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Building
a world
that works
better for
everyone
Kin and Carta plc
Annual Report and Accounts
For the year ended 31 July 2022
Company number: 01552113
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Welcome to our
Annual Report
Kin + Carta is a London Stock Exchange listed global digital
transformation consultancy committed to working alongside
clients to build a world that works better for everyone.
Kin + Carta’s 2,000 consultants, engineers and data scientists around the world bring
the connective power of technology, data and experience to the world’s most influential
companies – helping them to accelerate their digital roadmap, rapidly innovate,
modernise their systems, enable their teams and optimise for continued growth.
Headquartered in London and Chicago with offices across three continents,
the borderless model of service allows for the best minds to be connected to
collaborate on client challenges.
With purpose at its core, Kin + Carta became the first company listed on the London Stock
Exchange to achieve B Corp certification. It meets high standards of verified social and
environmental performance, public transparency and accountability to balance the triple
bottom line of people, planet and profit.
C
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Overview
Highlights
About Kin + Carta: who we are
Our Kin and our Carta
At a glance
Our regions and business mix
Investment case
Chairman’s statement
Strategic Report
The digital transformation industry
Case studies
Business model
Our strategy
Our strategic priorities
Aligning purpose, values, strategy and culture
Chief Executive Officer’s review
Key performance indicators
Chief Financial Officer’s review
Alternative performance measures ("APMs")
A responsible business
(including Section 172 statement)
Risk management
Governance
Board of Directors
Corporate governance report
Audit Committee report
Nomination Committee report
Directors’ remuneration report
Directors’ report
Statement of Directors’ responsibilities
in respect of the financial statements
Financials
Independent auditors’ report to the
members of Kin and Carta plc
Consolidated income statement
Consolidated statement of other
comprehensive income
Consolidated statement of changes in equity
Consolidated balance sheet
Consolidated statement of cash flows
Notes to the consolidated financial statements
Company balance sheet
Company statement of changes in equity
Notes to the company financial statements
Shareholder information
Glossary
01
2
4
6
7
8
10
11
16
22
28
30
36
40
44
48
51
55
60
100
114
118
130
138
142
173
178
182
194
195
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264
265
266
276
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OverviewBuilding a world that works better for everyone.
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Highlights
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Continuing
operations1
Net revenue2, 3
£190.3m +48%
Adjusted operating profit3
£18.9m +54%
Adjusted profit before tax3
£17.1m +65%
Adjusted basic earnings per share3, 4
8.7p +82%
Statutory (loss) before tax6
(£15.9m)
Statutory basic (loss) per share7
(8.2p)
Net debt5
£0.5m £19.2m
Continuing and
discontinued operations
Net revenue2, 3
£196.2m +26%
Statutory profit before tax6
£9.8m
Statutory basic earnings per share (p)7
5.6p
1 Results for the year ended 31 July 2021 have been restated to reflect:
(i) a revised grouping of continuing and discontinued operations (note
8), and (ii) a change in accounting policy following adoption of the
IFRS Interpretation Committee's agenda decision on Configuration
and Customisation Costs in a Cloud Computing Arrangement. This
change in accounting policy has increased the Group adjusted profit by
£83,000 (note 2).
2 Net revenue is defined as gross revenue excluding all direct costs and
third-party expenses passed to clients.
3 Adjusted results exclude Adjusting Items to enhance understanding
of the ongoing financial performance of the Group. Adjusting Items
comprise: costs related to acquisitions, fair value gain from deemed
sale on step acquisition, costs related to the Company’s Defined Benefit
Pension Scheme, restructuring and other charges, interest income, gain
or loss on disposal of subsidiaries and the tax charge / credit related to
these items (note 7).
4 This measure is defined as basic earnings per share after Adjusting
Items. Further details are provided within the Alternative Performance
Measures section.
5 Cash and cash equivalents less bank loans payable and US government
loans payable under the Paycheck Protection Program.
6 This is the Group result before tax (see section “Impact of adjusting
items on Group results” in note 7). Also see further details in the Basis of
Preparation (note 1).
7 This is calculated by dividing the total profit for the period attributable
to ordinary equity holders of the Company by the weighted average
number of shares in issue during the period, excluding shares held as
own shares by the Group.
8 Like-for-like growth in relation to net revenue is defined as the
net revenue from operations at constant currency and excluding
acquisitions when comparing the current period to the prior period.
9 Backlog is the value of client awards that have a signed contract,
statement of work or an explicit verbal commitment to start work with
no further permissions or conditions required. Pipeline is the value of
the qualified and targeted sales funnel.
10 A reconciliation of the continuing adjusted operating profit to the
adjusted operating cash inflow from continuing operations before
working capital is provided under note 33.
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• Net revenue of £190.3 million from continuing
operations1, 2 up 48% year-on-year (“YoY”) and up
37% like-for-like8
• Americas net revenue grew 55% YoY (49%
organic) to £132.2 million, representing 69% of
total net revenue
• Europe net revenue grew 33% YoY (27% organic)
to £58.1 million, representing 31% of total
net revenue
• Record year-ending backlog9 (£96 million, up 35%
YoY) and pipeline9 (£176 million, up 74% YoY)
• Adjusted profit before tax from continuing
operations1 grew 65% to £17.1 million3
(FY21: £10.3 million)
• Total loss before tax from continuing operations1 of
£15.9 million3 (FY21: loss of £5.8 million) due to typical
acquisition and pension-related charges as well as
lease related impairments and provisions
• Adjusted EPS from continuing operations1 increased
by 82% from prior year to 8.7p3, 4
• Adjusted operating cash inflow from continuing
operations1 before working capital of £25.9 million10
(FY21: inflow of £12.6 million) driven by higher EBITDA
• Balance sheet strengthened with net debt reduced
to £0.5 million5 (31 July 2021: £19.2 million), after
the effect of £5.6 million of share purchases by the
employee benefit trust
• Legacy pension scheme accounting surplus
increased to £38.7 million (31 July 2021: £19.3 million)
following the April 2022 technical valuation
• Pension in technical surplus of £5.4 million at the
latest triennial date, 5 April 2022, with full hedge
in place against interest rate and inflation risk
• Completion of three DX acquisitions adding
annualised net revenue of c.£19 million:
software development consultancy Melon
Group in Bulgaria, North Macedonia and
Kosovo, commerce consultancy Loop
Integration, and responsible artificial
intelligence platform Octain
• Contract sizes rising, including a record
$90 million digital transformation contract
with financial services client
• New client wins including six new UK Public
Sector departments and notable multi-year
commitments continue to underpin growth
expectations
• 85% of top 20 clients buy two or more service
lines, building resilience in strategic accounts
• Partnership channel grew 16% year-on-
year with valuable ‘managed partner’ status
awarded to Kin + Carta by Google, Microsoft
and Amazon
• Organic development of new delivery hubs in
Colombia and Greece
•
Pricing power, homegrown junior talent
(Kin Accelerator Programme) and the scaling
of margin-efficient nearshore delivery is
mitigating market salary inflation
• Employee value proposition is resonating in
the talent market and keeping attrition below
market rates
• Goal achieved to be the first certified
B Corporation on the London Stock
Exchange, and Kin + Carta named Microsoft
Sustainability Changemaker Partner of
the Year
Building a world that works better for everyone.
Overview
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About Kin + Carta: who we are
Kin + Carta is a technology, data and experience consultancy
that believes in using business as a force for good.
We are at the forefront of a new class of digitally native firms built to deliver Digital
Transformation 2.0, and we choose to do so as a socially responsible business that
champions inclusion, diversity, equality and sustainability.
Building . . .
Kin + Carta builds sustainable technology that
solves mission-critical enterprise problems,
with a maker culture that values craft and
consultancy excellence.
Read about our
strategy on
pages 30 to 35
Read about our
business model
on pages 28 to 29
Read about our
Santander case study
on page 24
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. . . a world
Technology is transforming business processes
and customer expectations, while attitudes to
social and environmental responsibility
demand new standards.
Read about our
marketplace on
pages 16 to 21
our
Read about our
Corteva case study
on page 23
Building a world
works better for
that
everyone
that works better . . .
Digital transformation requires efficient processes,
effective and accessible technology applications,
democratic data, connected experiences and
predictive, unbiased algorithms.
Read about our
investment case
on page 10
Read about our
Planning Inspectorate
case study on page 27
. . . for everyone
We use business as a force for good, measuring
our impact on people, planet and profit, and
ensuring accessibility, sustainability and inclusivity
are core to our product and our business.
Read about our
responsible business
on pages 60 to 99
Read about
B Corp on page 60
Read about our
healthcare study
on page 22
Building a world that works better for everyone.
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Our Kin and our Carta
At a glance
Kin (noun)
Family; connected people.
Kin represents Kin + Carta’s emphasis
on connection and collaboration.
Carta (noun)
Direction; showing the way.
Our map, underscoring Kin + Carta’s mission
to help our clients navigate the new digital
world, while plotting a clear path to growth
for our people and our shareholders.
See page 35 for more information
Our Kin and culture
We align our purpose, values, strategy and culture for the good of our staff, clients and communities, by consciously
connecting Kin + Carta’s values with promises that contextualise those commitments in our everyday business.
This ensures their combined strength delivers a connected global mindset; one consistent thread throughout our
business, regardless of practice, territory or region.
See pages 40 to 43 for more information
Our connections are the
enabler that allow us to
build and to transform;
to be more than the sum
of our parts.
Our values
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A connective mindset
never stops learning; it
brings the right minds
to the problem and acts
as a multiplier to the
outcome.
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Every single day.
This is the value that
strengthens us to believe
in better, and be brave
enough to recognise
that change starts from
within.
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If empathy can be
passive, and altruism
self-serving, compassion
is active.
It is our decision to do
something, to stand for
something and make
a positive impact that
defines us.
What we do
Kin + Carta is an industry
driver and definer of Digital
Transformation 2.0. We are a
digitally native consultancy
operating at the intersection
of technology, data and
experience to drive what we
call "connected outcomes" for
our clients.
The domains
we serve
Technology, data and
experience. The combination of
these three critical domains of
Digital Transformation gives
Kin + Carta a powerful ability
to leverage their intersections
as value-multipliers in the
pursuit of outcome-based
enterprise transformation.
The outcomes
we create
Five business-critical service
lines drive connected outcomes
for our clients across the full life
cycle of product and platform
ecosystems. Typically, there
are four types of outcome
that we deliver for our clients:
Innovation; Modernisation;
Enablement and Optimisation.
07
STRATEGY + INNOVATION
Digital investment
planning
Technology
MANAGED
SERVICES
Run, grow +
optimise
PRODUCT +
EXPERIENCES
Data-led intelligent
experiences
Data
Experience
DATA + AI
Unlocking data
potential
See page 20 for more information
on our service lines
CLOUD + PLATFORMS
Mission critical
applications
OverviewBuilding a world that works better for everyone.
Our regions and business mix
08
2,000 Kin across
three continents
Kin + Carta is organised into two trading regions
(Americas and Europe) with regional leadership
and a globally aligned operating model.
Why Kin + Carta?
• Digitally native consultancy built to adapt to today’s volatility.
• Experts in modern software design and engineering techniques.
• Small enough to pivot quickly to changing market needs.
• Large enough to take on our clients’ biggest challenges.
• High value domestic consultancy with margin efficient global delivery.
• Social responsibility as a supply and demand differentiator.
Net revenue by sector1
Net revenue by region1
3%
4%
10%
28%
31%
(2021: 34%)
6%
10%
16%
23%
Financial services
Healthcare
Retail and
distribution
Industrial and
agriculture
Technology,
digital and
media
Public sector
Transportation
Other
69%
(2021: 66%)
FY21 net revenue by region in brackets
Americas
Europe
1 Continuing operations only. Continuing operations
exclude the results of Incite Marketing Planning
Limited, Incite New York LLC, Edit Agency Limited,
Relish Agency Limited, The Health Hive (US) LLC,
The Health Hive Group Limited and subsidiaries,
and Pragma Consulting Limited (note 8).
09
London
London
Manchester
Manchester
Liverpool
Liverpool
Edinburgh
Edinburgh
New York
New York
Netherlands
Netherlands
Portland
Portland
Chicago
Chicago
Denver
Denver
Colombia
Colombia
Argentina
Argentina
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800
Onshore Kin
250
Nearshore Kin
60%+
Engineers
Greece
Greece
Bulgaria
Bulgaria
North Macedonia
North Macedonia
Kosovo
Kosovo
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600
Onshore Kin
350
Nearshore Kin
50%+
Engineers
See page 46 for an
operational review
of our Regions
Map Key:
Onshore: high-touch sales,
consultancy and domestic delivery
Nearshore: scalable, margin-
efficient, high-quality delivery
Kin + CartaOverviewBuilding a world that works better for everyone. Investment case
Chairman’s statement
10
01.
Digital transformation is
driving increased budgets
and the need for a new
kind of outcome-focused
technology consulting
provider
02.
Kin + Carta’s growth will be
sustained by a systematic
multichannel approach to
demand generation and
client growth
03.
We believe we are tasked
with building the technical
foundation for tomorrow’s
society; and we are doing
that through a socially
responsible lens. This
is helping Kin + Carta
further differentiate in the
competition for digital talent
See pages 16 to 21 for
more information
See pages 28 to 38 for
more information
See pages 60 to 99 for
more information
John Kerr
Chairman
11
Our core capabilities
in software, data
and innovation are in
short supply in the
marketplace and the
leadership team has
worked hard this year
to carefully manage
the balance of supply
and demand.
The Company’s business model is
simple. Our people help our clients
to be more successful by building
technology that helps them to serve
their customers more efficiently
and effectively. We do it by hiring
and developing outstanding people
and deploying them in carefully
assembled teams that work with
our clients to deliver innovation
and successful outcomes. Our core
capabilities in software, data and
innovation are in short supply in
the marketplace and the leadership
team has worked hard this year to
carefully manage the balance of
supply and demand.
I’m delighted to be able to report to
you that by focusing on execution
of this model, our company was
among the top 20 performers
measured by Total Shareholder
Return relative to the FTSE All Share
Index for the three year period to 31
July 2022.
Focus on digital
transformation
The year had a number of defining
factors:
• Kin + Carta has completed its
transformation from a print and
marketing company to a digitally
native service company and
has built a solid platform for
future growth.
• The technology marketplace
has changed as a consequence
of the digital revolution and,
accelerated by the COVID-19
pandemic, technology is
now a core part of all leading
companies and no longer a
discretionary investment for
our clients.
• High quality people are
critical to service delivery and
companies that can attract,
retain and motivate great people
to do great work are valued
highly by clients.
• COVID-19 clearly established
the concept of remote working
and that high quality technology
services can be delivered by
distributed teams.
Kin + CartaOverviewBuilding a world that works better for everyone. 12
Chairman’s statement
continued
• As we emerge from the
pandemic, the market is
returning to its pre-pandemic
competitive condition and
we are seeing the emergence
of economic headwinds. I am
confident that the executive
team is set to manage carefully
through these changing
conditions.
The Company has implemented
strategies over the past three
years that have positioned it well
to respond to these developments
in the market. The foundations are
established. The business is focused
on the success of our clients, the
success of our people, and the
ways we continue to differentiate in
the digital transformation market,
while continually building what our
clients need next; innovation in data
and sustainability by making use of
price-competitive global delivery
models.
Focus on clients
Our net revenue growth of 48%
speaks for itself. We have delivered
for our clients and they have
rewarded us by continuing to buy
our services and grow our mutual
relationships. This is the basis
of strong technology services
businesses.
As our clients evolve from their
post-pandemic positions, they
face new macroeconomic
challenges. In this environment,
clients are searching for positive
digital transformation business
outcomes amid the disruption and
the Company is focused on client
success and strategic account
growth.
Focus on people
• We have an intense focus on our
Kin. We implemented steps to
support them through the worst
of the pandemic and we have
now taken further key steps to
develop and incentivise them:
• The introduction of the Kin
Academy Programme to develop
our new graduate joiners.
• The extension of our LTIP
programme to offer incentives
to an expanded group of leaders,
which aligns the interests of our
key people with those of our
shareholders.
Focus on responsibility
I’d like to highlight the significant
achievement during the year of
Kin + Carta becoming the first
company listed on the London
Stock Exchange (“LSE”) to achieve
B Corp certification. This was a
response to the aspirations of
our people. Top talent wants to
work with companies that have a
purpose, that reflect their values
and are good corporate citizens.
We, at Kin + Carta, aspire to build a
world that works better for everyone
and our achievement of B Corp
certification is a recognition of that.
This represents not only a
significant achievement by the
Company but it also reflects the
commitment of the Company and
the Board to responsible business
practices, which demonstrate that
we can grow and be profitable while
also being committed to treating
our people fairly and well and
behaving responsibly in relation to
the planet and the environment.
13
We were very proud to be invited to
open the LSE on 2 December 2021,
which represented a milestone on
a significant and ongoing journey.
I’d like to thank the entire team for
their efforts in getting us there. It was
a milestone but not a destination
- we will continue to improve our
responsible business practices and
measure our progress.
Focus on performance
In all of my communications to
you, I have emphasised three
key priorities and those remain
consistent for us:
Focus – during the year, we sold
the final remaining businesses
that did not fit with our digital
transformation focus, which means
that we are now a pure-play
digital transformation business
strengthened by data capabilities.
Geographic expansion - as we look
forward, it seems likely that the
economies in our main markets
will be challenged by continuing
shortages of talent coupled with
inflationary pressures. Therefore,
the Company has taken steps in
the past year to secure a foothold in
new jurisdictions. Kin + Carta now
trades in nine countries across three
continents, providing access to new
pools of talent, and reducing the cost
of delivery, helping us to respond
to market demand and inflationary
pressures:
• We invested £19.0 million to
acquire the Melon Group, based
in Bulgaria, North Macedonia
and Kosovo which brought
c. 300 new Kin into the Group at
competitive daily average costs,
helping to reduce our cost of
delivery to clients.
• We have built additional
nearshore delivery teams
in Colombia and Greece.
These teams have been built
organically, funded through our
own profit and loss account
rather than by acquisition.
Partnerships – we took the decision
some time ago to invest in building
close working relationships with
technology providers such as Google
and Microsoft. In FY22, the partner
channel grew 16% year-on-year.
Governance
and change
Your Board remains committed
to maintaining high standards of
corporate governance. It comprises
five Non-Executive Directors
(including me, as Chairman) along
with the Chief Executive Officer
and the Chief Financial Officer.
We have implemented systems to
ensure oversight of the business
meets the standards expected by
our shareholders. The Board and
its three sub-committees – Audit,
Nomination and Remuneration
– operate effectively. In August
2022, we conducted a review of
the effectiveness of the Board,
further information can be found on
page 129.
All three of the sub-committees
have been very active during
the period:
• The Audit Committee conducted
an external audit tender process,
which is described on page
137. As a result of the tender, a
resolution is being put forward
at our AGM for shareholders to
approve KPMG’s appointment
as external auditor for the year
ending 31 July 2023.
• The Nomination Committee led
the process to select the new
Chief Executive Officer.
• The Remuneration Committee
has overseen the redesign of the
compensation schemes for the
key Executives, the conclusions
of which will be put to the
shareholders at the AGM.
I would like to thank the Board for its
hard work over the year.
Leadership continuity
During the year, J Schwan took the
decision to retire from consulting
and from the Board of Kin + Carta.
J was the founder of Solstice,
a digital product engineering
and innovation firm acquired by
the Company in 2015 and the
foundation of Kin + Carta Americas.
He then spent time as Group Chief
Digital Officer before becoming
Chief Executive Officer in 2018. I’d
like to thank him for his contribution
to Kin + Carta and his leadership
through some of the most difficult
circumstances imaginable over the
past years. J led the transformation
of the business on a challenging and
ultimately successful journey. His
contribution was immeasurable and
the business is unrecognisable from
its position when he took over.
I have much pleasure in welcoming
his successor, Kelly Manthey, to the
Board as Chief Executive Officer,
following her success as Chief
Executive Officer of Kin + Carta
Americas (2020–2022). Kelly was
the first recruit at Solstice and has
been on the same journey as J. She
has led Kin + Carta Americas since
its establishment as a region and
has delivered excellent financial
results in that role while also
integrating acquisitions such as
Spire and Cascade Data Labs. We
are delighted to appoint Kelly at a
time when women Chief Executive
Officer's of FTSE-listed companies
sadly remain an exception. Kelly was
the outstanding candidate for the
role and the Board looks forward to
her leading Kin + Carta on the next
stage of the journey and taking us
to new heights.
John Kerr
Chairman
12 October 2022
Kin + CartaOverviewBuilding a world that works better for everyone. i
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Strategic
Report
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Contents
Strategic Report
The digital transformation industry
Case studies
Business model
Our strategy
Our strategic priorities
Aligning purpose, values, strategy and culture
Chief Executive Officer’s review
Key performance indicators
Chief Financial Officer’s review
Alternative performance measures ("APMs")
A responsible business
(including Section 172 Statement)
Risk management
16
22
28
30
36
40
44
48
51
55
60
100
Building a world that works better for everyone.
The digital transformation industry
Digital transformation market landscape
16
Foundations for change
Enterprise businesses’ digital
transformation agendas and
roadmaps have never been stronger.
The need for product and process
innovation, modernisation,
optimisation and enablement – key
digital transformation outcomes –
is business-critical as a pandemic-
hardened market approaches a
period of economic volatility.
Crucially, businesses need access
to talent. Experienced, reliable,
technically excellent engineering
resource is in high demand and
only the companies with authentic,
attractive, flexible employee value
propositions will attract and scale
the best talent.
And as the change accelerates, the
requirement for sustainable digital
transformation solutions that save
carbon, are accessible and inclusive,
leverage green computing, and
deliver on corporate responsible
business commitments increases
in lockstep.
Increasing demand for
digital transformation
Macroeconomic pressures and
recessionary fears are driving a
change agenda already fuelled
by rapidly changing consumer
expectations.
Enterprise budgets are evolving
to reflect an "always-on" attitude
to global digital transformation
investment across capital and
operational expenditure in both
private and public sectors.
As supply constraints diminish the
ability to build engineering teams
in-house, client organisations
are looking to digitally native
consultancies for access to
engineering quality and leadership to
supplement or replace their teams.
1717
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Increased velocity:
COVID-19 accelerated market demand.
A market that was growing at 18% is now
projected to grow at
20%
CAGR
during the next seven years as businesses
invest to build the differentiated digital
value proposition at their companies1.
N
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Investment to:
Rethink the approach to technology.
Reassess the value of data.
Reconsider connected experiences.
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Key DX objectives:
Innovation
New digital products, platforms and
services.
Modernisation
Re-engineering of critical data and
technology stacks.
Enablement
Giving our clients the tools, platforms
and teams to scale.
Optimisation
Continuous improvement and
managed services.
P
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DX consultancies:
Pure-play digitally native.
Platforms, not portfolios.
Strong cloud partnerships.
Global with US focus.
Nearshore delivery models.
High growth, high P/E multiples
1 https://www.polarismarketresearch.com/industry-analysis/digital-transformation-market
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Market drivers
COVID-19
18
Digital-first
consumers
Industry
competition
Workforce priorities
Macroeconomic
pressures
1919
As digitally native brands set the
pace, customer expectations are
rapidly evolving. Cross-platform
speed, efficiency, connectedness
and secure predictive data
applications have become a
baseline.
As businesses move to digital
shopfronts for consumers
and employees using similar
technologies and partner
ecosystems, the race to truly
differentiate through digital
experience, has accelerated.
How Kin + Carta is well placed
to respond
How Kin + Carta is well placed
to respond
Kin + Carta builds intelligent,
data-powered experiences
enabled by cloud computing. We
create the technical foundations
for our clients’ success and
continuously run, grow and
optimise those products and
services to meet changing
consumer and enterprise needs.
The ability to connect our clients’
data from source to product,
empowering and optimising the
experience, is a key differentiator.
Kin + Carta data scientists and
engineers unlock the value of
our clients' data, innovating and
executing with our engineering
teams across a full portfolio of
digital transformation service lines.
The pandemic accelerated
enterprise digital transformation
and bolstered demand. Businesses
that had previously failed to invest
in technology and processes that
drive efficiency and effectiveness
scrambled to maintain market
share, and market leaders invested
to protect and accelerate their
positions. Ways of working and
engagement models changed
in favour of remote/distributed
working.
How Kin + Carta is well placed
to respond
Kin + Carta grew revenue and
resource during the pandemic,
capitalising on increased demand
for digital transformation services.
In FY22, high quality, margin-
efficient nearshore delivery
centres were expanded in Latin
America and acquired in Europe
to offer our clients depth of
engineering excellence with
competitive pricing. Kin + Carta
focuses on pure-play digital
transformation services in the
domains of data, technology
and experience that solve the
market’s biggest problems, and is
recognised by industry analysts,
clients and staff as a progressive,
responsible and sustainable
business. We partner with Google
and Microsoft as well as with
cutting edge software partners so
we can deliver ambitious products
and experiences on the cloud.
94%
of Chief Executive Officers
want to maintain or accelerate
the already intense pace of
digital transformation sparked
by the pandemic1
70%
of Chief Financial Officers
expect digital technology to
get more funding1
As demand grows, the shortage
of experienced digital talent
becomes more pertinent.
Employees expect flexible working,
clear career paths, inclusive
and equitable policies crafted
by employers who reflect their
personal values. Businesses unable
to demonstrate and evidence this
outlook are failing to attract and
retain the best digital talent in a
supply-constrained market.
How Kin + Carta is well placed
to respond
Kin + Carta’s commitment to
social responsibility and being
an internationally recognised
"best place to work" are notable
workplace differentiators as we
continue to attract and scale the
highest quality digital talent. A
strong employee value proposition
ensures progressive policies,
continuous career development,
and an equitable, diverse
employee experience. In FY22,
Kin + Carta became the first B
Corporation listed on the London
Stock Exchange.
Rising inflation, fuel prices,
cost-of-living and supply chain
disruption have created evolving
macroeconomic considerations
that the digital transformation
industry is well placed to
help mitigate for enterprise
businesses. Manual tasks are being
automated, data improvements
are highlighting inefficiencies, and
consumers expect connected,
secure experiences. Those who fail
to invest are preparing to fail.
How Kin + Carta is well placed
to respond
For our clients, we bring cost-
saving efficiencies with speed
to value and clear return on
investment. Our innovation is
shaping the future of our clients’
businesses and defining how they
differentiate in a competitive
market and pressured economic
climate. Wage inflation has
been absorbed by pricing
adjustments with our clients,
nearshore delivery ensures price
competitiveness, and we have
developed and executed a Kin
Accelerator Programme to train
and deploy diverse new talent
onto client work.
1 Source: 2022 Gartner CEO and Senior Business Executive Survey, Gartner webinar poll: CFOs 2022 Playbook for Enhancing Profitability and Driving
Digital Acceleration, 2021 Gartner Candidate Panel Survey, Gartner Supply Chain's 2021 Customer Expectations Survey
© 2022_Gartner, Inc. All rights reserved. CTMKT 1879401
Kin + CartaBuilding a world that works better for everyone.Strategic Report The digital transformation industry
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continued
Critical digital
transformation
domains
While investment in digital
transformation has increased
and the pace has accelerated,
customers have foundational
requirements underpinning their
ambitions:
Rethink the approach
to technology
How can our digital estate be
more effective, more efficient,
more sustainable, deliver a better
customer experience and higher
return on investment?
Reassess the value
of data
How can we unlock the value of
our data, securely democratise
access to insights, and leverage
the predictive analysis of
responsible AI?
Reconsider connected
experiences
How can our experiences be
seamlessly connected, data-
driven, personalised, and truly
differentiating to deliver customer
advocacy, loyalty and increase
revenue?
Core digital transformation
service lines
This change requires specialist domain expertise. At Kin + Carta, consulting
and engineering craft are delivered through an interconnected portfolio of
services lines that solve the most valuable problems in digital transformation:
Strategy + Innovation
Digital investment planning
• Cloud strategy
• Data strategy
• Product + Experience
strategy
• Digital operations strategy
Product +
Experiences
Data-led intelligent
experiences
• Experience platform
innovation
• Connected commerce
• Digital product innovation
Cloud + Platforms
Mission-critical apps
• Mission-critical app
modernisation
• Cloud migration
• Commerce + content app
modernisation
Data + AI
Unlocking data potential
• Data platforms
•
Insights + AI
• Data products
Managed Services
Run, grow and optimise
• Managed intelligent
experiences
• Cloud-managed services
• Application support
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Our market and our customers
We partner with progressive senior leaders in blue-chip businesses who are aligned on the need for change,
targeting the following industry verticals:
Industrials + Energy
Increased efficiency and
productivity.
See our case study on Corteva
on page 23
Healthcare
Giving people easier and
better access to healthcare.
See our case study on healthcare
on page 22
Financial Services
Leading digital customer
experiences.
See our case study on Santander
on page 24
Retail + Consumer
Multichannel connected
commerce.
See our case study on Toolstation
on page 25
Public Sector
Service-oriented operating
models for digital and data.
See our case study on the
Planning Inspectorate on page 27
Transportation
Data-driven customer-centric
experiences.
See our case study on Canadian
National Railway on page 26
Building a world that works better for everyone.
Kin + Carta
Case Study:
Case Study:
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How we are building a
world that works better
for everyone
Healthcare
Working to give people easier and better access to healthcare
Problem
Kin + Carta worked with one of
New York’s not-for-profit health
insurers, specialising in Medicaid,
Medicare Advantage plans, long-
term care plans, qualified health
plans, and individual and small
group plans to members in New
York City and its surrounding areas.
In late 2018, they were looking
to reimagine the way that they
interacted with their members.
Grounded in a mission to be
community-centric, incorporating
digital touchpoints into their
member journey represented both
a tremendous opportunity and
great risk. The opportunity was to
engage in a new manner with their
members and make it easier for
them to understand their healthcare
coverage and get better access
to care. As they were an analogue
business, the move to digital was a
fundamental shift. With that in mind,
Kin + Carta needed to ensure that
the member and community
focus that earned the client its
reputation was enhanced by this
move to digital.
Approach
Together, the client and Kin + Carta
took a member-centric approach
from the get-go. In the initial phase
of the partnership, the team took a
wide lens and interviewed members
across New York City and conducted
focus groups to better understand
how a mobile application might fit
into the existing experience. Before
a single line of code was written, we
defined our target audience and
aligned our metrics to the needs
and desires of those members.
To ensure continued alignment with
those member needs, the Kin +
Carta team consistently interviewed
and tested its hypotheses and
designs with members throughout
development. Rather than releasing
to the public all at once, Kin + Carta
worked with the client and ran a
series of Beta releases to identify
both strengths and improvement
opportunities for the product.
Outcome
The COVID-19 pandemic increased
the urgency around helping
members access care. Our team
pivoted quickly and accelerated
our launch to April 2020. Since
launch, we have improved prospect
and member communication
through the development of a
conversational toolkit, which
allowed the client to connect with
members during the pandemic.
This omnichannel tool allows them
to quickly adapt to their members’
preferences and behaviours, further
expanding digital conversation
experiences in voice, chat,
messaging and video.
Link to product type / service:
Strategy +
Innovation
Product +
Experiences
Cloud +
Platforms
Data + AI
Managed
Services
136,000+
users of the NY app as of 2022
4+ star ratings
in both iOS and Android
app stores
Continually
improving
features in development
include a digital health
incentive programme designed
to increase plan awareness and
use of preventative services
Industrials + Energy –
Corteva
Increasing crop yields with Corteva through a pioneering app
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330,000
different crop yields
estimated more accurately
25,000+
downloads
700%
increase in app usage
Problem
We live in a world where it’s crucial
to maximise the return we get
from growing crops. The ability to
estimate crop yields goes a long
way to helping farmers achieve this,
allowing them to plan, optimise their
output and target problem areas.
However, it can be difficult to make
these forecasts and technology
that relies on internet connectivity
can be inoperable out in the fields.
Long-standing client Corteva
asked Kin + Carta to build a better
solution.
Approach
We worked on creating an app that
would give farmers the answers
they needed through the use
of mobile technology. Our team
thought carefully about the data
and technology that could deliver
this through a simple-to-use app.
We also considered how the app
would be used offline and how to
increase its functionality.
Outcome
Launched in summer of 2019, the
Pioneer Seeds mobile app provides
users with the ability to estimate
crop yields by taking pictures of
ears of corn. Efficiency is maximised
with a multi-national code library
that allowed Pioneer Seeds to be
used on multiple products and in a
variety of countries.
Our team utilised an open source
machine learning platform that
growers can run offline, meaning
they can estimate corn crop yield in
the field where internet connectivity
can be challenging. Firebase
Analytics was used to track user
behaviour and prioritise features.
Daily enhanced satellite imagery
from Planet Labs also allows
growers and seed reps to target
problem areas. Since its release,
over 3,000,000 satellite images
have been viewed.
Growers can now scan bag tags to
create planting events, reducing
friction in data entry. This digital
bag tagging feature was previously
located in a separate app. New
features released allowed the
sunsetting of two older mobile apps.
Pioneer Seeds is now the largest
app that Corteva has launched.
Farmers have estimated over
330,000 different crop yields more
accurately and further into the
future than before, gaining insights
up to two months before harvest.
Link to product type / service:
Product +
Experiences
Building a world that works better for everyone.
Case Study:
Case Study:
Financial Services –
Santander
Retail + Consumer –
Toolstation
Empowering Santander’s people to deliver leading digital experiences for customers
Building Toolstation iOS and Android applications using Flutter
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33%
account growth
in nine months
40%
account
nearshore
Industry leading
digital experiences
Problem
Like many banks, Santander
identified a lot of potential in
optimising its digital channel
experiences. It had identified
certain challenges in delivering
digital journeys, leveraging data
and consistently applying leading
software and agile practices. To
support with this, Santander sought
a partner to deliver the experience,
best practice and organisational
know-how required to make a
step-change in performance.
Approach
We used our skills, knowledge
and experience to provide a
highly effective product-led
transformation of a well established,
mature channel for the bank,
Retail Mobile.
Starting with assessing the current
delivery practices, processes, ways
of working and skills, we quickly
designed and implemented a
product operating model aligning
cross-functional teams with the
skills needed to deliver customer
outcomes. We quickly delivered
path-to-production improvements
to reduce time to market and
improve quality. We onboarded
transformational leaders and
ramped up squads across multiple
digital channels, blending in
nearshore team members to deliver
high quality at scale.
Outcome
Santander now finds itself at the
front of the pack in terms of a
leading digital capability delivering
high quality experiences for
customers.
This is sustainable progress with
an embedded team that has
the confidence, knowledge and
structure to continuously improve.
Kin + Carta has now been asked
to lead enablement for wider
digital teams.
Link to product type / service:
Strategy +
Innovation
Product +
Experiences
1.1
million orders
£27m
in revenue processed
4.8
stars across Play Store
and App Store
Problem
Toolstation is on a mission to
expand its business across Europe
by providing a leading experience
for customers on its digital
channels. It chose Kin + Carta
based on our deep expertise in
this area. Our job was to ensure
the multi-channel experience was
seamless while driving customers
up the value chain and giving trade
credit customers VIP status.
Approach
We built a class-leading
ecommerce app with a frictionless
experience from search to order in a
few clicks. Our team leveraged new
technologies to scale and reduce
maintenance costs (cross-platform
tech powering the proposition).
We also created a valuable product
that people actually want to use
via research and insights from key
target audiences.
Outcome
With aligned ways of working and
a combined focus on speed-to-
value, our customer-centric teams
delivered a robust experience that
will scale with Toolstation as it goes
from strength to strength.
In the UK, the app now accounts for
10% of Toolstation’s sales and it is
built to allow seamless international
expansion beyond Netherlands,
Belgium and France - the apps
in those markets already take
advantage of the single code base.
Link to product type / service:
Product +
Experiences
Building a world that works better for everyone.
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Case Study:
Case Study:
Transportation –
Canadian National Railway
Public Sector –
Planning Inspectorate
Providing a single, seamless digital experience to Canadian National
Railway’s customers
Making the planning process better for everyone by enhancing the Planning
Inspectorate’s service offering
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16
apps merged into one modern
digital experience
weeks to Beta launch from
start of project
Problem
Amid growth and rising customer
expectations, Canadian National
Railway needed to deliver a single
digital experience to customers
looking to transport goods cost-
effectively and with less harm to the
environment. It sought to show its
customers that it was changing with
the times and that it made doing
business "easy." Kin + Carta was
required to create a simple, intuitive,
cohesive, customer-centric
experience. One that provided
painless interactions to those
requiring transportation services
spanning the Atlantic, Pacific and
Gulf of Mexico.
Approach
The Kin + Carta team developed
a responsive, web-based, front-
end application that allows users
to track shipments on a map. Core
functionality included the ability to
search, track and view equipment
or shipments. Users would be able
to filter shipment status including
details of current location and route.
Google Analytics was implemented
to enable feature flagging,
application logging and to localise
the code base for three languages.
The user experience was further
enhanced by rich map functionality,
the ability to subscribe to
notifications and harmonisation with
the existing eBusiness experience.
Outcome
A customer Beta was launched
within 16 weeks after initial
discussions. Within one week, the
Alpha release was launched to
customers, meeting a key end-of-
year milestone for the business.
We established an automated
deployment pipeline to enable
faster production releases more
often and also implemented front-
end analytics for the first time to
enable real-time customer insights.
Link to product type / service:
Product +
Experiences
Cloud +
Platforms
Data + AI
8
working software releases in
eight weeks
40%
more points delivered
per sprint
Removing
barriers
to enable teams to deliver
on outcomes
Problem
Making a planning application in the
UK can be a complicated process.
This was accentuated by a digital
offering that was no longer as
efficient as the executive agency
required and could result in errors.
Development of this system needed
agile practices and a range of
expertise. The Planning Inspectorate
wanted to work with an organisation
to learn and understand industry
best practice.
However, previous partners had
struggled to understand Cloud
Native and translate this to the
existing process.
Approach
Kin + Carta partnered with the
Planning Inspectorate to transform
how the internal team worked
and move to a service-oriented
operating model for digital and data.
Working as a blended team enabled
us to evolve internal capabilities
more effectively. We removed
any siloed working practices so
the solutions developed could be
applied across multiple services.
The revamped service will support
modernising planning solutions to
the cloud and change the focus
to delivering real outcomes for
all users.
Outcome
Teams are now delivering more
value at a faster pace just weeks
after handover. Improved team
working includes information
sharing and the reuse of software
across Appeals, Applications and
Back-Office services. We have
also helped enhance user analysis
and design, resulting in improved
alignment of the solution from
both a design and technical point
of view. Overall, the Inspectorate is
delivering a vastly improved service
due to the changes that were
implemented with the team having
more transparent responsibilities
and improved processes as well as
greater creativity and proactivity.
Link to product type / service:
Cloud +
Platforms
Data + AI
Managed
Services
Product +
Experiences
Building a world that works better for everyone.
Business model
Why
As demand for transformative
digital services accelerates,
Kin + Carta is . . .
28
What
Focused on mission-critical services in the key domains of digital
transformation.
STRATEGY + INNOVATION
Digital investment
planning
Technology
Building
a world
that works
better for
everyone.
Read more about the digital
transformation industry on pages 16 to 21
How
How we grow
There are four ways in which we scale
Kin + Carta.
Services
Sectors
2929
Value generated for:
Shareholders
Scaling, profitable business with strong track record
in a growing sector with robust ESG credentials.
Clients
Delivery and enablement of connected, efficient and
effective digital transformation products and services.
Employees
Diverse, inclusive and equitable employee value
proposition, learning and development, career paths,
all with clear commitment to responsibility.
Partners
Technical innovation on partner technologies, co-
marketing thought leadership, and opportunity
identification.
Communities
Offices as diverse as the communities they exist
within, actively engaged in community engagement,
philanthropy, and local charitable causes.
Environment
Triple bottom line commitment to measuring our impact
on people, planet and profit as a globally certified B
Corporation.
Read our Section 172 statement on
pages 93 to 99
MANAGED
SERVICES
Run, grow +
optimise
Data
Experience
PRODUCT +
EXPERIENCES
Data-led intelligent
experiences
Partners
Territories
Read more about our strategy
on pages 30 to 35
DATA + AI
Unlocking data
potential
CLOUD + PLATFORMS
Mission critical
applications
Read more about our domains and
service lines on page 20
With technology partnerships
Accelerating go-to-market and innovating in partnership with Microsoft,
Google and other leading technology partners.
Read about our partnerships on pages 31 to 33
How we monetise our solutions
The significant majority of Kin + Carta revenue
is time and materials consultancy delivered
through agile methodologies. Service level
agreements and recurring revenue is earned
through managed services.
Read more on page 20
How we use business as
a force for good.
The first B
Corporation listed
on the London
Stock Exchange.
Read about Kin + Carta as a responsible business on
pages 60 to 99
Read about our values and culture on
pages 40 to 43
Kin + CartaBuilding a world that works better for everyone.Strategic Report i
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Our strategy
There are four ways in which we grow Kin + Carta
Our strategy: Partnerships
Services
The buoyant digital transformation market is
constantly evolving. Kin + Carta’s Chief Product
Officers continually seek new opportunities to
add complementary service lines and offerings
to the portfolio of services that solve the
most valuable problems in our clients’ digital
transformations.
Sectors
We approach industry vertical growth by
tracking sector maturity curves, acquiring
key domain knowledge and experience and
targeting a new industry with a repeatable high
value proposition brought to market with key
technology partners.
Partners
Kin + Carta’s partnership with Microsoft,
Google and other leading technology partners
allows us to innovate on the world’s leading
technologies, accelerate go-to-market with
co-branded marketing, and identify mutually
valuable opportunities.
Territories
Geographic growth that brings access to a new
market, clients, capability or technology.
In FY22, Kin + Carta has expanded organically
into new markets (Greece and Colombia)
building from the ground up, and executed
high quality acquisitions in Bulgaria, North
Macedonia, and Kosovo.
Our partner strategy
Kin + Carta’s partner strategy of aligning ourselves with the continued growth of the hyperscalers — Google,
Microsoft, and AWS — is diversifying our revenue, building new capabilities, and supporting our clients’ technology
stacks. This top-line strategy will continue as “legacy application modernization remains a top 10 priority for CIO’s
with 36% indicating increased investment for 2022”¹. During the year, we have also focused on working with our
hyperscalers’ ecosystems. We have built relationships with partners that offer services aligned to our own, enabling
them to act as referral or delivery partners as we compete with broader offerings. We expect continued growth in
this area in FY23.
3131
Our partnerships can be categorised into three areas:
Platform Partners
Product Partners
Microsoft, Google Cloud and
Amazon Web Services (“AWS”) –
these are the public clouds that
our clients want us to build their
products in and with.
Optimizely, Headless, Confluent,
Commercetools, Contentstack
and Contentful – these are the
products our clients want us
to implement, integrate and
provide services around and
are based or built on our cloud
platform partners.
Technical and
Referral Partners
Apple, Nvidia, Adobe, Appian –
these are the technical tools we
use to create our solutions for
our clients.
FY22 Partnership highlights:
• Overall year-on-year channel revenue grew by 16% and an outstanding
143% growth in revenue sold in our European region as it develops
its maturity.
• 38% of Kin + Carta’s new business opportunities came from the partner
channel, and we continue to prioritise its growth.
• Kin + Carta was recognised with two Partner of the Year awards. We also
achieved three specialisation designations and achieved or maintained
managed partner status across portfolio and product partnerships.
See page 91 for our environmental and social risk policy for client and partner engagements
Read about our recent acquisitions on page 37
1.
How to Start and Drive Your Modernization Strategy (Gartner) – May 2022
The Gartner content described herein, (the “Gartner Content”) represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by
Gartner, Inc. (“Gartner”), and are not representations of fact. Gartner Content speaks as of its original publication date (and not as of the date of this Annual Report and
the opinions expressed in the Gartner Content are subject to change without notice.
Building a world that works better for everyone.Strategic Report
Our strategy
continued
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Our strategy: Partnerships continued
Platform partner FY22 highlights
Platform partner FY22 highlights
• Our revenue grew 14% year-on-year globally for the
• Microsoft revenue grew by 77% in the UK, bringing
Google Cloud channel.
• We saw significant Google portfolio expansion in our
UK market, with over 350% growth year-on-year.
• We diversified our revenue evenly across three
Kin + Carta service lines: Data + AI, Cloud +
Platforms, and Product + Experiences. Notably, we
earned our first revenue from machine learning work
across three different clients, which we expect to
increase in FY23.
• We achieved two "Partner Specializations" in Google
Partner Advantage and in Application Development
and Data & Analytics, demonstrating proven
expertise and success in building customer solutions
using Google Cloud Platform (“GCP”).
