Kin + Carta PLC (LON:KCT), the company formerly known as St Ives, moved into profit last year – if you ignore £49.6mln of one-off impairments.
The company ditched its print business to focus on strategic marketing with the emphasis on helping customers to move away from a print-based strategy to a digital one.
Revenue from continuing operations in the 53 weeks to 3 August 2018, rose 9% (11% on a constant currency basis) to £178.4mln from £162.9mln in the 52 weeks to 28 July 2017.
Adjusted profit before tax rose 38% to £18.5mln from £13.4mln the year before but on a statutory (or unadjusted) basis, the company’s loss widened to £31.2mln from a loss of £19.2mln the previous year.
The difference between the positive and negative numbers for the year just ended was largely due to £47.8mln of non-cash charges relating to the amortisation of acquired intangibles, impairment of goodwill and intangibles related to its Hive business and contingent consideration from previous acquisitions that is required by accountancy rules to be treated as remuneration.
We're announcing the launch of Kin + Carta (previously the St Ives Group). #KinandCarta is not an agency, or a group, but a Connective — a global ecosystem of 1500 technologists, strategists, and creatives connected by culture. Learn more about us at https://t.co/3BdxswhTAp pic.twitter.com/f397ZJ7fYZ— Kin + Carta (@kinandcarta) October 3, 2018
Cash generated from operations was £25.8mln, down from £30.7mln the previous year, of which £20.5mln was generated from continuing operations and £5.3mln from discontinued operations.
The company’s pension scheme is now showing a small surplus of £1.9mln, compared to a deficit a year earlier of £16mln.
"It's been a transformational year as we've achieved our long-term ambition to move away from our print legacy to focus solely on strategic marketing and now more specifically, digital transformation,” said J Schwan, who took over as the chief executive officer of the company on August 4.
“The digital transformation market is large, growing and we are well positioned to capitalise on this opportunity. We're a c.1,500-strong global team with the size and the reach to help the world's largest companies to invent, operate and market profitable new products and services,” he added.
With the new name came an overhaul in its operating model that the company has dubbed “The Connective”. This model is grouped into “four key service pillars”: strategy (where to target); innovation (what to build); communications (who to tell); and transformation (how to work).
The group is planning to invest £2mln in its central marketing and sales teams to accelerate its organic growth rate and warned that this may put a dent in the current year’s earnings.
The group said it expects to see mid-single-digit growth, in percentage and constant currency terms, this year and an adjusted operating margin of more than 10%, rising to at least 12% from fiscal 2020.
The company also expects to manage net debt – currently standing at £26mln (down from £54.6mln the year before) and 1.1 times annual underlying earnings (EBITDA) – down to less than annual EBITDA by the end of the 2020 fiscal year.
Shares in kin and Carta were unchanged after an hour of trading.