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Kin + Carta : A business for the digital age

“Every business is struggling to try to understand the potential of digital technologies"

Kin + Carta -
“Every business is struggling to try to understand the potential of digital technologies,

Digital transformation (or DX) is top of the corporate agenda for any business with serious aspirations.

That is good news for LSE-listed Kin + Carta PLC (LON:KCT), which has gone through a re-invention of its own to position itself at the centre of this burgeoning trend.

J Schwan, the chief executive, describes the business as a services company that helps businesses answer the question of how they should change to take advantage of digital-age opportunities.

 

In some cases, that might mean developing a whole new business model or figuring out which products or launch or how to augment existing offerings.

K+C has strategists and a team of over 1500 designers and engineers to work out the best digital solutions.

“Every business is struggling to try to understand the potential of digital technologies, especially as the technologies themselves evolve and change each and every year.”

Most of these changes are coming from the big four of Facebook, Apple, Google and Microsoft, he adds.

“How do these technologies potentially disrupt the business and can they drive new areas of growth, are questions that every boardroom is discussing.”

Encouragingly for a consultant such as Kin + Carta there is no one-size-fits-all solution.

“The answer is quite different depending on the sector and depending on the business,” says Schwan.

Digital re-invention

Kin + Carta has experienced the problems of dealing with digitisation first-hand, having been formed out of the St Ives group that was one of the UK’s leading printers before the shift to online media destroyed that market.

Now it helps the host of companies with legacy businesses to reinvent themselves and learn how to apply technology to keep up with the digital upstarts entering their space.

Financial services are an important sector for the company and one of the markets where digitisation is reasonably well advanced.

Healthcare is another important area, says Schwan, as pharma businesses and insurance groups decide how they can use digital to change the patient experience.

Driverless cars and industrialisation are strong growth sectors, while Schwan says B2B-focused businesses are also coming round to the view that their perspective is not that much different from consumer-facing organisations.

“We are just human beings who have certain expectations in terms of how services are delivered.”

“There is a lot of work to be done in those areas,” he adds.

Being smaller than the ‘big four’ management consultants and ‘laser-focused’ on DX gives Kin + Carta an edge when it comes to pitching for business and also, crucially, is recruiting the best people available.

US and UK the bulk of revenues

Revenues at present are roughly split half in the US and half in the UK, but Schwan sees opportunities to roll-out further across Europe and into the western half of the US.

A restructuring instigated a year ago by Schwan was designed to give the scale and capability for expansion.

Rather than a portfolio holding company model, the business is now an integrated consultancy focused around three areas: Innovation; Strategy; and Communications.

Schwan concedes the pace of change has been a little behind schedule with the Strategy and Communications arms taking longer to get in to shape than expected, but he is confident that the foundations are now in place.

The market seems to have recognised that too, with the shares recovering now after a trading update in August had knocked sentiment.

At 86p, the business is valued at £133mln compared with net revenues of £148mln in the year to July and adjusted profits £17.6mln, down 5% year-on-year.

There was a pre-tax profit of £1.8mln, however, against a loss of £31.2mln while the dividend was maintained at 1.95p.

Schwan expects a big improvement over the coming twelve months and had has already predicted double-digit net revenue growth.

Organic growth is ‘paramount’ but acquisitions are also on the agenda, especially to boost its regional presence.

Big companies tend to work with businesses close to their headquarters, he explains.

US$200bn market

Given the growth in the market overall, there seems little reason why K+C should not be able to maintain that pace over the next few years.

Digital transformation is a US$200bn global business that is growing at 18% per year, he says.

“We have worked hard to build a central sales team arm and to expand our geographic capabilities as well as bulking up in areas such as artificial intelligence and the cloud.

Quick facts: Kin + Carta

Price: 94 GBX

LSE:KCT
Market: LSE
Market Cap: £144.14 m
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