• We maintained the status of being a Google Cloud
Premier Partner, reflecting our teams’ ability to
maintain the highest knowledge, support, and
ingenuity standards when working with Google
Cloud products.
the region into sharper strategic focus going forward.
• Kin + Carta won the US “Sustainability Changemaker”
Partner of the Year award. This category recognises
a partner organisation that excels at providing
innovative and unique services or solutions based
on Microsoft technologies that help customers solve
challenges of sustainable digital transformation.
We won this award due to various achievements,
including our support for Microsoft Cloud for
Sustainability and future pipeline projects that help
Microsoft clients realise their sustainability initiatives.
• We achieved our first "Advanced Specialization" for
Microsoft Azure. Advanced Specializations validate
a solution partner’s deep knowledge, extensive
experience, and expertise. Only partners that meet
stringent criteria around customer success and staff
skilling, as well as pass third-party audits, can earn
an Advanced Specialization.
• We hold two “Solution Partner Designations” for
Azure Data and AI and Digital and App Innovation.
• We maintained our Microsoft “Managed Partner”
status in the US and UK.
•
159% growth in our Headless / Amazon Web Services
("AWS") portfolio in the US as our strategic focus on it
increases.
•
• Kin + Carta achieved AWS Advanced Tier Services
Partner status; we became an official “managed
partner” and were certified as an AWS Public Sector
Partner in government and nonprofit. The AWS
Advanced Tier Services status is only awarded
to organisations that are proven to leverage
skilled teams of certified technical professionals,
who demonstrate expertise in AWS, and provide
exceptional customer experiences. These accolades
validate Kin + Carta’s credentials and technical
expertise in the market to create seamless,
innovative digital transformation for our clients
using AWS.
• As we start FY23, we continue to grow our pool
of AWS-certified professionals specialising in
AWS competencies such as AWS Lambda, Digital
customer experience software, and Internet of Things
("IoT") Services.
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In October 2021, we were named Optimizely’s
“Partner of the Year” in the UK and Ireland. The
Partner of the Year Award honours top-performing
partners that have demonstrated outstanding
business performance and excellence in the sales
and delivery of Optimizely solutions.
• Kin + Carta is the only Optimizely partner globally
with three “Optimizely MVPs” — individuals who bring
their experience in technology and business forward
in the spirit of open exchange of knowledge and
creativity.
Headless
• Kin + Carta worked to meet another stringent set of
certification and compliance standards to become
a MACH Alliance member (Microservices, API-first,
Cloud Native, and Headless).
• We were the first certified B Corp to join this group
of independent technology companies dedicated
to advocating for open, best-of-breed technology
ecosystems.
Building a world that works better for everyone.
Our strategy
continued
Acquisition integration and
value acceleration
34
Scaling a modern software delivery platform
with a single mission: building a world that
works better for everyone
Buy a location,
capability, sector or
partnership
Unlock a new market of clients or talent
through acquisition
Invest in our Kin and
our Carta
Utilise the returns from the acquisition to
enhance the Carta while providing new
opportunities and career pathways for our
Kin – geographic mobility, new technical
capabilities, broader range of clients and
partners
Implement the Carta
Common platforms including
Growth, Services, People,
Responsibility, Operations and M&A
The Carta
Our six platforms provide globally aligned shared services, systems and business processes for the benefit of our
existing trading regions and act as a key accelerator for new acquisitions.
Platform
Value created
3535
Growth Platform
Global sales, marketing, and partnerships,
driving Kin + Carta’s growth, market
position and penetration among key target
audiences and industry sectors.
For clients: Trusted, outcome-based relationships.
For partners: Increased value through mutually beneficial value exchange.
For shareholders: A systematic approach to driving organic net
revenue growth.
Services Platform
Innovation, go-to-market and scaling of
business critical digital transformation
service lines enabled by a global
operating model that drives value and
champions craft.
People Platform
Industry-leading employee value
proposition and experience with clear
career paths and progressive learning and
development #foreveryone.
Responsibility Platform
Initiatives focused on enabling an
inclusive, accessible and sustainable
business, with positive impact for clients,
employees and other key stakeholders,
including the communities within which
we exist.
Operations Platform
Shared service functions, including
legal, finance, HR operations,
Connective Digital Services (IT) and
business intelligence.
M&A Platform
Identifying, acquiring and integrating
key acquisition target businesses or
intellectual property.
For clients: Specialist, connected, domain and sector leadership.
For partners: Borderless craft opportunities and increased
leadership paths.
For shareholders: Increasing market differentiation and improving gross
margins.
For clients: The best digital talent in the market.
For our people: Continuous learning and development with clear career
paths in diverse and inclusive business.
For communities: Diverse recruitment for under-represented
communities.
For shareholders: The specialist talent to scale the business globally.
For clients: A progressive environmental, social and corporate governance
("ESG") partner that reflects their values and commitments.
For our people: Increased employee engagement and belonging, critical
as a talent attractor.
For communities: Supporting responsible business and positive
impact initiatives.
For shareholders: Substantiation of Kin + Carta’s sustainable investment
credentials.
For our Executives: Integrated commercial and operational data to drive
informed decision-making.
For all commercial partners: Increasing efficiency of business relations.
For acquisitions: A critical enabler of M&A evaluation, diligence
and integration.
For shareholders: Reducing risk and increasing operating margins.
For acquisitions: Positive acquisition experience and value-adding
integration.
For shareholders: Value generation through inorganic growth.
Kin + CartaBuilding a world that works better for everyone.Strategic Report Our strategic priorities
In 2022, as we built the foundations of Kin + Carta, our strategic priorities
were focused on the Carta, a collection of shared platforms that drive efficient
growth and accelerate the integration of acquisitions.
Link to KPIs:
1
Like-for-like net revenue growth at constant currency
2 Adjusted operating profit margin
3 Net revenue predictability
4 Number of £1 million clients
5 Employee net promoter score
6 Mean gender pay gap
36
3737
Growth
Services
People
Responsibility
Operations
M&A
Global sales, marketing, and
partnerships, driving Kin + Carta’s
growth, market position and penetration
among key target audiences and
industry sectors.
Innovation, go-to-market, and scaling of
business-critical digital transformation
service lines enabled by a global
operating model that drives value and
champions craft.
Industry-leading employee value
proposition and experience with clear
career paths and progressive learning
and development #foreveryone.
2022 objective
Increase resilient and recurring revenue
by launching a partnership-aligned
managed service offering; deepening
partner relationships and increasing
managed service revenue.
2022 objective
Embed and leverage the new global
operating model to support the delivery
and continued innovation of service
offerings; increasing organic revenue
by 20%.
Progress this year
Global and regional leadership has
been appointed to drive the managed
services proposition, refine the
operating model and accelerate
scale through partner-alignment and
nearshore delivery.
Global managed services revenue is
approximately 5.5% of net revenue
for FY22. It is approximately 1% of net
revenue in the Americas, and 15% of net
revenue in Europe. Revenue overall for
FY22 grew (370% in Americas, and 14%
in Europe).
Progress this year
Global organic revenue increased
by 37%. Business-critical digital
transformation service lines, service
offerings, and practices have been
refined and aligned to a global
operating model.
Processes for identifying new service
offerings have been established to
ensure ongoing innovation.
2022 objective
Establish an internal learning and
development brand MVP ("minimum
viable product") by creating a
programme for two entry-level new hire
cohorts, reshaping the profile of our
workforce. In addition, launch multiple
learning paths for more experienced Kin
to continue delivering on our EVP.
Progress this year
Our Kin Accelerator Programme ("KAP")
exceeded expectations with a total
of seven cohorts launched globally in
FY22. KAP was a profitable path to bring
diverse, junior talent to the organisation.
We launched an additional training
curriculum for existing employees –
People Leader training was provided
across our practices, service lines,
and platforms.
Initiatives focused on enabling an
inclusive, accessible and sustainable
business, with positive impact for clients,
employees, and other key stakeholders
including the communities within which
we exist.
2022 objective
Measure and improve inclusivity,
accessibility and sustainability in all
service lines, ensuring client work is
delivered through responsible methods.
Progress this year
The Responsibility Platform was
established and organised around
Inclusion, Diversity, Equity and
Awareness ("IDEA"), philanthropy and the
environment. Positive impact project
scoring, and service line engagement
was activated.
A Responsible Business Bootcamp with a
focus on IDEA has been implemented for
employee onboarding. This ensures that
all employees have an understanding of
our IDEA values and shows them which
affinity groups and support systems are
available to them.
Ambitious responsibility goal completed,
becoming the first publicly traded B Corp
on the London Stock Exchange.
Shared service functions, including legal,
finance, HR operations, Connective
Digital Services (IT) and business
intelligence.
Identifying, acquiring and integrating
key acquisition target businesses or
intellectual property.
2022 objective
Improve ‘digitised’ maturity state,
by completing core Kin + Carta
(excluding new acquisitions) Force,
Business Intelligence ("BI") and Human
Resources Information System ("HRIS")
implementations in partnership with the
Regions for efficient delivery and higher
operating margin.
Progress this year
The initial roll out of two financial and
operational software applications
– Planful and Force – has been
implemented in the Americas and Europe
(excluding FY22 acquisitions) improving
maturity in the Americas and Europe.
BI was improved and legal processes
were digitised. Supplier Management and
Employee Experience ("EX") processes
were automated. Launched our new
global HRIS, which replaces disparate
systems and unites our processes.
Single sign-on was implemented on core
systems. Operating profit and operating
expenditure as percentage of net
revenue increased year-on-year.
2022 objective
Establish a global M&A platform that
acquires and integrates new businesses,
and grows nearshore headcount to 25%.
Progress this year
The M&A Platform was established,
acquiring nearshore European delivery
business, Melon Group. The business is
located in Bulgaria, Kosovo and North
Macedonia and adds 300 nearshore
employees taking nearshore headcount
to 29%.
The remaining 50% interest in Loop
Integration was acquired, expanding
commerce capabilities, along with
Octain, which provides clients
advanced insight, predictions and
recommendations governed by socially
responsible AI principles.
Link to KPIs
1
2 3 4
Link to KPIs
1
2 3 4
Link to KPIs
5 6
Link to KPIs
5 6
Link to KPIs
2
Link to KPIs
1
Read more about our KPIs on
pages 48 to 50
Kin + CartaBuilding a world that works better for everyone.Strategic Report
Our strategic priorities
continued
In 2023, with the foundations of Kin + Carta established and the business moving
from transformation to scaling profitable growth, the structure of our strategic
priorities evolves for the new financial year.
38
Optimise the foundation
Data and process efficiency
Optimise and enhance the global systems that drive operational efficiency
Focus on core
How we win
Client success
Kin success
Optimise brand positioning to
supply and demand conditions
Focus on strategic account
growth and delivery standards
Develop craft and delivery skills
through the Communities of
Practice closest to the work
Focus on what clients need next
Unlocking the
value of data
Increase global revenue from
data consultancy, services,
and delivery
Sustainability
Global delivery
Operationalise new commitment
to help our clients save 1,000,000
by 2027
tonnes of CO
²
Scale distributed delivery,
increase nearshore delivery
and explore offshore M&A
3939
Kin + CartaBuilding a world that works better for everyone.Strategic Report Aligning purpose, values,
strategy and culture
Our values
Building a world that works better for everyone.
40
Connection
Our connections enable us to
build and to transform; to be
more than the sum of our parts.
A connective mindset never
stops learning; it brings the right
mind to the problem, and acts
as a multiplier to the outcome.
Courage
Every single day.
This is the value that
strengthens us to believe in
better, and be brave enough to
recognise that change starts
from within.
Compassion
If empathy can be passive,
and altruism self-serving,
compassion is active.
It is our decision to do
something, to stand for
something and make a positive
impact that defines us.
Our promise
Connective
Connection drives
transformation
This is our "how", our value multiplier,
and how we create better business
outcomes for our clients.
Our blended model draws on
data, technology and experience
specialists to create the four
connected outcomes of innovation,
modernisation, enablement and
optimisation.
This isn’t by chance.
Unlike many of our competitors,
our structures and platforms are
designed to deploy borderless
connections for the benefit of our
clients, rather than a dependency
on clients to nurture alliances and
share knowledge between holding-
group business units.
A connected world. No dead ends.
No full stops.
Kin + Carta was founded with a
unifying perspective; the more
connected we are, the stronger
we are. This is our first value:
Connection.
Adaptive
Adaptability drives resilience
Responsible
Responsible business matters
4141
Innovate at the speed of demand.
Build technology ecosystems
that scale. Democratise data to
release value.
Making these choices together
allows us to navigate complex
new tech frontiers without losing
touch of what makes an everyday
difference:
Easier.
Faster.
Connected.
Our empowered teams value agility,
craft, quality and effectiveness. We
challenge by being open to the idea
that there may be another way, not
a blinkered belief that our way is the
only way.
Progress advances further
than petulance, collaboration
is a baseline and momentum is
measurable.
To deliver our pathfinder promise
at a global scale, we partner with
the brands that are building the
infrastructure of tomorrow, today.
In parallel, we build and acquire
new capabilities, technologies and
locations, enabled by the Carta,
a platform ecosystem that drives
scalable growth and invests back
into our Kin.
Better doesn’t stand still.
To think differently; to take our
clients by the hand and lead them
into the unknown, we have to show
Courage.
We believe that business should be
used as a force for good.
Today’s digital platforms, products
and experiences need to be
designed and built with a moral
compass at the centre.
Inclusion and Diversity isn’t a
programme, it’s an imperative and a
competitive advantage.
Everyone has the right to be
themselves and to bring themselves,
to be respected equally for who
they are. To live, work, and enjoy
a safe and nurturing community
that values and supports them.
Everyone.
Our work must be as inclusive as
our workplaces, and our workplaces
must be as diverse as the
communities they exist within.
We have to hold ourselves to
account.
Kin + Carta is a certified B
Corp, meeting high standards of
verified social and environmental
performance, public transparency,
and legal accountability to balance
profit and purpose.
The ability to see beyond our own
lived experiences and recognise
those of others is at the heart
of our final Kin + Carta value
Compassion.
Kin + CartaBuilding a world that works better for everyone.Strategic Report Aligning purpose, values,
strategy and culture continued
Culture
Across Kin + Carta, we make a significant investment in creating a value-based
environment that supports and develops our people. These values enable our people
to thrive in their work and build strong client relationships, while also creating an
environment that fosters collaboration and the support of our communities.
42
Our employee value proposition ("EVP") is focused on enhancing culture and employee experience.
Purpose
& Culture
Professional
growth
Personal
wellbeing
Recognition
& Reward
See pages 65 to 71 for further detail on our EVP and matters relating to our people
4343
Monitoring our culture
We monitor culture to understand
behaviours and sentiment
throughout Kin + Carta and provide
an opportunity to address any
misalignment with the intended
culture. Our mechanisms for
monitoring culture include:
• Group and Regional Chief
Executive Officer office hours
that allow any Kin to drop in for
a video conference conversation
to discuss any topic of their
choosing. This helps maintain
alignment between our senior
leadership and the wider
workforce.
• Half-yearly employee engagement
("eNPS") and diversity and
inclusion surveys (see page 50 for
information on our eNPS).
• Kin Council dedicated to listening
to the voices of employees and
making changes. Our Kin Council
is formed of people from across
the business who help to inform
us of employee sentiment on
matters relating to key decisions
and internal projects across
Kin + Carta. This maintains
alignment between our culture,
values and delivery of our
strategy. A key achievement of
the Kin Council this year was
clarifying and influencing the
hybrid working policy.
An award-winning workplace
We take great pride in receiving company awards that showcase our
successes in areas such as workplace and culture, and technical areas, such
as product and service development.
Examples of how we are embedding this for our people include:
Purpose and culture
• Providing opportunities
• Enabling and supporting external
connections.
•
Intentionally facilitating a
borderless organisation.
Professional growth
• Kin Accelerator Programmes
globally.
• Leadership programmes for
women and minorities.
for employees to work on
meaningful projects and
on-the-job coaching that allows
them to enhance and apply their
skills.
Personal wellbeing
promoting positive mental
health, offering wellbeing tips
and resources.
• Paid therapy sessions and
mental health first aider training
to support colleagues’ mental
health.
• Health scheme to encourage
Recognition and reward
healthy living.
• Hosting a range of talks and
webinars with external experts
• Global pay equity programme.
•
Increasing the pool of employees
eligible for LTIP awards.
How our values and culture contribute to the success of our strategy
Our values and culture help us deliver our brand promises of being connective, adaptive, and responsible, and
our purpose to build a world that works better for everyone. Through our values, promises and purpose, we
use our global organisation as a force for good to deliver innovative digital products and services across data,
technology and experience throughout our Regions, with our clients and inside our communities.
Kin + CartaBuilding a world that works better for everyone.Strategic Report Chief Executive Officer’s
review
44
Kelly Manthey
Chief Executive Officer
The foundations of
our global digital
transformation
consultancy are now
well established,
enabling profitable
and sustainable
growth across new
and established
trading regions.
Market growth
Kin + Carta’s pure-play focus
on the business-critical digital
transformation sector positions
us for continued growth during a
period of economic volatility.
With the DX sector forecast to
continue growth at a CAGR of
over 20% (2022-30), the rate
of client DX spend is expected
to maintain its velocity during a
period of economic disruption.
Gartner research indicates that
"94% of CEOs want to maintain or
accelerate the already intense pace
of digital transformation sparked
by the pandemic, and 70% of CFOs
expect digital technology to get
more funding, with the imperative
for organisations being placing the
right digital bets at the right cost."1
Strengthened
foundations
The foundations of our global digital
transformation consultancy are now
well established, enabling profitable
and sustainable growth across new
and established trading regions. In
the first half, the divestment of the
remaining non-core businesses
completed our transformation
to become a DX specialist. The
proceeds of those divestments
were invested in the acquisition
of three pure-play DX businesses:
software engineering consultancy,
Melon Group, commerce
consultancy, Loop Integration, and
responsible AI platform, Octain.
These acquisitions added new
talent funnels and high value
capabilities to satisfy the strong
demand we see from our clients.
Alongside Melon Group's footprint
in Bulgaria, North Macedonia and
Kosovo, additional talent funnels
were organically built in Greece
and Colombia to serve our clients'
demand for blended domestic and
nearshore teams at a competitive
price point.
Our go-to-market service
lines, shaped to solve the most
challenging DX problems, have been
aligned to one global operating
model, delivering innovation,
modernisation, enablement and
optimisation outcomes to our
clients efficiently and consistently.
To ensure continued access to the
highest quality digital talent,
Kin + Carta’s Employee Value
Proposition ("EVP") was reimagined
for hybrid working, keeping attrition
below market benchmarks in all
1 Source: 2022 Gartner CEO and Senior Business Executive Survey, Gartner webinar poll: CFOs
2022 Playbook for Enhancing Profitability and Driving Digital Acceleration, 2021 Gartner
Candidate Panel Survey, Gartner Supply Chain's 2021 Customer Expectations Survey
© 2022_Gartner, Inc. All rights reserved. CTMKT 1879401
4545
Regions, and the Kin Accelerator
Programme ("KAP") was established
for entry-level training and
deployment.
Investment in the processes,
platforms and systems that
increase operational efficiency,
notably Enterprise Resource
Planning ("ERP"), Human Resources
Information System ("HRIS"), and
Kin + Carta’s Operations Platform
will drive improvements in operating
margin as we scale globally, and
remain an investment focus for FY23
and beyond.
I am especially proud that our
commitment to responsible
business continued to scale through
client and partner sustainability
initiatives, achieving recognition as
the first B Corp on the London Stock
Exchange, and winning Microsoft’s
2022 “Sustainability Changemaker”
Partner of the Year Award.
Continued growth
Last year we outlined a plan to
leverage four dimensions of growth
through services, partnerships,
geography and industry sectors,
and I am pleased to share that the
successful execution of this plan
in FY22 has underpinned 48% net
revenue growth year-on-year to
£190.3 million (37% like-for-like).
In our trading regions, Americas’ net
revenue grew 55% year-on-year
(49% organic) to £132.2 million and
Europe net revenue grew 33%
year-on-year (27% organic) to
£58.1 million. We saw continued
growth from the partner channel
(38% of new business opportunities
in FY22) and scaling deal values as
strategic combinations of service
lines, technology partners, and
industry sector knowledge build
resilient revenue through long-term
client partnerships. FY22 saw the
largest DX deal in Kin + Carta’s
history with a $90 million contract
in the financial services sector.
A record year-ending backlog
of £96 million, up 35% year-on-
year, underlines continued strong
demand across all service lines,
technology partnerships and
industry sectors, positioning us well
to continue the momentum of this
growth. In FY21, we announced that
we expected to double organic net
revenue by FY25. A year later, I am
pleased to share that we are on
track to deliver this milestone by
FY24, a year ahead of schedule.
This year, we achieved 65%
year-on-year growth in adjusted
profit before tax from continuing
operations to £17.1 million (FY21:
£10.3 million), setting the scene
for the next phase of Kin + Carta’s
scaling story.
Scaling profitably and
responsibly
In FY23, we will continue investment
in the foundational systems,
platforms and processes that
further enhance operational and
cost efficiency.
We will enhance our core, focusing
on the connected relationship
between service line (e.g. Kin + Carta
Cloud + Platforms), technology
partner (e.g. Google), and industry
sector (e.g. healthcare); a key driver
of resilient revenue, client growth,
and differentiation. At a time of
disruption for our clients, we will
maintain and enhance the delivery
experience that enables our
clients’ success, and the employee
experience that has proven to
attract and retain the world’s
leading digital talent.
The importance of data
transformation services will
continue to rise. Kin + Carta’s
investments ahead of the curve
are well placed to build intelligent
enterprises, enabling our clients
to democratise their data, realise
the value of their data assets and
deliver market-differentiating data-
driven experiences. For example,
in the last year, our data centre of
excellence has worked with a global
coffee retailer to help it understand
its data across loyalty, supply
chain, commerce and marketing.
Operating across this data
spectrum allows Kin + Carta
to deploy the value chain, cross-
selling service lines, accessing new
areas of the client’s business and
building resilient revenue within
strategic accounts.
In FY22, we expanded our nearshore
presence to complement our
domestic capabilities and provide
more options for our clients.
When we diversify the delivery
mix by incorporating nearshore
capabilities, experience tells us
that client budgets stretch further,
engagement lifecycles expand, and
high-value domestic resources
are freed to start new projects.
Consequently, accelerating
nearshore delivery remains a
significant opportunity to better
serve our clients while enhancing
our margins.
Our FY23 M&A ambitions expand to
evaluate offshore delivery; a third
lever to scale high quality managed
services that grow and run our
clients’ products and services.
Our increasing value to clients will
be the blend of domestic, nearshore
and offshore delivery options
configured to their evolving needs.
In addition, we continue to target
acquisitions that will provide us
further geographic scale, new digital
capabilities, and the potential for a
transformative deal, underpinned
by robust processes for deal
identification and evaluation.
As architects and engineers of
digital transformation, we have a
central role to play in our clients’
sustainability journeys. In FY23,
we are making a new commitment
to our clients as we help them
deliver on their ESG agendas.
Kin + CartaBuilding a world that works better for everyone.Strategic Report 4747
Chief Executive Officer’s
review continued
Growth execution
The foundation for growth is
established, thanks in no small part
to my predecessor, J Schwan, who
had the vision and execution to lead
the transformation of Kin + Carta
into the global, B Corp certified,
digitally native DX consultancy that
drives our clients’ success today. As
we now take the business beyond
transformation to scaled profitable
growth, it is the strength and depth
of our leadership team, the talent
and diversity of our people, and the
calibre of our clients that fill me with
confidence and excitement for the
path ahead.
Now we build. We build a higher
standard of consultancy with the
success of our clients and our
people at its core. We build the
products, services and innovation
that our clients need next. We
build responsibly, upholding our
environmental and sustainability
commitments.
It is my honour to lead Kin + Carta
forward as we build a world that
works better for everyone.
Kelly Manthey
Chief Executive Officer
12 October 2022
Europe
The integration of the two separate
UK businesses (the prior Create and
Connect pillars) was completed
in FY22. In FY23, we now have one
UK trading legal entity, one set of
employee and client contracts, a
single instance of our ERP platform,
integrated functional teams (e.g.
sales, finance and operations) and
integrated delivery practices. This
Integration Playbook will be used
again as we integrate Melon Group
into the European business.
In FY22, the region saw net revenue
increase 33% year-on-year (27%
organic) to £58.1 million, with 15 new
clients driving 18% of net revenue.
UK Public Sector grew to 6% of net
revenue in FY22, forecast to double
in FY23 following notable multi-year
commitments and the winning of
six new government departments.
Financial Services continued to
scale, closing FY22 with a
£6 million, 12-month commitment
from Santander for Kin + Carta to
run and optimise retail and business
banking mobile applications.
Executing on our global delivery
strategy, the acquisition of Melon
Group brought a 300-strong team
of high quality, margin-efficient web,
mobile, and data specialists working
across Bulgaria, North Macedonia
and Kosovo, to bolster regional
capacity in line with demand, and
in addition to organic expansion in
Greece.
46
We pledge to help our clients
save 1,000,000 metric tonnes
of CO2 by FY27 through the
implementation of progressive
green computing, responsible and
sustainable technology practices,
cloud migration services and the
measurable decarbonisation of our
clients’ digital estates.
Championing innovation for our
clients during a downturn is an
accelerant to their recovery that
we shall continue to deliver. In FY23,
investment will continue in service
line, technology partnership and
industry vertical innovation as we
push new technology horizons.
Regions
Americas
FY22 was a year of accelerated
growth for our Americas region.
Strong demand drove regional net
revenue growth of 55% year-on-year
(49% organic) to £132.2 million, with
31 new clients added, nine with an
annual run rate over $1 million. In line
with our global delivery strategy, 68%
of new hires in the Americas region
were in the Latin America territory,
bolstering nearshore delivery
capability, including 77 Kin in our
newest office in Bogota, Colombia.
Industry sector progress included
continued scaling of agriculture,
notable gains in financial services
(including a record $90 million
contract), and innovative work in
retail and quick service restaurants.
Acquisition of the remaining 50%
of joint-venture Loop Integration
boosted commerce capabilities,
while the IP acquisition of
Octain artificial intelligence ("AI")
accelerated our clients’ paths to
unlocking the value from their data.
Following a comprehensive search
and selection process, Adam
Hasemeyer, formerly President
of Kin + Carta’s West Territory,
has been appointed Group Chief
Executive Officer, Americas.
Kin + CartaBuilding a world that works better for everyone.Strategic Report Key performance indicators
Our strategic priorities:
We use a broad range of financial and non-financial measures to monitor our progress
in delivering our strategy to create long-term sustainable value for our stakeholders.
Growth
Services
People
Responsibility
Operations
M&A
48
4949
1 Like-for-like net revenue growth at
2 Adjusted operating profit margin1, 2
3 Net revenue predictability1
4 Number of £1 million clients1
constant currency1
2022
2021
13%
37%
2022
2021
9.9%
9.5%
2022
2021
76%
71%
2022
2021
40
30
Definition
Like-for-like net revenue growth at constant currency
indicates the increase of net revenue compared to
the previous year excluding any acquisition effect
during the current year and at constant currency rate
of exchange. This measure identifies the underlying
net revenue growth trend. This excludes the impact
of the Loop Integration and Melon Group acquisitions
in February 2022 and May 2022 respectively and
the annualisation effect of the Cascade Data Labs
acquisition in the prior financial period. Like-for-like
net revenue is presented at a constant currency rate
of exchange in order to neutralise any fluctuations
generated by foreign exchange movement during
the year.
Progress this year
Last year, we outlined a plan to leverage four
dimensions of growth through Services, Sectors,
Partners and Territories and the successful execution
of this plan in FY22 has driven organic net revenue
growth of 37% year-on-year.
Definition
Percentage of adjusted operating profit over net
revenue. Adjusted operating profit margin is the
measure used by the Global and Regional Leadership
Team to evaluate Kin + Carta’s performance and
allocate resources.
Definition
A measure that shows net revenue generated by
those clients with a tenure of three years or more.
Revenue tends to be more predictable when derived
from clients with longer tenures.
Definition
A measure that shows the number of clients from
whom Kin + Carta generates more than £1 million
revenue individually in each financial year. These
are key clients who contribute materially towards
our growth.
Progress this year
Compared to FY21, the higher adjusted profit is due
to revenue growth and managing our cost base,
resulting in a decrease in total operating expenses as
a percentage of net revenue.
Progress this year
Having focused on growing long-term established
relationships with our top clients, some £144.0 million
(76%) of our net revenue comes from existing
clients who had a tenure of three years or more
(2021: £92.8 million / 71%).
Progress this year
In 2022, there were 40 clients from whom Kin + Carta
generated more than £1 million revenue individually
(2021: 30). This diversity provides a robust foundation
for growth.
Link to strategic priorities
Link to strategic priorities
Link to strategic priorities
Link to strategic priorities
Link to risks
1
3 12
Link to risks
1
2 5 6 10
1 Continuing operations only. Continuing operations exclude the results of Incite Marketing Planning Limited, Incite New York LLC, Edit Agency Limited,
Relish Agency Limited, The Health Hive (US) LLC, The Health Hive Group Limited and subsidiaries, and Pragma Consulting Limited (note 8).
2 Adjusted results exclude adjusting items to enhance understanding of the ongoing financial performance of the Group. Adjusting items comprise:
costs related to acquisitions, fair value gain from deemed sale on step acquisition, costs related to the Company’s Defined Benefit Pension Scheme,
restructuring and other charges, interest income, gain or loss on disposal of subsidiaries and the tax charge / credit related to these items (note 7).
Link to risks
1
3 4 6
Link to Risks:
Link to risks
3 4 6
1
Economy and volatility
6 Scalability
11 Laws and regulations
2 Our people
3 Growth
7 Information, cyber security and systems
12 Pandemic shocks
8 Data protection
13 Legacy Defined Benefit Pension Scheme
4 Client concentration
9 Being a responsible business
14 Financing
5 Integration
10 Operational resilience
Kin + CartaBuilding a world that works better for everyone.Strategic Report Key performance indicators
continued
Chief Financial Officer’s
review
50
5 Employee Net Promoter Score
6 Mean gender pay gap1
("eNPS")1
2022
2021
+32
+21
2022
2021
18%
14%
Definition
eNPS is based on employees’ likelihood to recommend
Kin + Carta as an employer. We believe employee
engagement is an indirect measurement of both
employee happiness and business performance.
Measuring engagement ensures that, as the firm scales
globally and acquisitions are integrated, we have a
consistent way to track the overall wellbeing and
collective feeling of our employees.
Progress this year
Our eNPS score has increased markedly in FY22, from
+21 to +32, with increases seen across both Regions.
As a result, we have surpassed our target for the year
of +25, and are approaching our longer-term goal of
+35. While mindful of fluctuations in this metric in
line with economic cycles, we are confident that we
will continue to see improvements in our eNPS as we
grow and provide further development opportunities
for our Kin.
Definition
An equality measure that shows the difference in
average earnings between women and men.
Progress this year
FY22 has seen a deterioration in our gender pay
gap of 4ppts, largely driven by the need to recruit
engineers quickly to meet demand, which has
affected the gender demographic and fee scales of
the appropriate talent.
Link to strategic priorities
Link to strategic priorities
Link to risks
2 5 6 9
Link to risks
2 9
1 Continuing operations only. Continuing operations exclude the results of Incite Marketing Planning Limited, Incite New York LLC, Edit Agency Limited,
Relish Agency Limited, The Health Hive (US) LLC, The Health Hive Group Limited and subsidiaries, and Pragma Consulting Limited (note 8).
2 Adjusted results exclude adjusting items to enhance understanding of the ongoing financial performance of the Group. Adjusting items comprise:
costs related to acquisitions, fair value gain from deemed sale on step acquisition, costs related to the Company’s Defined Benefit Pension Scheme,
restructuring and other charges, interest income, gain or loss on disposal of subsidiaries and the tax charge / credit related to these items (note 7).
5151
Chris Kutsor
Chief Financial Officer and
Chief Operating Officer
Group net revenue from continuing operations of £190.3 million was up
48% on the prior year, driven by strong growth in both Regions. Organic net
revenue at constant currency rates was up 37%. Acquisitions in the financial
year added £7.4 million of net revenue (annualised c. £18 million) and
favourable currency movements contributed a further £4.2 million of the net
revenue increase.
Adjusted operating margin from continuing operations was 9.9% for the
period (FY21: 9.5%), inclusive of a net £0.4 million increase in expense
associated with the accounting policy change on SaaS software
implementation costs adopted in the period. The Company is continuing
to invest in core operations systems using SaaS software, which will have
an adverse impact on EBITDA in FY23 of c. £1 million when compared to the
previous accounting treatment of capitalising such costs.
Adjusted profit before tax from continuing operations rose by 65% to
£17.1 million (FY21: £10.3 million). The higher adjusted profit is due to strong
revenue growth and careful management of our cost base, resulting in a
decrease in total operating expenses as a percentage of net revenue.
Higher employee costs have been the norm around the world for the past
twelve months, and the Company has taken active steps to mitigate this
dynamic. We have increased prices by 5% on average to 75% of our tenured
client base, and new client rates are transacted at significantly higher base
prices reflecting the current market conditions. At an employee level, we
have increased our junior resources and responded to employee demand for
hybrid working by rolling out a comprehensive Employee Value Proposition
whilst achieving Best Place to Work recognition across all territories. In
addition, we have continued to scale our margin-enhancing nearshore
delivery capabilities through both organic development and the acquisition
of Melon Group in Bulgaria, North Macedonia and Kosovo.
Kin + CartaBuilding a world that works better for everyone.Strategic Report Chief Financial Officer’s
review continued
Compared to FY21, adjusted profit before tax shows a substantial increase
both before and after removing the effects in the prior year of income
and expenses associated with government assistance programmes and
the repayment in H2 FY21 of salaries which were sacrificed in FY20, as
summarised below.
52
Continuing operations adjusted PBT as reported
US PPP forgiveness income
Project costs funded by government assistance
programme
Salary sacrifice repayment
Adjusted PBT excluding items above
Year to
31 July 2022
£'m
Restated*
Year to
31 July 2022
£'m
17.1
–
–
-
17.1
10.3
(4.5)
3.0
2.0
10.8
*Restated to classify Edit and Relish as discontinued operations. 2021 includes Edit, Relish, Incite, Hive and Pragma
as discontinued operations.
of a customer dispute, and
£1.7 million of severance charges
in respect of restructuring
across the Group.
• £5.5 million of charges to
operating profit relating to the
Company's legacy Defined
Benefit Pension Scheme,
including a £3.9 million past
service charge for guaranteed
minimum pensions, as well as an
interest credit of £0.3 million on
the Scheme surplus.
Details are provided within note 7
and the "Alternative performance
measures" section.
Regional performance
Americas’ net revenue grew 55%
year-on-year to £132.2 million,
which accounted for 69% of
the total Group net revenue.
Adjusted operating profit grew
56% year-on-year to £22.9 million,
with operating profit margin in line
with the prior year at 17.9%. Gross
margins expanded by 1.2% (120
basis points) year-on-year, largely
driven by new business wins that
were secured at a higher margin
than the regional average.
The total loss before tax from
continuing operations in the period
was £15.9 million (FY21: loss of
£5.8 million), which is stated after
net adjusting cost items of
£32.9 million (FY21: £16.2 million).
Adjusting items in the current
period include:
• £21.0 million related to
acquisitions which is
comprised of: £13.2 million of
consideration required to be
treated as remuneration for
the acquisitions of Cascade
Data Labs, Spire, Melon Group,
Loop Integration and Octain;
£6.4 million related to the
amortisation of acquired
intangibles; and £1.4 million of
acquisition-related costs.
• a credit of £1.6 million following
the deemed disposal of the 50%
joint venture stake previously
held in Loop Integration, as a
result of the purchase of the
remaining 50% of the joint
venture, and corresponding to
the step up to fair value of the
existing holding.
• £8.3 million of restructuring
costs, comprised of £6.2 million
in respect of the impairment and
empty property costs related
to a partial closure of leased
premises in Chicago,
£0.4 million related to litigation
Europe’s net revenue grew 33%
year-on-year to £58.1 million,
which accounted for 31% of FY22
total Group net revenue. Adjusted
operating profit of £4.0 million was
lower year-on–year as a result of
lower operating margin (7.0% vs
10.0% in FY21). The lower margin
is due to a higher number of
contractors associated with rapid
growth and the higher costs of
those contractors associated with
the tight labour market, particularly
in the UK. Recent actions have
substantially improved both the
contractor to permanent employee
mix and associated margins. The
recent trend of improved margins
is expected to continue into FY23
as we change the shape of our
workforce in the UK and benefit
from our distributed nearshore
delivery capability through the
recent acquisition of Melon Group.
The increase in corporate costs was
contained to 18%, driving operating
leverage and improving our Group
operating profit percentage from
9.5% to 9.9%, despite the headwinds
of divesting approximately
£6.6 million of annualised operating
profit associated with the non-core
disposals.
Acquisitions
Acquisitions include Octain, which
was completed in December 2021,
the acquisition of the remaining
50% of our joint venture, Loop
Integration, completed in February
2022, and the Melon Group,
completed in May 2022. Total
consideration paid in FY22 was
£20.1 million, net of cash acquired,
with the potential for an additional
£9.2 million to be paid over the
next three years contingent upon
achieving revenue or EBITDA and
revenue growth targets.
• Through Octain, we acquired
the intellectual property of an
ethical, machine learning data
platform that provides custom
artificial intelligence models for
our clients.
5353
• Loop Integration is a Chicago-
based full-stack e-commerce
consultancy that generated
net revenue of US$9.3 million
and US$1.8 million of adjusted
operating profit for the year
ended 31 December 2021.
• Melon Group provides margin-
efficient nearshore software
engineering in Bulgaria, North
Macedonia and Kosovo with c.
300 engineers, which has been
growing net revenue at 20%+
in recent years. Melon Group
generated revenues of
€9.0 million and operating
profit of €2.2 million for the year
ended 31 December 2021.
The incremental operating profit
impact to Kin + Carta of Loop
Integration post-acquisition was the
remaining half of Loop Integration’s
total results, as we previously
recorded 50% of Loop Integration’s
profits on a single line under
adjusted other income using the
equity accounting method.
Capital allocation
The Company remains disciplined
in its approach to the allocation of
capital with the overriding objective
being to enhance shareholder value
by delivering sustainable growth.
Our capital allocation framework
remains unchanged and prioritises
investing in growth.
Given the scale of the DX
opportunity in front of us and the
significant opportunity to grow
the business, the Company is
focused on reinvesting capital
for both organic and inorganic
growth, aligned with our strategy.
Consequently, our framework
remains unchanged and prioritises:
• Organic investment to
accelerate growth.
• Meaningful acquisitions, whilst
maintaining a prudent level of
financial gearing.
• A normalised net debt/EBITDA
ratio in a range of 0-2.0x
(excluding temporary M&A
impacts).
In addition, given the scale of the
opportunity, the Board has decided
not to pay dividends for the
foreseeable future.
The emphasis is on growth that
delivers significant shareholder
value through scale and return on
capital, whilst remaining mindful
of prudent pension support. We
continuously assess our medium to
long term plans, which take account
of investment in the business,
growth prospects, cash generation
and leverage.
Balance sheet and
cash flow
Net assets grew by £40.9 million
over the year to £126.1 million. The
increase in the legacy pension
Scheme surplus to £38.7 million,
net of tax, contributed
£13.3 million of the increase, with
net income through the primary
income statement providing a
further increase of £9.8 million, and
other increases in equity of
£17.8 million, primarily related
to equity additions to fund
acquisitions of £15.8 million, as well
as employee incentive transactions
and currency revaluation of dollar-
denominated net assets, partially
offset by the purchase of shares
into our EBT to hedge future vesting
of employee equity awards.
The cash inflow from operations
before working capital of
£18.4 million for FY22 is up 34% on
the prior year, due to the strong
growth in net revenue and related
EBITDA generation. The net working
capital outflow of
£7.0 million reflects mostly an
increase in receivables related to
revenue growth. On a continuing
operations basis, before the cash
effect of adjusting items and
working capital movements, we saw
an operating cash inflow of
£25.9 million (refer to note 33),
which is an increase of £13.3 million
on the prior year. Cash flows related
to finance charges decreased
slightly with the reduction in
net debt, partly offset by higher
borrowing rates. Tax cash outflows
were reduced by the utilisation of
prior year tax losses and tax refunds
in the UK.
Investing cash inflow of
£21.0 million includes the proceeds
from divestments of Incite, Edit and
Relish businesses, which generated
£34.3 million, partially offset by
acquisition outflows of £11.9 million
related to Octain, Loop Integration
and Melon Group. Included within
financing cash flows are lease
payments, which were slightly lower
than the prior year at £3.8 million
following the divestments, and
£5.6 million was used to purchase
treasury shares for the Employee
Benefit Trust to satisfy future
vesting of employee share awards.
The resulting free cash inflow was
used to pay down bank debt. As a
result, we ended the year with the
balance sheet significantly de-
geared and a net debt position of
£0.5 million compared to a net debt
position of £19.2 million at
31 July 2021.
Pension
The IAS19 pension accounting
surplus increased at 31 July 2022
to £38.7 million from £19.3 million
at 31 July 2021 due to increases
in interest rates and updated
demographic assumptions. We
have provisionally agreed with the
trustees to reduce the portion of
the asset portfolio allocated to
growth assets from 40% at 31 July
2021, with the balance likely to be
invested in investment grade credit
assets to help meet pension cash
flows or whose movement broadly
matches the value of pension
liabilities (UK government bonds).
Around 14% of total assets was
Kin + CartaBuilding a world that works better for everyone.Strategic Report Chief Financial Officer’s
review continued
Alternative performance
measures (“APMs”)
Our liquidity and balance sheet
position remains very strong. Taking
into account the effect of the
acquisitions completed in the year,
our balance sheet is de-geared (pro
forma net debt to adjusted EBITDA
of 0.01X at 31 July 2022). We benefit
from a low level of debt, limited
pension-related commitments,
reduced lease obligations, deferred
consideration on acquisitions
payable in cash of less than
£13 million at 31 July 2022, and
only modest claims on our future
cash flows beyond growth-related
investment.
We are also tracking ahead of
our previously stated ambition to
double organic net revenue within
four years. We now anticipate
achieving this in FY24 rather than
FY25. When coupled with selective
acquisitions, we continue to achieve
meaningful scale with double-digit
growth, improved cash generation,
better operational efficiencies and
expanding margins. Notwithstanding
the macroeconomic backdrop, the
Company is in excellent shape and
performing as expected.
Chris Kutsor
Chief Financial Officer and
Chief Operating Officer
54
a negligible level of net bank debt
at 31 July 2022, limited pension-
related commitments, reduced
finance lease obligations, deferred
consideration on acquisitions
payable in cash of less than
£13 million, and only modest current
claims on our future operating
cash flows beyond growth-related
investment in working capital.
Taking into account the effect of the
acquisitions completed in the year,
our pro forma leverage ratio (net
debt to adjusted EBITDA) was 0.01X
at 31 July 2022. We have substantial
undrawn capacity on our credit
facility and it is anticipated that this
will be used in part to fund further
acquisitions over the remaining
term of the facility. We have the
option to fund between 50% and
75% of deferred payments on
previous acquisitions with new
equity.
Summary
FY22 has been another year of
material progress for Kin + Carta.
From an operational perspective,
we completed three acquisitions,
the most significant being Melon
Group in Bulgaria, North Macedonia
and Kosovo. This, combined with
the organic development of offices
in both Greece and Colombia
substantially boosts our expertise,
capacity and margin enhancing
options as we look to scale the
business globally. We have also
demonstrated the ability to hire
and retain the best available talent
in what is a changing workplace
and we have enhanced our
Employee Value Proposition as well
as launching the Kin Accelerator
Programme in both Regions.
Our B Corp status and ongoing
commitment to responsible
business underpin these initiatives.
allocated to equities at 31 July 2022,
with the balance of the growth
portfolio invested in return seeking
credit, alternatives, property
and commodities. The Scheme
remains approximately fully hedged
against interest rate and long-term
inflation rate risk, and was in a
technical surplus of £5.4 million at
5 April 2022, the triennial valuation
date. The difference between the
accounting and technical measures
of the surplus relates principally to
the assumption on improvements in
future member mortality, where the
technical provisions incorporate an
additional level of prudence, as well
as differences in the discount rates
used for the liability.
As there is a surplus, statutory
deficit repair contributions are no
longer required by the Scheme,
but the Company has agreed
to pay £2.5 million of voluntary
contributions during the period
August 2022 until April 2025, in
addition to £0.4 million per annum
towards trustee expenses, in order
to accelerate the time to a state of
“low dependency” of the Scheme
upon Kin + Carta.
