audiences and converting them into lifelong • Restructuring and improved backlog and go get position expected to provide stabilisation in H2 customers. 18 PROPRIETARY AND CONFIDENTIAL

our clients 19 PROPRIETARY AND CONFIDENTIAL

Our expanding Blue Chip client base INDUSTRIALS AND HEALTHCARE FINANCIAL RETAIL AND TRANSPORTATION AGRICULTURE SERVICES DISTRIBUTION New DX REMITS 20 Proprietary and Confidential

Telematics and machine learning optimize fm eet management for Ford Key Partners: +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 21 PROPRIETARY AND CONFIDENTIAL