Kin and Carta PLC (lon:kct)
Kin And Karta - Another Consultancy I Had Never Heard Off

Financials

ItemCurrent PeriodPrevious Period
Year20192018
Period6 Months6 Months
Revenue£173m£174m
Earnings
Adjusted Earnings
EBITDA
Adjusted EBITDA
Statutory Profit£2m
Adjusted Profit
Total Debt
Net Debt£38m£26m

Commentary History
Commentary
Title: Kin And Karta - Another Consultancy I Had Never Heard Off
Company: KCT - Kin and Carta PLC
Share Price Then: 49p
Author: Ian Smith
Date: Thu 23 Jul 2020
Comments: I had never heard of this company until starting this commentary, so I went to their web site and the first item on their home page is a paragraph and link to their position on the Black Lives Matter campaign.

I find this worrying, as it seems to suggest an organisation that is impressed with its own importance, indeed after having read the home page I still don’t really know what they do, only that they are something to do with software and consultancy.

Kin + Carta’stransformation into an integrated global consultancy continues.

In other words it is an established business that has undergone various transformations.

They have been around since at least 1981, in 1988 the share price was around 230p peaking at over 600p, it crashed down to around 50p during the 2008/2009 crises had recoverd to around 180p during 2013-2015 and seemed settled at around the 100p mark for the last few years.

£27 million acquisition of Spire Digital via successful placing of 15.3 million new ordinary shares

The latest trading update shows business up to Jan 2020 as pretty much the same as last year with a loss of £5.9m up from £1.6m and an expected drop in revenues of around 20% due to COVID for the rest of the year.

In November 2019 the company raised almost £14m via a share issue of 15m shares at 89p per share to finance the purchase of Spire Digital US-based digital transformation consulting firm This was about 10% of the existing shares. There seems to be earnings related payments up to a maximum of £27m.

Spire generated revenues of $9.4 million and adjusted operating profit, adjusted for normalisation of owners' compensation, of $1.3 million for the year ended 31 December 2018.

I find this worrying as it seems to be the sort of acquisition that can easily result in next year’s accounts writing off the acquisition as it hasn’t performed under its new ownership.

Often this type of acquisition is a result of management wanting to make deals rather than grow organically because the deal is exciting, but the deal causes the staff in bought company to lose interest, they worked because it was a small company and they liked the fouder.

All in all it seems to me to be a company that some good customers but grown to the size were it is neither a small dynamic business or a giant operating in a market where hype is still present.

It also tends to be a very low volume share so it is a buy to hold until at least the next set of accounts or unexpected news.
Read Count: 121


Navigation & Details
Pages


Share Commentaries, their purpose.