The very recent high volatility in
UK gilts had little effect on the
Scheme technical funding level
due to prudent levels of liquidity
and hedging. As at 30 September
2022, the Scheme could tolerate a
further increase in the UK gilt curve
up to approximately 3.2% before
exhausting its gilt collateral. The
increase in gilt yields has the effect
of reducing the Scheme solvency
deficit and therefore, if the increase
is sustained, reducing the cost of
eventual risk transfer.
Credit facility
We extended by the term of our
£85 million committed revolving
credit facility by one year with all
four lender banks in the period
and the facility is now committed
until September 2026. Our liquidity
position remains very strong, with
5555
The full year results include both
statutory and adjusted results.
Management believes that the
adjusted results reflect the
underlying performance of the
business, how the business is
managed on a day-to-day basis
and allow for a consistent and
meaningful comparison.
The APMs are aligned to our
strategy, are used to measure the
performance of our business and
are the basis for remuneration.
The adjusted results exclude the
items listed below as their inclusion
could distort the understanding of
the performance for the year and
the comparison with prior years.
Key adjustments for
adjusted operating
profit, profit before tax
and EPS
Adjusted operating profit is
calculated by adding back the
following costs: contingent
consideration required to be treated
as remuneration; amortisation of
acquired intangibles; acquisition
and integration costs; interest
income and costs related to
the Company’s Defined Benefit
Pension Scheme; impairment,
lease modification and empty
property costs; customer litigation;
redundancies and other charges;
and the fair value gain from deemed
sale on step acquisition. The tax
effects of these adjustments are
reflected in the adjusted tax charge.
The adjustments are detailed below:
1. Acquisition costs consist of
contingent consideration
required to be treated as
remuneration, and increases
in deferred consideration
– our acquisitions, where
deferred consideration arises,
are structured such that the
consideration is contingent
on continued employment
within the Group and the
level of financial performance
achieved post-completion.
Under IFRS 3 this is treated
as an expense and, therefore,
part of the statutory result.
Where the purchase price has
been determined and there
is a subsequent increase
or decrease arising from
the payment of deferred
consideration under IFRS 3 this
is required to be expensed.
We do not consider either of
these items to be part of the
underlying trading performance.
2. Amortisation of acquired
intangibles and impairments –
the amortisation and impairment
of assets acquired through
business combinations are
excluded from adjusted results.
These costs are acquisition
related and are not part of the
underlying trading performance
of the business.
3. Acquisition and integration costs
– costs of £1.5 million
(2021: £1.0 million) were incurred
as part of the acquisition and
integration of Datorium (the
legal entity that owns Octain, the
responsible artificial intelligence
platform), Loop Integration and
Melon Group and in respect
of other acquisition and
divestment-related activities in
the period.
4. Administrative expenses related
to St Ives Defined Benefit
Pension Scheme – the Scheme
was closed to new members in
2002 and ceased future accrual
in 2008. There are now only two
employees who are members of
the Scheme and still employed
by the Group. The costs of the
Scheme including administration
costs, past service costs related
to Guaranteed Minimum Pension
("GMP") and the pension finance
income are not considered to be
part of the ongoing performance
of the Group and they are
excluded from the performance
measures. As such they are
treated as adjusting items.
5. Impairment, lease modification
and empty property costs
- these are costs incurred
following a decision to vacate a
significant portion of the Group’s
leasehold property in Chicago
from September 2022 and to
exercise a break on the whole
lease in November 2026. The
charges and credits include:
a. An impairment charge on the
related right of use asset
b. Contractually unavoidable
future expenses relating
to the business rates and
maintenance charges of the
leasehold property
c. Credit associated with the
lease modification, which
reduced the lease liability
due to the decision to
exercise the break clause
6. Customer litigation - relates
to external legal advisor costs
in defence of a claim brought
by a former client. These costs
are considered one-off in
nature, and therefore have been
classified as adjusting.
7. Redundancies and other charges
- include staff severance across
the Group’s Regions, following
the change to a regional
structure, merger of the two
UK trading businesses and the
costs of simplifying the Group’s
legal structure through the
liquidation of a number of legal
entities.
8. Fair value gain from deemed
sale on step acquisition - The
acquisition of the remaining
50% of Loop Integration, where
in line with IFRS 3, this has been
accounted for as a disposal,
followed by a full acquisition.
The notional disposal of the
existing 50% gives rise to a step
up to fair value of the previously
held investment.
Kin + CartaBuilding a world that works better for everyone.Strategic Report Alternative performance
measures (“APMs”) continued
The analysis of adjusting items from continuing operations is set out below:
56
Contingent consideration required to be treated as remuneration
Amortisation of acquired intangibles
Acquisition and integration costs
Administrative expenses related to St Ives Defined Benefits Pension Scheme
Impairment, lease modification and empty property costs
Customer litigation
Redundancies and other charges
Fair value gain from deemed sale on step acquisition
Total Adjusting Items added back to the total operating profit
Pension finance credit
Total Adjusting Items added back to the total profit before tax
Tax related to Adjusting Items
Total Adjusting Items added back to the total profit after tax
Year to
31 July 2022
£‘000
Restated*
Year to
31 July 2021
£‘000
13,229
6,390
1,421
5,492
6,264
380
1,693
(1,621)
33,248
(340)
32,908
(3,603)
29,305
4,956
7,527
966
2,542
181
–
-
–
16,172
(21)
16,151
(1,738)
14,413
* Restated to classify Edit and Relish as discontinued operations. 2021 includes Edit, Relish, Incite, Hive and Pragma as discontinued operations.
The key APMs frequently used by the Group for continuing operations are:
Net revenue: The measure is defined as revenue less project-related costs as shown on the consolidated income
statement. Project-related costs comprise primarily of third-party pass-through expenses and direct costs
attributable to a project.
Revenue
Project-related costs
Net revenue
Year to
31 July 2022
£‘000
197,123
(6,846)
190,277
Year to
31 July 2021
£’000
137,321
(8,402)
128,919
Like-for-like net revenue at constant currency: The measure is defined as the net revenue from continuing
operations when comparing the current period to the prior period at constant currency rate of exchange excluding
the effects of acquisition.
Net revenue
Impact of acquisitions*
Effect of constant currency**
Like-for-like net revenue
Like-for-like net revenue increase %
Year to
31 July 2022
£‘000
190,277
(10,057)
(4,202)
176,018
37%
Year to
31 July 2021
£’000
128,919
-
-
128,919
* Where there is no comparable net revenue in the prior period, this amounts to an impact from acquisition. This comprises six months’ trading from Loop Integration (£5.0 million) three
months’ of Melon Group (£2.4 million) and removed five months’ of Cascade Data Labs trading (£2.7 million).
**The impact of retranslating FY22 net revenue at the FY21 average exchange rate.
Adjusted operating profit: This measure is defined as the operating profit or loss less adjusting items.
Total operating loss
Add back total Adjusting Items excluding pension finance charge and tax
Adjusted operating profit
Year to
31 July 2022
£‘000
(14,355)
33,248
18,893
Year to
31 July 2021
£’000
(3,904)
16,172
12,268
Like-for-like adjusted operating profit at constant currency: The measure is defined as the adjusted organic
operating profit from continuing operations when comparing the current period to the prior period at constant
currency rate of exchange, excluding the effects of acquisition or disposal.
Adjusted operating profit
Impact of acquisition in current period*
Effect of constant currency**
Like-for-like Adjusted operating profit
Like-for-like Adjusted operating profit increase %
Year to
31 July 2022
£‘000
18,893
(2,056)
(582)
16,255
33%
5757
Year to
31 July 2021
£’000
12,268
-
-
12,268
* The prior period has been adjusted to remove the impact of the FY22 acquisitions. The acquisition impact includes six months’ of Loop Integration trading and three months’ of Melon
Group trading. Additionally, five months’ of FY22 Cascade Data Labs was removed as there was no comparable revenue in FY21.
**The impact of retranslating FY22 net revenue at the FY21 average exchange rate.
Adjusted profit before tax: This measure is defined as the Group net profit or loss before tax from continuing
operations excluding adjusting items.
Statutory loss from operations
Add back total Adjusting Items before tax
Adjusted profit before tax
Year to
31 July 2022
£‘000
(15,852)
32,908
17,056
Year to
31 July 2021
£’000
(5,836)
16,151
10,315
Adjusted profit after tax: This measure is defined as the Group profit or loss after tax from continuing operations
excluding adjusting items.
Statutory loss after tax from continuing operations
Add back total Adjusting Items after tax
Adjusted profit after tax
Year to
31 July 2022
£‘000
(14,198)
29,305
15,107
Year to
31 July 2021
£’000
(6,273)
14,413
8,140
Adjusted basic earnings per share from continuing operations: This measure is defined as basic earnings per
share after adjusting items.
Adjusted profit after tax
Weighted number of shares (‘000)
Adjusted basic earnings per share (pence)
Year to
31 July 2022
£‘000
15,107
173,700
8.70
Year to
31 July 2021
£’000
8,140
169,985
4.79
Kin + CartaBuilding a world that works better for everyone.Strategic Report Alternative performance
measures (“APMs”) continued
Adjusted operating margin: This measure is defined as basic earnings per share after adjusting items.
58
Net revenue
Adjusted operating profit
Adjusted operating margin
Year to
31 July 2022
£‘000
190,277
18,893
9.9%
Year to
31 July 2021
£’000
128,919
12,268
9.5%
Adjusted EBITDA: This measure is calculated using the preceding 12 months’ results and is defined as the adjusted operating
profit or loss before depreciation, amortisation, finance expense and taxation. The covenant adjustment includes an adjustment
to present on a “frozen GAAP” pre-IFRS 16 basis.
The adjusted EBITDA for 2022 has been determined on the basis of continuing operations solely for the purpose of calculating
the ratio of bank net debt to EBITDA for bank covenant purposes.
Adjusted operating profit
Add: depreciation and amortisation
Less: amortisation of intangibles classified as Adjusting Items
Adjusted EBITDA
Covenant adjustment
Adjusted EBITDA for covenant purposes
Year to
31 July 2022
£‘000
Year to
31 July 2021
£’000
18,893
10,547
(6,390)
23,050
(1,817)
21,233
15,028*
13,192
(7,527)
20,693
(1,072)
18,496
*The 2021 Adjusted operating profit excludes Hive, Pragma and Incite as discontinued operations, but has not been restated.
Net debt: This measure is calculated as the total of loans and other borrowings excluding finance leases, less cash
and cash equivalents.
Loans
Cash and cash equivalents
Net debt
31 July 2022
£‘000
31 July 2021
£‘000
13,148
(12,609)
539
64,218
(44,971)
19,247
For the measurement of the bank covenants, cash, cash equivalents and borrowings denominated in currencies
other than GBP Sterling are translated at an average rate over the preceding 12 months rather than at the period end
spot rate used in the Consolidated Balance Sheet. Borrowings drawn under the US Paycheck Protection Program are
excluded from the calculation. The reconciliation between balance sheet net (cash)/debt and the covenant measure
is as follows:
5959
Net debt
Foreign exchange difference between spot rate and average rate
Deduct Paycheck Protection Program loan
Net debt for leverage covenant purposes
Year to
31 July 2022
£‘000
Year to
31 July 2021
£‘000
539
(353)
-
186
19,247
848
(1,853)
18,242
Net debt to adjusted EBITDA for bank covenant purposes: This measure is calculated by dividing net debt
for covenant purposes by adjusted EBITDA for covenant purposes. The adjusted EBITDA is based on the total of
continuing and those discontinued operations that were not divested at the balance sheet date.
Adjusted EBITDA for covenant purposes
Net debt for covenant purposes
Net debt to Adjusted EBITDA for covenant purposes
Year to
31 July 2022
£‘000
21,233
186
0.01
Year to
31 July 2021
£’000
18,496
18,242
0.99
Kin + CartaBuilding a world that works better for everyone.Strategic Report
A responsible business
An introduction to responsible business at Kin + Carta
Bringing our purpose to life
At Kin + Carta, we are striving to build a world that works better for everyone. This purpose means our commitment
to corporate social responsibility (which we refer to as "responsible business") is woven through Kin + Carta's
business and operations. We achieve this by considering our impact, positive or negative, our stakeholders and
implementing improvements on an ongoing basis across our business practices, policies, products and services.
60
This "A responsible business" section on pages 60 to 99 serves as our annual impact report, a key reporting commitment
of Kin + Carta as a certified B Corp. It demonstrates Kin + Carta’s progress on responsible business matters
quantitatively through KPIs and qualitatively through summarising key achievements and areas of focus in the year.
B Corp
During the year, Kin + Carta became the first company listed on the London Stock Exchange to be certified as
a B Corp, businesses that meet the highest standards of verified social and environmental performance, public
transparency, and legal accountability to balance profit and purpose. Two years ahead of our target, we achieved our
ambition to be one of the world’s leading publicly traded triple bottom line businesses (with a focus on people and
planet as well as profit).
We were delighted with this external recognition and validation of the progress we have made in the area of
responsible business, but view this as just a milestone on our continuing journey to improve and enhance our impact.
B Corp impact areas
As a B Corp, we recognise five key impact areas, being governance and four primary stakeholder groups:
our people, community, environment, and clients.
People
Community
Environment
Governance
Clients
Our Triple Bottom Line Initiative: giving consideration to people,
planet and profit
People
Planet
Profit
People
Community
Environment
Clients
Governance
Governance
S
t
r
a
t
e
g
i
c
R
e
p
o
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t
61
61
Our ambitions
Our responsible business strategy is to drive positive social and environmental change in everything we do,
from the solutions we deliver for clients to our employee experience and the impact we have in our local and
regional communities.
Kin + Carta’s key goals in this area are to be an internationally recognised best place to work, and to help our
clients save 1,000,000 metric tonnes of CO2 by FY27.
We seek to achieve these goals by organising our Responsibility Platform around IDEA, philanthropy and the
environment and setting short-term objectives and targets in these areas.
Our progress
Aug 2021
Development of new Climate
Strategy and Action Plan.
Sep 2021
Kin and Carta plc articles of association
amended to include an objective to have
a material positive impact on society
and the environment.
Oct 2021
B Corp certification of
Kin + Carta Europe.
Dec 2021
B Corp certification of Kin and
Carta plc (the first B Corp listed on
the London Stock Exchange).
Jan 2022
Ranked in the Human Rights Campaign
Foundation’s 2022 Corporate Equality Index
("CEI"), recognising corporate policies and
practices related to LGBTQ+ workplace equality.
Feb 2022
New charity partnerships
set up in the US and Latin
America.
Feb 2022
New ambitious long-term goal launched:
to help our clients save 1,000,000 metric
tonnes of CO2 by FY27.
Jun 2022
Awarded Microsoft Sustainability
Changemaker Partner of the Year.
Jul 2022
Scope 3 emissions measured
for the first time.
Kin + CartaBuilding a world that works better for everyone.
A responsible business
continued
Link to stakeholders
Responsible business KPIs
62
Introduced in 2021, our responsible business KPIs, associated with our People and Responsibility Platforms, help us
goal-set and measure progress in non-financial strategic areas of focus across the business.
Summary of our performance this year
We have achieved our target in six out of the eight measures. The two areas where we did not meet our target – mean
gender pay gap and equivalent % of net profit raised for charity – will receive increased focus in FY23. The tables on
pages 62 to 64 explain the movements in our metrics and highlight events impacting performance.
Employee net promoter score ("eNPS")1
Definition
Performance commentary
Our eNPS score has increased markedly in
FY22, from +21 to +32, with increases seen
across both Regions. As a result, we have
surpassed our target for the year of +25,
and are approaching our longer-term goal
of +35. While mindful of fluctuations in this
metric in line with economic cycles, we
are confident that we will continue to see
improvements in our eNPS as we grow and
provide further development opportunities
for our Kin.
eNPS is based on employees’
likelihood to recommend
Kin + Carta as an employer. We
believe employee engagement
is an indirect measurement
of both employee happiness
and business performance.
Measuring engagement
ensures that as the firm scales
globally and acquisitions
are integrated, we have a
consistent way to track the
overall wellbeing and collective
feeling of our employees.
Link to stakeholders
Percentages of employees promoted per annum1
Definition
Performance commentary
A metric for career progression,
which is an important part
of our responsibility as an
employer.
Almost a third of employees were
promoted during FY22. This exceeded our
target and is reflective of the progression
and development of our Kin. Further,
during a year of intense competition for
digital talent, promotion acted as a key
talent retention mechanism.
In FY23, we consider the promotion of
20% of our Kin to be an appropriate and
sustainable target.
Link to stakeholders
+32
FY22 Outcome
+25
FY22 Target
+21
FY21 Outcome
+35
FY23 Target
29%
FY22 Outcome
20%
FY22 Target
18%
FY21 Outcome
20%
FY23 Target
1 Continuing operations only. Continuing operations exclude the results of Incite Marketing Planning Limited, Incite New York LLC, Edit Agency Limited,
Relish Agency Limited, The Health Hive (US) LLC, The Health Hive Group Limited and subsidiaries, and Pragma Consulting Limited (note 8).
People
Communities
Environment
Client
Mean gender pay gap1
Definition
Performance commentary
An equality measure that
shows the difference in average
earnings between women
and men.
FY22 has seen a deterioration in our
gender pay gap of 4ppts, largely driven
by the need to recruit engineers quickly
to meet demand, which has affected the
gender demographic and fee scales of the
appropriate talent.
18%
FY22 Outcome
14%
FY22 Target
16%
FY23 Target
6363
14%
FY21 Outcome
Link to stakeholders
Percentage of employees identifying as Asian, Black, Latinx or other non-white1
Definition
Performance commentary
A measure to demonstrate
our commitment to diversity,
where we aim to have teams
that are representative of
the communities in which
they work.
We continue to progress our IDEA agenda,
with an increase in ethnic minority
representation across our workforce to
28% of the total in FY22.
Link to stakeholders
Equivalent % of net profit raised for charity1
Definition
Performance commentary
An indication of our
philanthropic contribution,
comprising cash donations,
funds raised in Company
initiatives and time volunteered
at charge-out rates.
Despite a 34% increase in total equivalent
charitable contributions to over £250,000,
we did not achieve our target 2% of net
PBT due to the significant increase in PBT
versus the prior year, shortfall in volunteer
time and cash donations compared to
the plan. We will look to work more closely
with our philanthropic partners in FY23 to
achieve our target.
Link to stakeholders
28%
FY22 Outcome
25%
FY22 Target
31%
FY23 Target
1.5%
FY22 Outcome
2.0%
FY22 Target
2.0%
FY23 Target
24%
FY21 Outcome
1.5%
FY21 Outcome
Kin + CartaBuilding a world that works better for everyone.Strategic Report
A responsible business
continued
Net number of jobs added per annum as a percentage of total1
Definition
Performance commentary
64
Providing new careers in
emerging areas of technology
is an important part of
making our communities
live and thrive. This measure
excludes job growth through
acquisitions.
We have continued to organically grow
our teams to provide employment
opportunities in each of our locations and
exceeded our target for the year.
Link to stakeholders
Carbon intensity1
Definition
Performance commentary
Tonnes of CO2 per £m revenue
– allows us to measure our
carbon footprint as we grow.
Link to stakeholders
In this first year of measuring and reporting
on Scope 3 emissions (specifically the Kin
+ Carta material categories of purchased
goods and services, and business travel) in
addition to Scope 1 and 2, we are pleased
that our carbon intensity is lower than
target, at 5.2 tonnes per £m revenue.
We will look to reduce our intensity as we
grow through new policies and discussions
with suppliers.
17%
FY22 Outcome
15%
FY22 Target
19%
FY23 Target
5.2
FY22 Outcome
10
FY22 Target
4
FY23 Target
33%
FY21 Outcome
0.9
FY21 Outcome2
Total revenue from positive impact projects1, 3
Definition
Performance commentary
Revenue from positive impact
projects or workstreams,
being those which have a
beneficial and measurable
social or environmental effect,
through the development
and implementation of a new
technological capability, service,
product, or infrastructure.
Positive impact revenue has grown
significantly in 2022, driven by projects in
the healthcare, energy, and the not-for-
profit sectors.
In FY23, we aim to maintain the proportion
of our revenue derived from positive
impact projects as our net revenue
continues to grow.
Link to stakeholders
£16.5m/9%
FY22 Outcome
£7.9m/6%
£7m
FY22 Target
FY21 Outcome
9%
FY23 Target
1 Continuing operations only. Continuing operations exclude the results of Incite Marketing Planning Limited, Incite New York LLC, Edit Agency Limited,
Relish Agency Limited, The Health Hive (US) LLC, The Health Hive Group Limited and subsidiaries, and Pragma Consulting Limited (note 8).
2 Excludes Scope 3.
3 Updated KPI to include percentage of net revenue earned from positive impact projects in addition to total cash amount.
Our people
Introduction
We value our people and recognise
that our success is generated by
the talent and experts in our teams.
As a result, we prioritise recruiting,
retaining and progressing the
best people across Kin + Carta.
Throughout the year, we have
continued to increase the number
of people working across our
service offerings, creating new
development opportunities and
enhancing their skills and experience
by collaborating with colleagues
across our many locations.
Onboarding process
The feeling of connection drives
deeper relationships between our
Kin, which help them feel supported,
confident and ready to perform their
role and job duties at Kin + Carta,
ultimately impacting our employee
experience, retention, client
relationships, and team morale.
Our current virtual onboarding
experience welcomes and
celebrates new Kin globally,
highlighting opportunities to learn,
connect and build confidence.
Results across 2022 demonstrate
that our new starters are both
engaged and content with the
experience, showing up to 80%
satisfaction.
In our new financial year, as we
continue to invest in our onboarding
experience, we will be adding
cohort communities to strengthen
our connections and sense of
belonging, enhance new hires’ self-
driven mindset with automated
services, and provide enhanced soft
skills training to help new Kin build
courage, curiosity, and confidence.
Employee experience
Across Kin + Carta, we make a significant investment in creating an
environment for our people that demonstrates our core values: connection,
compassion and courage. These values enable our people to strive in their
work and build strong client relationships, while also creating an environment
that fosters enjoyment and the support of our communities.
6565
We continue to clearly articulate and live our employee value proposition
("EVP") - the theme of which is Connecting Curious Minds. Our EVP is all
about providing Kin with:
• opportunities to learn;
•
tools to help them embrace new challenges;
• a global connective of experts who happily share their knowledge; and
• meaningful coaching and feedback to help them advance their career.
Purpose
& Culture
Professional
growth
Personal
wellbeing
Recognition
& Reward
1,766
Number of employees as at
31 July 20221
19.25%
Staff turnover for the year
ended 31 July 20221
1,739
27
Full time
Employees by contract type as at 31 July 20221
Part time
1 For these purposes, employee refers to an individual engaged under a contract of service
and, therefore, does not include our contingent workforce.
Kin + CartaBuilding a world that works better for everyone.Strategic Report
A responsible business
continued
66
Our EVP has four key building blocks
akin to Maslow’s hierarchy of needs.
The development and
implementation of our EVP is in line
with our long-term goal to become an
internationally recognised best place
to work. With our EVP framework
providing our guiding principles, we
continue to invest in core areas of
employee experience including:
Recognition and reward: a hygiene
factor with an important focus
on rewarding people fairly and
equitably, celebrating excellence,
and promoting learners, connectors
and teachers.
• Global pay equity programme.
•
•
Increasing the pool of employees
eligible for LTIP awards.
Introduced Moments that
Matter, a programme that
empowers our People Leaders
to recognise, acknowledge,
and memorialise important
events that happen within their
employees' lives.
• Launched several other new
and revamped recognition
programmes including birth
or adoption of a child, Kin in
mourning, and birthdays +
anniversaries.
• Employee assistance programme.
• Mindfulness sessions.
• Hosting a range of talks and
webinars with external experts
promoting positive mental
health, offering wellbeing tips
and resources.
Professional growth: how we
engineer learning and teaching
opportunities for our people.
• Junior talent accelerator
programmes.
• Enhancing learning paths for
more experienced people.
• Providing opportunities
for employees to work on
meaningful projects and on-the-
job coaching that allows them to
enhance and apply their skills.
• Encouraging completion
of partner certification
programmes.
• Lunch and learn sessions
to support the continued
development of cutting-edge
technical skills.
• Leadership development
in various forms including
coaching, our leadership
accelerator programme, and
unconscious bias training.
Personal wellbeing: recognising the
healing power of connections and
enabling wellbeing initiatives.
Purpose and culture:
• Empowering external
connections to build a world
that works better for everyone,
focusing on enabling people to
work on purposeful projects.
• We support communities of
purpose and practice, and we
strive to facilitate a borderless
organisation.
Employee experience
and culture highlights
• We launched our new global HRIS
("Human Resources Information
System"). This replaced our
previous disparate systems used
across Kin + Carta, providing
us with a single system for
numerous activities, giving more
power to our people and uniting
our processes.
• Our eNPS score saw significant
improvement in our recent
survey, with a positive increase
to a score now of +32. There
is still more to be done as we
continue to focus our efforts on
becoming recognised as a "Best
Place to Work."
• We launched a new wellbeing
support programme for our
people in Europe, partnering
with wellbeing professionals
to offer access to wellbeing
programmes, on-site wellbeing
management and on-demand
therapy and coaching.
Employee experience case study:
Kin + Carta Labs: Sustainability Challenge
Kin + Carta recently hosted a six-month
hackathon for its employees centred on solving
problems at the intersection of technology and
sustainability. The Sustainability Challenge resulted
in four digital products that covered challenges
of social, environmental, and economic forms of
sustainability with over 200 contributors.
The Sustainability Challenge provided a space for
Kin to explore new technologies, new roles, and new
ways of working, all in a value-centred way. The
four teams spanned globally across six offices and
were supported with a contextual readout about
sustainability challenges, recommended team
structures, and operational support to ensure that
they could explore the intersection of technology
and sustainability in fruitful, frictionless ways. Each
team was coached and given feedback, through the
application process until delivery.
IDEA – Inclusion, Diversity, Equity and Awareness
Our IDEA vision
At Kin + Carta, we exist to make the world work better for everyone through our commitment to Inclusion, Diversity,
Equity and Awareness. As part of our goal to become a true triple bottom line and socially responsible business, we
pledge to seek out diverse perspectives, celebrate differences and build a culture where everyone is empowered to
bring their authentic self to work. We believe in using our platform and resources to break down structural inequality.
We vow to be a force for good, both within Kin + Carta and throughout our local communities.
6767
Our IDEA guiding ambitions
We will know we have succeeded when:
• Our teams are as diverse as the population in the regions in which we operate.
• People are paid equitably for equal work.
• Employees feel they can bring their authentic selves to work.
•
IDEA is a sustainable and ingrained part of how we do business.
• We are IDEA leaders in the technology community.
Read our IDEA strategy: https://www.kinandcarta.com/en/idea/
Our IDEA in 2022
Strategic action objective
Progress in 2022
Our teams are as diverse
as the population in
the regions in which we
operate.
People are paid equitably
for equal work.
Employees feel as if they
can bring their authentic
selves to work.
IDEA is a sustainable and
ingrained part of how we
do business.
After reviewing and improving our hiring practices last year, we learned that we needed
to increase the diversity at the top of our recruiting funnel. As a result, we chose to invest
significantly in the enhancement of our employer branding so that more job seekers would
proactively seek out Kin + Carta providing a broader, more diverse pool of candidates.
We continue to run a full pay equity analysis every six months. In addition, for FY22, we began
Group-wide tracking and reporting of the rate and frequency of promotions for different
demographic groups including by legal gender (Group-wide) and also for ethnicity (US only).
The IDEA theme for the year was allyship and increasing active bystanders. To meet this
theme, we set up a monthly calendar of events, targeted towards education and using your
voice to call out inequality when seen. Throughout the year, we have run over 50 successful
events, leading to 81% of our Kin stating that they can be their authentic selves at work.
As we’re growing Kin + Carta, we need to ensure all Kin have the tools to support each other
in creating a safe and inclusive environment. This was achieved with a focus on onboarding
new starters and reducing the barriers to entry to get involved in the IDEA team by easy sign-
up options.
We are IDEA leaders in the
technology community.
This year, we have been strengthening our relationship with the British Interactive Media
Association ("BIMA") – a non-profit organisation specifically targeted at supporting the next
generation of digital professionals. This has included:
•
•
•
Four of our Kin being named in the BIMA 100.
Taking part in a Digital Day where the team went into schools across the UK to encourage
young people to discover a career in digital.
Two of our Kin on the BIMA council, which has an objective to promote inclusiveness and
ensure representation.
Kin + CartaBuilding a world that works better for everyone.Strategic Report A responsible business
continued
Our affinity groups
Our affinity groups provide a space for all our Kin and their allies to connect, grow, and cultivate an inclusive culture.
The affinity groups provide support, resources, advocacy, external outreach to community not-for-profits, and
promote internal education.
68
The affinity groups, listed below, are empowered to make substantial changes to Kin + Carta as a whole by
influencing Company policy, compensation and delivery.
BAME
Black+ Kin
LGBTQIA+
Purpose: to provide support to
Kin + Carta employees from
black, Asian, mixed and other
minority ethnic groups.
Purpose: to identify, organise
and connect black technologists,
to build community, foster trust
and exchange ideas to equip all
its members with the requisite
knowledge to flourish at Kin +
Carta and beyond.
Purpose: to provide an open,
safe, inclusive space and
community committed to
a continuous process of
understanding and challenging
all forms of oppression, primarily
focusing on under-represented
orientations and expressions of
one’s sex, gender, and sexuality.
Mental Health
Parents' Group
Philanthropy
Purpose: to actively support
our Kin with their mental health
and wellbeing.
Purpose: to build a best-in-the-
world workplace for all parents
and caregivers.
Purpose: to support and
facilitate Company and
country-wide charity initiatives
and partners.
Universal
Access
Purpose: to smash physical,
digital, and communication
access and inclusion barriers for
all team members.
Women's
Group
Purpose: to provide a place
where women and allies can
chat about interesting topics,
share experiences and learn
from one another.
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
69
69
For these purposes:
• Employee refers to an individual
engaged under a contract of
service and, therefore, does
not include our contingent
workforce
• Senior manager refers to the
members of the Founder’s Circle
(other than Kin and Carta plc
Directors and the Company
Secretary), in accordance with
the Code. The Founder's Circle is
Kin + Carta's global and regional
leadership group
For information on ethnic diversity,
see the KPI “Percentage of
employees identifying as Asian,
Black, Latinx or other non-white” on
page 63.
For information on other key
demographic information related to
our people, see page 65.
The gender diversity of our employees
as at 31 July 2022
All employees
Senior management’s
direct reports
644
20
1,122
Female
Male
41
Female
Male
Senior managers
Board
4
2
15
Female
Male
5
Female
Male
For the period from 1 August 2022 to the date of
this report, being 12 October 2022
Board
3
4
Female
Male
Building a world that works better for everyone.
Kin + Carta
A responsible business
continued
IDEA initiatives
IDEA-related global policy
creations and updates in the year
We introduced the following
policies:
70
• Travel for Medical Care policy: If
Kin find themselves in a position
where non-routine medical
care is not available within a
reasonable distance of their
home, Kin + Carta will assist by
covering some of the related
travel costs.
• Transitioning at Work policy:
This policy provides a guide for
employees, People Leaders, and
team members of someone
transitioning gender and
provides guidance on matters
like building an action plan and
updating workplace records.
• Medical + Surgical Leave policy:
To complement the above, we
are expanding our sickness
absence policies to give Kin
up to 12 weeks' fully paid leave
for medical procedures and
surgeries.
• Bereavement policy: This forms
part of our Compassionate
Leave policy, which we have
updated to include support for
miscarriages and pregnancy
terminations for any reason.
Mental health team and
programme
We grew the mental health team to
over 35 qualified Mental Health First
Aiders based in the Europe region.
All of our Mental Health First Aiders
(“MHFA”) have been trained by
Mental Health First Aid England.
There is also a smaller task force
that focuses on the day-to-day
leadership of the MHFA team. The
task force dedicates time to create
helpful resources and promote
positive mental health within
Kin + Carta. They also run sessions
in conjunction with an external
provider, That Day, focused on
personal growth.
We have recently revamped our
mental health provision internally
and notable achievements include:
• Onboarding of new MHFAs.
• A revamped internal mental
health website where Kin can
access various resources to
support mental health.
•
Improved support mechanisms
for our Kin.
• Free anonymous therapy
sessions for any Kin within the
UK, Netherlands and Greece
– with plans to expand to our
other jurisdictions.
• Weekly external sessions hosted
by That Day around the topics of
mental health and wellbeing.
• Collaboration with the IDEA
team to align on their themes
when possible.
Equal opportunities
We are committed to providing
equal opportunities to all
employees and job applicants.
When recruiting and promoting
people, we give full and fair
consideration to all populations
based on their competencies,
strengths and potential. Grounded
in our IDEA and Anti-Harassment,
Discrimination and Bullying policies,
we have embedded practices
to embrace and encourage our
Kin's differences, such as age,
sex, disability, gender identity,
medical conditions, race, religion
and sexual orientation, to ensure
no one receives less favourable
treatment on the grounds of those
characteristics. For example, we
train interviewers in unconscious
bias and fair hiring practices and
we make reasonable adjustments
to support our employees' physical
and mental wellbeing needs.
Employees who become disabled
during their working life will
remain in employment wherever
possible, and will be assisted with
occupational rehabilitation and
retraining. Wherever practicable,
Kin + Carta will modify procedures
or equipment to maximise an
individual’s full capabilities.
Our Accident Severity Rate (“ASR”)
was 74 (2021: 26). Our ASR figures
include absences that have resulted
from work-related stress and was
within our target of less than 100.
Our Employee Experience and
Office Management teams continue
to support our Kin by providing
aforementioned Mental Health First
Aiders, workshops on resilience
and mindfulness, and mental health
surveys.
7171
Health and safety
management
Kin + Carta’s Health, Safety +
Environmental Management
(“HS+E”) governance and diligence
is managed through our HS+E
Management System, which is
based on the plan, do, check, act
model. This management system
comprises:
• HS+E framework policy and
supplementary policies on the
protection of people and the
environment.
• Register of our compliance
obligations.
• Environmental aspects,
impact risks and opportunities
assessment.
• Health and safety risk
assessments.
• Setting of objectives and targets.
• Operational controls, such as
building inspections, testing and
maintenance.
• Emergency planning
arrangements for fire and
first aid.
• HS+E performance reports.
•
Internal policy and procedure
auditing and evaluation of
compliance with our HS+E
obligations.
Accident incident rate and
accident severity rate
One work-related accident was
reported for the year, achieving
our Accident Incident Rate (“AIR”)
target of less than three. While the
accident ended our two-year zero
accident trend, it was anticipated
that a return to the office following
COVID-19 restrictions would result
in such adverse events.
Accident Incident Rate: <1
Target rate: ≤3
Accident Incident Rate (“AIR”) — All classes of work-related injury accident.
Headcount includes agency workers but excludes contractors and other third parties. AIR is
calculated as total accidents x100,000/total worked hours. Cases of stress are included in the
accident severity rate, but excluded from incident data.
Accident severity rate: 74
Target rate: <100
Accident Severity Rate (“ASR”) — Total lost hours due to any work-related injury, accident or
work-related stress case counted from the next scheduled shift or working day. Hours are as
recorded using a standard working day. Total worked hours includes hours worked by agency
workers but excludes contractors and other third parties. ASR is calculated as total lost hours
x100,000/total worked hours.
Kin + CartaBuilding a world that works better for everyone.Strategic Report A responsible business
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Communities
At Kin + Carta, we are committed
to helping our local communities
through inclusive recruitment,
ethical procurement, charitable
initiatives and other types of
engagement as we believe it
benefits our business, as well as the
local population and environment.
Across our regions we engage
in charitable projects in local
communities through individual
fundraising, volunteering efforts,
pro bono projects, and Company
donations. These contributions
have covered a broad range of
deserving causes and the provision
of time has ranged from practical
volunteering activities to strategic
advice for charities.
In addition, we engage with local
organisations in our recruitment
processes, to ensure broad
representation in our candidate
pools, and encourage recruitment
from under-represented
populations.
• Almost £100,000 of Company
cash donations to our regional
charity partners and other
charities.
• Over 1,000 hours of
volunteer time contributed to
philanthropic activities across
Kin + Carta.
• Grassroots initiatives in all of
our offices, which support local
charities through participation in
events and fundraising.
Supplier management
Confirming compliance with
our Supplier Code of Conduct
continues to be a key part of
the global procurement process,
ensuring that all new suppliers, and
those whose contracts are being
renewed, meet high standards of
ethical behaviour.
A core element of promotion of
responsible business with our
suppliers is maintaining well-
established practices, supported by
our policies:
See page 88 for information on our
anti-bribery and corruption policy
See page 90 for information on our
ethical and sustainable procurement
policy
See page 91 for information on our
modern slavery policy
See page 90 for information on our
supplier code of conduct
We have various initiatives to
support our communities, including:
• Regional targets for the
contribution of an equivalent
percentage of net profits to
charities through the donation
of voluntary or pro bono time,
money and funds raised in
Kin + Carta initiatives.
• Establishment of local and global
philanthropy committees to
facilitate effective community
and charitable involvement.
• Matching the total charitable
contribution made by the
Chairman forgoing a proportion
of his fees.
• Operating a Give As You Earn
scheme, introduced in 2020,
through which our people in
England and Scotland can
donate to charity directly from
payroll tax efficiently.
• Guidance to procurement
managers to buy locally where
possible.
During FY22, our philanthropy
activities included:
• Setting up regional charity
partnerships in the Americas:
• US: we partner with
Techbridge Girls, which is re-
engineering STEM education
for BIPOC girls.
• South America: we partner
with Por Igual Mas, which
promotes the recognition of
people with disabilities.
• Continuing our UK
charity partnership with
CodeYourFuture, which provides
coding training for refugees and
disadvantaged people.
• Support for Ukraine through
giving pro bono technical
support to a charity providing
psychological support for people
in Ukraine.
Case Study:
Providing digital support for
CodeYourFuture, our Europe
charity partner
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During the second half
of the year, several
members of our European
team worked closely
with our regional charity
partner, CodeYourFuture,
on a pro bono basis.
CodeYourFuture ("CYF")
provides coding training
for refugees and other
disadvantaged people.
Kin + Carta’s support involved
helping CYF software development
trainees learn about design, working
with the charity’s digital team to
improve the organisation’s website
and helping to develop a new user
experience insight ("UXI") programme.
Our initial involvement was to
provide user experience ("UX")
and design mentoring to software
development trainees across
the CYF programme, specifically
graduation projects, which ranged
from designing websites to apps. To
help make CYF’s coding programme
even more work-ready, Kin + Carta
instructed the trainees on designing
user-centric experiences and
applying user interface ("UI") design
principles.
In addition to this student
mentoring support, several of our
team also worked closely with the
charity’s Head of Digital to consider
how to improve the CYF website.
Using our expertise across UX, data
intelligence, and copywriting, we ran
a discovery project that provided
CYF with a heuristic analysis of its
website, followed by the provision of
wireframes and website copy.
Having made good progress on the
website, CYF asked us to focus on
its newly-launched UX/UI course,
a new and ambitious area for the
charity - and somewhere we could
leverage our skills to help deliver a
successful programme. The team
was proud to help CYF create the
UX/UI course’s structure, content,
and goals. To further ensure course
success, we also ran a mentoring
and consultation programme for the
UX/UI trainees, where we reviewed
and guided their projects. The
trainees needed an approachable
resource they could rely on when
needed, so we adopted an open-
door policy to provide assistance,
which proved vital.
We’re delighted that some trainees
recently graduated from the UX/
UI course and are now creating
portfolios as part of their career
guidance. Although their journeys
in UX/UI have only just started,
with the course CYF provided, the
graduates have some foundations
to build on, and will hopefully soon
start successful careers in digital.
Building a world that works better for everyone.
Kin + Carta
A responsible business
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Human rights
At Kin + Carta, we are committed to
equality, fair practices and human
rights. As a responsible business, we
must operate legally, ethically and
with integrity to deliver high-quality
equitable and sustainable service to
all our stakeholders.
We have several policies to help us
achieve this:
See page 92 for information on our
code of ethics
See page 92 for information on our
inclusion, diversity, equity and
awareness policy
See page 91 for information on our
modern slavery policy
See page 88 for information on our
speak up policy
Human rights in the
workplace
In recognition of the right to private
and family life, Kin + Carta has
a flexible working policy, driven
by the understanding that we
should all have the opportunity to
take ownership of our own work-
life balance to support personal
needs and aspirations. Everyone
is entitled to benefit from working
flexibly, as long as they are meeting
expectations with regards to
performance and operate within
the parameters of the policy. Line
managers monitor an employee’s
flexible hours to ensure that, inter
alia, it continues to fit both the
individual’s needs and the needs
of the team. Furthermore, our US
offices have an unlimited holiday
policy to support work-life balance
and mental wellbeing.
We also firmly believe that everyone
has the right to a standard of living
adequate for their health and
wellbeing, so we are committed
to fair and equitable pay. For our
UK-based businesses, this includes
compliance with the National
Living Wage.
Human Rights
Campaign Foundation’s
2022 Corporate
Equality Index
During the year, Kin + Carta
received a score of 90 out of 100
on the Human Rights Campaign
Foundation’s 2022 Corporate
Equality Index ("CEI"), the United
States’ foremost benchmarking
survey and report measuring
corporate policies and practices
related to LGBTQ+ workplace
equality. Kin + Carta joins the ranks
of 1,271 major US businesses that
were also ranked in the 2022 CEI.
See pages 65 to 71 for information on
practices related to our people and
inclusion, diversity, equity and awareness
("IDEA")
Our planet
Our environmental
framework
Our commitment to minimising
the environmental impact of
Kin + Carta’s operations continues
with the development of new
policies and frameworks, including a
Climate Strategy and Action Plan.
A summary of our environmental
management policies and
frameworks can be found at the end
of this Strategic Report:
See page 90 for information on our
climate strategy and action plan
See page 90 for information on our
ethical and sustainable procurement
policy
See page 91 for information on our
environmental and social risk policy for
client and partner engagements
See page 89 for information on our
health, safety and environment
framework
In addition, our reporting
in alignment with the
recommendations of the Task
Force on Climate-Related Financial
Disclosures can be found on pages
78 to 85.
No environmental incidents were
reported during the year.
How we are measuring,
and reducing carbon
emissions
We are measuring our Scope 1,
2 and 3 carbon emissions using
the methodology detailed in the
adjacent "energy and carbon
reporting" section.
In the year, measures to reduce
energy consumption included:
• Moving internal data centres to
sustainable cloud partners.
• Continuously running
optimisations for cloud size
efficiency.
• Transitioning towards hybrid
flexible working resulting in
reduced commuting.
Our ongoing work to reduce
consumption includes:
•
Improving corporate travel
management.
• Continuously reviewing
operational efficiencies in
offices, such as adjustments
in heating, ventilation and air
conditioning ("HVAC") settings.
• Procuring renewable energy
tariffs in territories where this is
technically possible and where
Kin + Carta directly controls
procurement.
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Energy and carbon
reporting
Kin + Carta’s carbon emissions for
2021/22 have been calculated using
the 2022 UK DEFRA greenhouse gas
emission factors (as specified by
the UK Environment Agency). These
emissions calculations have been
used to determine the tonnes of
carbon dioxide equivalent (tCO2e)
produced. Calculating the tCO2e
allows different greenhouse gases
to be compared on a like-for-like
basis relative to one unit of CO2.
Where available, energy data was
collected from invoices and meter
readings; where this data was not
available, the consumption was
estimated by an external carbon
consultancy. Estimates used the
pro-rata method and previous
year's data. Some overseas sites
have been estimated based on floor
area and average use for similar
buildings. Travel data was obtained
through expense claims and travel
management companies.
Our carbon reporting is aligned
with the Greenhouse Gas (“GHG”)
Protocol methodology. This protocol
establishes comprehensive global
standardised frameworks to
measure and manage emissions
from private sector operations,
value chains and mitigation
actions. The framework has been
in use since 2001, and forms a
recognised structured format to
calculate a carbon footprint. The
scope of emissions calculated
included; electricity, natural gas,
direct mileage, indirect mileage, and
upstream goods and services. No
mandatory emissions have been
excluded from the data.
