Shares in Kin and Carta (KCT) took a dive on 20 August, when the ‘digital transformation’ group said that full-year pre-tax profits were expected to be marginally lower than market expectations. This was because the company had increased investment in its strategic plans – and was continuing to “reposition” its communications and strategy segments.
The official numbers revealed a varied financial performance. Among the group’s three divisions, communications endured a “challenging” 12 months, as it moved from lower-value work to higher-value digital transformation-related work. But Kin says that this business is “stabilising”. Meanwhile, the innovation wing reported double-digit sales growth in the US and the UK – helped by the rapidly growing arena of cloud transformation, whereby customers’ old software systems are overlaid on top of its partner cloud platforms, such as Google (US:GOOGL).
In any case, the group swung into the black – and maintained its annual dividend. Net debt of £38.4m was up nearly a half, albeit due to earn-out payments on earlier acquisitions.
House broker Numis expects adjusted EPS of 9.6p for FY2020, up from 9.2p in FY2019.
| KIN AND CARTA (KCT) | ||||
| ORD PRICE: | 83p | MARKET VALUE: | £127m | |
| TOUCH: | 83-83p | 12-MONTH HIGH: | 114p | LOW: 75p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 114 | |
| NET ASSET VALUE: | 57p* | NET DEBT: | 43.6% | |
| Year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015† | 345 | 8.7 | 4.4 | 7.8 |
| 2016† | 368 | -5.7 | -5.9 | 7.8 |
| 2017† | 393 | -44.1 | -30.4 | 1.95 |
| 2018 (restated)** | 150 | -31.2 | -22.1 | 1.95 |
| 2019*** | 148 | 1.8 | 0.7 | 1.95 |
| % change | -1 | - | - | - |
| Ex-div: | 21 Nov | |||
| Payment: | 17 Dec | |||
| †Historical St Ives numbers. St Ives became Kin and Carta in 2018 *Includes intangible assets of £111m, or 73p a share **371 days to 3 Aug 2018 ***Net revenue shown for 2019 and 2018 - excluding direct costs and third-party expenses passed to clients | ||||