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Carbon emissions and energy consumption 2022
Scope 1 emissions (tCO2e)
Scope 2 emissions (tCO2e)
Total Scope 1 and 2 emissions (tCO2e)
Total Scope 1 and 2 energy consumption (kWh)
UK and offshore
Global (excluding UK
and offshore)
6.71
51.10
57.81
61.12
72.44
133.55
298,889
1,555,667
% UK
9.9
41.4
30.2
16.1
Global Scope 3 emissions (tCO2e)
Energy consumption split (UK and overseas)
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kWh energy consumed
tCO2e emitted
Electricity
Natural
gas
Transport
Upstream
goods and
services
Total
Scope 1
Scope 2
Scope 3
2022
2021
2020
638,813
350,004
16,320 1,005,816 2,010,953
68 (7% )
124 (12%) 829 (81%)
632,949
41,340
5,754
1,915,113
193,858
172,986
N/A*
N/A*
680,043
2,281,957
9
78
148
490
N/A*
N/A*
* Not reported in previous years.
Total (of
Scopes
1+2)
Intensity
ratio (of
Scopes
1+2)
191
157
567
0.97
0.87
3.38
The intensity ratio has been calculated as: tCO2e produced per million pounds of turnover. The intensity ratio
excludes Scope 3 emissions.
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Case Study:
Our new commitment
to the planet
In 2022, the Board
considered and approved
a new strategic goal for
Kin + Carta:
To help our clients save
1,000,000
metric tonnes of CO2 by FY27.
This commitment is both an
acknowledgement of the climate
crisis and our understanding of the
significant role technology can play
in decarbonising our world. The IT
sector contributes 3.7% to global
CO2 emissions – a similar amount
to aviation1. Therefore, it is vitally
important to build digital products
in less carbon intensive ways.
Digital and data products also have
a special role to play in helping
the world track progress towards
global targets such as the UNSDGs,
which include carbon emission
reduction targets.
The target figure was chosen
because it will be difficult to achieve
but not impossible – the type of
challenge we thrive on accepting.
Making an impact
We can directly support our clients
to decarbonise by helping them
build a more efficient digital estate.
Internally, we are focusing on
developing training programmes
that educate our people on how to
practise their craft in more carbon
efficient ways.
We can also assist our clients
in building digital products and
experiences that empower
decarbonisation within their
businesses. Often this will require
new, innovative products that harness
the power of an organisation’s data,
drive insights from that data, and
highlight areas of carbon inefficiency.
Progress so far
We have just begun our journey
towards the new goal, we have
defined the scope of measurement
in the work we do and set yearly
and quarterly targets. A newly
appointed Global Sustainability
Manager has accountability for
operationalisation and reporting
to the Board on progress against
the goal. Measuring performance
against this target will include
standardised measurements of
digital estate efficiency gains as well
as carbon reduced by way of digital
experience. Additionally, members
of our delivery teams will participate
in a structured training programme
that educates them of the
importance of carbon reduction in
IT and will include current research
from organisations including the
Green Software Foundation.
1 Lean ICT: Towards Digital Sobriety –
The Shift Project (2019)
Building a world that works better for everyone.
A responsible business
continued
Task Force on Climate-Related Financial Disclosures
Reporting in alignment with the recommendations of the Task Force on Climate-Related
Financial Disclosures
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We report below on the four thematic areas set out in the Task Force on Climate-Related Financial Disclosures'
(“TCFD”) recommendations: governance, strategy, risk management, and metrics and targets. Kin + Carta has
complied with the requirements of LR 9.8.6R(8) by including climate-related financial disclosures consistent with the
TCFD recommendations and recommended disclosures.
Theme
Strategy
Theme
Governance
Disclose the organisation’s governance around climate-related risks and opportunities:
a. Describe the Board’s oversight of climate-related risks and opportunities.
b. Describe management’s role in assessing and managing climate-related risks
and opportunities.
The Kin + Carta Executive Directors have overall responsibility for climate-related risks and
opportunities, with oversight of key policies related to environmental and climate matters,
including our Climate Strategy and Action Plan ("CSAP"), and the Kin + Carta risk register.
During the year, climate-related matters were reported at two of seven Board meetings, one
relating to the CSAP and the other relating to performance against responsible business KPIs,
which includes sustainability matters. A key outcome of the Board's oversight during the year
was the Board’s approval of our new goal to help our clients save 1,000,000 metric tonnes
of CO2 by 2027. Management considered the operationalisation of the goal and appointed a
Global Sustainability Manager to lead the initiative (see page 77 for more information).
Management across the business is responsible for assessing and reporting on climate-
related risks, establishing and monitoring metrics and targets to support the achievement of
our climate-related goals, as well as identifying and implementing opportunities to work with
clients and partners on climate-related projects. Specifically:
• Our Climate Task Force was formed during the year to focus on climate-related matters,
including assessing, reviewing and reporting on business-wide climate-related risks and
opportunities. A summary of the task force's activities is disclosed on page 87.
• Our Environmental and Social Risk Review Board is responsible for reviewing any client
or partnership opportunity where an environmental or social risk in a project brief or
activities of a client or partner has been identified during opportunity qualification. A
summary of the review board's activities is disclosed on page 87.
The risk assessment process undertaken by management is outlined on page 80. Further,
within acquisition due diligence, management performs a high-level assessment of a potential
acquisition target's responsible business practices, using a set of targeted qualitative
questions covering a range of social and environmental impacts to guide the process. This
provides Kin + Carta with an understanding of the acquisition target's current practices,
along with insight into the management's awareness of and approach to responsible business
matters, including climate and sustainability-related practices. This, alongside consideration
of other key diligence matters, such as the target's financials and technical capabilities, forms
part of the acquisition opportunity qualification process and management's recommendation
to the Board of whether to proceed with an acquisition.
Executive Director and senior management’s remuneration is linked to performance against
climate change goals. Their reward packages include fixed pay, a bonus as a percentage
of fixed pay and eligibility to participate in the Long Term Incentive Plan ("LTIP"). 10% of the
2021/22 bonus is tied to performance against responsible business KPIs, which include carbon
intensity and total revenue from positive impact projects. 20% of the 2020/21 LTIP award is
tied to B Corp re-certification in 2024, coupled with an increase in weighted net corporate
score (demonstrating improvement in underlying ESG operations and metrics, including
environmental matters). See pages 142 to 172 for more information on the annual bonus
and LTIP.
Disclose the actual and potential impacts of climate-related risks and opportunities
on the organisation’s businesses, strategy and financial planning where such
information is material:
a. Describe the climate-related risks and opportunities the organisation has identified
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over the short, medium and long term.
b. Describe the impact of climate-related risks and opportunities on the organisation’s
businesses, strategy and financial planning.
c. Describe the resilience of the organisation’s strategy, taking into consideration
different climate-related scenarios, including a 2°C or lower scenario.
The context of our strategy
The Intergovernmental Panel on Climate Change ("IPCC") has concluded that the world
must reach net zero emissions by around 2050 to limit global warming to 1.5°C above pre-
industrial levels and avoid the worst consequences of climate change1.
To meet this urgent challenge, we recognise the key role digital technologies play in helping
to mitigate climate change. For example, artificial intelligence and the internet of things can
improve energy management in all sectors, increase energy efficiency and promote the
adoption of many low-emission technologies. We also acknowledge the need for strong
governance of digitalisation to avoid inadvertent negative trade-offs across sustainability
goals, for example, increases in electronic waste1.
It is in this context that we have developed our climate strategy and consider the
transitional and physical climate-related risks and opportunities for Kin + Carta.
Our climate strategy
At Kin + Carta, we are committed to play our part in helping to address climate change. Our
key initiatives are to:
• Support the transition to a low-carbon economy: During the year, we set a new goal to
help our clients save 1,000,000 metric tonnes of CO2 by 2027 (for further information,
see page 77).
• Reduce our environmental impact: We monitor our carbon footprint and hold ourselves
accountable to reducing our environmental impact through our carbon intensity ratio KPI
(for further information, see page 64) and our carbon neutral and net-zero greenhouse
gas ambitions, outlined in more detail on page 85.
Together, these are our “Carbon Reduction Initiatives.”
1
IPCC (2022). Summary for Policymakers. In: Climate Change 2022: Mitigation of Climate Change. Contribution of Working Group III to the Sixth
Assessment Report of the Intergovernmental Panel on Climate Change. P.R. Shukla, J. Skea, R. Slade, A. Al Khourdajie, R. van Diemen, D. McCollum, M.
Pathak, S. Some, P. Vyas, R. Fradera, M. Belkacemi, A. Hasija, G. Lisboa, S. Luz, J. Malley, (eds.). Cambridge University Press, Cambridge, UK and New
York, NY, USA. doi: 10.1017/9781009157926.001.
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Climate-related risks and opportunities over the short, medium and long term
We outline below a high-level summary of Kin + Carta’s material climate-related risks and opportunities over the
short, medium and long term, along with the potential impacts these could have. These risks and opportunities are
determined according to Kin + Carta's risk management model. This process includes identifying and assessing risk
events, and the potential impact and likelihood of these risks materialising on both an inherent and residual basis.
Only those risks and opportunities that could have a material impact on the business have been included below.
This was determined according to the rating assigned to each risk event, being a multiple of a) the likelihood of the
risk event occurring and b) the potential impact determined by a combination of the qualitative and/or quantitative
measurement. This assessment is informed by external data sources, such as the IPCC's reports on climate change,
and internal reference points including Kin + Carta's sustainability and subject-matter experts.
Timeframe key:
• Short term (S): 0 - 3 years
• Medium term (M): 3 - 10 years
• Long term (L): 10+ years
Material climate-related transition risks and their associated impacts
Description
Risks, opportunities and impacts
Mitigations
Market and
technology shift
Timeframe: S, M, L
• Client preferences for
sustainable products
may change demand for
Kin + Carta’s products
and services.
Reputation and
sentiment
Timeframe: S, M, L
• Socio-cultural and
behavioural changes
may occur in sentiment
toward sustainability,
resulting in stakeholder
activism and/or
changes in stakeholder
sentiment.
Risks
An inability to effectively capture the
opportunity for sustainable digital products
(e.g. due to the inability to upskill existing Kin
or recruit appropriately skilled talent to meet
the pace of demand) could result in a loss of
revenue and demand.
Opportunity
Systemic changes related to decarbonisation
may increase demand for Kin + Carta’s services
for solutions that address our clients’ climate
goals. Kin + Carta has appointed a Global
Sustainability Manager to lead the client-
focused environmental initiatives.
Risks
Misalignment of Kin + Carta’s broader
sustainability agenda to stakeholder sentiment,
and underachievement of that agenda, could
harm Kin + Carta’s reputation and result in,
for example, demand-side risk with clients not
engaging due to a failure to meet "know your
client" criteria. This would impact Kin + Carta’s
ability to generate revenue.
• We are investing in positive
impact services (see page
86 for more information).
• Our Carbon Reduction
Initiatives.
• Our Environmental and
Social Risk Review Board
(for more information, see
page 87).
• B Corp certification,
demonstrating third -party
verification of
Kin + Carta’s responsible
business practices in
areas including the
environment. This positions
us well to demonstrate
our responsible business
credentials to stakeholders
as sentiment changes.
For completeness, and to aid the understanding of the climate-related scenario planning disclosures on pages
83 and 84, we summarise below examples of additional risks and opportunities considered as part of the risk
assessment process, which were not considered to be material due to their low risk rating. We continue to monitor
their impact and likelihood to assess whether their materiality classification needs to change.
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Examples of other climate-related risks monitored by Kin + Carta
Legal, policy and regulatory
This climate-related transition risk contemplates:
• Carbon pricing such as carbon taxes and voluntary removal and offset costs, and programmes that encourage
changes in consumer behaviour.
• Enhanced climate governance through national or international regulations to provide overall direction, setting
targets, mainstreaming climate action across all policy domains and enhancing regulatory certainty.
Financial
This climate-related transition risk contemplates:
• Changing requirements for securing financial resources due to financiers' increased focus on ensuring financial
flows shift towards supporting net zero targets as well as systemic changes to financing and economic
structure (e.g. national green finance strategies).
• High inflation (e.g. due to businesses incurring additional costs associated with undertaking climate-related
mitigation activities and passing these on to consumers).
Physical environment
This climate-related physical risk contemplates:
• Extreme weather conditions occurring more frequently and more severely, e.g. floods, heatwaves, thunder/
tropical storms, wildfires, hail storms, extreme wind speeds, droughts, freezing conditions and winter
precipitation, that may impact our offices, local infrastructure (e.g. power) and displace our people, which could
lead to additional expenditure and/or cause business disruption and loss of customer service and revenue.
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How actual and potential climate-related risks and opportunities have impacted the business, strategy
and financial planning.
Business and strategy
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Our new medium-term goal to help our clients save 1,000,000 metric tonnes of CO2 by 2027 is the key area of
business and strategic planning regarding climate-related risks and opportunities. It seeks to address risks and
opportunities related to market and technology shifts through a focus on providing service offerings that help our
clients build a more efficient digital estate and reduce their carbon emissions by way of digital experience, while also
providing structured training opportunities for our delivery teams to upskill and educate them on carbon reduction
in IT. This goal, and our initial plans to operationalise it in our business, are described in more detail on page 77. In
addition, in 2022/23, we will review business continuity plans to address physical risks and conduct detailed planning
on how we will reduce our carbon footprint (including emissions reductions milestones towards our target of having
net zero emissions by 2027). The emissions reductions focus will be on our areas of significant (though still relatively
low level) emissions, including a focus on using renewable energy in our offices, review of our business travel policy,
and emissions by suppliers in the purchased goods and services category.
Financial planning and analysis
Kin + Carta considers actual and potential climate-related risks and opportunities in its financial planning through
considering their impacts on the viability of the business, the potential impairment of value of business assets and
the potential for contingent liabilities to arise. Currently, Kin + Carta considers that climate-related risk will not have
a material financial impact on these matters as summarised in the table below. Further, as part of our responsible
business commitments, we have defined targets related to carbon neutrality and the associated offsetting initiatives
are incorporated into the 2022/23 budget; again, these amounts are immaterial.
Examples of potential climate-related
risks considered in financial planning and
analysis
Financial viability
The Company may not be viable in the
medium term because of the effect of
climate-related transition risks.
Impairment of business assets
Assets owned by the business may
need to be impaired because of
climate-related matters.
Contingent cash outflows
Crystallisation of contingent liabilities
may lead to cash outflows because of
climate-related matters.
Assessment summary
As explained in the viability statement on pages 176 and 177, the viability
analysis includes a number of stress tests, which include scenarios that
may be impacted by climate-transition risk (e.g. a significant downturn
in revenue, which may arise from a market and technology shift or a
change in reputation and sentiment). As noted in the viability statement,
the results of the viability analysis show that the stress test scenarios
that include impacts arising from, inter alia, the material climate-change
transition risks are unlikely to threaten the viability of the business over
the period covered by the forecast.
The impact of climate-related matters on Kin + Carta's business assets
(e.g. physical assets, long-term assets and other principal trading assets)
was undertaken. It was concluded that Kin + Carta's business assets had
a low level of exposure to climate-related matters and it was therefore
not considered material to significant judgements and estimates.
Consideration was given to the Company's Legacy Defined Benefit
Pension Scheme (described in note 27), which is invested in a broad
range of assets, and the potential impacts on Kin + Carta should the
assets fail to perform due to climate-related risks. Based on current
regulations, the mitigating activities, which include the reduced
exposure to assets with higher climate-related risks, were considered to
reduce the risk of cash outflows because of climate-related matters to
an immaterial level.
Scenario planning
Scenario analysis is beneficial to both the Company and its wider stakeholders, including investors, as it enhances
the understanding of:
• The risks and opportunities to the Company in a transition to a low-carbon economy.
• The resilience of the Company’s business model and strategy to climate change.
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In our first year of climate-related scenario planning, we have used qualitative analysis to consider two climate-related
scenarios, outlined below. We have used a <2°C warming scenario (SSP 1-2.6) as it is aligned to the objectives of the
Paris Agreement. We have used a ~4°C warming scenario (SSP 5-8.5) as a potentially stressful but plausible scenario1 :
Scenario
Description
Intergovernmental Panel on
Climate Change SSP 1-2.6
Intergovernmental Panel on
Climate Change SSP 5-8.5
Very low GHG emissions with minimal challenges
to mitigation and adaptation. This scenario
assumes rapid policy, regulatory, technological
and market changes by 2030 to restrict
emissions to a level which limits global warming
to <2°C. Examples of the types of changes
include the application of carbon pricing
schemes to reduce emissions across various
sectors, increased climate governance to provide
an overall direction and to mainstream climate
action across policy domains, and an increasing
awareness within society on climate change
resulting in a change in stakeholder sentiment.
Very high GHG emissions with high challenges
to mitigation and low challenges to adaptation.
This scenario assumes limited policy or
regulatory support for emission reduction,
leading to a world with increasing physical
climate change impacts. It envisages a world
that places increasing faith in innovation to
produce rapid technological progress and
development2. The scenario leads to global
warming of 4°C, resulting in gradual, chronic
changes in temperature and precipitation
patterns, as well as more frequent and intense
extreme weather events.
Outcome
<2°C warming
~4°C warming
Risks
The greatest risks associated with this scenario
are transitional. Specifically, macroeconomic
financial risk as extensive global climate
change mitigation efforts are projected to
increase expenditure (e.g. carbon pricing and/
or investment in sustainable initiatives) across
the wider economy, resulting in inflation. This
could increase our cost base through the inflation
impacts on salaries and other operating costs.
Further risks of this scenario include:
• The rapid pace of market and technology
shifts to provide low-carbon or net-zero
carbon digital solutions, posing a risk if
Kin + Carta cannot effectively capture the
opportunity.
• Reputation and sentiment, with impact
projected across all key stakeholder groups
and the strongest of which forecast to
be associated with changes in investor
requirements.
The greatest risks associated with this
scenario are physical. The unprecedented
extreme weather conditions would have
serious impacts on human systems,
ecosystems and associated services. The
severe disruptions, damage and dislocation
of people envisaged in this scenario would
provide an extreme challenge to both
Kin + Carta’s business operations (posing
risk to revenue if our delivery is negatively
impacted) and those of our clients (posing
risk of bad debt if our clients are significantly
exposed to the negative effects of climate
change). Other risks are transitional and
include market and technology shifts due
to the increasing faith in innovation to
produce rapid technological progress and
development.
Risk analysis
time frame
2030
2030
1 Schellnhuber, H. J., Hare, W., Serdeczny, O., Adams, S., Coumou, D., Frieler, K., Martin, M., Otto, I. M., Perrette, M., & Robinson, A. (2012). Turn down the
heat: why a 4 C warmer world must be avoided. Worldbank. http://documents.worldbank.org/curated/en/865571468149107611/Turn-down-the-heat-
why-a-4-C-warmer-world-must-be-avoided.
2 O’Neill, B., Kriegler, E., Ebi, K., Kemp-Benedict, E., Riahi, K., Rothman, D., van Ruijven, B., van Vuuren, D., Birkmann, J., Kok, K., Levy, M., & Solecki, W. (2017).
The Roads Ahead: Narratives for Shared Socioeconomic Pathways describing World Futures in the 21st Century. Global Environmental Change, 42,
169–180.
Kin + CartaBuilding a world that works better for everyone.Strategic Report A responsible business
continued
Research was conducted to determine the impacts on transition and physical risks that could affect Kin + Carta as a
result of each climate scenario; the material risks summarised on page 80 and the other risks summarised on page 81
were used as an initial framework. Through interactions with key business leaders, including our Head of Responsible
Business, Head of Risk Management and Global Sustainability Manager, we considered the potential impacts of
the manifestations of those risks on Kin + Carta. Risks were disclosed in the scenario table if their risk score was
medium-high or above.
84
Resilience
Overall, the assessment through this scenario planning exercise suggests that Kin + Carta’s existing mitigations
(referenced alongside the material risks on page 80) manage some of the risks in the two scenarios. For example, a
commonality to both scenarios is the market and technology shift, driving increased innovation and technological
progress. Our current mitigating activity to support the transition to a low-carbon economy through our goal to help
our clients save 1,000,000 metric tonnes of CO2 by 2027 would provide a degree of protection in both scenarios. We
considered that Kin + Carta is better positioned to adapt to the <2°C warming scenario (SSP 1-2.6) due to our current
mitigations being most closely aligned to the transitional risks foreseen in this scenario, particularly our existing
actions to mitigate against legal, policy and regulatory risks and reputation and sentiment risks (e.g. our Carbon
Reduction Initiatives). The continued implementation of these mitigations, and appropriate adaptations to them as
global sustainability efforts evolve, requires ongoing investment in resource and expertise. The ~4°C warming scenario
(SSP 5-8.5) revealed higher disruption due to extreme physical environment challenges. In this scenario, there would
be the greatest need to rely upon robust business continuity plans and to diversify our geographic delivery locations
to reduce our risk exposure to localised extreme weather events. Our ongoing global expansion efforts reduce this
risk exposure.
Theme
Risk Management
Disclose how the organisation identifies, assesses, and manages climate-related risks:
a. Describe the organisation’s processes for identifying and assessing climate-
related risks.
b. Describe the organisation’s processes for managing climate-related risks.
c. Describe how processes for identifying, assessing, and managing climate-related
risks are integrated into the organisation’s overall risk management.
Kin + Carta has established a “Three Lines of Defence” risk management model to
identify, monitor and manage all risks, including climate-related risks (see pages 100 and
101 for more information). The first line of defence is the senior leadership team who are
responsible for day-to-day business operational supervision, and are required to review all
current and developing risks that could impact on the achievement of strategic objectives,
including ESG and climate-related risks. This process includes identifying and assessing
risk events, and the potential impact and likelihood of these risks materialising on both
an inherent and residual basis. This process is used to determine the significance of all
risks facing Kin + Carta, including climate-related risks, whereby each risk is assigned a
rating. This rating is a multiple of a) the likelihood of the risk event occurring and b) the
potential impact determined by a combination of the qualitative and/or quantitative
measurement. The analysis is informed by regular communication with our internal and
external stakeholders with consideration given to regulatory, reputational, and physical risks,
together with opportunities to improve our engagement with clients. Through this process,
Kin + Carta has identified climate-related risks, resulting in intense weather conditions and
natural disasters, as an emerging risk.
We also recognise the potential regulatory and reputational risks associated with the
transition to a low-carbon economy. Therefore, our Environmental and Social Risk Review
Board serves as a key part of the second line of defence and evaluates material ESG risks in
our client and partnership engagements, and corresponding mitigation activities.
The third line of defence is Kin + Carta’s Internal Assurance team, providing an independent
and objective view on the adequacy and effectiveness of the internal control environment.
Theme
Metrics and Targets
Disclose the metrics and targets used to assess and manage relevant climate-related
risks and opportunities where such information is material:
a. Disclose the metrics used by the organisation to assess climate-related risks and
opportunities in line with its strategy and risk management process.
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b. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (“GHG”)
emissions, and the related risks.
c. Describe the targets used by the organisation to manage climate-related risks and
opportunities.
The key metrics used to assess climate-related risks and opportunities and monitor the
progress of our Carbon Reduction Initiatives are tabled below, alongside associated targets
for each. This is our first year reporting on these metrics; in future years we will include prior
year comparators to allow for trend analysis.
Metric
GHG Emissions (Scope 1, 2, 3) (tCO2e)
Carbon intensity (tCO2e / £m revenue) (includes Scope 3 emissions;
excludes carbon offsets)
FY22 Outcome
1,021
5.2
Climate-related positive impact project revenue (£m / % of total
revenue)1
£4.6m / 2.4%
1 From FY23 onwards, we will report climate-related positive impact revenue as a % of total revenue.
FY23
Target
1,000
4
3%
We have set a Group-wide net-zero GHG emissions target to be achieved by the end of
2027, with an interim carbon neutral target to be achieved by the end of 2023. In relation
to our ambition to be carbon neutral by the end of 2023, we have included the estimated
cost to offset our Group-wide emissions in our FY23 budget. In relation to our net-zero
goal, our FY22 task was to measure accurately our Scope 1, 2 and 3 GHG emissions (which
are disclosed on page 76). Having achieved this, our next objective is to review the areas
which contribute significantly to our carbon footprint and form detailed plans on how
emissions in those areas can be reduced. This will be part of a broader plan setting out how
we can achieve net-zero GHG emissions and which will include the associated financial and
strategic impacts.
For more information on our Scope 1, 2, and 3 GHG emissions, see page 76.
For more information on our carbon intensity ratio, see page 64.
For information on our broader positive impact project revenue responsible business KPI,
which includes work for clients that has social benefits, see page 64.
Kin + CartaBuilding a world that works better for everyone.Strategic Report A responsible business
continued
86
Clients
Sustainable and
accessible services
The responsible business agenda
is now a focus for most businesses,
and will only become more
important with time as high levels
of accessibility and sustainability
become market requirements
rather than desired outcomes. As
a result, our continued emphasis
on providing services to our clients
which meet their responsible
business – as well as societal and
environmental – needs puts us
in a strong position to deliver on
this agenda, as well as providing
additional project opportunities for
Kin + Carta.
Across all of our service lines and
Regions, 2022 saw an increased
focus on the type and level of
responsible client service offerings
that we can provide, with a
continued use of the lenses of
diversity, inclusion, accessibility
and environmental sustainability.
These include accessible
research methods and balanced
representation, wider adoption of
inclusive design principles, reducing
bias in AI algorithms, reduced
energy use through migration to
cloud and improved operational
efficiency, and data-driven waste
reduction. In addition, the adoption
of our new medium-term goal to
help our clients save 1,000,000
metric tonnes of CO2 (as set out in
detail on page 77), brings additional
attention and intention to this
area of our business, in particular
through the introduction of a new
role, Global Sustainability Manager,
and we look forward to progressing
our service proposition as well as
client delivery success over the
coming years.
We strive to introduce these
elements of responsible business
into client conversations at the
earliest stage, with a view to
encouraging clients to help us
build digital products in the most
inclusive, ethical, accessible and
energy efficient ways. We are
working more and more with clients
across sectors and regions to
understand their needs in order
to provide the relevant, focused
products and services which deliver
on their own goals.
Positive impact
projects
We continue to track positive
impact projects (defined using
a bespoke methodology which
considers the sector, the project
scope, capabilities leveraged, and
the outcome intention) and the
revenue earned from them. We
saw increased revenue from these
positive social or environmental
impact projects over the past
year, from £7.9 million (6% of total
revenue) in 2021 to £16.5 million in
2022 (which represents 9% of total
revenue). The main sectors we work
in to deliver these types of projects
are healthcare, not-for-profit,
energy, and agricultural technology.
See pages 22 and 26 for examples
of our positive impact client
work with a healthcare company
(positive community impact) and
Canadian National Railways (positive
environmental impact).
In addition to our project initiatives,
a core element of our promotion
of responsible business with
our clients is maintaining well-
established practices, supported by
our policies:
See pages 88 to 92 for information
on our Anti-Bribery and Corruption
Policy, Code of Ethics, and
Environmental and Social Risk Policy
for Client and Partner Engagement.
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Governance
The Board is collectively responsible
for leading Kin + Carta, promoting its
long-term success, and generating
value for its stakeholders, including
shareholders and wider society. It is
the principal decision-making body
for all significant matters affecting
Kin + Carta, and it has implemented
a governance framework,
summarised on pages 122 to 124,
to establish clear expectations and
common understandings of the
roles, responsibility and authority
of the Board, its committees and
individual members.
In decision making, the Board
assesses shareholder and
stakeholder interests from the
perspective of the long-term
sustainable success of the Company.
This requires it to manage any
conflicts between short-term
interests and the long-term impacts
of its decisions, at all times having
regard to the Company’s purpose to
build a world that works better for
everyone. For further information,
see our Section 172 statement on
pages 93 to 99.
Articles of association
In September 2021, Kin + Carta’s
shareholders passed a special
resolution to amend its Articles
to include an objective to have a
material positive impact on society
and the environment.
The practical effect of the
amendment to the Articles is the
formalisation of the Company’s
pre-existing commitment to
responsible business culture and
practices by explicitly embedding
into the Articles a requirement that
Directors adopt a “triple bottom
line” approach to decision making,
seeking to balance considerations
around people, profit and planet.
It is also consistent with the
increasing focus on responsible
business practices and behaviours
by companies in the UK, and further
afield, through initiatives such as the
UK Green Finance Strategy and the
EU Sustainable Finance Action Plan.
Committees and
working groups
Across Kin + Carta we have
forums designated to support our
responsible business practices and
priorities. Examples include:
Climate Task Force
Formed in 2021 to focus on climate-
related matters including assessing,
reviewing and reporting on business-
wide climate-related risks and
opportunities.
During the year, it established the
responsibility assignment matrix to
allow reporting against the metrics
set out in the Climate Strategy
Action Plan ("CSAP"). The CSAP is
described on page 90.
Environmental and Social
Risk Review Board
Formed in 2021 to review any new
client or partnership opportunity
where an environmental or social risk
in a project brief or activities of a
client or partner has been identified
during opportunity qualification.
During the year, it received 11
referrals from Kin and convened
seven meetings to discuss
opportunities spanning various
industries from defence to gambling.
Informed by briefing papers
prepared by the Head of Responsible
Business with input from internal
subject-matter experts, the review
board authorised the progression
of the majority of opportunities,
while two were disqualified. Where
a client or partner worked in a
high risk sector, a key decision-
making factor was whether the
opportunity would materially reduce
that client or partner’s negative
social or environmental impact.
The associated Environmental and
Social Risk Policy for Client and
Partner Engagements is described
on page 91.
Responsible business governance highlights
• B Corp certification: Kin + Carta received B Corp
certification and was named a 2022 Best for the
World™ B Corp™ in recognition of its exceptional
positive impact on governance.
• Articles: Amended our articles of association
(“Articles”) to include an objective to have a material
positive impact on society and the environment.
• Global governance structure: Established our
global governance structure for our Responsibility
Platform, organised around IDEA, Philanthropy and
the Environment.
• FTSE4Good Index Series: In 2022, Kin and Carta
plc became a constituent of the FTSE4Good Index
Series. This follows an independent assessment
according to the FTSE4Good criteria. The
FTSE4Good Index Series is designed to measure
the performance of companies demonstrating
strong environmental, social and governance ("ESG")
practices.
Kin + CartaBuilding a world that works better for everyone.Strategic Report A responsible business
continued
Policies
We have a range of policies and codes that support our commitment to conducting business responsibly for
all of our stakeholders and apply consistent governance standards across Kin + Carta. For the purposes of the
Non-Financial Reporting Regulations, these include, but are not limited to:
88
Anti-bribery and corruption
Policy
Description
Anti-Bribery and
Corruption
Sets out standards in areas such
as the prohibition of facilitation
payments, political donations, and
minimum standards in relation to
charitable donations, and gifts and
entertainment.
Associated stakeholders
Policy
Description
Speak Up
(whistleblowing)
Outlines the procedures and
channels for our people to
confidentially raise any concerns
about suspected misconduct
in confidence without fear of
retaliation.
Associated stakeholders
Policy embedding, due diligence and
outcomes
Issued Group-wide with recipients required to
confirm they acknowledge and understand the
policy.
Senior management team is responsible for
implementing standards and enforcing them
throughout the Group. Furthermore, senior managers
respond to an internal controls questionnaire that
includes questions on engagements with politically
exposed people and client jurisdictions. This is
reviewed by the Internal Audit function on an
annual basis.
2022 annual review found all businesses within
Kin + Carta to be deemed low risk.
Policy embedding, due diligence and
outcomes
Issued Group-wide with recipients required to
confirm they acknowledge and understand the
policy.
During the year there were three allegations
of whistleblowing. Two instances related to
employment matters and one related to company
credit card irregularities. Thorough investigations of
the allegations were conducted, led by the Company
Secretary and Head of Internal Audit, and action was
taken accordingly.
Environmental, social and community matters
Policy
Charitable
Giving
Description
Sets out the framework through
which Kin + Carta donates time,
fundraising efforts, knowledge,
skills and money to charitable
organisations.
Associated stakeholders
Policy
Description
Health Safety
+ Environment
Framework
Defines the areas that are particularly
important to our business, and
explains the mechanisms we use to
meet our commitments to improve
performance. The policy statement
is supported by our Health, Safety
+ Environment Framework, which
outlines how Kin + Carta manages
health, safety and environmental
matters, including responsibilities
and arrangements.
Associated stakeholders
Policy embedding, due diligence and
outcomes
Due diligence undertaken on charity partnerships
that involve donations, fundraising or volunteering
over specified thresholds.
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Policy framework was followed in the selection of
regional charity partnerships for Kin + Carta US
(Techbridge Girls) and Kin + Carta Latin America
(Por Igual Mas) in 2022. Continued the relationship
between CodeYourFuture and Kin + Carta Europe,
which was established in 2021 following the
application of the policy framework (see page 73
for our case study on CodeYourFuture).
Policy embedding, due diligence and
outcomes
Compliance with our policy and legal obligations is
internally audited.
No environmental incidents were reported during the
year. For information on our accident incident rates
and accident severity rates, see page 71.
Link to stakeholders
People
Communities
Environment
Client
Suppliers
Kin + CartaBuilding a world that works better for everyone.Strategic Report
A responsible business
continued
Environmental, social and community matters
Policy
Description
Supplier Code of
Conduct
90
Sets high mandatory standards
and behaviours required from
our suppliers related to their
treatment of employees, health,
safety and environment, conduct
of business and ethical standards
of behaviour. Sets out supportive
desirable behaviours to encourage
improvements in practices (e.g.
supplier commitments to paying
the living wage, measurements of
carbon footprint and greenhouse
gas emissions, and commitments to
reduce or offset emissions).
Associated stakeholders
Policy embedding, due diligence
and outcomes
The Supplier Code of Conduct assessment is
embedded into our procurement process. Each new
supplier to Kin and Carta plc and existing supplier
that renewed business with Kin + Carta in 2022
completed the assessment and in the majority of
cases met our criteria.
Where any non-compliance with mandatory
requirements has been flagged, discussions were
had with the supplier to understand the reasons and
agree alternative, equal standards as appropriate.
Policy
Description
Climate Strategy
and Action Plan
("CSAP")
Sets out the framework through
which Kin + Carta approaches
governance, strategy, risk
management and metrics to
address climate-related risks and
opportunities.
Policy embedding, due diligence
and outcomes
Approved in September 2021, the CSAP includes
commitments for scheduled reporting on performance
against the key metrics and targets to the Board.
For information on our environmental metrics and
KPIs, see page 85.
Associated stakeholders
Policy embedding, due diligence
and outcomes
Policy has been communicated to all office
management and other relevant procurement
staff, who make the majority of purchases in the
categories referenced therein.
Policy
Ethical and
Sustainable
Procurement
Description
Promotes the purchase of goods
and services that minimise negative
or enhance positive impacts on
the environment and society while
meeting our business requirements.
Seeks to achieve benefits for both
the people in our supply chain
by minimising any risk of social
exploitation, and for the environment
by reducing resource usage and
considering optimum performance
efficiency wherever possible.
Associated stakeholders
Environmental, social and community matters
Policy
Description
Environmental and
Social Risk Policy for
Client and Partner
Engagements
Provides a decision-making
and assessment framework for
prospective client engagements
in sectors that are likely to have a
higher environmental and/or social
risk and negative impact.
Encourages meaningful
conversations with prospective
clients about their current and
intended plans to reduce any of their
negative environmental and social
impacts, and where Kin + Carta
may work with those clients on any
such plans.
Associated stakeholders
Human rights
Policy
Description
Modern Slavery
Sets our zero-tolerance approach
to any form of modern slavery
in recognition that slavery and
human trafficking is a violation of
fundamental human rights.
Annual Kin + Carta Statement on
Modern Slavery outlines the actions
taken to address the risks of modern
slavery and human trafficking in
our operations, supply chain, and
customer and client relationships.
Our Modern Slavery Statement is
available to view on our website
www.kinandcarta.com/en/modern-
slavery-act/.
Associated stakeholders
Policy embedding, due diligence
and outcomes
Policy and process revised and improved during
2022 following employee feedback.
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Assessments undertaken during the opportunity
qualification process.
Declined a small number of client opportunities
that did not comply with the risk criteria as set out
in the policy.
Policy embedding, due diligence
and outcomes
Suppliers confirm via Supplier Code of Conduct
assessment that they comply with all applicable
human rights and equity laws, and laws prohibiting
modern slavery, and that they adhere to our Modern
Slavery policy.
Kin + Carta policies and values reinforce our
expectation that any concerns be highlighted
using the appropriate reporting channels, and
management are to act accordingly.
No incidents of Modern Slavery were reported or
identified during the year.
Kin + CartaBuilding a world that works better for everyone.Strategic Report
A responsible business
continued
Our people
Policy
Code of Ethics
92
Policy embedding, due diligence
and outcomes
Issued Group-wide, and we reinforce the
Kin + Carta values that support the code
through "setting the tone from the top" with our
Board and senior leadership team’s actions and
communications.
Description
Sets out the ethical values and
compliance framework for the
execution of our organisational
purposes and ensuring professional
integrity.
Kin + Carta is to adhere to the
code in all business endeavours
and community support initiatives
to ensure it operates legally,
ethically and in accordance with the
approved Kin + Carta operational
policies.
The code includes commitments
to safeguard the interests of our
stakeholders.
Associated stakeholders
Policy
Description
Inclusion, Diversity,
Equity and
Awareness ("IDEA")
Sets out Kin + Carta’s commitment
to fostering, cultivating and
preserving a culture of IDEA. Outlines
Kin + Carta’s diversity initiatives,
employees’ responsibility to treat
others with dignity and respect,
and exhibit conduct that reflects
inclusion. Identifies the processes
that employees should follow in the
event of a breach of the IDEA policy
and initiatives.
Associated stakeholders
Policy embedding, due diligence
and outcomes
IDEA principles integrated into day-to-day business,
for example in Group-wide recruitment and
retention practices.
IDEA metrics reported at both subsidiary and
Kin + Carta Board meetings.
See page 67 for information on our 2022 IDEA
progress.
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Section 172
Stakeholder
engagement
When providing direction to the
Company on strategic opportunities
and challenges, our Directors
must perform their duties under
the Companies Act and articles
of association. This includes
considering our impact on our key
stakeholders. Our ability to engage
and work constructively with these
stakeholders underpins the long-
term success and sustainability of
Kin + Carta.
A key purpose of this report is to
demonstrate the manner in which
these duties have been discharged,
with particular focus on the duty
to promote the long-term success
of the Company for the benefit of
its members as a whole, and the
Company’s additional objective to
have an overall material positive
impact, through its business
and operations, on society and
the environment, taking into
account the range of factors and
stakeholders identified in section
172 of the Companies Act, and the
Company’s articles of association.
In accordance with our articles of
association, stakeholder interests
are considered in the same manner
as shareholder interests when
making strategic decisions that will
affect the Company’s members.
Our approach
At Kin + Carta, our purpose is to
build a world that works better
for everyone. We are connective,
understanding that at the
intersections between experiences,
data and technology we can create
practices to win personally and
professionally. We take courage to
be adaptive, look ahead, learn and
stay curious, with a compassionate
and responsible mindset that
recognises our impact on the world,
and the need to come up with new
solutions in our local communities
and beyond.
These values support our purpose.
They reflect the importance our
Board places on considering our
stakeholders in key business
decisions and how they are
fundamental to our ability to drive
value creation over the longer term,
allowing us to be adaptive and
seek responsible ways to improve
and grow.
Set out overleaf is an overview
of how our Directors satisfy
their duties and how we live
our values for each of our key
stakeholder groups: our clients,
our communities, our environment,
our partners, our people, our
shareholders and our suppliers.
We set out the interests of each
stakeholder group, our tailored
approach to engaging with them
and how this engagement has
shaped Board decision making
and discussions, along with an
overview of how we have promoted
responsible business with each
stakeholder. Further information
can also be found throughout
the Strategic Report and in our
summary of the 2022 key focuses
of the Board set out in the
Governance Report.
Kin + CartaBuilding a world that works better for everyone.Strategic Report
A responsible business
continued
Stakeholder
Why do they matter?
What are their key priorities?
How do we engage?
What were the key impacts?
Our clients
94
For our business to prosper and have a
long-term sustainable future, it is essential
that we provide products and services
that meet the needs of our clients and the
market.
Our clients seek a holistic service offering,
supported by deep technical knowledge
delivered at competitive rates, developing
long-term partnerships, building their brand
and performance, credibility and trust and
sustainable and ethical business practices
(including anti-bribery and corruption,
environmental responsibility, human rights,
and modern slavery matters).
Our community and environmental
priorities include environmentally
sustainable digital transformation, inclusive
recruitment, products and services, ethical
procurement and charitable initiatives.
Our
communities
and
environment
The local communities of our office
and home-working locations are the
ecosystems within which our current and
prospective people and their families, and
many of our clients, suppliers, partners and
shareholders live and work.
Our communities include the wider
environment. We must be intentional about
our impacts on the world around us, from
the code we write and the platforms we
build to the energy we use to get there.
We recognise our responsibility to bring
the strategies of sustainability and digital
transformation together to build and design
digital products and services that are
sustainable and energy efficient.
The Board approved acquisitions during the year to
satisfy client priorities, including:
• Melon Group, which expands Kin + Carta’s
9595
nearshore software development capacity, enabling
high value and lower cost delivery for Kin + Carta’s
global clients.
• Octain, which provides clients advanced insight,
predictions and recommendations governed
by socially responsible AI principles. Alongside
the December 2020 acquisition of data science
company Cascade Data Labs, it supports services
to our clients including quick and accurate
prediction of supply chain shortages and
measurement of customer retention, to aid data-
driven decision making.
Kin + Carta launched its five service lines with focused
business critical DX service offerings, delivered by 13
new practices, to provide a holistic service offering to
clients.
During the year, we developed inclusivity, accessibility
and sustainability strategies for all service lines.
The Board considered and approved our new
Responsibility Platform goal to help our clients save
1,000,000 metric tonnes of CO2 by FY27. Management
considered the operationalisation of the goal and
appointed a Global Sustainability Manager to lead the
initiative. For more information on this goal, see page 77.
In philanthropy, we established two new regional charity
partnerships, with Techbridge Girls in the US and Por
Igual Mas in Latin America, in order to provide more
focus to our community efforts.
Our Kin maintain close dialogues with our clients at all
levels of the organisation, from their Chief Executive
Officer to procurement teams to allow us to listen to
our clients, understand their needs and provide the
products and services they want.
At monthly subsidiary Board meetings, Kelly Manthey,
our Chief Executive Officer, and Chris Kutsor, our Chief
Financial Officer and Chief Operating Officer, receive
reports on matters related to key clients including
operational updates, the health of the relationship and
related opportunities and threats.
Briefings to the Board of Kin and Carta plc summarise
key client developments, keeping the Board abreast of
significant relationship matters and broader trends. The
Board also receives deep-dive presentations on key
client engagements several times a year.
We participated in the Vision 2045 leadership summit,
which featured some of the world’s most innovative
businesses working together to advance the United
Nations’ Sustainable Development Goals. We were
proud to have the opportunity to share our learnings
and gain insight from others.
We engage with our communities through the donation
of time, advice and money to charities. Our regional
philanthropy committees work with our charity partners
and other local organisations to identify and deliver
fundraising and pro bono initiatives which often support
local disadvantaged populations.
Following the achievement of our previous core
Responsibility Platform goal – to achieve B Corp
certification for Kin and Carta plc – management
proposed a new Responsibility Platform goal to help our
clients save 1,000,000 metric tonnes of CO2 by FY27.
This goal was proposed following leadership review of
strategic priorities and climate-related opportunities in
relation to Kin + Carta having a positive impact on the
planet and is consistent with our focus on sustainable
digital transformation.
Kin + CartaBuilding a world that works better for everyone.Strategic Report A responsible business
continued
Stakeholder
Why do they matter?
What are their key priorities?
How do we engage?
What were the key impacts?
Our partners
96
Our partners look to us for the depth of our
industry knowledge, technical expertise
and credentials, range of capabilities, ability
to solve challenges of sustainable digital
transformation, excellent service and our
meaningful relationships with our clients.
We partner with the world’s leading
technology providers, Google, Microsoft,
Amazon Web Services ("AWS") and their
ecosystem partners to assist in supporting
our shared enterprise clients. These
partnerships diversify our revenues, build
our capabilities and support our clients’
technology stacks. Our deep partnerships
extend across cloud providers, data
analytics tools, e-commerce platforms,
and artificial intelligence and machine
learning tools.
Our people
Our people are fundamental in offering our
clients a wealth of knowledge, creativity
and expertise to support their outcome-
focused needs. We value our people and
recognise our success is generated by the
talent and experts in our teams.
The primary needs of our people fall into
four categories:
• Recognition and reward, including global
pay equity and externally benchmarked
remuneration.
• Personal wellbeing, including access to
support services for staff.
• Professional growth, including training
and qualifications.
• Purpose and culture, including working
on purposeful projects and enabling
external connections to build a world
that works better for everyone.
Our Global Partner Development Managers maintain
close dialogue with our partners and jointly focus on
maintaining a balance across the four mechanisms
of channel activation: bringing opportunities from our
clients to partners, partners bringing opportunities to
us, going to market jointly to find clients together, and
working with joint partners to expand our reach and
relationships.
Kin + Carta won the US “Sustainability Changemaker”
Partner of the Year award in recognition of innovative
and unique services or solutions based on Microsoft
technologies that help customers solve challenges of
sustainable digital transformation. We won this award
for reasons including our support for Microsoft Cloud
for Sustainability and future pipeline projects that help
Microsoft clients realise their sustainability initiatives.
9797
We achieved new specialisation awards including:
• Advanced Specialization for Microsoft Azure.
• Google Partner Specializations in Google Partner
Advantage in Application Development and Data &
Analytics.
Kin + Carta’s employee value proposition was clearly
articulated, with a corresponding Kin Council dedicated
to listening to the voice of employees and making
changes, including clarifying and influencing the hybrid
working policy.
We increased the number of global affinity groups
at Kin + Carta to eight (see page 68 for further
information on our affinity groups).
Launched a new wellbeing support programme with
access to services including on-demand therapy and
coaching.
We engage in partner certification and specialisation
programmes to demonstrate our competency and
technical ability in our partners’ products and services.
Briefings to the Board summarise key partner
developments and KPIs, keeping the Board abreast of
significant relationship matters and broader trends.
Our Kin across all levels of the organisation have
multiple channels through which they can engage with
the Board, senior leadership and other colleagues,
including:
• Group and Regional Chief Executive Officer office
hours that allow any Kin to drop in for a video
conference conversation to discuss any topic of
their choosing.
• Half-yearly employee engagement ("eNPS") and
diversity and inclusion surveys.
• Kin Council dedicated to listening to the voice of
employees and making changes.
• Workforce Advisory Panel, with panel members
including Nigel Pocklington (Independent Non-
Executive Director), Kelly Manthey, Daniel Fattal
(Company Secretary), the Director of Global
Employee Experience Operations and the Head of
Responsible Business.
Reporting and feedback channels to the Board include:
• Regular updates on people matters and eNPS scores
and findings following half-yearly surveys.
• Reports and presentations from the Head of
Diversity and Inclusion on IDEA matters.
• Our Director of Global Employee Experience
Operations supporting the Remuneration
Committee to continue to strengthen the alignment
between global total reward strategy for our people
and remuneration for Executive Directors, and how
both deliver Company purpose and strategy.
Kin + CartaBuilding a world that works better for everyone.Strategic Report A responsible business
continued
Stakeholder
Why do they matter?
What are their key priorities?
How do we engage?
What were the key impacts?
Our
shareholders
98
Our shareholders are investors in, and
owners of, our business, providing the
capital we need to invest in and grow
Kin + Carta.
Our shareholders are interested in the
stable financial and ESG performance of
Kin + Carta and its growth prospects. They
consider how our governance arrangements
support the pursuit of our strategic
objectives, and how the implementation
of our strategy impacts people and the
planet, in addition to profit. They value
transparency in any communication
with them.
Our suppliers
Our suppliers provide goods, services and
expertise to Kin + Carta that support our
infrastructure, internal capabilities, agility
and, in turn, our growth.
Our suppliers have regard to several
factors when considering a business
relationship with Kin + Carta, including:
the success of our business, developing
long-term, fair business relationships,
credibility and trust, ethics (including anti-
bribery and corruption, human rights and
modern slavery), our responsible sourcing
requirements, and terms and conditions
(including payment terms).
Principal engagement mechanisms include:
To mitigate against macroeconomic factors, we:
• Meetings and calls with Directors (including John
• Expanded our nearshore software development
Kerr, Chair of the Board and Nomination Committee,
and Nigel Pocklington (Chair of the Remuneration
Committee).
•
Investor presentations.
• The AGM, which the Chairman, Executive Directors,
and Chairs of each Board committee attend
to facilitate engagement with a broad range of
shareholders.
• Annual Report.
• Stock Exchange announcements.
At Board meetings, investor relations updates are
provided to allow a clear, common understanding of
the views of our shareholders. Our Board also monitors
movements in the share register to maintain an
understanding of our investors’ profiles.
We are committed to building strong working
relationships with our suppliers, ensuring that together
we are aligned on quality, ethics, delivery, innovation,
risk and compliance. We actively engage with our
suppliers through various means to achieve this,
including: maintaining ongoing dialogue, scheduling
regular check-ins, performing retrospective reviews and
undertaking Supplier Code of Conduct assessments.
9999
capacity through acquiring Melon Group, enabling
margin-efficient, lower cost, high quality delivery
and intend to create a Global Business Service
centre at their headquarters in Bulgaria from
which certain Operations Platform services will be
performed.
•
Introduced higher pricing and more junior talent
(Kin Accelerator Programme) to mitigate market
salary inflation and macroeconomic cost pressures.
• Launched a partnership-aligned Managed Services
offering across both our Regions to increase resilient
and recurring revenue.
We rolled out a global procurement programme,
which incorporates a holistic review of each supplier
across commercial and financial considerations,
risk, data protection, information security and social
responsibility.
Kin + CartaBuilding a world that works better for everyone.Strategic Report Risk management
Our approach
Identifying and managing risks and uncertainties is central to achieving our strategic priorities and our long-term
success. Kin + Carta’s risk management framework is overseen by the Board and reviewed by the Audit Committee
at least once a year or when there are significant changes affecting Kin + Carta’s risk profile. It aims to ensure
consistency and acts as a primary tool for monitoring and reporting risks across Kin + Carta.
100
Kin + Carta has policies and procedures in place to ensure that risks and emerging threats that may impact the
business in the longer term are identified, evaluated and managed at the appropriate level within the organisation.
Our risk management framework
Accountability
Board and Audit Committee
The Board has overall responsibility for risk management, and it sets
the risk appetite it considers appropriate and acceptable to achieve
our strategic priorities.
The longer-term viability of the
Company has been assessed by
the Board over a three-year period
during the year. Details of this
review are on pages 176 and 177.
Whistleblowing procedures, aligned
with the Bribery Act 2010, are
embedded across Kin + Carta
and allow employees to report
suspected breaches of law or
regulations or other malpractice.
Kin + Carta has implemented an
Anti-Bribery and Corruption policy
which extends to all Kin + Carta
business dealings and transactions
in all countries in which it or its
businesses operate (for further
information, read about our Speak
Up and Anti-Bribery and Corruption
policies on page 88).
101101
Principal risk interdependencies
We continue to consider risks both individually and collectively in order to fully understand the potential impacts
to Kin + Carta. By analysing the interaction of multiple risks, we can identify those that have the potential to impact
or increase other risks and ensure these are weighted appropriately. The diagram below shows the principal risk
interdependencies.
Actions: first line
Day-to-day management control
and internal controls
Actions: second line
Functions that oversee and
specialise in risk management
Assurance
Independent assurance
Our platforms:
Our platform leaders, who are
responsible for developing and
maintaining risk methodology, also
have the ability to enforce and
align best practices, and the risk
management model across the
organisation.
Internal Audit and
Risk Management:
Our internal Assurance team
provides independent assurance
that risk management is working
effectively. It provides proactive
evaluation of controls proposed
by the management, and advises
on potential mitigating activities
and design of controls.
E
x
t
e
r
n
a
l
A
s
s
u
r
a
n
c
e
Legacy
Defined
Benefits
Pension
Scheme
Pandemic
shocks
Economy
and volatility
Financing
Growth
Information,
cyber
security and
systems
Data
protection
Scalability
Integration
The review of top-down principal
existing and emerging risks involves
the Board considering specific risk
matters at each Board meeting and
any significant matters arising from
the businesses’ monthly reviews
being highlighted to the Board.
The Board undertakes reviews
and discussions on emerging and
existing risks, as well as trends,
opportunities and challenges facing
the business. Risks are recorded
with a full analysis where warranted,
and risk owners are nominated who
have authority and responsibility for
assessing and managing these risks.
The Board assigns a risk tolerance
level appropriate for each of the
principal risks. They are defined as
Low, Cautious, Open and High.
Manage risks
During the risk evaluation process,
a risk owner is assigned to each
risk and they are accountable for
implementing necessary processes
and controls to manage the risk to
an acceptable level as set out by
the Board.
For each existing and emerging
risk reported to the Board, severe
but plausible scenarios are
contemplated to provide additional
insight into the potential threats.
This approach to risk management
ensures that we manage not only
near-term risk but also have better
risk management strategies in place
to allow Kin + Carta to achieve its
strategic goals in the long term.
Key:
Internal risk
External risk
Internal and external risk
Being a
responsible
business
Operational
resilence
Our people
Client
concentration
Laws and
regulataions
Emerging risks
We also face uncertainties where
an emerging risk may potentially
impact us in the future. We continue
to track the following global events
that we classify as top emerging
risks to our business and assess the
likelihood and impact of these risks
as new information emerges:
•
Impact of significant inflation
and evolving economic
uncertainties driven by
geopolitical events.
•
Invasion of Ukraine and unrest in
Kosovo.
• Potential usage of cyber activities
to support geopolitical agendas.
•
Increased regulatory action
on personal data international
transfers.
• COVID-19 and potential future
pandemic shocks that might
have an impact on Kin + Carta’s
operations.
• Climate-related risks resulting in
intense weather conditions and
natural disasters.
The Board is also mindful of the
potential impact of the pace of
change in the DX market, along
with the recent changes in senior
management, and has considered
this in its review of the principal risks.
Additionally, the Board continues to
focus on key areas that are closely
linked to the strategic priorities
including responsible business
matters, evolving our proposition
to meet and exceed our clients’
expectations and supporting
our people.
Our businesses:
Our Executive Directors and senior
leadership team identify risks,
and are responsible for day-
to-day operational supervision,
which includes the identification,
mitigation and management of risk.
They also have the responsibility
to identify emerging risks caused
by external or internal factors.
Identify risks
Risks pertinent to the businesses
are considered by the Executive
Directors during monthly
presentations by each of our
Regions. The presentations are a key
"bottom-up" mechanism through
which emerging risks, which may
present longer-term challenges, are
identified and existing principal risks
are discussed. The presentations
include an update on the regional
forecasts, pipeline, current market
conditions, strategic direction and
consideration to potential strengths,
weaknesses, opportunities and
threats facing the businesses. The
Executive Directors also evaluate
and determine which principal
existing and emerging risks warrant
further exploration and escalation
to the Board.
Kin + CartaBuilding a world that works better for everyone.Strategic Report
Risk management
continued
Principal risks
The table on pages 102 to 110 details Kin + Carta’s principal risks, key mitigating activities in place to address them
and their relevance to the strategic priorities set by the Board. The changes in the risk ratings from the Board’s
assessment in the prior year have also been highlighted.
102
1. Economy and volatility
Description
Challenging economic and political conditions may
inhibit growth and create uncertainty. This could
lead to volatility in earnings. It could also impact the
outcome of strategic priorities set by the Board.
Several shocks such as higher than expected inflation
worldwide, invasion of Ukraine, worse than expected
slowdown in China, coupled with issues arising from
political instability, have hit a world economy already
weakened by the pandemic.
While the business has long-term contracts with
clients, the level of spend is predominantly at the
client’s discretion rather than being derived from
guaranteed sales volumes.
A worsening of the global economic climate could
lead to an increase in our cost base, attrition in
employees and wellbeing of our people.
Mitigating activities
Diversification into markets that are capable of
delivering growth with an increasing number of
diverse companies.
Offering a highly relevant suite of digital transformation
service lines across areas of Strategy + Innovation,
Cloud + Platforms, Product + Experiences, Data + AI
and Managed Services to our clients, collaborating with
strategic partners where appropriate.
Secure more long-term client relationships and
contracts with a greater emphasis on recurring revenue.
2. Our people
Description
Attracting and retaining talent is a key priority for Kin
+ Carta as it continues to expand and invest in new
and innovative service lines and fulfil client demand.
Failure to attract and retain people due to the highly
competitive environment for top talent in local
markets would impact the ability of the business
to deliver the services sought by our clients and
support the growth of the business.
Mitigating activities
Strong emphasis on culture and responsibility, which
are part of our strategic priorities where initiatives
are focused on supporting a diverse, inclusive
and responsible business, with an exceptional
employee experience.
Continued focus on enhancing employee experience in
all relevant areas of our EVP framework (as detailed on
pages 65 and 66).
Succession planning for senior management.
Launching a new global HRIS ("Human Resources
Information System") providing us with a single system
for numerous activities, giving more power to our people
and uniting our processes.
Tracking of eNPS scores and continued efforts on
becoming recognised as a "best place to work".
Launching wellbeing support programmes.
Integrating our Kin from newly acquired businesses
onto common platforms and cohort communities to
help them feel supported and part of Kin + Carta.
Continue to invest in nearshore and offshore expansion
to limit the impact on Kin + Carta’s margin and an
ongoing review of Kin + Carta’s cost base.
Trend
Increase our global footprint which will give us the
flexibility to take advantage of favourable local
economic climate.
Trend
Trend:
Increase
Decrease
No change
3. Growth
Description
Growth is core to Kin + Carta’s long-term
strategy. This includes organic growth driven by
strategic initiatives and inorganic growth driven
by acquisitions.
Growth channels may be underinvested or not
pursued in the right locations or sectors with the
right service offering and may therefore fail to
deliver growth.
Failure to adhere to compliance related to newly
introduced service offerings.
Mitigating activities
Monitoring three distinct but complementary growth
channels which focus on:
a. Existing enterprise client base
b. New business channel
c. Partnerships channel
These channels are underpinned by four growth
levers; Services, Partners, Sectors and Territories (see
page 30 for further information on our growth model).
Investment in our people, bringing new service lines
to market and targeting new locations.
Linking growth targets to incentives for the majority
of our people within the business.
Targeting clients from new geographic markets through
the acquisition of businesses with similar ethos to Kin
+ Carta, while our M&A Platform helps integrate the
newly acquired businesses to realise synergies.
103103
4. Client concentration
Description
Kin + Carta holds relationships with a number of key
clients and is a strategic partner to these clients.
Should Kin + Carta lose several of its largest key
clients in a short time period, this could have a
significant impact on its revenue, profits and people.
Mitigating activities
Our largest clients have multiple, bespoke services
and solutions being delivered to different client
stakeholders, and usually with different budgets. We
encourage our clients to think strategically about
their future direction and differentiation and how,
together, we can make the world work better for their
customers. This approach also distinguishes Kin +
Carta’s offering from its competitors.
These services also typically have various statements
of work associated with them with varying lengths of
time and completion dates. We strive to achieve or
exceed service level agreements with clients.
There is continuous effort by our leaders in the
Growth Platform to diversify the range of clients
across its key operating territories and sectors.
Devising acquisition strategy that targets business
with a strong addressable client base and with
cross-selling opportunities.
Continuous monitoring of client KPIs such as net
revenue predictability, top 30 clients’ spend and
client longevity.
Our priorities are the US and expanding nearshore
delivery capabilities in Latin America and Europe.
Trend
Trend
Kin + CartaBuilding a world that works better for everyone.Strategic Report
Risk management
continued
104
Principal risks continued
5. Integration
Description
Following the recent acquisitions of Melon Group and
Loop Integration, failure to integrate these businesses
into Kin + Carta's operating model could manifest
in the form of temporary challenges as cultures are
merged and common practices are implemented.
This has led to an increase in the risk rating.
Mitigating activities
Stringent selection criteria for pursuing acquisitions that
fit within the Kin + Carta strategy and culture. A defined
structured plan and dedicated integration team for the
integration of new acquisitions.
Identifying and facilitating resource requirements to
manage the changes.
Our responsible business initiatives encourage greater
collaboration across Kin + Carta with a common goal,
while our employee experience programmes foster an
aligned culture with shared values across the business.
Kin + Carta continues to identify areas for assimilation
and integration to create a solid platform for growth
through a responsible business lens.
Trend
6. Scalability
Description
Achieving scalability is important in order to pursue
a high growth strategy in a profitable and sustainable
way. While included as a risk, achieving greater
scalability is also an opportunity for the business.
Scale requires investment in sales, systems and
tools, people and operations. This adds cost and
complexity in the near term, which is expected to
earn a payback with growth.
Digital transformation businesses may not have
sufficient scale within their sectors to secure
substantial customer contracts. Without sufficient
scale, our businesses may find it more challenging to
secure larger client contracts.
Mitigating activities
Investing in digitising and upgrading our systems and
processes under the Operations Platform to achieve
efficiencies and drive best practices and thus a
scalable offering.
Continued investment in our Services and M&A
Platforms, acquisition of high growth digital
transformation businesses and greater focus on
securing longer-term contracts and revenue from
partner-aligned managed services.
Trend
7. Information, cyber security and systems
Description
The inability to identify and contextually control access to critical data and platforms based upon device ownership
and device security health is the most significant threat to our business.
105105
Failure to adequately secure and control access to third-party devices used by our Kin as Kin + Carta scales
globally could lead to breach of stakeholder contractual agreements, in violation of data sovereignty, possible theft
of our intellectual property resulting in reputational and financial damage. Furthermore the limitations of access and
device control, especially as a digital transformation business, increasingly exposes Kin + Carta to the impact of
hacking and ransomware.
Visibility of tracking activities in respect of data handling and system usage on our, or third-party, platforms as well
as to adequately protect, prevent and respond to a cyber threat or unauthorised access to our systems and devices
is paramount to our business. Failure to actively manage and respond to these activities in a timely manner would
expose Kin + Carta to non-compliance with the applicable local data protection laws, reputational damage, fines,
compensation or damages, disruption to the business and/or the loss of information for our clients and our people.
Kin + Carta relies on multiple third-party platforms to communicate and deliver the services to our clients. A
disruption to the availability of multiple services at a point in time could have a significant impact on Kin + Carta’s
finances and reputation.
Evolving cyber threat landscape continues to generate vulnerability to all businesses globally with additional threats
to regions directly or indirectly affected by geopolitical events.
Mitigating activities
The CDS team is responsible for actively identifying risks, designing internal controls and implementing change
across all parts of the Company.
CDS has been focused upon maturing policy and people. These controls are effective for managing current
known risks. For evolving risks and stakeholder requirements Kin + Carta continue to assess and invest in digital
platforms to modernise and strengthen the IT infrastructure and to generate further return on investment such
as multi-factor authentication and single sign-on solutions.
The evolution of our digital ecosystem incorporates a degree of platform diversity to provide availability of data
and communication tools thereby reducing reliance and impact from a single vendor or system.
Accompanied with an independent cloud backup for our core platforms, the additional focus to utilise our client
environments reduces impact to project timelines due to unforeseen outages.
Trend
Kin + CartaBuilding a world that works better for everyone.Strategic Report
Risk management
continued
Principal risks continued
8. Data protection
Description
106
Regulatory changes
The evolution of privacy laws around the globe with previously unregulated territories now being regulated and
existing regulations reinforced and broadened to cover new technologies, processing methods and international
transfers. This includes increased activity of data privacy regulators within the EU, UK divergence from the
European GDPR, and further state level privacy legislation in the US.
This leads to an increased number of applicable data privacy laws within our scope, and, while many of these laws
share the same genesis, there are unique elements to all which increase the risk of infraction.
The partial funding of the Information Commissioner's Office ("ICO") by fines threatens its impartiality and
increases risk of fines for any business investigated.
The enhanced threat of data breaches is raised as Kin + Carta extends its search for talent and engagements into
new regions.
Technology changes
Acceptance of previously “new” technology now being in place as standard (e.g. biometric access) increases risk
of moving the business into regulated areas which increase the risk of accidental infraction and punishment.
Data
The loss or theft of critical and sensitive data such as personally identifiable information could have a significant
impact from a reputational, contractual, regulatory and financial standpoint. This, combined with the change in
working practices and behaviour, has significantly increased the risk profile of our business.
Mitigating activities
The Data Protection Officer is responsible for Group-wide compliance with data protection legislation, and putting
in place guidance, training and processes.
Our data protection framework is closely linked to our Connective Digital Services ("CDS") and Services Platform
with continuous efforts to ensure the data we process remains secure and confidential. The framework is reviewed
on an ongoing basis to ensure Kin + Carta has robust processes to adhere to local regulations.
Growth of the team to ensure more trained individuals are available to review and protect the business.
Increased legal support both internally and externally to assist with the assessment of new and changing
regulation and activities.
Onboarding training for new hires and employee training reinforce awareness and ensure proper processes
are followed.
Trend
9. Being a responsible business
10. Operational resilience
Description
Description
Risk of misalignment of expectations in respect
of our culture, values and ESG, together with our
commitment to the triple bottom line initiatives
with our stakeholders, could result in lost business
opportunities, adverse effect on our share price and
failure to attract and retain the necessary talent.
Mitigating activities
Alignment throughout the business to demonstrate
that Kin + Carta’s purpose is to build a world that
works better for everyone.
People and Responsibility Platforms that span across
Kin + Carta, covering employee experience, B Corp
and IDEA initiatives, which are embedded into
Kin + Carta’s culture through grassroots participation
across the business.
Launching projects such as embedding inclusivity,
accessibility and sustainability within our service
line strategies and helping our clients with positive
impact projects seeks to ensure client work is
delivered through responsible methods.
Monitoring of the responsible business KPIs that
are set out in the "A responsible business" section
(pages 62 to 64).
Trend
107107
Services may not meet clients' expectations or an
unplanned event can impact our ability to deliver
services to the client.
Kin + Carta may not be able to stay ahead of the
technological advances in its three core domains:
technology, data and experience.
By providing new innovation solutions to our clients,
there is a risk of failure to deliver and embed new
capabilities within the business.
Mitigating activities
Focus on a highly relevant suite of digital
transformation service lines to complement the
talent of our people.
The Chief Strategy Officer along with leaders of
the Services Platform are focused on continuous
evolution of our service lines. In the current year,
we appointed Regional Service Line and Practice
Leaders in the Americas and Europe regions who are
senior experts in their areas and they continue to
enhance Kin + Carta’s delivery framework.
Acquisitions can complement or expand
Kin + Carta’s service offerings.
Focus on our three key areas of technology, data
and experience. Providing new innovative solutions
in support of our clients’ evolving technology needs.
Also we continue to work with clients to understand
their future requirements and viability of the new
technology to ensure we are investing in relevant
future capabilities.
We continue to invest in our people with an emphasis
on improving and developing our capability.
Trend
Kin + CartaBuilding a world that works better for everyone.Strategic Report
Risk management
continued
108
Principal risks continued
11. Laws and regulations
Description
Kin + Carta’s growth strategy includes geographic
expansion of operations in new territories in Latin
America and Europe. As a result, Kin + Carta is
subject to a range of local and international laws
and regulations.
Also, introducing new service lines, entering into
new sectors as well as retaining B Corp certification
requires Kin + Carta to adhere to additional
frameworks.
Failure to comply with or promptly respond to the
applicable laws and regulations could lead to fines,
penalties, restriction in trading activities and would
cause reputational and financial damage to Kin + Carta.
Mitigating activities
Kin + Carta maintains in-house Data Protection,
Finance, Corporate Governance, Connective Digital
Services ("CDS" or IT) and Legal functions who are
subject matter experts and help define policies
and processes in order to maintain governance and
compliance standards across Kin + Carta. External
consultants are also used to advise on local legal and
regulatory requirements.
Our global policies, as set out in the "A responsible
business section" (see pages 88 to 92), provide
guidance to our people on our (“positive impact
approach”) to behave ethically, comply with
all applicable local and international laws and
regulations, and adhere to the mandatory
requirements as defined in the policies at all times.
The M&A team, together with subject matter experts,
continue to develop a framework of processes when
moving into a new geographic area working with local
consultants when required.
Trend
12. Pandemic shocks
Description
As a result of the COVID-19 pandemic, Kin + Carta
has adopted new ways of working including hybrid
working practices for our Kin, and the way we deliver
services to our clients.
Should a new virus or a vaccine resistant-virus
emerge then the risk including revenue loss and
cyber and data security might increase.
Mitigating activities
Our agile, digital ways of working enable Kin + Carta
to adapt quickly to change.
Activation of cost management programmes across
the business.
Regular dialogue with employees and wellbeing
initiatives with new hybrid working practices.
New business targets are focused on industries
that are likely to be less negatively impacted
by pandemics.
Utilising pandemic-specific government schemes,
if required.
Kin + Carta continues to adapt its business
continuity plans to respond to future shocks.
In general the COVID-19 pandemic has accelerated
the growth of the digital transformation market and
Kin + Carta has been well placed to take advantage
of this opportunity.
Trend
13. Legacy Defined Benefit Pension Scheme
Description
The Scheme surplus/deficit is impacted by changes in Scheme asset values, and by changes in other key financial
assumptions – most significantly the expected inflation rate and the discount rate derived from UK Government gilt
yields, as well as changes in demographic assumptions, such as expected mortality, rates of pension commutation
and transfers of members out of the Scheme. The 2022 triennial technical valuation showed a surplus of £5.6 million
as at 5 April 2022. A return to a technical deficit could lead to a resumption of the need for deficit repair in cash
contributions by the Company to the Scheme.
109109
The Scheme deploys a liability driven investment strategy which includes the use of derivative instruments linked to
UK interest rates. Continued high volatility in the market for UK public debt securities could cause liquidity constraints,
as the Scheme meets counterparty demands for collateral and margin calls on related interest rate derivative
instruments, which could lead to reductions in the levels of hedging practically achieved.
The strength of the sponsoring employer’s covenant in relation to the Scheme could be adversely impacted by the
shortfall of the consolidated net assets of the Group (£126 million excluding the pension accounting surplus, net of
related tax, at 31 July 2022) versus the Scheme’s solvency deficit, a measure of the deficit in an insolvency scenario
(£117 million at 5 April 2022 as per the 2022 valuation).
Mitigating activities
The Scheme was in a technical surplus at 5 April 2022 and is now fully hedged against interest and inflation risks.
Following the move into a technical surplus, the Company has agreed with the Trustees to increase the proportion of
Scheme assets invested in instruments that match the variation in the value of the Scheme liabilities or which match
expected cash flows, from 60% to 70% in order to reduce the volatility of the Scheme surplus. Although the Scheme
was in surplus as at 5 April 2022, the Company agreed to pay a further £3 million of voluntary contributions after
that date, in order to accelerate the point at which the Scheme reaches a state of low dependency on the Company
corresponding to full funding at a funding rate of gilts +0.5% by 2030.
The Scheme manages liquidity carefully, and was able to navigate the very high volatility seen in the UK gilt market
in September 2022 without any need to liquidate those Scheme assets which provide a Scheme hedging function in
order to meet margin calls on interest rate derivatives with hedging counterparties. The hedging strategies remained
intact in this high stress scenario which avoided excessive fluctuation in the Scheme funding level.
The solvency deficit has halved since the last triennial valuation, standing at £117 million at 5 April 2022 (£237 million
at 5 April 2019). This is also an estimate of the cost of Scheme "buyout", a full transfer of the Company’s obligations
to an insurer. New risk transfer solutions are emerging, most significantly pension "superfunds" which could allow a full
transfer of the Company’s obligations at a lower value than an insurer would require. It is likely that, if current trends
continue, a full risk transfer would become affordable in the next five to seven years.
The Scheme is fully hedged against interest and inflation risks. Also a significant proportion of its assets are invested in
matching assets in order to manage investment risk.
Regular engagement with the Trustee directors in discussions on Kin + Carta’s performance.
Work with an external advisor and follow regulatory compliance.
Trend
Kin + CartaBuilding a world that works better for everyone.Strategic Report
Risk management
continued
Principal risks continued
14. Financing
Description
110
Kin + Carta’s ability to trade may be compromised by
a lack of cash funds.
Ability to finance working capital and carry out
operations is fundamental to the business.
Ability to fund the remaining contingent consideration
in respect of recent acquisitions.
Inadequate financing to appropriately fund selective
acquisitions or reinvest in Growth, Services,
Operations, People and Responsibility Platforms.
Mitigating activities
Kin + Carta secured an extension of the Revolving
Credit Facility of £85 million until September 2026.
Should there be strain on Kin + Carta’s liquidity, there
are cost management programmes in place to limit
the impact.
The leadership team prioritises areas of investment
that align with our strategic priorities set by the Board.
Management undertakes the following activities to
monitor the liquidity of the business:
• Reviews to assess the headroom on liquidity and
banking covenants for potential acquisition targets.
• Conducts half-yearly "going concern" reviews and
longer-term viability assessments.
• Ongoing monitoring of Kin + Carta’s performance
against its banking covenants with a target of Net
Debt/EBITDA ratio below 2.0x.
• Monthly reviews of forecasts, working capital, cash
forecasts and headroom on banking covenants.
• Periodically reviews Kin + Carta’s financial KPIs
with its bankers.
Trend
This Strategic Report on pages 16 to 110 was approved
by the Board of Directors and signed on its behalf by:
Kelly Manthey
Chief Executive Officer
12 October 2022
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Governance
Contents
Governance
Board of Directors
Corporate governance report
Audit Committee report
Nomination Committee report
Directors’ remuneration report
Directors’ report
Statement of Directors’ responsibilities
in respect of the financial statements
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Building a world that works better for everyone.
Building a world that works better for everyone.
Board of Directors
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N
John Kerr
Chairman
Appointed to the Board
22 July 2019 as Non-Executive
Chairman Designate and
subsequently Chairman on
5 December 2019.
Career
John previously acted as Chief
Executive Officer of Deloitte
Consulting, leading the creation of
Deloitte Digital, the first dedicated
digital consulting business. He
grew the business organically and
by strategic acquisition. John was
also Managing Partner of Innovation
and Talent, Deloitte, where he
drove numerous societal initiatives,
including the provision of mentoring
to school pupils in disadvantaged
areas and the creation of the
BrightStart Apprenticeship
programme. He has extensive
experience of working with client
boards throughout his 40-year
career in professional services.
John holds a BA from the University
of Strathclyde and is a member
of the Institute of Chartered
Accountants of Scotland.
Relevant skills and
experience
John brings to the Board strong
leadership skills along with
considerable business and senior
board-level expertise. He has
extensive experience in building and
scaling consulting businesses, and
in helping with the development
of digital capabilities, having led
the creation of Deloitte Digital.
This enables John to contribute
wide-ranging global, strategic and
advisory knowledge and insight to
the Board, and to support
Kin + Carta on its growth journey.
John has gained valuable insight
and experience through holding
senior roles in Deloitte and through
his experience on other boards,
strengthening his ability to facilitate
Board discussions that consider
a wide range of stakeholders and
their interests in a balanced manner.
Other roles
John is Chairman of LC Financial
Holdings Limited and CMSPI
Limited. He also serves as a Trustee
of Plan International UK.
Other Directors who served during the period
Helen Stevenson, Senior Independent Director, stepped down from
the Board on 14 December 2021.
J Schwan, Chief Executive Officer, stepped down from the Board on
31 July 2022.
Committee membership
Chair of the committee
N Member of the Nomination Committee
A Member of the Audit Committee
R Member of the Remuneration Committee
N
Kelly Manthey
Chief Executive Officer
115115
Appointed to the Board
1 August 2022.
Career
Kelly was appointed Chief Executive
Officer on 1 August 2022.
She is a visionary leader who has
been at the forefront of digital
transformation for more than 25
years. She has a proven track record
in driving double-digit growth for
digital consulting businesses.
Kelly began her career as a software
developer at Accenture’s emerging
technologies lab, joining Solstice
(the digital product engineering
and innovation firm at the core of
our Americas business) as the first
recruit in 2006, and rising to be its
Chief Executive Officer in 2018.
Relevant skills and
experience
She has been central to
Kin + Carta’s strategy and growth
from the inception of the brand,
transitioning Solstice from a product
development start-up into an
enterprise digital transformation
consultancy. She led the business
through the cultural, structural, and
growth strategy changes needed for
the next stage of scale to compete,
grow and win.
Under Kelly’s leadership, Kin + Carta
Americas has been recognised as
Fast Company’s Best Workplaces for
Innovators, Consulting Magazine’s
Best Large Firms to Work For, and
Fortune Magazine’s Best Places
to Work.
Kelly has been recognised in The
Consulting Report’s Top 25 Women
Leaders in IT Services, Crain’s
Chicago Business Tech 50, and is
an active advocate for inclusion,
diversity, and raising the visibility of
women in the technology sector.
Other roles
Kelly also sits on the Board of
Directors for Skills for Chicagoland’s
Future.
Appointed to the Board
17 June 2019.
Career
Chris was appointed Chief
Financial Officer in June 2019, and
additionally Chief Operating Officer
on 1 August 2022. He has led finance
organisations spanning billion-dollar
operations, venture capital investing
and strategic sales functions. Prior
to joining Kin + Carta, Chris most
recently served as the Investor
Relations Officer of a global Fortune
500 technology firm. He holds an
MBA in Strategy and Finance from
The University of Chicago Booth
School of Business.
Relevant skills and
experience
Chris is a seasoned executive with
proven financial leadership in the
technology sector. He brings to
the Board broad financial expertise
and a strong history of managing
effective relationships with the
institutional investor community
and media.
Other roles
Chris serves as a Board Director to
First Light USA, LLC, a privately held
technology development company.
N
Chris Kutsor
Chief Financial Officer and
Chief Operating Officer
Kin + CartaBuilding a world that works better for everyone.Governance Board of Directors continued
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A N
David Bell
Independent Non-Executive
Director
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Maria Gordian
Independent Non-Executive
Director
Appointed to the Board
4 August 2018.
Career
David served as Chief Executive
Officer of two of the world’s largest
advertising marketing services
companies, NYSE-listed True North
and Interpublic Group. He was also
Chief Executive Officer of Bozell
Worldwide, which he helped grow
to a top-ten global agency. From
2006 to 2009, David was a senior
adviser to Google and has held
a similar position with AOL/Oath.
David was elected by his peers
into the Advertising Hall of Fame
in the USA in 2007 and, in 2013,
the Hall of Fame established the
David Bell Award, which is given
to one inductee who has best
demonstrated this level of service.
Appointed to the Board
1 November 2021.
Career
Maria is a highly experienced
professional services executive with
more than 25 years of management
consulting and business leadership
experience. She is currently a leader
in Bain & Company’s Diversity, Equity
and Inclusion (“DEI”) practice and
serves as head of its global DEI
sub-committee to the board.
Additionally, Maria is a partner in
Bain’s Healthcare practice, where
she advises clients on creating
growth strategies, identifying M&A
opportunities and leading geographic
expansion efforts across a range
of healthcare sectors, including
hospitals, pharmaceuticals, biotech
and medical device companies.
Prior to her time at Bain, Maria
worked at another global consulting
firm, where she was a partner and
leader in its Pharmaceutical and
Medical Product practice and helped
build the firm’s global Research &
Development group.
Maria’s previous experience also
includes the Hospital of the University
of Pennsylvania, where she was a
David was an independent director
at Time Inc. between 2014 and
2018 and has previously served on
numerous other US-listed company
boards, as well as many growth
stage companies in the marketing
and media technology sectors.
Relevant skills and
experience
David’s extensive experience
in digital media is an asset to
the Board, contributing to the
development and implementation
of its digital transformation
growth strategy. He also has deep
knowledge of the US market, which
is a key geography for the business.
Other roles
David is currently an Independent
Director of Creative Realities Inc..
Radiology Fellow and Robert Wood
Johnson Clinical Scholar, as well as
her training at Harvard Medical School
affiliated hospitals where she was a
Radiology Resident. Maria completed
her BA at Harvard University, before
achieving her MD at Tufts University
School of Medicine, and an MBA from
The Wharton School of the University
of Pennsylvania.
Relevant skills and
experience
Maria has extensive business
experience including executive
leadership at Bain, which, coupled
with her academic and clinical
background in medicine, makes her
a unique and rare executive with a
diverse perspective on how to scale
and enhance businesses across
the globe. Maria’s strong leadership
experience in DEI practice enhances
her contributions to matters
related to Kin + Carta’s People and
Responsibility Platforms.
Other roles
Maria is a partner in Bain & Company’s
Healthcare and DEI practices, and
the head of its global Diversity, Equity
and Inclusion sub-committee and is a
member of the Bain board.
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Michele Maher
Independent Non-Executive
Director
A N R
Nigel Pocklington
Independent Non-Executive
Director
117117
Appointed to the Board
15 May 2019.
Career
Michele most recently served as
Chief Financial Officer of Hogg
Robinson Group plc. She trained
with KPMG and held various
positions at technology solutions
company, Dell.
Michele is a Fellow of the Institute
of Chartered Accountants of Ireland
and holds an Executive MBA from
Cranfield.
Appointed to the Board
1 June 2016.
Career
Nigel is Chief Executive Officer
of Good Energy Group plc, one
of the UK’s first suppliers of
100% renewable electricity and
a leading player in digital energy
products and services. Prior to
joining Good Energy, he served
as Chief Commercial Officer of
Moneysupermarket.com Group
plc. He spent seven years in global
senior roles with Expedia Inc’s
Hotels.com brand. Early in his career,
Nigel spent a decade at Pearson plc,
including a period leading the digital
operations of the Financial Times.
Relevant skills and
experience
Nigel has strong, relevant and
current commercial experience
at a senior management level in a
Relevant skills and
experience
Michele is a chartered accountant
and provides the Board and the
Audit Committee with relevant
financial expertise, gained through
an established career in senior
finance and management roles
across a range of business sectors.
This comprehensive experience
makes her ideally suited to chair the
Audit Committee and to act as its
financial expert, a position she took
on in October 2019.
Other roles
Michele has no other appointments
to disclose.
variety of global digital businesses,
ranging from global e-commerce to
financial technology. He previously
acted as executive sponsor of
Moneysupermarket’s Employee
Resource Group focused on
diversity and inclusion, which
enhances the contribution he
makes as the Non-Executive
Director appointed to our Workforce
Advisory Panel. He currently serves
as Chair of the Remuneration
Committee. Nigel’s experience
gained from his membership of that
committee for over two years prior
to being its chair, combined with
his understanding of employee and
investor viewpoints, make him well
suited to chairing the Remuneration
Committee.
Other roles
Nigel is Chief Executive Officer of
Good Energy Group plc.
Committee membership
Chair of the committee
N Member of the Nomination Committee
A Member of the Audit Committee
R Member of the Remuneration Committee
Kin + CartaBuilding a world that works better for everyone.Governance Corporate governance report
Implementation of the Code
Compliance with the Code
As a company listed on the London Stock Exchange, Kin + Carta is required to explain how it has applied the
principles of the Code and complied with the Code’s provisions throughout the financial year ended 31 July 2022.
A copy of the Code is publicly available on the website of the Financial Reporting Council (“FRC”), www.frc.org.uk.
118
During the year, we have complied with the provisions of the Code in all respects, save for:
• Provision 12 related to the appointment of a Senior Independent Director. On 14 December 2021, Helen Stevenson,
Senior Independent Director, stepped down from the Board having served for nine years. Given the changes
to the composition of the Board described on pages 138 to 141, the Board considered the most appropriate
course of action to be to appoint a Senior Independent Director following those changes and subsequent annual
evaluation of the Board which took place in August 2022. Therefore, the provision related to the appointment of
a Senior Independent Director has not been satisfied for the period from 15 December 2021. A process to fill this
role is well underway and is expected to be concluded shortly. Since Helen’s resignation, both the Chairman and
Independent Non-Executive Director, Nigel Pocklington, have engaged with shareholders and each non-executive
Director has provided a sounding board for the Chairman as and when required.
• Provision 38 related to the alignment of the pension contribution rates for Executive Directors with those available
to the workforce. Throughout the year, the pension of the Chief Financial Officer was aligned to that offered to the
majority of employees (currently 5% of salary) whereas the pension of the Chief Executive Officer, J Schwan, was
15% and, therefore, not aligned. From 1 August 2022 to the date of this report, the Company has complied with
this provision as the pension of both the Chief Executive Officer, Kelly Manthey, and Chief Financial Officer, Chris
Kutsor, were aligned to that offered to the majority of employees.
The table below describes where commentary on how the principles of the Code have been applied can be found.
1. Board leadership and company purpose
The role of the Board
Purpose, values and culture
Resources and controls
Shareholder and stakeholder engagement
Workforce policies and practices
2. Division of responsibilities
Board composition
Division of responsibilities
Ensuring the Board functions effectively and efficiently
3. Composition, succession and evaluation
Appointments and succession planning
Skills, experience and knowledge
Evaluation
Diversity
4. Audit, risk and internal control
Independence and effectiveness of internal and external audit functions
Fair, balanced and understandable assessment
Risk management and internal controls
5. Remuneration
Designing remuneration policies and practices to support strategy and long-term success
Executive remuneration
Remuneration outcomes and independent judgement
Workforce engagement on remuneration
Page(s)
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40 to 43
100 to 110
60 to 99
88 to 92
Page(s)
121
123
128 and 129
Page(s)
141
121
129
140
Page(s)
135 to 137
133
100 to 110
Page(s)
147
142 to 172
158 to 172
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Governance at a glance
Highlights
• Kin + Carta received B Corp certification and
was named a 2022 Best for the World™
B Corp™ in recognition of its exceptional
positive impact on governance
• Amended the Company’s articles of association
to include specified wording committing to a
“triple bottom line” approach to business
• Kin + Carta became a constituent of the
FTSE4Good Index Series. This follows an
independent assessment according to the
FTSE4Good criteria. The FTSE4Good Index
Series is designed to measure the performance
of companies demonstrating strong,
environmental, social and governance (“ESG”)
practices
Deep-dive presentations to the
Board on key business areas
including:
• Data + AI service line
• Partnerships
Employee net promoter score
(“eNPS”)¹
+32
(2021: +21)
119119
Major Board decisions
• Approved the divestments of Edit, Incite
and Relish
• Approved the acquisitions of Melon Group,
Loop Integration and Octain
• Approved the appointments of Maria Gordian
as Non-Executive Director and Kelly Manthey
as Chief Executive Officer
• Conducted an external audit tender (led by
the Audit Committee) and approved the
appointment of KPMG as the Company’s new
external auditor commencing for the year
ending 31 July 2023
Governance enhancements
• Approved new Group Delegation of Authorities
• Established our global governance structure for
our Responsibility Platform, organised around
IDEA, Philanthropy and the Environment
• Single sign-on was implemented across core
IT systems to enhance cyber and information
security
1 Continuing operations only. Continuing operations exclude the results of Incite Marketing Planning Limited, Incite New York LLC, Edit Agency Limited,
Relish Agency Limited, The Health Hive (US) LLC, The Health Hive Group Limited and subsidiaries, and Pragma Consulting Limited (note 8).
Building a world that works better for everyone.
Kin + CartaGovernance Corporate governance report
continued
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Role of the Board
The Board is collectively responsible
for leading the Company, promoting
its long-term success, generating
value for shareholders and
contributing to wider society. As
such, it is the principal decision
making body for all significant
matters affecting the Group; its key
responsibilities are summarised on
page 123. In making these decisions,
the Board assesses shareholder
and stakeholder interests from
the perspective of the long-term
sustainable success of the Company.
This requires it to manage any
conflicts between short-term
interests and the long-term impacts
of its decisions, at all times having
regard to the Company’s purpose
to build a world that works better
for everyone. You can read more
about how the Board engages with
our employees, clients, suppliers,
partners and other stakeholders,
and the impact of this engagement
on decision making, in our section
172 statement and “A responsible
business” section on pages 60 to 99
of our Strategic Report.
During the year, John Kerr
(our Chairman), met with the
Non-Executive Directors individually,
facilitating open discussions on the
strategic direction of Kin + Carta
and performance of management
and individual Executive Directors
against agreed strategic priorities.
The Board’s membership
throughout the year and the
Directors’ attendance at scheduled
meetings of the Board is set out in
the table on page 128.
The Company’s articles of
association set out detailed
provisions for the appointment,
reappointment and retirement
of Directors. In accordance with
the Code, all of the Directors at
the date of this report will retire
at the forthcoming AGM and seek
re-election, with the exception of
Kelly Manthey, whose appointment
as Chief Executive Officer took
effect from 1 August 2022 and who
will, therefore, seek election at the
forthcoming AGM.
Board membership
The composition of the Board is key
to its effectiveness in successfully
directing Kin + Carta to achieve its
strategic priorities and in promoting
its long-term sustainable success.
The Board is satisfied that it has an
effective and appropriate balance
of diversity, experience, knowledge
and skills, and that each Director
makes a positive contribution to
discussions and decision making.
This is aided by clear expectations
and common understandings of the
roles, responsibility and authority
of the Board, its committees and
individual members. A summary
of the roles and responsibilities
of the Board and its committees,
Chairman, Chief Executive Officer,
Senior Independent Director and
Non-Executive Directors are set out
on pages 123 and 124.
The Board considers that,
throughout the year, each of the
Company’s Non-Executive Directors
was independent in their role and
free from any business or other
relationship that could materially
interfere with the exercise of
their judgement. In reaching this
opinion, the Board considered
the nature of the Non-Executive
Directors’ other appointments,
any potential conflicts of interest
they have identified and their
length of service. Their individual
circumstances were assessed
against those that are likely to
impair a Non-Executive Director’s
independence, as set out in
the Code.
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Board composition as at 31 July 2022
Board gender diversity
Board ethnicity
as at 31 July 2022
as at 31 July 2022
2
1
5
Female
Male
6
Ethnic minority
White
Chair and Non-Executive
Director tenure
as at 31 July 2022
Independence
as at 31 July 2022
Key skills and experience
as at 31 July 2022
1
1
3
0–3 years
3–6 years
6+ years
1
4
2
3
3
5
Chair – independent on
appointment
Executive Director
Non-Executive Director –
independent
Digital innovation and
technology
Finance, accounting and
investor relations
People skills
Board gender diversity for the period from 1 August 2022 to the date of this
report, being 12 October 2022
3
4
Female
Male
Building a world that works better for everyone.
Kin + Carta Corporate governance report
continued
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External board
appointments and
conflicts of interest
Each Director keeps the Chairman
and the Board informed of any
proposed external appointments
or other significant commitments
as they arise. These are monitored
to ensure that each Director
has sufficient time to meet their
responsibilities to the Company.
Each Director’s biography and
external appointments are set
out on pages 114 to 117. During
the year, there were no material
changes to the Directors’ external
appointments or other significant
commitments.
In accordance with the provisions
of section 175 of the Companies
Act, the Company has procedures
to deal with the situation where a
Director has a conflict of interest
and the Board regularly reviews
conflict authorisation. Directors
do not take part in discussions
on matters in which they have a
potential conflict, and they may
be requested to leave a meeting at
which a matter in which they may
be conflicted is to be discussed. No
conflicts of interest were identified
during the period.
Our governance
framework
To ensure it maintains an
appropriate level of oversight,
the Board delegates certain roles
and responsibilities to its three
committees: Audit, Nomination and
Remuneration. Membership of these
committees consists primarily of
our Non-Executive Directors and,
in some cases, the Chairman.
The Nomination Committee makes
recommendations for appointments
to the Board and its committees.
The activities of the committees
during the year are explained in
more detail on pages 130 to 172. The
minutes of each committee meeting
are circulated to all Directors. Each
committee’s terms of reference are
documented and agreed by the
Board; they are available to view
in the governance section of our
website: investors.kinandcarta.com.
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The Board
The Board’s key responsibilities include:
• establishing the purpose and values of
• promoting the highest standards of corporate
Kin + Carta
governance
• debating and agreeing the Group’s strategy,
long-term business objectives and risk appetite
• approving acquisitions, divestments and major
• ensuring the Group has the necessary resources,
processes, controls and culture in place to deliver
Group strategy and promote long-term growth
capital projects
• approving the Group’s annual budget, dividend
proposals and financial statements
Audit Committee
Key responsibilities include:
• monitoring the integrity
of the financial reporting
process, including reviewing
the appropriateness of any
judgements and estimates
taken in preparing the
financial statements
• monitoring and reviewing
the effectiveness of the
internal and external audit
functions
•
reviewing the effectiveness
of the risk management
systems and monitoring of
internal controls
Nomination
Committee
Key responsibilities include:
Remuneration
Committee
Key responsibilities include:
• evaluating the size,
• determining practices
and policy on executive
and senior management
remuneration that support
strategy and promote
Kin + Carta’s long-term
sustainable success
• aligning executive
remuneration, bonuses,
long-term incentive
arrangements and other
benefits to Kin + Carta’s
purpose and values, and the
successful delivery of the
Group’s long-term strategy,
having regard to workforce
remuneration
structure and composition
of the Board and its
committees, having regard
to the diversity, experience,
knowledge and skills of
Board members, and the
future challenges affecting
the business
•
reviewing the results of
the Board performance
evaluation process that
relate to the composition of
the Board
• considering length of
service of the Board as
a whole
• overseeing succession
planning
•
the identification and
nomination of candidates
to fill Board and committee
positions and recommending
the re-election of Directors
Building a world that works better for everyone.
Kin + Carta Board activity
The Chairman, with support from the Company Secretary, sets the Board agenda primarily focused on strategy and
growth, performance, our people, and accountability, and ensures that the Group’s key stakeholders are considered
throughout its discussions.
All Directors have full and timely access to the relevant information needed to enable them to properly discharge
their responsibilities and have unrestricted access to other executives within the business to discuss any matter of
concern. The Executive Directors brief the Board on their regular meetings with the senior leadership team, covering
matters related to strategy alignment and Group expansion, performance, key clients, sales growth, risks and people
matters. All Directors receive agenda and papers in advance of each meeting. Following the meeting, minutes are
recorded and actions followed up.
Where appropriate, the Directors may obtain independent professional advice in respect of their duties to the Board
and its committees at the Company’s expense. Each Director also has access to the advice and services of the
Company Secretary, who advises the Board on corporate governance matters and has responsibility for ensuring
that Board procedures are observed.
125125
Corporate governance report
continued
Key responsibilities
Chairman
124
Chief Executive
Officer
Chief Financial
Officer and Chief
Operating Officer
Senior Independent
Director
Non-Executive
Directors
• setting the Board’s agenda, in consultation with the Company Secretary
• shaping the culture in the boardroom and ensuring it promotes challenge
and debate
• encouraging all Directors to maximise their contributions to the Board by drawing
on their skills, knowledge and experience
• engaging and fostering relationships, both inside and outside the boardroom,
e.g. with major shareholders and key stakeholders
• promoting high standards of governance, including through Board inductions,
allowing adequate time for discussion of all agenda items, ensuring there is a
timely flow of high-quality information to the Board and its committees, and that
the training and development needs of Directors are supported
leading the Board evaluation process
•
• ensuring compliance with all corporate governance requirements with
explanations for any non-compliance
• proposing strategic priorities to the Board and then leading, and taking advice
from, the Group’s senior leadership team in implementing the agreed strategy
• ensuring the Board understands the view of senior leadership on business issues
• managing the Group’s day-to-day business, within the authorities delegated by
the Board
• maintaining senior level contact with clients
• executive responsibility, in conjunction with the Chief Financial Officer, for the
half-year and preliminary results statements
• overall responsibility for communication of Company performance and
expectations to shareholders, analysts and press
• promoting the Group’s People and Responsibility Platforms in a way that
encourages responsible business and protects the health and safety of
employees and those involved in the Group’s activities. This includes executive
responsibility for the responsible business KPIs that cover areas of strategic
focus related to client, community, environmental and people matters
• providing strategic financial leadership to the Group and day-to-day
•
management of the finance function
responsible for our global Operations Platform, which includes Finance, Legal,
Employee Experience, Connective Digital Services (IT) and Risk Management
• oversee the scaling of operations in pursuit of further financial and operational
effectiveness
responsible for Investor Relations
•
• acting as an experienced sounding board for the Chairman
• being available as a trusted intermediary for other Board members and
shareholders
leading the annual evaluation of the Chairman by other Non-Executive Directors
•
• carrying out orderly succession planning of the Chair’s role in conjunction with
the Nomination Committee
• meeting with major shareholders for a balanced understanding of their issues
and concerns and supporting the Chair in ensuring these are shared with
the Board
• providing constructive challenge, effective guidance and advice to the Board and
committees (as applicable)
• holding management to account in monitoring their success in achieving the
agreed strategy through sound judgement and objectivity
• devoting time to understand the Group, its business and workforce, and the key
market trends and opportunities it faces
Kin + CartaBuilding a world that works better for everyone.Governance
Corporate governance report
continued
2021/22 key focuses of the Board: how governance contributes to strategy
Link to Strategic Priorities
1
Growth
2 Services
3 People
4 Responsibility
5 Operations
6 M&A
People and responsible business
Governance, risk and controls
3
4
1
2
3
4
5
6
Strategy and business
1
2
3
4
5
6
Finance
1
5
6
127127
126
Link to
strategic
priorities
Key activities
and
discussions
in 2021/22
• Received updates on responsible business
matters, including progress against KPIs.
• Considered a new ambitious goal for
the Responsibility Platform following the
achievement of the prior goal (to receive B
Corp certification for Kin + Carta).
• Received summaries on employee engagement
and experience, including culture and IDEA
initiatives.
• Considered talent matters and incentive
proposals for the wider workforce.
• Considered recruitment and associated
matters across Kin + Carta, including attrition
rates and reasons.
• Attended to regulatory disclosures, which
included the review and approval, according
to the Audit Committee’s recommendations,
of the Annual Report and Accounts, and half
and full-year results announcements.
• Considered reports on governance and
regulatory matters, including data protection,
cybersecurity and changes to legislation.
• Conducted a robust assessment of the
principal and emerging risks facing the Group,
and the effectiveness of the internal controls
and risk management systems.
• Considered Board succession planning.
• Conducted an external audit tender process.
• Considered salary inflation and mitigations.
• Oversaw the ongoing simplification of the
legal structure of the Group.
Key outcomes • Earned B Corp certification for Kin + Carta.
• Approved our new Responsibility Platform goal:
to help our clients save 1,000,000 metric tonnes
of CO2 by FY27 (our “Carbon Reduction Goal”).
• Launched our new global HRIS (“Human
Resources Information System”), which
replaced previous disparate systems and
unites our processes.
• Offered all-employee share schemes to the UK
and US workforces and increased the maximum
monthly savings amount in both countries.
• Launched the Kin Accelerator Programme –
• Approved the appointments of Maria Gordian
as Non-Executive Director and Kelly Manthey
as Chief Executive Officer.
• Strengthened and standardised practices
related to Information Security and Digital
Defence matters, including the roll out of
single sign-on to protect company assets.
• Approved the appointment of KPMG as the
Company’s new external auditor commencing
for the year ending 31 July 2023.
• Placed dormant legal entities in members’
voluntary liquidation.
an entry-level training programme – with seven
cohorts, which brought diverse, junior talent
to Kin + Carta.
• Digitised our Legal engagement process to
support compliance and increase time and cost
efficiencies.
• Won Microsoft’s US “Sustainability
• Commenced a significant procurement and
Changemaker” Partner of the Year award in
recognition of innovative and unique services or
solutions based on Microsoft technologies that
help customers solve challenges of sustainable
digital transformation.
controls project to consolidate software tools
to realise cost and business efficiencies.
Key priorities
for 2022/23
• To operationalise our Carbon Reduction Goal.
• To maintain emphasis on attracting and
developing the world’s leading digital talent
through a market-leading EVP, exceptional craft
practices, and a commitment to the ongoing
career success of our Kin.
• To achieve a “digitised maturity state” by
implementing new, and scaling existing,
systems.
• To continue to oversee the simplification of
the legal structure of the Group.
• Received reports from the Chief Executive Officer
on performance against the strategic priorities.
• Considered updates on the Regions, along with
key client and strategic partner developments.
• Received presentations on the market
environment, scaling and nearshore expansion
initiatives.
• Discussed and approved strategic business
• Discussed performance versus budget, reviewed the
capital allocation framework, and reviewed trends and KPI
performance throughout the year.
• Considered the Company’s financial position, liquidity
headroom, banking covenants and realistic downside
scenarios.
• Considered the financing arrangements for the acquisitions
of Melon Group, Loop Integration and Octain.
initiatives, including acquisitions and divestments.
• Considered macroeconomic inflationary pressure and
• Held a Board Strategy Day to focus on areas
of strategic importance, including scaling the
business, expansion initiatives, and key trends in
the digital transformation market.
• Launched the service lines, with focused
business critical DX service offerings (see
page 20).
•
Increased nearshore capacity organically through
the establishment of a nearshore facility in Colombia.
• Completed the acquisition of Melon Group,
which expands Kin + Carta’s nearshore software
development capacity, enabling high value and
lower cost delivery for Kin + Carta’s global clients.
• Completed the acquisition of Octain, which
provides clients advanced insight, predictions
and recommendations governed by socially
responsible AI principles.
• Completed the divestments of Edit, Incite and
Relish, completing our journey to a pure-play
DX focused business.
• Launched a Digital Intelligence capability within
CDS, which utilises data to create reports and aid
in key decision making for the business.
mitigations.
• Received updates on the St Ives Defined Benefit Pension
Scheme and its technical valuations and journey plan to
low dependency.
• Considered the settlement mechanisms in respect of
employee share plan vestings and exercises.
• Considered the segmental reporting requirements of
the Group.
• Allotment of shares to satisfy the consideration related to
the acquisitions of Melon Group and Loop Integration.
• Continued the roll-out of FinancialForce, a cloud financial
accounting and software application.
• Approved the budget allocation, capital allocation
framework and key investment areas for 2022/23.
• Renewed the Group’s multi-currency credit facility
agreement.
• Conducted an operational expenditure and expenses review.
• Legacy St Ives Defined Benefit Pension Scheme is, subject
to audit, in a modest technical surplus following triennial
valuation dated April 2022, and agreed a further reduction
in scheme assets allocated to risk investments from 40%
to 30%.
• Approved that the Group report three segments: Americas,
Europe and Corporate.
• To continue to pursue acquisition opportunities
aligned to Kin + Carta’s proposition and
operating model.
• To continue to monitor the Company’s performance versus
budget, financial position, liquidity headroom, banking
covenants and realistic downside scenarios.
• To continue to invest in our partnerships with some
of the world’s largest and fastest-scaling technology
organisations, and focus on our other growth levers.
• To consider, and where appropriate, constructively
challenge, matters related to the 2022/23 strategic
priorities described on page 38.
• To consider the extension of the Group’s multi-currency
credit facility agreement by a further year.
• To monitor the return on investments made within the business.
• To implement processes and initiatives to realise the
savings opportunities identified from the operational
expenditure and expenses review.
Kin + CartaBuilding a world that works better for everyone.Governance Corporate governance report
continued
Board and committee meetings and attendance
The Board meets at regular intervals to enable it to fulfil its role and discharge its duties effectively. During the year,
the Board held seven scheduled Board meetings. It also convened one further time and held a number of ad hoc
meetings, principally in connection with acquisition-related activity.
128
Senior management make regular presentations to the Board to apprise it on the markets and how they serve
them, trends, growth opportunities, and future challenges and how they propose to address them. Their attendance
provided an additional opportunity for the Non-Executive Directors to engage directly with the senior leadership
team and challenge management’s thinking on discussion items, particularly strategic implementation.
Directors’ attendance at scheduled Board and committee meetings during the year was as follows:
David Bell
Maria Gordian1
John Kerr
Chris Kutsor
Michele Maher
Nigel Pocklington
J Schwan
Helen Stevenson2
Board
7
7
5 5
7
7
7
7
7
7
7
7
7
7
3 3
Audit
Committee
3 3
–
–
–
5 5
5 5
–
2
2
Nomination
Committee
Remuneration
Committee
4 4
3 3
4 4
4 4
4 4
4 4
4 4
1
1
–
2
2
–
–
4 4
4 4
–
2
2
Meetings attended
Meetings convened
1 Maria Gordian was appointed to the Board on 1 November 2021.
2 Helen Stevenson stepped down from the Board on 14 December 2021.
This table only details attendance at meetings in the scheduled annual meeting calendar; other ad hoc meetings
were held during the year. This table is based on each Director’s maximum possible attendance at these meetings.
Throughout the year, at least three Independent Non-Executive Directors served on each of the Audit, Nomination
and Remuneration Committees.
Facilitating Board effectiveness
Inducting and training Directors
On appointment, each Director receives an induction tailored to their skill set, previous experience and knowledge of
the markets in which the Group operates. The induction is designed to broaden the Directors’ understanding of the
Group, its strategic priorities, its key stakeholders and engagement mechanisms, as well as the legal and regulatory
framework that it operates in. Meetings with our people, including the executive and senior leadership team, provide
insight into the culture of the Group, and our main areas of business activity and their associated risks. Training is
provided on the duties and responsibilities of being a director of a listed company.
Since 1 August 2021, two Directors have been appointed to the Board:
• On 1 November 2021, Maria Gordian was appointed as an Independent Non-Executive Director.
• On 1 August 2022, Kelly Manthey was appointed Chief Executive Officer. She previously served within the Group
as Chief Executive Officer of Kin + Carta Americas (2020-2022) and of Solstice (the digital product engineering
and innovation firm at the core of Kin + Carta Americas; 2018-2020).
Through their inductions, both Maria and Kelly received a presentation from the Company’s corporate lawyers on listed
company obligations and directors’ duties. To tailor their inductions further, Maria had introductory meetings with key
members of the senior management team to enhance her knowledge of the business. Kelly also met with the Company
Secretariat function to expand her knowledge on Group-wide governance and corporate administration matters.
Evaluating the performance of the Board, its Directors and committees
The effectiveness of the Board is key to successfully leading Kin + Carta to achieve its strategic priorities. Regular
monitoring and constructive review of the Board’s performance is an important factor in surfacing and addressing
any issues that may inhibit effectiveness and to prompt the open discussion that facilitates entrepreneurial thinking.
The Board is mindful of the FRC’s Guidance on Board Effectiveness recommendation that smaller listed companies
consider periodic externally facilitated Board evaluations. With the last external evaluation having been undertaken in
2017, the Board will keep under review when it is most appropriate and beneficial to hold a further external evaluation
especially in light of recent Board changes. Each year, the Board considers the most appropriate mechanism for
conducting its annual Board effectiveness review. In 2022, internally facilitated effectiveness evaluations of the Board
and its committees were undertaken via questionnaire, led by John Kerr (Chairman) and supported by Daniel Fattal
(Company Secretary). As the Board considered the most appropriate course of action to be to appoint a new Senior
Independent Director following the annual evaluation, the Company Secretary assisted with the 2022 review of the
performance of the Chairman and discussed the feedback with the Directors. A summary of the 2022 effectiveness
review findings and actions identified is disclosed below. These actions will be carried out within the 2022/23
financial year. Following its effectiveness review, the Board confirms that all Directors standing for re-election
continue to perform effectively and demonstrate commitment to their roles.
129129
Matters arising from the 2022
effectiveness evaluation
Actions identified
Board
Board meeting agenda
Communication outside of
Board meetings
Board papers
While people matters are discussed at each Board
meeting as part of the updates presented by the Regional
Chief Executive Officers, the Board considered it would
be most effective to have people matters as a separate
agenda item with a specific report covering this topic in
order to provide a holistic overview and additional focus
Enhance communications outside of Board meetings by
considering, on a case-by-case basis, the most effective
mechanism for the discussion of ad hoc matters
While recognising the significant improvements in the
quality of the information provided in Board papers as
the business has evolved, further enhancements were
identified and will be implemented
Audit Committee
No actions were identified for the Audit Committee
Nomination Committee
No actions were identified for the Nomination Committee
Remuneration Committee Communication and process
related to event driven
matters
Enhance communications and process around
event driven matters that are not part of the annual
remuneration schedule
Kin + CartaBuilding a world that works better for everyone.Governance
Audit Committee report
130
G
o
v
e
r
n
a
n
c
e
131
131
2023 areas of focus:
In addition to the recurring matters
on the committee’s rolling agenda,
the committee expects to:
• Consider the control
environment in the context of
the Group’s ongoing growth
and expansion, including the
increasing use of nearshore in
financial processes.
• Consider new disclosure
requirements and narrative
reporting guidance.
Michele Maher
Independent Non-Executive
Director
Current members:
• Michele Maher (Chair)
• David Bell
• Nigel Pocklington
Membership changes
during the year:
• On 14 December 2021, Helen
Stevenson resigned as Senior
Independent Director and
ceased to act as a member of
the committee.
• On 3 March 2022, David Bell
was appointed a member of the
committee.
Meetings held:
5
For details of Audit Committee
members’ attendance at meetings
during the year, see page 128.
2022 key
achievements:
• Considered the segmental
reporting requirements of
the Group and determined it
appropriate that the Group
report three segments for 2022:
Americas, Europe and Corporate.
• Considered the cash-
generating units of the Group
and determined it appropriate
that the Group test for goodwill
impairment by reference to
three cash-generating units
(“CGUs”) for 2022: Americas,
Europe (excluding Melon Group),
and Melon Group.
• Conducted an external
audit tender process and
recommended to the Board that,
following the completion of the
31 July 2022 audit, KPMG be
appointed external auditor for
the new financial year.
• Considered the acquisition
accounting of Melon Group,
Loop Integration and Octain
and determination of deferred
consideration in respect of the
Cascade Data Labs acquisition.
• Reviewed financial controls,
including those designed to
mitigate fraud.
Chair’s introduction
On behalf of the Audit Committee, I
am pleased to present its report for
the year ended 31 July 2022.
The committee has reviewed a
number of areas within the Group’s
financial statements, including
key areas of judgement, critical
accounting policies, provisioning
and any changes in these areas
or policies. These areas include
acquisition accounting and the
valuation of retirement benefit
obligations. This work, together with
the insight from PwC, Kin + Carta’s
external auditors, has ensured the
correct focus of the committee’s
discussions and a high standard of
decision making. The judgement
areas are set out in this report.
Through the activities of the
committee, described in this
report, the Board confirms that it
has reviewed the effectiveness of
the Company’s internal systems
of control and risk management,
covering all material controls
including financial, operational
and compliance controls, and that
there were no material failings
identified, which require disclosure
in this Annual Report. The review
of the control systems includes an
evaluation by the committee of the
effectiveness of the internal and
external audit functions. We are
pleased to report that these reviews
concluded that the functions
were operating effectively, and
collectively provide assurance
of Kin + Carta’s internal financial
controls, regulatory compliance
and financial reporting. Detail of the
effectiveness reviews of the internal
and external audit functions is set
out on pages 135 and 136.
Michele Maher
Chair of the Audit Committee
12 October 2022
Building a world that works better for everyone.
Kin + Carta Audit Committee report
continued
132
Role of the committee
The Audit Committee is responsible
for the effective governance of
the Group’s financial reporting,
including the adequacy of financial
disclosures and gaining assurance
around the processes that support
it, including external audit, internal
control, risk management and legal
and regulatory compliance.
The committee carries out the
functions required by DTR 7.1.3R
of the FCA’s Disclosure Guidance
and Transparency Rules and it is
authorised by the Board to carry
out any activity within its terms
of reference.
Committee
membership
The Audit Committee members
are all Independent Non-Executive
Directors. I chair the committee and
bring recent and relevant financial
expertise, having been Chief
Financial Officer of Hogg Robinson
Group plc until its sale in 2018, and a
Fellow of the Institute of Chartered
Accountants. The Board is satisfied
that all members bring extensive
expertise to the Audit Committee
and, as a whole, have competence
relevant to the sectors in which
Kin + Carta operates.
Key activities
The committee held five meetings
in the year, at which it:
• Considered the external
auditors’ reports to the
committee, their fees and
their independence, including
an assessment of the
appropriateness to conduct any
non-audit work.
• Analysed the effectiveness of
the external audit by reviewing
replies to questionnaires
completed by management and
Audit Committee members.
• Conducted an external audit
tender process in respect of
the financial year ending 31 July
2023 and recommended to the
Board that KPMG be appointed
for the new financial year.
• Ensured the integrity of the
financial reporting process was
upheld.
• Considered significant
accounting and reporting
matters pertinent to the
preparation of the half-year
results and the Annual Report
and Accounts.
• Considered an assessment of
the Group’s longer-term viability.
• Received a report setting
out the going concern review
undertaken by management.
• Reviewed the Melon Group,
Loop Integration and Octain
acquisition accounting and
determination of deferred
consideration in respect of the
Cascade Data Labs acquisition.
• Considered discontinued
operations classifications in view
of the divestments of Edit, Incite
and Relish.
• Considered the segmental
reporting requirements of
the Group and determined it
appropriate that the Group
report three segments for 2022:
Americas, Europe and Corporate.
• Considered the cash-
generating units of the Group
and determined it appropriate
that the Group test for goodwill
impairment by reference to
three cash-generating units
(“CGUs”) for 2022: Americas,
Europe (excluding Melon Group),
and Melon Group.
• Considered the impact on the
Group of the IFRS Interpretations
Committee agenda decision on
Configuration and Customisation
Costs in a Cloud Computing
Arrangement.
• Reviewed the Group’s trading
updates and half-year results
prior to release.
• Considered key new mandatory
reporting requirements
for the year ended 31 July
2022, including reporting in
accordance with the Task Force
on Climate-Related Disclosures
(“TCFD”) Recommendations
and Recommended Disclosures,
and preparing and filing the
Annual Report and Accounts in
structured electronic format.
133133
Significant financial
issues
The committee has assessed
whether suitable accounting
policies have been adopted
and whether management have
made appropriate estimates and
judgements in respect of significant
financial issues. The committee
considered accounting papers,
which provided details on the main
financial reporting judgements
and classifications, which were
addressed as shown in the table
on pages 134 and 135.
• Agreed an internal audit and
assurance plan with the Group’s
Head of Internal Audit and the
Head of Risk Management.
• Considered risk and assurance
reports from the Head of
Internal Audit and Head of Risk
Management.
• Monitored the quality of work
performed by the Internal
Audit function and analysed
the effectiveness of the
function by reviewing replies
to questionnaires completed
by management and Audit
Committee members.
• Considered the appropriateness
of the Group’s risk management
process, including the
results of an internal controls
questionnaire, completed by
management within the Regions.
• Received the Group’s updated
bribery risk register and
considered the effectiveness
of recommendations by
Internal Audit.
• Assisted the Board with the
review of the Group’s Risk
Register together with the
current and future mitigating
activities, which are linked to the
Kin + Carta strategic priorities.
• Reviewed key controls
policies, including Anti-Bribery
and Corruption, Speak Up
(whistleblowing), and Non-Audit
Services and confirmed they
remained fit for purpose.
Financial reporting:
fair, balanced and
understandable
As part of its review of this
Annual Report and Accounts, the
committee considered whether
the report is fair, balanced and
understandable (noting the Code’s
reference to position, as well as
performance, business model
and strategy). In particular, the
committee considered the process
by which the Annual Report and
Accounts were prepared, the
appropriateness of the level of
detail in the narrative reporting
and balance between describing
potential risks and opportunities,
judgemental items, and noted the
robust year-end processes and
controls in place, including:
• Regular engagement with,
and feedback from, senior
management on proposed
content.
• Feedback from external parties
(corporate reporting specialists,
remuneration advisors, external
auditors) to enhance the quality
of our reporting.
•
Internal verification of
non-financial factual statements,
key performance indicators
and descriptions used within
the narrative to monitor
the accuracy, integrity and
consistency of the messages
conveyed in the Annual Report
and Accounts.
• The outcome of reviews
performed by the external
auditors.
This work enabled the committee
to provide positive assurance to the
Board to assist them in making the
statement required by the Code.
Kin + CartaBuilding a world that works better for everyone.Governance Audit Committee report
continued
Significant issues
considered
How the committee addressed
these issues
Significant issues
considered
How the committee addressed
these issues
134
The assessment of
the carrying value of
goodwill (£76.9 million)
and intangible assets
(£20.4 million)
The committee received reports in relation to the assessment of the carrying value of the
goodwill for each cash-generating unit (“CGU”). The committee considered key judgements
including the discount rate, terminal growth rates and the future cash flow forecast of each
CGU to which goodwill and investments are allocated, based upon the projected forecasts
approved by the Board.
The committee considered reports on the carrying value of acquired intangible assets
where there were indicators of impairment, such as loss of clients, maintenance of
proprietary techniques and trademarks. The committee also reviewed disclosures where a
reasonably possible change indicated a material impairment.
The committee was satisfied with the assumptions applied to support the carrying value of
goodwill of £76.9 million and intangible assets of £20.4 million. The conclusion of the review
and the key assumptions are disclosed in the notes to the consolidated financial statements.
The Board uses Adjusted results as the measure of the ongoing financial performance
of the Group’s businesses and excludes such items that are considered to distort the
comparison of the trading performance of the Group, and across its businesses. The Audit
Committee assessed the classification of these Adjusting Items according to their nature
and value, in line with ESMA and the FRC Guidance (“APMs”). The committee reviewed
reports outlining the accounting policy on the classification of Adjusting Items and satisfied
itself with the treatment applied.
The accounting policy on Adjusting Items can be found in note 7 to the consolidated
financial statements, and in the Alternative Performance Measures section on
pages 55 to 59.
The valuation of the St Ives Defined Benefits Pension Scheme (the “Scheme”) is judgemental
mainly due to underlying assumptions, used to determine the Scheme’s liability. This
includes assumptions such as the discount rate, inflation and life expectancy of the Scheme
members at the balance sheet date. The committee reviewed reports from management
outlining the assumptions used, and agreed with those assumptions as outlined in note 27.
The assumptions presented to the Audit Committee by management are underpinned by
actuarial advice. The Audit Committee considered the suitability of the actuary.
The committee reviewed and challenged management’s assessment of forecast cash
flows including sensitivity to trading and expenditure plans, and for the potential impact
of uncertainties. The committee also considered the Group’s financing facilities and future
funding plans. The committee was satisfied that the application of the going concern
basis for the preparation of the financial statements continued to be appropriate, and
recommended the approval of the viability statement to the Board. The going concern
conclusion can be found on page 174 and the viability statement can be found on
pages 176 and 177.
Following the acquisition of Octain, Loop Integration and Melon Group in the year, the
committee considered the allocation of the purchase price payable amongst the fair
value of acquired net assets, which includes acquired intangible assets and goodwill. In
addition, the committee considered the treatment of deferred consideration as deemed
remuneration. The committee was satisfied with the treatment applied.
The classification
of Adjusting Items
(£8.7 million
before tax)
The valuation of the
St Ives Defined
Benefits Pension
Scheme (£38.7 million
surplus)
Going concern basis
for the financial
statements and
viability statement
Accounting treatment
of acquisitions
Discontinued
operations
The committee considered the status of businesses sold within the year. The committee
agreed that the classification of Incite, Edit and Relish in both years and, in the prior year,
Pragma and Hive as discontinued operations was appropriate.
Segmental reporting
The committee considered the definition of the Group’s operating segments and
determined that it was appropriate to move to segmental reporting based on geographical
regions (Americas, Europe and corporate), reflecting the way the business is managed.
Changes in
accounting policy
Impairment of
property, plant and
equipment
The committee considered the application of the IFRS Interpretation Committee‘s decision
on Cloud Computing to the Group results and considered it appropriate to restate the prior
year results reflecting the application of the new treatment retrospectively. Details of the
restatement can be found in note 2 to the consolidated financial statements,
135135
The committee considered the accounting impact of the decision to partially vacate
leased premises in Chicago, USA, and to exercise the break clause to terminate the lease
early in 2026, and agreed that it was appropriate to take an impairment charge on the
related right-of-use asset, a provision for unavoidable contractual costs linked to the
premises with no economic value, and to write back the lease liability in respect of the
period after the break date.
Internal Audit –
Assurance functions
The Internal Audit function and
Head of Risk Management (together,
“Assurance”) provide independent
and objective assurance over
the Group’s risk management
and internal controls. Assurance
establishes an annual internal
audit and assurance plan based
on discussions with management
and assessments of the risks
inherent in the Group’s activities.
The activities of the Assurance
function are reported to the Audit
Committee and provide assurance
to management and the committee
that the system of internal control
achieves its objectives and
highlights areas for improvement.
The Assurance function consists
of the Head of Internal Audit and
the Head of Risk Management,
both qualified accountants who,
as necessary, draw on additional
resources from professional
services firms.
During the year, the Assurance
function performed work on the
Group’s internal controls: reviewing
the control environment and
conducting testing of key controls.
Control testing of accounts
receivable, accounts payable,
payroll and credit control cycles
took place at selected sites,
according to the audit cycle.
Additional reviews included:
The areas covered included:
• A review of the first deferred
consideration for Cascade
Data Labs.
• A review of the new HRIS
platform.
• An assessment of contractor
compliance across the Regions.
• A review of spend across the
Group, covering expenses, credit
cards and supplier spend.
• Risk assessments covering new
and emerging trends, including
the war in Ukraine.
• An initial review of the recent
acquisition, Melon Group.
High-risk issues identified within
audit reports and risk register
reviews, together with corrective
actions and current and future
mitigations, were considered in
detail at the meetings of the Audit
Committee.
During the year, the Audit
Committee undertook an
evaluation of the effectiveness of
the Internal Audit function. The
process involved the completion
of three questionnaires containing
assertions of best practice –
one by members of the Audit
Committee, one by members of
the management of Group Finance,
and another completed by the
management of Finance within each
Region.
•
responsiveness;
• communication;
• skills and technical knowledge;
• scope of audit work
undertaken; and
•
Internal Audit as an effective
agent for change.
The review concluded that the
Internal Audit function was
operating effectively and performed
well in responding to changes in
the organisation, its Regions and
associated risks.
Risk management
and internal control
The Board is responsible for
setting the Group’s risk appetite
and its system of internal control,
including financial, operational
and compliance controls and risk
management, and for reviewing the
effectiveness of those controls.
The system of internal control is
designed to manage and mitigate,
rather than eliminate, the risk
of failure to achieve business
objectives, and can only provide
reasonable, but not absolute,
assurance against material
misstatement or loss, fraud or
breaches of laws and regulations.
A key responsibility of the
committee is to review Kin +
Carta’s internal financial controls
and internal control and risk
management systems.
Kin + CartaBuilding a world that works better for everyone.Governance 136
Audit Committee report
continued
Annual review of the
effectiveness of the
systems of internal
control
Management is responsible for
establishing and maintaining
adequate internal controls and
the Board, supported by the Audit
Committee, has responsibility for
ensuring the effectiveness of those
controls. The committee reviewed
the process by which management
assessed the control environment, in
accordance with the requirements of
the Guidance on Risk Management,
Internal Control, and related Financial
and Business Reporting published by
the FRC.
The review for the year ended
31 July 2022 was supported by the
Company Secretary and Internal
Audit function. In addition, during the
year, the committee received regular
reports from Internal Audit and the
Head of Risk Management (together,
“Assurance”) on the effectiveness
of the Group’s internal controls
and risk management system, and
reports from the external auditors
on matters identified during its
statutory audit work.
The review process included
consideration of the effectiveness
of control functions and practices,
such as:
• Risk being monitored and
reported on by the senior
management of each Region.
• The role of the Head of
Risk Management who has
responsibility for providing
expertise, challenge, advice
and escalation with regard to
noteworthy risk issues and
developments.
• The presentation to the
committee of the findings
of an annual internal control
questionnaire, supplemented
by a half-year questionnaire,
which is completed by each
Region, reviewed by the Head
of Internal Audit and supplied
to the external auditors. Any
inconsistencies identified
with the Group’s established
corporate governance
frameworks are disclosed to the
Audit Committee.
• The role of the Connective
Digital Services (IT) function
in digital defence and data
security in strengthening and
standardising practices to unify
Kin + Carta’s approach, and
mitigate information security
and data-loss risk.
This process resulted in the
Board concluding, following a
recommendation from the Audit
Committee, that the Group had
effective risk management and
internal control processes in place.
Effectiveness of the
external auditors
During the year, the committee
undertook an assessment of the
effectiveness of the external audit
process for the year ended 31 July
2021. The process involved the
completion of two questionnaires
containing assertions of best
practice – one by each member of
the Audit Committee, and another
completed by the management of
each subsidiary. The areas covered
included:
• The audit planning process.
• Audit execution.
• Communication.
• Regular management meetings
• Adding value.
within each Region as
appropriate.
• The Group’s Internal Audit
function, whose work plan
is closely linked to the risk
management framework.
• Reporting.
• Timeliness.
• Focus.
The results were then reviewed by
the Audit Committee and Chief
Financial Officer and discussed with
the external auditor. The completed
questionnaires showed in aggregate
that the external audit had achieved
a majority of the assertions in each
area of focus. Areas of improvement
that had been noted were
addressed at the Audit Committee
meetings during the year and
continued to be implemented
throughout the external audit for
the year.
Provision of
non-audit services
The committee’s policy on the
engagement of the external
auditors for non-audit services,
which reflects applicable law and
regulation and the FRC Ethical
Standard for Auditors, sets out the
circumstances in which the external
auditors may be permitted to
undertake non-audit services and
the services that are not permitted
under any circumstances, such
as the provision of internal audit
outsourcing and tax advice.
The Chief Financial Officer has
authority to approve the permitted
services up to £25,000, with
permitted services between
£25,001 to £50,000 requiring
the Chief Financial Officer to
consult with the Chair of the Audit
Committee, and any permitted
services to the value of £50,001
and above requiring the approval
of the Audit Committee.
The committee has satisfied
itself that this policy has been
appropriately applied. In the
financial year ended 31 July 2022,
non-audit fees of £45,000 were
incurred (as disclosed in note
5 to the consolidated financial
statements). The non-audit fees
were in respect of the review of
the half-year results only, which is
standard practice.
137137
of contact, a structured series of
meetings and access to a virtual
data room to download company
information. Evaluation was
conducted using a standardised
scorecard to assess each firm’s
commitment, competence and
cultural compatibility.
At the conclusion of the
process, the Audit Committee
recommended a preferred choice
to the Board from two shortlisted
firms. KPMG was recommended
as the preferred choice based on
the commitment, competence
and cultural compatibility that
it demonstrated throughout
the tender process. After
considering the Audit Committee’s
recommendation, the Board
approved the appointment of KPMG
as the Company’s new external
auditor commencing for the year
ending 31 July 2023, subject to the
approval of shareholders at the
2022 Annual General Meeting.
Safeguarding the
external auditors’
independence
The committee considered the
robustness of PwC’s safeguards
and procedures to counter threats
or perceived threats to their
objectivity, the application of their
independence policies and their
adherence to the revised Ethical
Standard published by the FRC,
which the Company’s Policy on
Non-Audit Services complies
with. In all these respects, the
committee was satisfied with PwC’s
objectivity and independence. The
committee is satisfied that there
are no relationships between the
Company and PwC, its employees
or its affiliates that may reasonably
be thought to impair the auditors’
objectivity and independence.
The committee met with PwC
without any Executive Director or
management present to ensure
that no restrictions are placed on
the scope of their audit and to offer
the external auditors opportunities
to discuss any items they may not
wish to raise with the Executives
being present.
The Company has complied with the
Competition and Markets Authority’s
Statutory Audit Services Order
2014 for the financial year under
review in respect to audit tendering
and the provision of non-audit
services. Following an external audit
tender, PwC was appointed as the
Company’s external auditors in 2018,
with effect from the financial year
ended 31 July 2019. The external
auditors’ appointment is reviewed
regularly in accordance with
applicable law and regulation and
the Financial Reporting Council’s
(“FRC”) Ethical Standard for Auditors.
Brian Henderson served as the Lead
Audit Partner for the financial year
ended 31 July 2022; his second year
acting as Lead Audit Partner. As
disclosed in this Audit Committee
report, the Company retendered its
external audit engagement during
the year and the Board approved
the appointment of KPMG as the
Company’s new external auditor
commencing for the year ending
31 July 2023.
Tender for the external
audit engagement
During the year, the Committee
conducted a tender process for
the external audit engagement for
Kin + Carta’s financial year ending
31 July 2023.
Desktop due diligence was
conducted to confirm which firms
would be invited to participate
in the audit tender. The following
factors were considered:
• Experience of auditing
comparable organisations.
• Size and scale.
• Audit quality record.
•
International presence.
• Cultural alignment and
ESG matters.
As part of the due diligence, the
Company also sought assurance
that each firm would be capable
of being independent before being
appointed auditor.
Based on this exercise, firms were
shortlisted for the tender and
issued with invitation to tender
letters.
The audit tender was overseen
by the Audit Committee, which
agreed on the objectives and
desired outcomes, and approved
the design of the process. The
Audit Committee was assisted by
a working group consisting of the
Chief Financial Officer, the Deputy
Chief Financial Officer, the Regional
Chief Financial Officers, the Head
of Risk Management, the Head of
Internal Audit, the Group Company
Secretary, and the Chief Strategy
Officer. The audit tender was
designed to implement a selection
process that was efficient, fair and
effective. The participating firms
had clearly identified internal points
Kin + CartaBuilding a world that works better for everyone.Governance Nomination Committee report
138
G
o
v
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a
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139
139
John Kerr
Chairman
Current members:
• John Kerr (Chair)
• David Bell
• Chris Kutsor
• Maria Gordian
• Michele Maher
• Kelly Manthey
• Nigel Pocklington
Membership changes
during the year:
• Helen Stevenson stepped down
on 14 December 2021 and Maria
Gordian was appointed on
1 November 2021.
• J Schwan stepped down on
31 July 2022 and Kelly Manthey
was appointed on 1 August 2022.
Meetings held:
4
For details of Nomination
Committee members’ attendance
at meetings during the year, see
page 128.
2022 key achievements:
• Recommended to the Board
the appointment of a new
Non-Executive Director, Maria
Gordian, to replace Helen
Stevenson, who retired at the
2021 AGM having completed a
nine-year term on the Board.
• Having completed the
succession planning for all
other senior management
roles last year, except for the
Chief Executive Officer role,
the Committee undertook
succession planning for the
Chief Executive Officer role (see
page 141 for further information).
• Recommended to the Board the
appointment of Kelly Manthey
as Chief Executive Officer to
replace J Schwan who retired
from the Board with effect from
31 July 2022.
2023 areas of focus:
• Following the changes to
the Board referenced above,
consider further succession
planning.
Chair’s introduction
On behalf of the Nomination
Committee, I am pleased to present
its report for the year ended
31 July 2022.
Inclusion, Diversity,
Equity and Awareness
(“IDEA”)
At Kin + Carta, we believe it’s
everyone’s job to make the world
work better. That goes far beyond
technology and efficiency. It
starts with a foundation of equity,
inclusion, and the deliberate
unbundling of systematic
constraints that exist within our
society.
The committee and Board are
committed to sustainable social
change, particularly in areas of
IDEA, and are fully supportive
of the increasing focus on the
composition of Boards and
the emphasis on diversity. In
recognition that diversity within
the boardroom and across the
Group is important to our success,
improving adaptability, agility and
supporting long-term growth and
sustainability, the Company has a
Board Diversity Policy, which the
committee periodically reviews in
line with best practice guidance.
Within this report, we explain how
the committee has considered IDEA
throughout its operations.
• Approving the responsibilities
of the Chairman, the Chief
Executive Officer and Senior
Independent Director.
John Kerr
Chair of the Nomination
Committee
12 October 2022
Succession planning
During the year, the committee
recommended to the Board the
appointment of Kelly Manthey as
Chief Executive Officer, as outlined
on page 141.
The committee has discharged its
other principal duties by:
• Ensuring that an appropriate
review of Board, committee
and Director effectiveness was
undertaken.
• Considering whether the
Non-Executive Directors were
sufficiently independent for
corporate governance purposes.
Building a world that works better for everyone.
Kin + Carta Nomination Committee report
continued
Role of the committee
The principal role of the committee is to lead the process for Board appointments and make recommendations
to the Board. It considers candidates for Executive or Non-Executive Director positions in order to maintain an
appropriate balance of diversity, experience, independence and knowledge on the Board. The committee engages
in succession planning to ensure that the Board is appropriately refreshed and considers the findings of the annual
Board effectiveness review, and how those outcomes may impact Board composition.
140
Committee membership
The committee comprises a majority of independent Non-Executive Directors. It is important to our Board that the
selection process is appropriate to the particular circumstances and that any decision made to nominate a new
member of the Board is collective.
Focuses of the Nomination Committee in 2022
Inclusion, diversity, equity and awareness
In 2022, the Board revised its Diversity Policy, following a recommendation from the committee.
The Board Diversity Policy is available to view in the governance section of our website: investors.kinandcarta.com.
The policy recognises that diversity of the Board’s gender, ethnicity and other under-represented groups can have a
positive impact on Board debate and the quality of decision making. We outline below the measurable objectives of
the policy and our progress towards achieving them.
Board Diversity Policy objectives
Progress1
To ensure that the proportion of women on the Board is at
least 40% and that this is maintained going forward.
To ensure that the proportion of women members of
each of the Audit Committee, Nomination Committee and
Remuneration Committee is at least 33% and that this is
maintained going forward.
To ensure that at least one of the Chair, Chief Executive
Officer, Chief Financial Officer or Senior Independent Director
is a woman and that this is maintained going forward.
The proportion of women on the Board is 43%.
The proportion of women membership of the
committees is:
• Audit Committee: 33%
• Nomination Committee: 43%
• Remuneration Committee: 67%
The Chief Executive Officer is a woman.
To ensure that at least one Board member is from an ethnic
minority and that this is maintained going forward.
There is one Board member from an ethnic
minority background.
1. All metrics presented as of the date of this report, 12 October 2022.
To support the achievement of our policy objectives and to develop a diverse executive pipeline, we commit to the
following practices:
• Assist in the development of high-calibre candidates by encouraging a broad range of senior individuals
within the business to take on additional roles to gain valuable Board experience. A key outcome of this was
Kelly Manthey’s promotion to Chief Executive Officer, which follows her career path as Chief Executive Officer of
Kin + Carta Americas (2020-2022) and Chief Executive Officer of Solstice (the digital product engineering and
innovation firm at the core of Kin + Carta Americas; 2018-2020). During her tenure as Chief Executive Officer of
Kin + Carta Americas, Kelly presented to the Board on numerous occasions.
• To encourage executive search firms to produce diverse “long-lists” for Board positions that include
candidates from under-represented groups and a balanced proportion of male and female candidates. A key
outcome of this was the appointment of Maria Gordian as Non-Executive Director in November 2021.
Our IDEA commitment
Aligned with our People and Responsibility Platforms, we are committed to creating an industry-leading employee
experience. By recognising and embracing the benefits of a diverse workforce across the Group, we seek to develop
further as an organisation and as the best possible place to work.
Details of our commitments to IDEA, including our vision, guiding ambitions and strategic action objectives, can be
found on pages 67 to 70. These initiatives are intended to build a culture where everyone is empowered to bring their
141141
authentic self to work and serve
to develop a diverse pipeline by
breaking down structural inequality.
The diversity of the Board, senior
management and their direct
reports and Group employees is set
out within our Strategic Report on
page 69.
Performance evaluation
In 2022, internally facilitated
effectiveness evaluations of the
Board and its committees were
undertaken. The committee
considered the evaluation findings
and identified actions, which are
described in more detail on page
129 along with an overview of the
process.
Succession planning and
Board appointment
The Code stipulates that the Board
should establish a Nomination
Committee to “ensure plans are in
place for orderly succession to both
the Board and senior management
positions”. The Nomination
Committee seeks to ensure that
the Board’s composition, and that
of its committees, is appropriate
to discharge its duties effectively
and successfully direct Kin + Carta
to achieve its strategic objectives.
During the year, the Nomination
Committee considered the Board’s
composition, including the tenure of
Directors, diversity and the collective
attributes of the Board, such as
experience, knowledge and skills.
The Nomination Committee
continues to review Board
composition to ensure that there
is effective succession planning
at Board level. The Nomination
Committee reviewed its established
succession plans, in particular for
management succession should
a vacancy arise; succession
candidates for all senior leadership
roles, excluding the Chief Executive
Officer role, were identified.
During the year, the process of
establishing succession plans for
the Chief Executive Officer role was
undertaken by a delegation of the
Nomination Committee (the
“Sub-Committee”). The
Sub-Committee comprised of
David Bell, Maria Gordian, John Kerr
and J Schwan.
Having identified a list of potential
successors to this role internally, an
external advisor, Russell Reynolds
(which has no connections with
Kin + Carta or its Directors), was
engaged to perform a desktop
survey of the market and provide a
list of potential external candidate
profiles for consideration and to allow
the Sub-Committee to benchmark
attributes against the potential internal
candidates. The Sub-Committee
reviewed the external profiles and
concluded that the internal candidate
profiles met our criteria and were
at least as strong as the external
individuals and decided to base
succession planning around them. The
assessment process concluded that
all internal candidates were strong
and the Sub-Committee, supported
by the Nomination Committee,
recommended that the Board approve
Kelly Manthey to be designated the
succession candidate for the role of
Chief Executive Officer if and when
that role became available. Kelly
demonstrated a number of attributes
that the Sub-Committee recognised
as important and was able to provide
evidence of where she has prior
experience in relevant areas (e.g.
understanding the challenges and
having prepared a comprehensive
plan for the business). Following the
resignation of J Schwan, the Board
approved the appointment of Kelly
Manthey as Chief Executive Officer
on the recommendation from the
Nomination Committee in line with
the succession plan, which had been
established.
As detailed in last year’s Annual
Report, following the external
recruitment process to identify a
new Non-Executive Director in view
of Helen Stevenson’s retirement
having completed her tenure of
nine years on the Board, the Board
approved the appointment of Maria
Gordian on the recommendation of
the Nomination Committee. Maria’s
appointment was effective from
1 November 2021.
In 2023, the committee will
continue to consider the effective
composition of the Board generally
and its committees, having regard
to the findings of the 2022 Board
effectiveness evaluation.
Board appointment process
Preparation
Candidate identification
Selection and recruitment
• Define a shortlist
of external search
consultancies.
•
Identify the preferred
provider and agree scope
and terms.
• Define role and candidate profile.
• Shortlist preferred candidates.
• Undertake an initial search.
• Board interviews.
•
Identify a longlist of potential
internal and external candidates.
• Conduct initial interviews led by
two members of the Nomination
Committee.
• Nomination Committee makes
recommendation to the Board based on
merit, and against the objective criteria set
out in the role and candidate profile.
• Board to consider and, if thought fit,
approve the appointment recommended
by the Nomination Committee.
Building a world that works better for everyone.
Kin + CartaGovernance Directors’ remuneration report
142
2023 areas of focus:
• Continue to consider
remuneration arrangements to
ensure they remain supportive of
value creation for shareholders,
support Kin + Carta’s strategy,
while enabling us to recruit
and retain the talent we need
to succeed, while recognising
our status as a London Stock
Exchange listed company.
At a glance
Summary for Executive
Directors’ performance and
remuneration for 2022
• 2022 annual bonus pay-out
of 96% of maximum reflecting
exceptional financial and
strategic performance during
the year.
• 2019–22 LTIP award vesting
86% of maximum reflecting
exceptional share price
growth over the three-year
performance period.
2022 key achievements:
• Undertook a comprehensive
review of the Remuneration
Policy, including consultation with
shareholders regarding changes
to our Directors’ Remuneration
Policy, which will allow us to be
more competitive in recruiting
and retaining key talent in the
primary talent markets in which
Kin + Carta operates, which is
predominantly the US technology
sector, while recognising our
status as a London Stock
Exchange listed company.
• Further reviewed remuneration
arrangements for the wider
workforce during the year,
in particular the allocation
of share-based awards to
employees below Board to
ensure that we have the right
frameworks to attract and retain
the talent we need to thrive
in the digital talent market,
particularly in the US.
• Considered the remuneration
arrangements for FY22 and
approved the targets for the
2022 bonus and December 2021
LTIP awards.
Nigel Pocklington
Chair of the Remuneration
Committee
Current members:
• Nigel Pocklington (Chair)
• Michele Maher
• Maria Gordian
Membership changes
during the year:
• On 14 December 2021, Helen
Stevenson resigned as Senior
Independent Director and
a member of the Board and
ceased to act as a member of
the committee.
• On 3 March 2022, Maria Gordian
was appointed a member of the
committee.
Meetings held:
4
For details of Remuneration
Committee members’ attendance
at meetings during the year, see
page 128.
143143
Implementation for 2023
• Appointment of Kelly Manthey,
previously Group Chief Executive
– Americas, as Chief Executive
Officer from 1 August 2022. Her
salary for the role has been set at
$525,000, in line with J Schwan’s
salary as Chief Executive Officer.
• Salary increase for Chris
Kutsor to $405,000 (+14%)
reflecting the expansion of the
scale and scope of his role to
include both Chief Financial
Officer and Chief Operating
Officer responsibilities, and the
continuing pace of salary change
across the wider workforce and
our key talent markets in the US
technology sector.
• New Remuneration Policy
being put to shareholders
for approval at 2022 AGM to
improve the competitiveness of
our remuneration arrangements
in our key talent market,
the US technology sector,
while balancing shareholder
expectations as a London Stock
Exchange listed company.
• Maximum annual bonus of up to
150% salary (previously 100% of
base salary), based 35% on net
revenue growth, 35% on adjusted
PBT target, 20% on strategic/
personal objectives and 10% on
ESG-related measures. Further
details are disclosed on page 160.
• LTIP grants of up to 225% of
salary on an annual basis, 275%
of base salary in exceptional
circumstances (previously up
to 125% of base salary on an
annual basis, 200% in exceptional
circumstances). LTIP awards to
be granted with vesting based
50% on relative TSR, 20% on
ESG-related measures, 15% on
growth in adjusted net revenue
and 15% on growth in adjusted
PBT. The targets for these awards
are disclosed on pages 160
and 161.
Letter from Chair of
the Remuneration
Committee
On behalf of the Remuneration
Committee, I am pleased to present
the Directors’ remuneration report
for the year ended 31 July 2022.
This report is split into three parts:
this ‘annual statement’, the new
‘remuneration policy report’, which
will be put to shareholder approval
at the 2022 AGM and an ‘annual
report on remuneration’. The annual
report on remuneration provides
details of the amounts earned in
respect of the year ended 31 July
2022 and how the Remuneration
Policy, subject to shareholder
approval, will be implemented in the
year ending 31 July 2023.
The Remuneration Committee’s
key role is to set the broad policy
for remunerating the Executive
Directors and recommend
a Remuneration Policy that
supports the creation of value for
shareholders and the delivery of
the Group’s strategic priorities. The
committee is mindful of the scrutiny
around executive remuneration and
seeks to adopt best practice where
appropriate taking into account its
position in the FTSE SmallCap.
Business context
Kin + Carta has continued to
execute on its growth strategy.
For the year ended 31 July 2022,
we saw like-for-like net revenue
growth of 37% and adjusted profit
before tax has increased from
£10.3 million to £17.1 million.
We completed the divestment of the
non-core Ventures businesses and
enhanced our nearshore delivery
capabilities following the acquisition
of Melon Group in Bulgaria, North
Macedonia and Kosovo.
Remuneration Policy
The main focus of the committee
during the year was a full review
of its Remuneration Policy (the
“Policy”). The focus of the review
was to ensure that the Policy
provided sufficient flexibility to
enable us to recruit and retain key
executives in the primary talent
markets in which Kin + Carta
operates, which is predominantly
the US technology sector.
The Company has been completely
transformed over the past few years,
and the balance of our operations
has continued to shift towards the
US, where both of our Executive
Directors and most of our senior
commercial talent are based.
Almost 70% of our revenue and
profit now come from the US market
and our direct peer set is global
IT technology services, which are
mainly listed on US stock exchanges.
Our primary remuneration challenge
is that the reward markets in the
US and the UK are very different,
with the US market having a far
greater emphasis on long-term
incentive opportunity than in the
UK, particularly in the technology
sector in which we operate. As we
are a talent-focused business, trying
to operate in the US technology
market with a UK listed remuneration
model significantly inhibits our
ability to deliver a talent experience
that allows us to retain and recruit
the talent we need to continue to
successfully grow the business and
deliver returns to investors.
In this context, we are, therefore,
proposing to increase the maximum
annual bonus and LTIP opportunities
for Executive Directors. The
maximum annual bonus would
increase from 100% to 150% of
salary, and the maximum LTIP
opportunity would increase from
125% of salary (200% in exceptional
circumstances) to 225% of salary,
with an exceptional limit of 275%
of salary.
Kin + CartaBuilding a world that works better for everyone.Governance 145145
144
Directors’ remuneration report
continued
Although these changes would help
to support our ability to recruit and
retain talent, these opportunity
levels would still position our Chief
Executive Officer pay below the
lower quartile versus US peers and
the committee will continue to keep
our approach to pay under review
as the size and complexity of the
business continues to increase.
We are not proposing to make
any changes to the performance
measures. The annual bonus for
FY23 will, therefore, be based
35% on net revenue growth, 35%
on adjusted PBT target, 20% on
strategic/personal objectives and
10% on ESG-related measures and
the 2022 LTIP awards will be based
50% on relative TSR, 20% on
ESG-related measures, 15% on
growth in adjusted net revenue and
15% on growth in adjusted PBT.
Central to this Policy review
was a detailed and constructive
shareholder consultation process
with our largest shareholders. These
conversations were very helpful to
the committee and the feedback
that we received has shaped the
final proposals outlined in this
report. In particular, as a direct
result of these discussions, we have
reduced the maximum variable pay
opportunities available from those
that we had originally considered.
As a certified B Corp, a key part of
the committee’s considerations
has been how value is shared
between our shareholders, our
management team and our wider
staff as well as how we contribute
to society more broadly. We already
have, and are intending to make
further increases to LTIP awards
across our wider workforce. This
is in response to competing for
global technology talent to remain
competitive against, in particular,
our US technology peers. In 2021 we
increased the number of employees
receiving share awards to 322, up
from just 69 in 2018, 79 in 2019 and
167 in 2020 as the business shifted
into the US centric technology
sector. We will continue expanding
that population where possible,
taking into account affordability,
and where talent markets require,
we will continue to operate within
the enhanced dilution limit of 12.5%
of share capital in a rolling 10-year
period as agreed by shareholders at
the 2021 AGM.
Board changes
J Schwan
As announced on 20 July 2022,
J Schwan stepped down from the
Board and retired and stepped
down as Chief Executive Officer
with effect from 31 July 2022. J will
remain with the business during
his notice period until the end of
January 2023, providing handover
services and supporting Kelly
and the Board. J will be treated
as a good leaver for incentive
purposes. Given his dedication
and contribution over his tenure as
Chief Executive Officer, successfully
steering the business through a
period of unparalleled change,
in addition to his support during
the handover period to allow a
smooth transition in leadership, the
committee considered that this
treatment is appropriate. Further
details of the arrangements applied
in respect of his remuneration
have been detailed within the
payments for loss of office section
on page 169 and comply with the
Remuneration Policy.
Kelly Manthey
Kelly Manthey joined the Board as
Chief Executive Officer with effect
from 1 August 2022. Her salary on
appointment was set at $525,000,
the same as J received for the Chief
Executive Officer role. While we
understand shareholder guidance
that the base salary for a new
incumbent should be set below
that of the previous officer, given
the Kin + Carta Chief Executive
Officer’s salary has not been
increased for seven years and our
need to pay competitively in the US
technology market, the committee
believe that this salary positioning is
appropriate. Kelly’s pension was set
at 5% of salary, in line with the rate
of pension offered to the majority of
the wider workforce. Kelly’s variable
pay opportunities will be in line with
the proposed Policy changes i.e. for
2023 a maximum annual bonus of
150% of base salary and a maximum
LTIP award of 225% of base salary.
Chris Kutsor
From 1 August 2022, Chris’
responsibilities were expanded to
include both the Chief Financial
Officer and Chief Operating Officer
roles. To reflect this additional
responsibility, and the continuing
pace of salary change across the
wider workforce and our key talent
markets in the US technology
sector, Chris’ salary was increased
by 14% to $405,000. This compares
to a 12% increase for US resident
employees in 2022/23 and 10%
increase for the full Kin + Carta
workforce in 2022/23.
Performance and reward
for 2022
The strong performance for 2022
has resulted in a payout of 96% of
the maximum bonus award for the
Executive Directors. The committee
judged that:
• The 35% of bonus opportunity
based on adjusted PBT was
achieved in full. The restated
adjusted PBT growth target
range (restated to exclude
divestments (Edit, Incite and
Relish) and include prorated
contributions from acquisitions
(Melon Group and Loop
Integration)) was £13.9 million
to £15.4 million (with full payout
of 35% of salary if adjusted PBT
of £15.4 million was achieved
or exceeded). Actual adjusted
PBT for the year was £16.1 million
and, therefore, this target was
achieved in full.
• The 35% of bonus opportunity
based on net revenue was
achieved in full. The net revenue
growth target range was 20%
to 40% (with full payout of 35%
of salary if the 40% stretch was
achieved or exceeded). Actual
net revenue growth for the year
was 42% and, therefore, this
target was achieved in full.
• The 20% of bonus opportunity
based on strategic objectives,
relating to growth, services,
people, responsibility, operations
and expansion, was met 92.5%.
Therefore, 18.5% out of 20%
was achieved. Details of the
strategic objective outcomes are
described in detail on page 163.
• The 10% of bonus opportunity
based on environmental, social
and governance (“ESG”) matters
was met 75%. Therefore, 7.5%
out of 10% was achieved. Details
of the ESG outcomes are
described in detail on page 164.
In determining the bonus
outcome, the committee reviewed
performance in the round, in
particular the significant increase
to net revenue and adjusted PBT
growth, and the experience of our
wider stakeholders during the year,
and considered that a 96% bonus
award was appropriate. Further
details have been disclosed on
pages 163 and 164.
The annual report on remuneration
also gives detail of the LTIP awards
granted in December 2019, which
vest in December 2022. The relative
TSR target (50% of the award)
and growth in net revenue from
2018/19 to 2021/22 target (25% of
the award) were met in full. In the
case of relative TSR, out of 562
companies, we were ranked 17,
which is a remarkable achievement.
The target relating to the growth
in PBT from 2018/19 to 2021/22
(25% of the award) was partially
satisfied, with 42% of this portion
of the award vesting. Therefore, the
LTIP award will vest at 86%. Further
details are provided on pages 164
and 165. The committee considered
that the outcomes under the bonus
and LTIP elements of the Policy were
appropriate given the outstanding
performance achieved, and no
discretion was exercised.
Looking forward
I am grateful for the input provided
by our shareholders during the year.
We continue to value any feedback
from shareholders and hope to
receive your support for our new
Policy and our Annual Remuneration
Report at the forthcoming AGM.
Nigel Pocklington
Chair of the Remuneration
Committee
12 October 2022
Kin + CartaBuilding a world that works better for everyone.Governance Directors’ remuneration report
continued
Policy report
Directors’ Remuneration Policy
146
This section of the report sets out the Remuneration Policy (the “Policy”) for Executive and Non-Executive Directors,
which will be put forward for shareholder approval at the 2022 AGM on 1 December 2022. The committee intends
that the Policy will come into effect from the date of the AGM and is intended to apply for a period of up to
three years.
Overview of Remuneration Policy
The committee’s Policy for the remuneration of the Company’s Executive Directors is that it should be structured so
as to attract and retain executives of a high calibre with the skills and experience necessary to develop the Company
successfully. It aims to recommend strategies that support the creation of long-term value for shareholders and reflect
and support the delivery of the Company’s strategic priorities, while taking due account of market best practice.
When determining levels of remuneration, the committee periodically reviews the remuneration practices adopted by
appropriate comparator companies both in the market generally both in the US and the UK and in the same business
sector as the Company i.e. the technology sector. Both of our Executive Directors are based in the US where the
majority of our business and growth potential is and the committee took this into account when determining our
new policy.
The committee believes that a significant portion of the remuneration package of senior executives should be
linked to performance, while ensuring that an appropriate balance is struck between (i) fixed and variable pay;
(ii) short-term and long-term variable pay; and (iii) the delivery of rewards in cash and shares. The committee
will regularly review the Company’s remuneration policies to ensure that these policies neither encourage nor
reward inappropriate operational risk taking that may be to the detriment of shareholders’ interests and that these
remuneration policies are, therefore, compatible with the Company’s general risk policies and systems.
The Policy table on pages 148 to 153 sets out the key aspects of the Company’s Remuneration Policy for
Executive Directors.
How the new Remuneration Policy aligns with the 2018 UK Corporate Governance Code
The Code sets out principles against which the committee should determine the Remuneration Policy for executives.
A summary of the principles and how the revised Kin + Carta Remuneration Policy reflects these is set out below:
Principle
Approach
147147
Clarity – remuneration arrangements should be
transparent and promote effective engagement with
shareholders and the workforce.
Simplicity – remuneration structures should avoid
complexity and their rationale and operation should be
easy to understand.
Risk – remuneration arrangements should ensure
reputational and other risks from excessive rewards,
and behavioural risks that can arise from target-based
incentive plans, are identified and mitigated.
Predictability – the range of possible values of
rewards to individual Directors and any other limits or
discretions should be identified and explained at the
time of approving the policy.
Proportionality – the link between individual awards,
the delivery of strategy and the long-term performance
of the Company should be clear. Outcomes should not
reward poor performance.
The committee operates a consistent remuneration
approach that is well understood both internally and
externally with investors. Consultation with shareholders
on the revisions to the Policy has been undertaken.
The Company operates a UK market standard
remuneration structure that is familiar to all stakeholders.
Each year, incentive targets will be set, which the
committee believes are stretching and achievable within
the risk appetite set by the Board. The committee retains
discretion to override formulaic incentive outcomes if
they do not accurately, or fairly, reflect the underlying
performance of the business.
Incentive schemes include recovery provisions that allow
for recovery in circumstances such as gross misconduct,
calculation error, reputational damage or corporate
failure arising from poor risk management to ensure that
malus and clawback provisions are sufficiently wide-
ranging.
The committee maintains clear annual caps on
incentive opportunities and will use its available
discretion if necessary. Details of the range of possible
values of remuneration opportunities and other limits
or discretions can be found on page 154 and in the
Policy table.
The committee ensures performance metrics continue
to be clearly aligned with the Group’s strategy each
year, maintaining an appropriate balance between base
pay, short and long-term incentive opportunities and
between financial and non-financial goals.
Alignment to culture – incentive schemes should drive
behaviours consistent with Company purpose, values
and strategy.
Bonus and incentive schemes are reviewed by the
committee to ensure consistency with the Group’s
purpose, values and strategy.
Kin + CartaBuilding a world that works better for everyone.Governance Directors’ remuneration report
continued
Executive Directors’ Remuneration Policy
The following table sets out the elements of our Executive Director remuneration and how each element operates, as
well as the maximum opportunity of each element and, where relevant, the approach to performance measures.
148
Basic salary
Purpose and link to strategy
Maximum potential value
To provide competitive fixed remuneration that will
attract and retain key employees of a high calibre
and which reflects their experience and position in
the Company.
Operation
Normally reviewed annually with increases effective
from 1 August; salaries are normally paid monthly.
Increases may be awarded at other times if appropriate.
In setting salaries, the committee typically takes into
account the following:
•
•
•
the size and complexity of the organisation;
the size and complexity of the role;
the individual’s skills, experience, performance and
overall contribution to the business;
• pay and conditions across the workforce;
• external economic factors such as inflation;
• market practice for similar roles in comparable
organisations;
•
the impact of any base salary increase on the total
remuneration package; and
• any other factors that the committee considers
are relevant.
Benefits
No maximum salary or salary increase has been set,
although increases are generally in line with the range (in
percentage of salary terms) awarded across the Group.
In accordance with normal practice at all levels in
all parts of the Group, increases above this level (in
percentage of salary terms) may be made in certain
circumstances such as:
• promotion or where there is a change in scope or
increase in responsibilities of an individual’s role;
• an individual’s development or performance in role;
• a change in the size and complexity of the Group;
• significant market movement; and
• where an Executive Director has been appointed
to the Board at a lower than typical market salary
to allow for growth in the role, larger increases may
be awarded to move salary positioning closer to
typical market level as the Executive Director gains
experience and performance warrants this.
Performance metrics
Not applicable.
Purpose and link to strategy
Maximum potential value
To provide market competitive, yet cost effective,
benefits to attract and retain high calibre executives.
Operation
Benefits generally include provision of a car, or cash in
lieu of car and fuel allowance, and private medical and
life assurance cover.
The Committee may introduce other benefits to the
Executive Directors if this is considered appropriate
taking into account the individual’s circumstances, the
nature of the role and practice for the wider workforce.
Reasonably incurred expenses will be reimbursed.
The Company may meet any tax liabilities that may
arise on expenses.
Where an Executive Director is required to relocate to
perform their role, appropriate one-off or ongoing benefits
may be provided (such as housing, schooling etc).
While the Remuneration Committee has not set a
maximum level of benefits that Executive Directors
may receive, the value of benefits is set at a level which
the Remuneration Committee considers appropriate,
taking into account market practice and individual
circumstances.
The maximum overall cost of total benefit provision may
vary each year subject to changes in the Company’s
insurance premiums or changes to the terms of the
benefits provided.
Performance metrics
Not applicable.
Pension
Purpose and link to strategy
Maximum potential value
To provide market competitive, yet cost-effective
benefits.
Operation
Only basic salary is pensionable.
A Company contribution to a defined contribution
pension scheme, a personal pension or provision of
a cash payment in lieu of a pension contribution (or
combination of such) may be provided at the discretion
of the committee.
Maximum pension contribution will normally be no more
than that offered to the majority of employees (currently
5% of salary).
Performance metrics
Not applicable.
149149
Annual bonus
Purpose and link to strategy
Maximum potential value
Incentivises achievement of annual objectives,
which support the short-term performance goals of
the Company.
Operation
Awards are based on performance as determined by
the committee, typically measured over one financial
year. Pay-out levels are normally determined by the
committee after the year end.
Payments under the annual bonus plan are normally
subject to compulsory payment of any bonus earned
over 50% of maximum (on an after tax basis) in the
Company’s shares under the Company Deferred
Bonus Shares (“DBS”) arrangement, which are subject
to a holding period of two years. Deferred shares will
generally be forfeited if a Director leaves the Group
(unless in certain good leaver situations or if the
committee determines otherwise). The committee
reserves the discretion to disapply deferral in
exceptional circumstances such as where the amount
deferred is too small to make deferral practicable.
Dividends and/or dividend equivalents are payable
on the deferred bonus shares during the two-year
holding period. The number of additional shares may be
calculated assuming the reinvestment of dividends on
such basis as the committee determines.
Payments and awards in relation to the annual
bonus are subject to malus and clawback provisions,
further details of which are included as a note to the
Policy table.
150% of basic salary.
Performance metrics
The committee reviews the choice of annual bonus
measures and targets each year to ensure they reflect
the key performance indicators of the business at
that time.
Targets are normally set annually and aligned with key
financial, strategic and/or individual personal targets
(including ESG targets) with the weightings between
these measures determined by the committee each
year considering the Group’s priorities at the time. At
least 50% of any bonus will be earned for achieving
challenging financial targets aligned with the Company’s
key performance indicators (e.g. adjusted PBT or EPS).
A minority may be subject to achieving non-financial
targets, including ESG, strategic and/or personal
objectives, which reflect the key priorities of the role at
the time.
Normally, once a threshold level of performance is
achieved against a target, a bonus payment of up to 25%
of maximum is triggered, rising to 100% of maximum for
meeting (or exceeding) the maximum target(s) set.
Measurement of financial metrics is made on the basis
of audited figures. Where strategic/personal targets are
set, it may not always be practicable to set these using
a sliding scale and alternative approach may, therefore,
be used.
The Committee has the discretion to adjust performance
targets/set different measures if events occur outside
of management’s control or where the target no longer
satisfies its original purpose to ensure that pay is aligned
with performance.
The committee has discretion to adjust the formulaic
bonus outcomes both upwards (within the plan
limits) and downwards (including down to zero) if the
vesting outcomes are not considered to be reflective
of underlying financial or non-financial performance
of the business or the performance of the individual,
where performance targets are no longer considered
appropriate or where the outcome is not considered
appropriate in the context of the experience of
shareholders or other stakeholders.
Kin + CartaBuilding a world that works better for everyone.Governance Directors’ remuneration report
continued
Long-term incentives
Share ownership guidelines
Purpose and link to strategy
Maximum potential value
Purpose and link to strategy
Maximum potential value
150
Incentivises Executives to achieve superior financial
growth and returns to shareholders over the
longer term.
Awards with a face value of up to 225% of basic salary
in respect of any financial year or 275% if the committee
believes there are exceptional circumstances.
Provides alignment with shareholders through awards
of shares.
Promotes retention of key individuals.
Operation
Awards can be in the form of an option, a conditional
award or a forfeitable award.
Eligibility to receive awards is at the discretion of the
committee each year.
An LTIP award may be made shortly after an
appointment (subject to the Company not being in a
prohibited period) subject to the permitted maximum.
Awards are normally made on an annual basis and
normally vest three years from grant subject to
continued employment and the satisfaction of
challenging performance targets.
A two-year holding period following LTIP vesting applies
to grants to Executive Directors. In total, this results in a
five-year combined vesting and holding period.
Participants benefit from the value of dividends and/
or dividend equivalents paid over the vesting period
to the extent that awards vest at the time that awards
are exercised. The number of additional shares may be
calculated assuming the reinvestment of dividends on
such basis as the committee determines.
Awards are subject to malus and clawback provisions,
further details of which are included as a note to the
Policy table.
Performance metrics
Performance is usually measured over a three-year period.
Performance measures for LTIP awards will include
financial measures (which may include, but are not
limited to, total shareholder return (“TSR”), revenue, PBT,
cash flow, returns) and may include strategic measures
(which may include ESG measures).
Under each measure, and subject to the committee’s
discretion to override formulaic outturns, threshold
performance will result in up to 25% of maximum vesting
for that element, increasing to 100% for maximum
performance.
The Committee has the discretion to adjust performance
targets/set different measures if events occur outside
of management’s control or where the target no longer
satisfies its original purpose to ensure that pay is aligned
with performance.
The committee has discretion to adjust the formulaic
LTIP outcomes both upwards (within the plan limits)
and downwards (including down to zero) if the vesting
outcomes are not considered to be reflective of
underlying financial or non-financial performance of
the business or the performance of the individual,
where performance targets are no longer considered
appropriate or where the outcome is not considered
appropriate in the context of the experience of
shareholders or other stakeholders.
All-employee share schemes
Purpose and link to strategy
Maximum potential value
Encourages long-term shareholding in the Company.
Operation
Kin + Carta operates all-employee schemes in the UK
and the US, with invitations made by the committee
under the UK HMRC-approved Sharesave Scheme and
under the US Employee Stock Purchase Plan.
Executive Directors may participate in the all-employee
scheme that operates in their country of residence on
the same terms as other employees of the Group.
Sharesave Scheme: as per HMRC limits (current
maximum monthly savings towards share purchases is
limited to £500 per calendar month).
Employee Stock Purchase Plan: monthly savings towards
share purchases with a maximum value of as per
prescribed limits (currently US$25,000) per calendar
year, based on the market value of the Company’s
ordinary shares at grant).
Performance metrics
Not applicable.
To provide alignment between Executives and
shareholders.
Operation
Not applicable.
Performance metrics
Not applicable.
151151
The committee operates shareholding guidelines of
200% of salary for the Chief Executive Officer and 150%
of salary for other Executive Directors.
The net of tax number of deferred bonus shares or
vested shares under the Company’s LTIP will normally
be required to be retained until the guideline is met.
Post-employment share ownership guidelines
Purpose and link to strategy
Maximum potential value
Not applicable.
Performance metrics
Not applicable.
To provide continued alignment between Executives
and shareholders on stepping down from the Board.
Operation
The committee normally expects Executive Directors
to maintain a level of shareholding for 12 months after
stepping down from the Board, equal to the lower of
their shareholding at the time of leaving the business
and their in-post share ownership guideline.
Post-employment share ownership guidelines will
exclude individually purchased shares and shares
relating to incentives granted prior to the 2020
AGM. The committee will retain discretion about the
application of post-employment share ownership
guidelines in individual cases, including waiving this
guideline if it is not considered to be appropriate in the
specific circumstances.
Notes to the Policy table
1. Remuneration across the Group – While the Remuneration Policy for Executive Directors is designed having
had regard to the Policy for employees across the Group as a whole, there are some differences in the structure
for senior employees that the committee believes to be necessary to reflect the different levels of responsibility
within the Company. The following key differences exist between the Company’s Policy for the remuneration of
Executive Directors and its approach to the payment of employees generally:
•
there is an increased emphasis on performance-related pay and, in particular, for share-based incentives at
the Executive Director level;
• eligibility to participate in and the maximum opportunity in relation to an annual bonus vary, based on
individual role and local practice;
• participation in the LTIP is limited to the Executive Directors and certain selected senior managers and/or key
individuals; and
• benefits offered to other employees vary by location to take account of relevant market conditions and
local practice.
Kin + CartaBuilding a world that works better for everyone.Governance 152
Directors’ remuneration report
continued
2. Performance measures – The choice of the performance metrics and range of targets applicable to the annual
bonus plan for Executive Directors reflect the committee’s belief that any incentive compensation should be
appropriately challenging and tied to both the delivery of robust performance relating to the Group’s financial key
performance indicators and, where appropriate, specific individual/strategic objectives (including ESG objectives).
Performance metrics applicable to the LTIP are selected to support Company strategy and provide shareholder
alignment. Targets applying to the annual bonus and LTIP are reviewed annually, based on a range of internal
and external reference points. Performance targets are set to be stretching but achievable, with regard to the
particular strategic priorities and economic environment in a given year.
3. Shareholding guideline – The share ownership guideline levels are detailed in the Policy table. The shares that an
Executive Director may count towards the in-employment and post-employment shareholding guideline include:
those held in the name of the Director; those held in the name of the Director’s spouse, civil partner, partner or
children; any shares held in a family trust for the benefit of the Director and/or their spouse, civil partner, partner
or children; and any shares held in a personal pension plan on behalf of the Director. The committee may, in its
absolute discretion, approve the holding of shares by alternate means (e.g. shares held under a deferred share
bonus award) and, if permitted, on such terms determined by the committee, acting fairly and reasonably. The net
of tax number of deferred bonus shares or vested shares under the Company’s LTIP will normally be required to
be retained until the guideline is met.
4. Previously approved payments – For the avoidance of doubt, the Committee reserves the right to make any
remuneration payments and/or payments for loss of office (including exercising any discretions available to it
in connection with such payments) notwithstanding that they are not in line with the 2022 Remuneration Policy
set out in the document where the terms of the payment were agreed (i) before the policy came into effect,
provided that the terms of the payment were consistent with any applicable shareholder-approved Directors’
Remuneration Policy in force at the time they were agreed or were otherwise approved by shareholders; or (ii) at
a time when the relevant individual was not a Director of the Company (or other persons to whom the Policy set
out above applies) and, in the opinion of the Committee, the payment was not in consideration for the individual
becoming a Director of the Company or such other person. For these purposes, “payments” includes the
committee satisfying awards of variable remuneration and, in relation to an award over shares, the terms of the
payment are “agreed” no later than the time the award is granted. This Policy applies equally to any individual who
is required to be treated as a Director under the applicable regulations.
5. Plan rules – The committee operates the annual bonus, LTIP, Sharesave Scheme and Employee Stock Purchase
Plan, in accordance with their rules, local taxation guidance (e.g. HMRC and the Internal Revenue Code) and, where
relevant, the Listing Rules. To ensure these incentive plans operate in an efficient manner, the committee retains a
number of standard market practice discretions, which include:
• determining the eligibility to participate in the plans;
• determining the timing of grant of awards and any payments;
•
the size of awards and payments, although with quantum restricted to those detailed in the Policy table and
the respective plan rules;
•
the determination of whether the performance conditions have been met and the resulting vesting/pay out;
• dealing with a change of control (e.g. the timing of testing performance targets) or restructuring of the Group;
• determining a good or bad leaver for incentive plan purposes, based on the rules of each plan and the
appropriate treatment chosen;
• adjustments required in certain capital events such as rights issues, corporate restructuring events and
special dividends; and
•
the annual review of performance conditions for the annual bonus plan and LTIP.
In some circumstances, such as a material acquisition/divestment of a Group business, or a change in Accounting
Standards and Interpretations, which mean the original performance conditions are no longer appropriate,
the committee can adjust the targets, set different measures and alter weightings as necessary, to ensure the
conditions achieve their original purpose and are not materially less difficult to satisfy.
6. Malus and Clawback – Payments and awards under the annual bonus and LTIP are subject to malus and
clawback provisions, which can be applied to both vested and unvested awards. Malus and clawback provisions
will apply for a period of at least two years after payment or vesting. Circumstances in which malus and clawback
may be applied include a material misstatement of the Company’s financial position, fraud or gross misconduct
on the part of the award-holder, an error in calculating the award outcome, actions leading to serious reputational
damage or corporate failure arising from poor risk management.
153153
Participants in the annual bonus and LTIP will be required to acknowledge their understanding and acceptance of the
malus and clawback provisions as a pre-condition to participating in these schemes. The committee is satisfied that
the malus and clawback provisions are appropriate and enforceable.
Policy review process
The committee undertook a review of the Directors’ Remuneration Policy to ensure that it is appropriate to support
our strategy. The process the committee went through was as follows: (i) the committee considered the Company’s
strategy and the changes required to the policy to ensure that we were able to recruit and retain executives of
the calibre required to deliver this strategy and drive high levels of performance; (ii) the committee sought advice
from its independent remuneration consultant in developing the Policy including in relation to current investor
sentiment; (iii) when determining the new Policy the committee ensured it addressed the factors of Provision 40 of
the Code, namely clarity, simplicity, risk, predictability, proportionality and alignment to culture; (iv) the committee
reviewed the wider workforce remuneration and incentives to ensure the approach to Executive remuneration is
appropriate in this context; (v) the committee consulted with Executive Directors and other relevant members of
senior management on the proposed changes to the policy; and (vi) the committee conducted a full consultation
exercise with major shareholders and investor bodies on the changes. The committee was mindful in its deliberations
on the new Remuneration Policy of any potential conflicts of interest and sought to minimise them through an open
and transparent internal consultation process, by seeking independent advice from its external advisors and by
undertaking a full shareholder consultation exercise.
Changes to the remuneration policy
The key changes to the Policy approved by shareholders at the AGM on 23 December 2020 are:
•
•
Increased maximum bonus award from 100% to 150% of salary; and
Increased maximum LTIP award from 125% of salary (or 200% in exceptional circumstances) to 225% of salary with
an exceptional limit of 275% of salary.
Other changes have been made to the wording of the Policy to increase flexibility, to aid operation, to increase
transparency and to reflect typical market practice.
Kin + CartaBuilding a world that works better for everyone.Governance Directors’ remuneration report
continued
Reward scenarios
The chart below shows how the composition of each of the Executive Director’s remuneration packages varies at
different levels of performance under the Policy set out on pages 146 to 153, as a percentage of total remuneration
opportunity and as a total value.
154
K Manthey
Minimum
Target
Maximum
Max + 50% SP Growth
100%
$574,421
29%
25%
21%
17%
54%
$1,952,546
29%
23%
46%
$2,280,671
56%
$2,805,671
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
C Kutsor
Minimum
Target
Maximum
Max + 50% SP Growth
100%
$435,200
29%
25%
21%
17%
54%
$1,498,325
29%
23%
46%
$1,751,450
56%
$2,156,450
Service contracts and loss of office payments
Summaries of the Executive Directors’ contracts are disclosed below. These contracts are held at the registered
office and are available for inspection.
Executive
Kelly Manthey
Chris Kutsor
Date of service contract
Notice period
1 August 2022
9 May 2019
12 months
6 months
155155
It is the Company’s policy that Executive Directors should serve under rolling service contracts of 12 months’ duration
or less, and that there should be no special provisions for compensation in the event of termination (neither in
the normal course nor following a change in control of the Company) and that any compensation payments made
should take account of the Director’s duty to mitigate their loss. The Executive Directors’ current service contracts all
comply with this policy.
The Remuneration Committee reviews the contractual terms for new Executive Directors to ensure these reflect
best practice.
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
In summary, the contractual provisions are as follows:
Fixed remuneration
Annual bonus
LTIP
Fixed pay comprises the 2022/23 basic salary and expected pension contributions, and a value for benefits (using
the value for the year ended 31 July 2022 as a proxy). Incentive opportunities reflect implementation for 2022/23. The
assumptions used in the above at the ‘on-target’ performance level are: (i) 50% of maximum bonus is earned; and (ii) 50%
of the maximum LTIP award vests. The maximum performance level assumes the full bonus is earned and the LTIP award
vests in full. No share price growth is included under the first three scenarios; however, the fourth scenario includes the
impact of a hypothetical 50% increase in share price on the value of the LTIP in accordance with the reporting regulations.
Approach to recruitment and promotions
Basic salary levels will be set on appointment after having had due regard to the Company’s general Remuneration
Policy but adjusted, as appropriate, to reflect the experience and calibre of the individual and the market rates for
similar roles in comparable organisations. If it is considered appropriate to appoint a new Director on a below market
salary (e.g. in the event of an internal promotion), they may be the subject of a series of increases to a desired salary
positioning over an appropriate time frame, subject to performance in post.
Pension contributions will be aligned in percentage of salary terms with the pension offered to the majority of
employees at the time of appointment (currently 5% of base salary). Where an Executive Director is required to relocate
from their home location to take up their role, the committee may provide assistance with relocation (either via one-
off or ongoing payments or benefits). Benefits arrangements would generally be in line with those offered to current
Executives but it may be necessary to tailor these to reflect for example, local market norms and local legislation.
The annual bonus maximum will normally be in line with current Executive Directors (i.e. 150% of basic salary),
pro-rated for the period of service. Depending on the timing of the appointment, the committee may use different
performance measures, targets and weightings to that of the current executives for the first year of service.
An LTIP award may be made shortly after an appointment (subject to the Company not being in a prohibited period)
subject to the permitted maximum. The total maximum variable remuneration that may be awarded in respect of
recruitment is 425% of salary (excluding buy-out awards referred to below).
Where an individual forfeits outstanding variable pay opportunities or contractual rights at a previous employer as a result
of appointment, the committee may offer compensatory payments or awards, in such form as the committee considers
appropriate, taking into account all relevant factors including the form of awards, expected value and vesting time frame of
forfeited opportunities. When determining any such buy-out, the guiding principle would be that awards would generally
be on a like-for-like basis unless this is considered by the committee not to be practical or appropriate. Awards may be
facilitated under the existing incentive plans where possible, but also using Rule 9.4.2. of the Listing Rules, if necessary.
For an internal Executive Director appointment, any variable pay element awarded in respect of the prior role may be
allowed to pay out according to its terms, adjusted as relevant to take into account the appointment.
Provision detailed terms
Notice period:
Termination payment:
Up to 12 months
Limited to a maximum of basic salary and benefits (including pension),
normally paid monthly and subject to mitigation but may be paid in a lump
sum if the committee determines that this is appropriate
Change of control:
No Executive Director’s contract contains additional provisions in respect of
a change of control
The service contract for any new appointment would be made on similar terms to those described above.
In a leaver event, the following payments may also be made to departing Executive Directors:
1. any share-based entitlements granted to an Executive Director under a Company share plan will be determined
based on the relevant plan rules. In certain prescribed circumstances, however, such as death, ill-health, disability,
retirement or other circumstances at the discretion of the committee, a ‘good leaver’ status may be applied.
Under the LTIP, for good leavers, future awards will normally be tested for performance over the full performance
period and be reduced pro-rata to reflect the proportion of the performance period actually served, rounded-up
to the next complete financial year, with Remuneration Committee discretion to determine that awards vest at
an earlier date and/or to disapply time pro-rating. Vested LTIP awards, which are subject to an additional holding
period, will typically be retained and released at the end of the holding period, with committee discretion to treat
otherwise. Under the DBS, in certain prescribed circumstances, awards will be retained in connection with a leaver
event (such as death or permanent disability or any other reason permitted by the Remuneration Committee);
2. a pro-rata bonus may be payable for the period of service in certain prescribed good leaver circumstances
and in other circumstances at the discretion of the committee and subject to the achievement of the relevant
performance targets;
3. at the discretion of the Remuneration Committee, a contribution to reasonable outplacement costs in the event
of termination of employment. The committee also retains the ability to reimburse reasonable legal costs incurred
in connection with a termination of employment; and
4. any payment for statutory entitlements or by way of settlement of any claim arising in connection with the
cessation of employment.
Kin + CartaBuilding a world that works better for everyone.Governance Directors’ remuneration report
continued
Non-Executive Directors Remuneration Policy
Executive Directors may not accept an appointment outside the Company without prior permission of the Board.
The extent to which any fees are retained by the individual or are remitted to the Company will be considered on a
case-by-case basis. No Executive Director currently holds an external non-executive appointment on the Board of a
publicly listed company.
156
All Directors, including the Chairman and Non-Executive Directors, are subject to annual re-election at the AGM. The
Chairman and Non-Executive Directors’ letters of appointment are kept at the registered office and are available for
inspection. The letters of appointment are summarised as follows:
Non-Executive Director
Date of letter of appointment
Notice period
157157
Chairman and Non-Executive Directors
The following sets out the fee policy for the Chairman and Non-Executive Directors:
Purpose and link to strategy
Maximum potential value
These fees may be revised periodically in line with the
Company’s policy. Given the periodic nature of the review
any increases (as a % of total fees) may be greater than
that awarded to the wider workforce in any particular year.
The maximum aggregate fees are set in accordance
with the Company’s articles of association, currently
£500,000.
Performance metrics
Not applicable.
To attract and retain high calibre individuals without
prejudice to the application of independent views.
Operation
Non-Executive Directors’ remuneration is decided
by the Executive Directors and the Chairman; the
Chairman’s fee is set separately by the committee.
The fee level is reviewed at appropriate intervals by the
committee, taking into account time commitment, the
experience and calibre of the individuals and personal
contribution and fee levels at other companies of a
similar size and complexity.
Any increases in fees also take account of any
increases payable to Executive Directors and to the
general workforce.
Non-Executive Directors are paid a basic fee for
membership of the Board with additional fees being
paid for chairmanship of Board committees.
Additional fees may also be paid for other Board
responsibilities or roles or time commitment, such
as for holding the position of Senior Independent
Director. The Company may pay an additional fee to a
Non-Executive Director should the Company require
significant additional time commitment in exceptional
circumstances.
Fees are normally paid in cash.
Neither the Chairman nor any of the other Non-Executive
Directors are eligible to participate in any of the Group’s
incentive arrangements.
Reasonably incurred expenses will be reimbursed.
The Company may meet any tax liabilities that may
arise on expenses.
Additional benefits may be introduced if considered
appropriate.
David Bell
Maria Gordian
John Kerr
Michele Maher
Nigel Pocklington
10 July 2018
1 November 2021
17 July 2019
24 April 2019
4 March 2016
3 months
1 month
3 months
3 months
3 months
No other remuneration is payable to a Non-Executive Director on termination of an appointment.
In recruiting a new Non-Executive Director, the committee will use the Policy as set out on pages 156 and 157.
Consideration of shareholder views
The Remuneration Committee considers shareholder feedback received in relation to the AGM each year at a
meeting immediately following the AGM. This feedback, plus any additional feedback received from time to time, is
then considered as part of an annual review of the Remuneration Policy.
In addition, the committee seeks to proactively engage directly with major shareholders and their representative
bodies and takes their views seriously. In the event that the committee wishes to make material changes to the
Remuneration Policy, appropriate dialogue will take place with the Company’s major shareholders in advance.
This year, the committee undertook a review of the Remuneration Policy. Having developed a proposed policy, the
committee consulted with all major shareholders and key institutional investors were invited to provide feedback on
the proposals. The committee will seek to engage directly with major shareholders and their representative bodies
should any material changes be proposed to be made to the Remuneration Policy.
Consideration of employment conditions elsewhere in the Group
While the Company does not formally consult with employees on matters of executive remuneration, it does consider
the general basic salary increase for the broader UK employee population when determining the annual salary
review for the Executive Directors. The committee is also made aware of employment conditions within the wider
Group, including a general overview of variable pay plan outcomes. Additionally, it is the decision making body for
all-employee share plans. The committee also considers environmental, social and governance issues, and risk when
reviewing executive pay quantum and structure.
There has been engagement with the workforce to explain how executive remuneration aligns with wider company
pay policy. For example, a series of communications have taken place with the wider workforce related to share
plans and how they align with the Company’s aspirations, the Executive Director remuneration and that of the
wider workforce.
Kin + CartaBuilding a world that works better for everyone.Governance 158
Directors’ remuneration report
continued
Annual report on remuneration
The following section provides details of how Kin + Carta’s Remuneration Policy was implemented during 2021/22,
how we intend to implement the Remuneration Policy for 2022/23 is detailed on pages 160 to 172.
Membership of the committee
Michele Maher, Nigel Pocklington, Helen Stevenson (to 14 December 2021) and Maria Gordian (from 3 March 2022), all
Independent Non-Executive Directors, served on the committee during the year. The committee is chaired by Nigel
Pocklington. The number of meetings held, attendances and a description of the principal matters considered by the
committee in carrying out its duties during the year are described on pages 142 to 145.
During the year under review, the committee, where appropriate, sought advice and assistance from Daniel Fattal
(Company Secretary), and members of the Board, including John Kerr (Chairman), David Bell (Non-Executive
Director), J Schwan (Chief Executive Officer to 31 July 2022), and Chris Kutsor (Chief Financial Officer and Chief
Operating Officer) in connection with carrying out its duties. None of these persons took part in decisions relating
specifically to their own remuneration.
Role of the committee
The committee is responsible for determining and agreeing with the Board the overall Remuneration Policy and
its implementation, including setting the individual remuneration packages and contractual arrangements for the
Executive Directors, senior management and the Chairman, which support the creation of value for shareholders and
the delivery of the Group’s strategic priorities.
The committee is mindful of the intense scrutiny around Executive remuneration and seeks to keep abreast of and
adopt best practice where appropriate, taking into account its position in the FTSE SmallCap.
When undertaking its duties, the committee also ensures that due account is taken of pay and employment
conditions throughout the Group by keeping abreast of matters such as: (i) the general level of salary increases (if
any) applied throughout the Group; (ii) the levels of bonuses paid (and bonus opportunity offered) to the workforce
as a whole; and (iii) any widespread changes that are proposed to Group-wide employment conditions.
The full terms of reference for the committee are available on the Company’s website: investors.kinandcarta.com.
Committee’s advisors
Deloitte LLP have been retained as independent advisors to the committee since 2021, following a competitive
tender process. Deloitte is one of the founding members of the Remuneration Consulting Group, details of which can
be found on the Remuneration Consulting Group’s website: remunerationconsultantsgroup.com.
Deloitte reported directly to the chair of the Remuneration Committee. The fees paid to Deloitte in relation to advice
provided to the committee for 2022 were £91,500 (2021: £38,200), on a time and materials basis.
The committee has reviewed the advice provided by Deloitte during the year and is satisfied that the advice has
been objective and independent. The lead Remuneration Committee advisors have no other connection with
Kin + Carta or its Directors.
Summary of activities
During the year, the committee:
• approved outcomes of bonuses for the Executive Directors in respect of 2020/21;
• approved the Directors’ remuneration report for 2020/21;
• approved the grant of awards in December 2021 under the Company’s 2020 LTIP to certain senior managers and
159159
the performance conditions attached to their vesting;
• approved the structure of the Executive Directors’ bonus scheme for 2021/22;
• discussed the Executive Directors’ salaries and pension provision for 2022/23;
• discussed the Chairman’s and Non-Executive Directors’ fees for 2022/23;
• undertook a review of the Remuneration Policy, including consideration of award levels and incentive
structures; and
• consulted with major shareholders on the Remuneration Policy to be put to shareholder vote at the 2022 AGM.
Summary of shareholder voting
The following table shows the results of the last binding vote on the Remuneration Policy at the 2020 AGM and the
advisory vote on the 2020/21 Directors’ remuneration report at the 2021 AGM:
Resolution
Votes for
(note 1)
% for
(note 1)
Votes
against
%
against
Total
votes cast
Votes
withheld
Remuneration Policy – 2020 AGM
110,739,306
87.18%
16,290,885
12.82%
127,030,191
789,119
Remuneration Report – 2021 AGM
116,564,447
87.65%
16,430,573
12.35%
132,995,020
4,994
Note 1: Includes”discretionary” votes.
Kin + CartaBuilding a world that works better for everyone.Governance Directors’ remuneration report
continued
Implementation of Remuneration Policy for 2022/23
The following section provides details of how we intend to implement the Remuneration Policy for 2022/23, subject
to shareholder approval at the 2022 AGM.
160
Basic salary
The committee reviewed the Executive Directors’ salaries for 2022/23 as follows:
Kelly Manthey (appointed 1 August 2022)
Chris Kutsor
From
From
1 August 2022
1 August 2021
% increase
US$525,000
N/A
US$405,000
US$354,250
–
14.0%
As disclosed in the Annual Statement on page 144, the increase awarded to Chris Kutsor represents the increased
scope of his responsibilities from 1 August 2022 as Chief Financial Officer and Chief Operating Officer, and the
committee’s ongoing commitment to retain the market rate of employee pay in a highly competitive talent market.
The average salary increase across the Group for 2022/23 is 10%; for US resident employees only, the average is 12%.
Pension and benefits
No changes in pension contribution rates or benefits provision to the Executive Directors are to be applied during
the year.
Measure
Weighting
Targets
TSR relative to
the FTSE All-
Share
50%
ESG targets
20%
0% vesting below median performance
25% vesting for performance in line with median
100% vesting for upper quartile performance or greater
Straight-line vesting between these points
Establish carbon measurement framework (5% weighting)
Define and execute client engagement model (5% weighting)
Measure 100,000 to 400,000 tonnes of carbon savings
from client work (10% weighting), as follows:
0% vesting below 100,000 tonnes
10% vesting for 400,000 tonnes and above
Straight-line vesting between these points
Growth in net
revenue (CAGR)
15%
Growth in
adjusted PBT
(CAGR)
15%
0% vesting below 12% p.a.
25% vesting for 12% p.a.
100% vesting for 24% p.a. or more
Straight-line vesting between these points
0% vesting below 24% p.a.
25% vesting for 24% p.a.
100% vesting for 34% p.a. or more
Straight-line vesting between these points
Performance
measurement period
1 August 2022 to
31 July 2025
(three-month averaging)
1 August 2022 to
31 July 2025
161161
Net revenue in 2024/25 as
compared to 2021/22
Adjusted PBT in 2024/25 as
compared to 2021/22
Kelly Manthey and Chris Kutsor will receive pension contributions of 5% of base salary, in line with the rate applied to
the majority of the wider workforce.
In the event of any material acquisition or divestment, the committee would adjust the adjusted PBT and net revenue
targets for the acquisition or divestment.
Non-Executive Director Remuneration Policy for 2022/23
Base fee levels for the Chairman and Non-Executive Directors are currently £130,000 p.a. and £42,500 p.a.
respectively, with an additional fee for the Audit and Remuneration Committee chairs of £7,500 p.a. and a fee for
acting as the Senior Independent Director of £5,000 p.a.; John Kerr (Chairman) will forego £10,000 p.a. of his fee,
which the Company donates, together with a matching sum from the Company, to registered charities.
There will be no change to these fee levels for 2022/23.
Annual bonus
As discussed in the Annual Statement on page 143, bonus opportunities for Executive Directors will be 150% of
salary, with any amount earned over 50% of maximum deferred in shares for two years. The bonus will be based on a
combination of financial, strategic and ESG measures, weighted 70%, 20% and 10% respectively.
As always, the committee will consider overall business performance in approving any payouts at the end of the
financial year.
A summary of performance measures and weightings is included in the table below:
Measure
2022/23 adjusted PBT
2022/23 net revenue
Strategic objectives
Environmental, social and governance (“ESG”) matters
Weighting
35%
35%
20%
10%
In the event of any material acquisition or divestment, the committee would adjust the adjusted PBT and adjusted
net revenue targets for the acquisition or divestment. The Board considers the targets for the annual bonus
to be commercially sensitive and, therefore, will not be disclosing these prospectively. However, it is intended
that retrospective disclosure, including any such adjustment of targets, will be provided in next year’s Directors’
remuneration report. In setting adjusted PBT and adjusted net revenue targets for the year, the committee reviews a
range of internal and external reference points to ensure that targets are appropriately stretching yet achievable.
Long-term incentive awards in 2022/23
LTIP awards for Executive Directors in the 2022/23 financial year will be made in line with proposed Remuneration
Policy as discussed in the annual statement on page 143. The 2022/23 LTIP award level for Chief Executive Officer and
Chief Financial Officer will be 225% of salary.
These awards will be subject to relative TSR, net revenue, adjusted PBT and ESG targets, assessed over three years
to 31 July 2025, as set out on pages 160 and 161. Any vesting will be subject to the committee’s overall discretion. All
vested shares will be subject to a two-year holding period.
Kin + CartaBuilding a world that works better for everyone.Governance
Directors’ remuneration report
continued
Remuneration payable to Directors for the year ended 31 July 2022
Directors’ single figure table (audited)
Incentive outcomes for the year ended 31 July 2022 (audited)
Annual bonus
Set out below, in a single figure, is the total remuneration of all Directors for the financial year ended 31 July 2022 and
financial year ended 31 July 2021.
Executive Directors’ bonuses for the year ended 31 July 2022 provided for a payment of up to 100% of salary, with the
performance measures weighted as follows:
162
Director
Executive Directors
J Schwan (note 6)
2021/22
Chris Kutsor
(note 6)
2020/21
2021/22
2020/21
Non-Executive Directors
David Bell
Maria Gordian
(note 9)
2021/22
2020/21
2021/22
2020/21
John Kerr (note 7)
2021/22
Michele Maher
Nigel Pocklington
Helen Stevenson
(note 8)
2020/21
2021/22
2020/21
2021/22
2020/21
2021/22
2020/21
398.6
385.2
269.0
238.4
42.5
42.5
31.9
–
120.0
120.0
50.0
50.0
50.0
50.0
17.7
47.5
Basic
salary/fee
(note 1)
£’000
Taxable
benefits
(note 2)
£’000
Bonus
(note 3)
£’000
Share
plans
vesting
(note 4)
£’000
Pension
benefits
(note 5)
£’000
35.2
14.9
16.0
14.5
382.7
385.2
258.2
238.4
684.3
938.7
1,432.4
62.6
59.8
57.8
13.4
11.9
Total
£’000
1,560.6
1,790.4
1,989.0
565.8
Total
fixed
£’000
Total
variable
£’000
493.6
457.9
298.4
264.8
1,067.0
1,332.5
1,690.6
301.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
42.5
42.5
31.9
–
120.0
120.0
50.0
50.0
50.0
50.0
17.7
47.5
42.5
42.5
31.9
–
120.0
120.0
50.0
50.0
50.0
50.0
17.7
47.5
–
–
–
–
–
–
–
–
–
–
–
–
Note 1: Cash paid or payable in respect of the relevant period.
Note 2: Taxable benefits constitute additional payments in lieu of the provision of a company car, fuel benefit and, for J Schwan, tax equalisation to compensate for unrelieved
double tax suffered. For Chris Kutsor, the 2020/21 taxable benefits figure has been restated from £7.3k to £14.5k.
Note 3: This is the amount of cash bonus paid in respect of the financial year.
Note 4: Figures for “share plans vesting” are based on the number of shares vesting for performance periods substantially completed as at year end. In the 2020/21 Directors’
remuneration report, the potential value of the 2018 LTIP award was calculated using the average share price for the three months ending 31 July 2021, being 222.9p. For
J Schwan, whose 2018 LTIP award vested during the year, the 2018 LTIP figures in the table above have been restated to reflect the actual number of 2018 LTIP awards, which
vested on 19 November 2021 using the share price on the day of vesting (being 327.0p). The restated value provides a difference of 104.1p per vested share in comparison to
the estimate contained in the 2020/21 Directors’ remuneration report on page 164, which was £639.9k. The proportion of the restated value in the single figure table for these
awards which is attributable to share price growth is 31.8%. For Chris Kutsor, the 2020/21 figure reflects the vesting of 39,867 Restricted Stock Units (“RSUs”) on 15 March 2021
(the share price on the day of vesting being 157.0p); he did not receive a 2018 LTIP award as he was not employed by Kin + Carta on the date of grant. Chris Kutsor’s RSU awards
were made in connection with his appointment to the Board in 2019 and were subject to continued employment.
The 2019 LTIP award is expected to vest at 86% of maximum, detailed further on pages 164 and 165. The potential value of the 2019 LTIP award was calculated using the average
share price for the three months ending 31 July 2022, being 199.2p. The awards were granted on 17 December 2019, when the five-day average share price prior to the date of
grant was 100.14p. Between the grant date and the estimated share price, the proportion of the value disclosed in the single figure table attributable to share price growth is
49.7%. The 2022 figure for Chris Kutsor also reflects the vesting of 39,867 RSUs on 14 March 2022, which were subject to continued employment, and his Option over 358,803
shares with an exercise price of 110.5p per share, which vested on 14 March 2022. These were made in connection with his appointment to the Board in 2019 as detailed on page
165. For these two awards, the value shown is based on the share price on vesting of 249.5p.
Note 5: Pension benefits paid or payable in respect of the year are satisfied by part payment into a Group Personal Pension Plan and part payment as cash in lieu of pension for
J Schwan and Chris Kutsor.
Note 6: The remuneration of J Schwan and Chris Kutsor is denominated in US Dollars and has been converted for the purposes of the single figure table using the average £:$
exchange rate in the year of 1.317 (2021: 1.363).
Note 7: John Kerr has elected to forego £10,000 p.a. of his fee of £130,000 p.a.. The Company donates this sum withheld, together with a matching sum from the Company, to
registered charities.
Note 8: Helen Stevenson stepped down from the Board as Non-Executive Director on 14 December 2021. Her remuneration in the single figure table above is up to this date.
Note 9: Maria Gordian was appointed to the Board as Non-Executive Director on 1 November 2021. Her remuneration in the single figure table above is from this date.
Measure
2022 adjusted PBT
2022 adjusted net revenue
Strategic objectives
ESG
The following provides the performance measures targets, together with the outturns for 2021/22.
Financial measures (70% of maximum)
Measure
Adjusted PBT*
Threshold
target
(25% of
maximum)
Mid-target
(50% of
maximum)
Maximum
target
(100% of
maximum)
Actual
performance
£13.9 million
£14.4 million
£15.4 million
£16.1 million
Adjusted net revenue growth
20%
26.7%
40%
42%
Total
Weighting
163163
35%
35%
20%
10%
Bonus
earned as
a % of base
salary
35%
35%
70%
* The PBT target was restated to exclude divestments (Edit, Incite and Relish) and include prorated contributions from acquisitions (Melon Group and Loop Integration) made
during the year after the original target was set. This approach reflects our remuneration principles and is consistent with practice in prior years.
The outcome – full vesting under the adjusted PBT and adjusted net revenue growth measures – is considered
appropriate by the committee taking into account broader financial and operational performance over the year.
Strategic objectives (20% of maximum)
Each Executive Director may earn up to 20% of salary for the achievement of stretching strategic objectives, which
for 2021/22 related to the following initiatives: Growth; Services; People; Responsibility; Operations; and Expansion.
Both Executive Directors were assessed as having achieved their objectives in part to 92.5%, with the committee
noting in particular the following:
• For the Growth objective, we successfully launched a Managed Service offering in both Americas and Europe.
However, the target for global Managed Service revenue to account for 16% of total net revenue was not achieved.
The Growth objective has been 75% met.
• For the Services objective, new Service Lines, Service Offerings, and Practices have been identified and activated
contributing to the organic revenue increase by 37% year-on-year versus 2020/21, compared to a target of 20%.
The Services objective has been 100% met.
• For the People objective, a total of seven Kin Accelerator Programme cohorts were launched (US: four; Europe:
two; Latin America: one), compared to a target of four cohorts. The People objective has been 100% met.
• For the Responsibility objective, we successfully developed and launched a client-focused sustainability audit for
key clients and partners and developed a positive impact project scoring methodology in order to identify, which
projects, or parts of projects, have a positive impact. The Responsibility objective has been 100% met.
• For the Operations objective, several tools and systems were rolled out, including a new budget and consolidation
tool, a HR information system and digitalised various operational processes aimed at enhancing operational
efficiency throughout the organisation. The Operations objective has been 100% met.
• For the Expansion objective, we added £3 million of incremental EBITDA through acquisition, which was below
the £6 million of incremental EBITDA target. However, the target to acquire a nearshore business for the European
region was achieved through the acquisition of Melon Group, and in turn, the nearshore headcount target of 25%
of total headcount was also achieved by reaching 29%. The Expansion objective has been 80% met.
Therefore, 18.5% out of 20% was achieved.
Kin + CartaBuilding a world that works better for everyone.Governance Directors’ remuneration report
continued
ESG (10% of maximum)
In addition to the adjusted PBT, adjusted net revenue and strategic objectives, each Executive Director may earn up
to 10% of salary for achieving the Responsible Business KPI targets for the year. This measure was assessed as being
75% achieved; the outcome of each target is disclosed on pages 62 to 64. Therefore, 7.5% out of 10% was achieved.
164
Based on these achievements, the committee has agreed to award the Executive Directors annual bonuses
equivalent to 96% of salary in respect of 2021/2022, of which amounts over 50% of maximum will be deferred in
Company shares in line with the Remuneration Policy.
The committee believed the overall outcome was appropriate based on the Group’s performance during the year and
no discretion was exercised.
2019 LTIP vesting in December 2022 (audited)
For the 2019 LTIP award granted on 17 December 2019, the awards are subject to the achievement of performance
measures. Vesting of the 2019 LTIP awards is detailed in the table below:
Measure
Weighting
Targets
TSR relative to the FTSE
All Share
50%
0% vesting for below median
performance
25% vesting for median performance
100% vesting for upper quartile
performance or greater
Straight-line vesting between these
points
25%
0% vesting below 6% p.a.
25% vesting for 6% p.a.
100% vesting for 12% p.a. or more
Straight-line vesting between these
points
25%
0% vesting below 4% p.a.
25% vesting for 4% p.a.
100% vesting for 10% p.a. or more
Straight-line vesting between these
points
Growth in net revenue
(CAGR)
Growth in adjusted PBT
(CAGR)
Total vesting
Outcome
Above upper
quartile1
Vesting
%
100%
14.2%2
100%
5.4%3
42%
Performance
period
1 August 2019
to 31 July
2022
(three-month
averaging)
Net revenue
in 2021/22
compared to
2018/19
Adjusted PBT
in 2021/22
compared to
2018/19
The committee believed the vesting outcome of the 2019 LTIP award was appropriate in light of the Group’s
performance over the performance period and no discretion was exercised. The award is subject to a two-year
holding period.
2019 RSUs and 2019 Options vesting in March 2022 (audited)
As disclosed in 2019/20 Directors’ remuneration report, in order to facilitate the recruitment of Chris Kutsor in June
2019, the committee agreed a balanced buy-out package to compensate him for incentives forfeited on leaving
his previous employer, which included an award of 119,601 restricted stock units (“RSUs”) and an option to acquire
358,803 shares at an exercise price of 110.5p per share (the “Option”). Reflecting the time horizons of the awards
being replaced, it was agreed that the RSUs would vest in three equal tranches in March 2020, 2021 and 2022 subject
to continued employment with the Group and the Option would vest after three years in March 2022.
165165
Having satisfied the vesting criteria in March 2022, the final tranche of RSUs and the Option vested to Chris Kutsor. A
summary of the awards vesting, which are reflected in the single figure table on page 162, is as follows:
Award
type
Chris Kutsor
RSUs
Chris Kutsor
Option
Date of
grant
17 June
2019
17 June
2019
Total
number
of units
% units
vesting
Number
of units
vesting
Option
price per
share
Share
price
on vesting
Total value
on vesting
39,867
100%
39,867
N/A
249.5p
£99,468
358,803
100%
358,803
110.5p
249.5p
£498,736
Transfer
of award/
earliest
vesting
date
14 Mar
2022
14 Mar
2022
Scheme interests awarded during the 2022 financial year (audited)
Long-Term Incentive Plan (“LTIP”)
On 7 December 2021, J Schwan and Chris Kutsor were granted awards under the Company’s LTIP, as follows:
J Schwan
Chris Kutsor
Shares
over which
awards
granted
Face value
of share
awards
granted (£)
(note 1)
Date of
grant
7 Dec 2021
266,040
7 Dec 2021
179,513
£791,735
£534,231
% of salary
awarded
200%
200%
86%
Note 1: Face value is based on a share price of 297.6p (the five-day average prior to the date of grant). For both J Schwan and Chris Kutsor, the award level was calculated using
a similar five-day average £:$ exchange rate of 1:1.326.
1 The Company achieved a TSR ranking of 17 out of 562 companies, at the top end of the upper quartile.
2 Net revenue in 2021/22 of £162.7 million versus net revenue in 2018/19 of £109.4 million, both values have been adjusted to take into account
performance of divested and acquired entities.
3 Adjusted PBT in 2021/22 of £16.2 million versus adjusted PBT in 2018/19 of £13.8 million, both values have been adjusted to take into account
performance of divested and acquired entities.
Accordingly, the total number of LTIP shares that vested in relation to the performance period completed as at the
period end, and which are reflected in the single figure table on page 162, is detailed in the table below.
J Schwan
Chris Kutsor
Date of
grant
Total number
of shares
17 Dec 2019
399,440
17 Dec 2019
486,946
% shares
vesting
for
performance
86%
86%
Number
of awards
vesting
Total value
on vesting
(note 1)
Transfer
of award/
earliest
vesting date
343,518
£684,288
17 Dec 2022
418,773
£834,196
17 Dec 2022
Note 1: The potential value of the 2019 LTIP award was calculated using the average share price for the three months ending 31 July 2022, being 199.2p.
As disclosed last year, the committee granted these awards at the exceptional limit of 200% of salary to provide an
enhanced incentive to our senior team to continue to deliver exceptional growth to investors, and the opportunities
at the time from Kin + Carta to continue to develop into a robust digital business.
Awards granted vest on relative TSR, ESG metrics linked to B Corp recertification, growth in net revenue and growth
in adjusted PBT, assessed over the three years to 31 July 2024. As disclosed in last year’s report, these targets
have been set to include appropriate challenge for the exceptional award level. Any vesting will be subject to the
committee’s overall discretion. Vested shares will be subject to a two-year holding period.
Kin + CartaBuilding a world that works better for everyone.Governance
Directors’ remuneration report
continued
A summary of the performance conditions is shown in the table below:
Measure
Weighting
Targets
166
TSR relative to
the FTSE All-
Share
50%
ESG targets
20%
0% vesting below median performance
25% vesting for performance in line with median
100% vesting for upper quartile performance or greater
Straight-line vesting between these points
Performance
measurement period
1 August 2021 to
31 July 2024
(three-month averaging)
ESG targets linked to B Corp recertification (as required by B
Lab every three years), coupled with increase in weighted net
Corporate score (demonstrating improvement in underlying ESG
operations and metrics).
1 August 2021 to
31 July 2024
Growth in net
revenue (CAGR)
15%
Growth in
adjusted PBT
(CAGR)
15%
0% vesting below 10% p.a.
25% vesting for 10% p.a.
100% vesting for 20% p.a. or more
Straight-line vesting between these points
0% vesting below 15% p.a.
25% vesting for 15% p.a.
100% vesting for 20% p.a. or more
Straight-line vesting between these points
Net revenue in 2023/24 as
compared to 2020/21
Adjusted PBT in 2023/24 as
compared to 2020/21
In the event of any material acquisition or divestment, the committee would adjust the revenue and PBT targets to
ensure only out performance of the acquisition/divestment is rewarded.
Awards are subject to a malus and clawback provision, which will enable the committee to reclaim value that should
not have been received in the event that, if within the two-year period following the year of vesting, a material
misstatement of the Company’s financial results relating to the year of vesting is identified. In such circumstances,
a clawback would be based on the extent to which the first vesting was overpaid based on new information.
Deferred Bonus Shares (“DBS”)
As reported last year, the 2020/21 annual bonus was achieved at 100% of maximum. In line with the Remuneration
Policy, payments over 50% of the maximum are in the form of the Company’s shares under the DBS arrangement,
which are subject to a holding period of two years.
Accordingly, awards were granted under the DBS in respect of the annual bonus for 2020/21 on 3 November 2021,
details of the grant are disclosed in the Directors’ outstanding share incentive awards table on page 171.
Percentage change in remuneration of Directors and employees
The table on page 167 shows the annual percentage change in each Director’s salary/fees, benefits and bonus, and
the average percentage change in the same remuneration over the same period in respect of the employees of the
Company on a full-time equivalent basis for the periods 2019 to 2020, 2020 to 2021 and 2021 to 2022.
The analysis is based on the average earnings per employee (median of employee pay) in order to avoid distortions
to the Group’s total wage bill because of the movements in the number of employees. The comparator group used is
all Kin and Carta plc employees. The remuneration of J Schwan and Chris Kutsor is reported on a constant currency
in the table on page 167 to eliminate the impact of exchange rate fluctuations. Maria Gordian was appointed during
the year ended 31 July 2022 and, accordingly, has been excluded from the table on page 167.
Salary/fees1
Taxable benefits2
Annual bonus3
2022
2021
20201
2022
2021
2020
2022
2021
2020
Average
employee
J
Schwan
Chris
Kutsor
9.0%
–
–
–
–
–
125.5%
10.0%
–
(9.9)%
7.0%
9.1%
4.0%
3.7%
(6.4)%
0.0%
(26.2)%
(9.6)%
(4.0)%
231.4%
n/a3
(91.0)%
(100.0)%
5.9%
4.6%
n/a3
n/a
David
Bell
John
Kerr
Michele
Maher
Nigel
Pocklington
–
–
–
N/A
N/A
N/A
N/A
N/A
N/A
–
(0.4)%
0.4%
N/A
N/A
N/A
N/A
N/A
N/A
–
2.5%
18.0%
N/A
N/A
N/A
N/A
N/A
N/A
–
–
7.0%
N/A
N/A
N/A
N/A
N/A
N/A
167167
1 As detailed in last year’s Annual Report on Remuneration, all Directors volunteered a temporary reduction in their salary/fees for the three months
ended 30 June 2020. All Directors had volunteered a 20% reduction to their salary/fees for this period, with the exception of J Schwan, who
volunteered a 50% reduction to his salary. The Directors’ salary reductions were repaid in 2021 following a return to growth and strong performance
against strategic objectives and after all other employees who had volunteered a temporary reduction in salary had been repaid.
2 Taxable benefits constitute additional payments in lieu of the provision of a company car, fuel benefit, and, for J Schwan, tax equalisation.
Non-Executive Directors do not receive any additional taxable benefits. Annual bonus figures show any bonus earned during the respective financial
year. Non-Executive Directors are not eligible to participate in the bonus scheme.
3 The bonus for 2020/21 paid out in full reflecting performance during the year. There was no bonus paid for 2019/20 and, therefore, it is not possible
to calculate the percentage change.
4 Helen Stevenson retired from the Board on 14 December 2021 and therefore has been excluded from the table above.
Review of past performance
The chart below illustrates the Company’s Total Shareholder Return for the ten years ended 31 July 2022, relative
to the performance of the FTSE SmallCap Index and FTSE All-Share Index. Both the FTSE SmallCap and the FTSE
All-Share represent broad equity indices of which the Company has been a constituent member for the majority
of the period shown and, therefore, have been selected as comparators for this reason.
450
400
350
300
250
200
150
100
50
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Kin + Carta
FTSE SmallCap
FTSE All-Share
Kin + CartaBuilding a world that works better for everyone.Governance Directors’ remuneration report
continued
The table below details the Chief Executive Officer’s single figure of remuneration over the same ten-year period:
2013
Patrick
Martell
2014
Patrick
Martell
2015 Matt
Armitage
2016 Matt
Armitage
2017 Matt
Armitage
2018 Matt
Armitage
2019
J Schwan
2020
J Schwan
2021
J Schwan
2022
J Schwan
168
Total
remuneration
£’000
Annual bonus
as a percentage
of maximum
LTIP vesting as
a percentage of
maximum
1,335.0
1,648.4
1,133.5
477.8
478.2
878.6
582.9
469.4
1,790.4
1,560.6
96.3
100.0
69.7
93.9
98.5
100.0
Nil
Nil
Nil
100.0
25.0
Nil
100.0
96.0
Nil
Nil
N/A
Nil
70.0
86.0
Relative importance of spend on pay
This table shows overall expenditure on pay, excluding employer’s NICs, for all employees and shareholder
distributions (payments of dividends), with the percentage change in each. There were no share buy backs during
the year.
Overall expenditure on pay for
continuing operations
Dividends paid in the year
(including share buy backs)
Chief Executive Officer pay ratio
2022
£’000
161,904
-
2021
£’000
109,543
-
Percentage change
performance
47.8%
-
UK legislation requires companies with 250 employees or more to publish information on the pay ratio of the Group
Chief Executive Officer to UK employees. In line with this requirement, the table below shows the ratio of Chief
Executive Officer total pay to that of three employees indicative of lower quartile (P25), median (P50) and upper
quartile (P75) pay received during the financial years ended 31 July 2020 to 31 July 2022 and includes basic salary,
pension, and the value received from incentive plans. On average, the Group employed 610 UK employees during the
financial year ended 31 July 2022 (2021: 764).
Financial year
2022
2021
2020
Calculation
methodology
Lower quartile
(P25)
Median
(P50)
Upper quartile
(P75)
Option A
Option A
Option A
36.4:1
39.2:1
12.1:1
25.4:1
28.0:1
8.6:1
17.4:1
19.5:1
5.9:1
We have chosen Option A under the Regulations for the calculation, which takes into consideration the full-time equivalent basis of
all UK employees and provides a representative result of employee pay conditions across the Company. Total full-time equivalent
remuneration for all UK employees has been calculated on the same basis as used in the single figure table for our Chief Executive
Officer and covers the whole 2022 financial year. Total compensation figures have been checked to ensure the employees identified
at each quartile are representative of pay at these levels in the organisation. The committee believes the median pay ratio for 2022
is consistent with the Group’s wider policies on employee pay, reward and progression policies for the Company’s UK employees
taken as a whole. The median pay ratio was lower in 2020 compared with 2021 and 2022 due to variations in variable pay received
by the Chief Executive Officer. The decrease in the CEO pay ratio in 2022 compared to 2021 is attributable to an increase in the UK
employees’ remuneration at the boundaries of the quartiles.
A summary of the salaries and total single figures of remuneration for the relevant individuals is included in the
table below:
Pay level
Salary
Single figure of remuneration
Chief Executive
£398,633
£1,560,641
Lower quartile
(P25)
£41,600
£42,848
Median
(P50)
£60,900
£61,366
Upper quartile
(P75)
£73,500
£89,440
169169
A significant proportion of the Chief Executive Officer’s total remuneration is delivered in variable remuneration
(i.e. bonus and LTIP). In order to drive alignment with shareholders, the value ultimately received from LTIP awards is
linked to stretching company performance targets and long-term share price movement. As a result, the pay ratio is
likely to be driven largely by the Chief Executive Officer’s LTIP outcome (and secondly the bonus outcome) and may,
therefore, fluctuate significantly on a year-to-year basis reflecting the Company’s performance.
Payments for loss of office in the year (audited)
As disclosed in the annual statement, J Schwan stepped down from the Board and his role as Chief Executive Officer
with effect from 31 July 2022. J Schwan will remain with the business during his notice period until 31 January 2023 as
a special advisor, receiving his salary of US$525,000 p.a. and taxable benefits until that date.
J Schwan retained his DBS award from the bonus earned for the financial year ending 2020/21. This award will vest at
the normal time.
J Schwan retained his awards under the LTIP granted in 2019, 2020 and 2021. These awards will vest at the originally
envisaged time subject to the satisfaction of the applicable performance measures assessed over the original
performance periods and a pro-rata reduction to his termination date. As J will have been in employment for the
entire vesting period of the 2019 LTIP award (as well as in office for the entire performance period), these will not
be reduced for time pro-rating. The awards will remain subject to a two-year holding period following vesting. The
proration of LTIP awards is disclosed in the table below.
Other than as set out above, no payments for loss of office to former Directors were made in the year.
Proration of J Schwan’s LTIP awards
Date of Grant
17 December 2019
27 November 2020
7 December 2021
Total
Number of shares
subject to award
Normal
vesting date
Maximum number
of shares capable
of vesting
399,440
17 December 2022
390,757
27 November 2023
266,040
7 December 2024
1,056,237
399,440
283,689
101,893
785,022
Kin + CartaBuilding a world that works better for everyone.Governance
Directors’ remuneration report
continued
Payments to past Directors (audited)
There have been no payments to past Directors other than those disclosed in previous years.
170
Share ownership guidelines and Directors’ interests in the
share capital of the Company (audited)
Shareholding guidelines are in place that require Executive Directors to acquire a holding equivalent to 200% of
basic salary for the Chief Executive Officer and 150% of basic salary for the Chief Financial Officer. These levels are
considered appropriate to ensure that there is robust long-term alignment achieved between Executive Directors
and shareholders. The net of tax number of deferred bonus shares or vested shares under the Company’s LTIP
will normally be required to be retained until the guideline is met. Directors’ share dealings must be conducted in
accordance with the Company’s Share Dealing Policy.
Interests of Directors and their connected persons in 10p ordinary shares (fully paid) of the Company at 31 July 2022
were as follows:
Unvested LTIP
awards (subject
to performance
conditions)
Unvested
deferred
bonus
share
awards
Unexercised
share options
Unvested
ESPP
awards
Beneficial
holding
31 July
2022
Beneficial
holding
31 July
2021
Expressed as
a percentage
of annual basic
salary (note 1)
Executive (notes 2 and 3)
J Schwan (note 2)
Chris Kutsor
Non-Executive
David Bell
John Kerr
Michele Maher
Nigel Pocklington
Helen Stevenson
(note 3)
Maria Gordian
–
358,803
1,056,237
908,356
72,131
44,652
-
3,016,679
7,657,487
1,809
388,972
304,453
1,409%
269%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
-
-
-
-
-
-
84,486
112,359
28,089
21,235
84,486
112,359
28,089
21,235
62,255
62,255
–
–
–
–
–
–
–
–
Note 1: Calculated by reference to: the number of unvested deferred bonus share awards added to beneficial holdings; the mid-market closing price of the Company’s ordinary
shares on 29 July 2022 (187.2p), being the last business day of the financial year; and the Director’s annual rate of basic salary. The basic salary of J Schwan and Chris Kutsor is
denominated in US Dollars and has been converted for the purposes of this table using the average £:$ exchange rate in the year of 1.317.
Note 2: J Schwan’s 2020 and 2021 LTIP awards will be prorated as described in “Payments for loss of office in the year (audited)” on page 169.
Note 3: Helen Stevenson stepped down from the Board on 14 December 2021, her share interests shown in the table above is as at the date of her stepping down from
the Board.
Directors’ outstanding share incentive awards (audited)
Details of the share options held by Directors who served during the year are shown below. All options were granted
under the LTIP for nil consideration.
Type of
award
(note 1)
J Schwan
LTIP4
LTIP3,4
LTIP4
LTIP4
DBS6
Date of
award
Exercise
price for
options
Balance
at
31 July
2021
Awarded
during
year
Exercised
during
year
(note 2
and 3)
Lapsed
during
year
(note 3)
Balance
at
31 July
2022
Vesting
date
Expiry
date
Status
171171
19 Nov 18
17 Dec 19
27 Nov 20
7 Dec 21
1 Nov 21
–
–
–
–
–
410,088
399,440
390,757
–
–
–
–
–
266,040
72,131
(287,061)
(123,027)
-
19 Nov 21
19 Nov 28
Vested and
exercised
–
–
–
–
– 399,440 17 Dec 22 17 Dec 29
Unvested
–
390,757 27 Nov 23 27 Nov 30
Unvested
– 266,040 7 Dec 24
7 Dec 31
Unvested
–
72,131
1 Nov 23
1 Nov 31
Unvested
1,200,285
338,171
(287,061)
(123,027)
1,128,368
Chris Kutsor
RSU2
17 June 19
–
39,867
OPT5
LTIP3,4
LTIP4
LTIP4
DBS6
ESPP7
17 June 19
£1.105
358,803
486,946
241,897
17 Dec 19
27 Nov 20
7 Dec 21
1 Nov 21
–
–
–
–
15 Nov 21
$3.315
–
–
–
179,513
44,652
1,809
–
–
–
–
(39,867)
–
–
–
–
–
–
–
–
–
–
–
358,803
14 Mar 22
17 June 29
Vested and
exercised
Vested and
unexercised
– 486,946
17 Dec 22
17 Dec 29
Unvested
–
–
–
–
241,897
27 Nov 23 27 Nov 30
Unvested
179,513
7 Dec 24
7 Dec 31
Unvested
44,652
1 Nov 23
1 Nov 31
Unvested
1,809 2 Dec 22
2 Dec 22
Unvested
1,127,513
225,974
(39,867)
– 1,313,620
Note 1: LTIP = Long Term Incentive Plan, RSU = Restricted Share Unit (Chris Kutsor buy-out awards only), OPT = Share Options (Chris Kutsor buy-out awards only), DBS = Deferred
Bonus Scheme, ESPP = Employee Stock Purchase plan.
Note 2: Details of RSUs vesting to Chris Kutsor in March 2022 are included on page 165. Chris retained these shares in full.
Note 3: Details of the December 2019 LTIP, which was tested for performance at the year end and expected to vest at 86% of the maximum award in December 2022, is included
on pages 164 and 165.
Note 4: 2018 LTIP, 2019 LTIP, 2020 LTIP and 2021 LTIP award performance conditions are detailed on the Company’s Investor site: https://investors.kinandcarta.com/governance/
remuneration/default.aspx.
Note 5: Details of OPT performance conditions are disclosed on page 89 of the 2018/19 Annual Report and Accounts.
Note 4: Kelly Manthey was appointed Chief Executive Officer on 1 August 2022. As of 31 July 2022, Kelly Manthey had a beneficial interest over 169,754 ordinary shares in the
Company, representing 79.3% of her Chief Executive Officer’s salary, which is denominated in US Dollars, calculated pursuant to the mid-market closing price of the Company’s
ordinary shares on 29 July 2022 and the average £:$ exchange rate in the year referenced under note 1 above.
Note 6: Awards are subject to continued employment over two-years.
Note 7: Details of the right to acquire shares pursuant to the ESPP are included on page 172.
From 31 July 2022 to 11 October 2022, there were no changes to the above stated holdings.
In the event of any material acquisition or divestment, the committee would adjust the targets to ensure only out
performance of the acquisition/divestment is rewarded. Vesting of awards is subject to overall committee discretion.
The market price of Kin and Carta plc ordinary shares of 10p each at 29 July 2022, being the last business day of the
financial year, was 187.2p and the range during the financial year 2022 was 169p to 348p.
Kin + CartaBuilding a world that works better for everyone.Governance
Directors’ remuneration report
Directors’ report
continued
Share options – Sharesave Scheme and Employee Stock Purchase Plan (audited)
There are no outstanding Sharesave options in respect of Directors.
172
Chris Kutsor has the right to acquire 1,809 shares in the Company on 2 December 2022 at a purchase price of
US$3.315 per share, pursuant to the Company’s Employee Stock Purchase Plan (“ESPP”).
Dilution
Under the ESOS 2001, LTIP 2020, the Employee Stock Purchase Plan and the Sharesave Scheme, awards of options
over no more than an aggregate 12.5% of the Company’s issued share capital may be granted over new issue shares
in any rolling ten-year period (with awards made under any other share plans also being counted).
As at 31 July 2022, excluding lapsed options and options exercised and satisfied from utilising existing issued shares,
options over 15,501,612 shares (8.7% of the Company’s issued share capital) have been exercised through new shares
or remain outstanding under all share plans and so count towards this limit.
Approved by the Board and signed on its behalf by
Nigel Pocklington
Chair of the Remuneration Committee
12 October 2022
173173
The Directors present their
Directors’ report and the audited
consolidated financial statements
for the year ended 31 July 2022. The
Corporate governance report set
out on pages 118 to 129 also forms
part of this report.
Details of significant events
since the balance sheet date are
contained in note 39 to the financial
statements.
An indication of likely future
developments in the business of
the Company, including trends and
opportunities and risks are included
in the Strategic Report.
Information about the use of
financial instruments by the
Company and its subsidiaries is
given in note 28 to the financial
statements.
Additional information
The Company’s share capital
consists of ordinary shares, as
set out in note 30 to the financial
statements. The shares carry a
right to vote but no rights to fixed
income. On a show of hands at a
general meeting, every member
present in person and every duly
appointed proxy shall have one
vote and on a poll, every member
present in person or by proxy
shall have one vote for every
ordinary share held or represented.
The notice of meeting specifies
deadlines for exercising voting
rights and each share carries
the right to one vote at general
meetings. All shares are fully paid.
There are no specific restrictions
on the size of a shareholding nor on
the transfer of shares. The Company
is not aware of any agreements
between shareholders that may
result in restrictions on the transfer
of securities and voting rights.
Details of employee share schemes
are set out in note 34. Shares held
by the Employee Benefit Trust
abstain from voting.
The appointment and replacement
of Directors of the Company
is governed by the Company’s
articles of association, the Code,
the Companies Act and related
legislation. The Company’s articles
of association may only be
amended by a special resolution of
shareholders at a general meeting.
Directors are elected or re-elected
by ordinary resolution at a general
meeting of shareholders.
The Board may appoint a Director,
but anyone so appointed must be
elected by ordinary resolution at the
next general meeting. All Directors
are subject to annual re-election at
the AGM with the exception of Kelly
Manthey who will seek election at
the AGM following her appointment
as Chief Executive Officer on
1 August 2022.
Annual General Meeting
The 41st AGM of the Company
will be held on 1 December 2022.
The notice of meeting is included
in a separate document sent to
shareholders.
Auditors
Each of the Directors of the
Company has confirmed that:
• so far as the Director is
aware, there is no relevant
audit information of which
the Company’s auditors is
unaware; and
•
the Director has taken all the
steps that they ought to have
taken as a Director to make
themself aware of any relevant
audit information and to
establish that the Company’s
auditors are aware of that
information.
This confirmation is given and
should be interpreted in accordance
with the provisions of section 418 of
the Companies Act 2006.
Change of control and
the Company’s credit
facility
In the event of a change of control
of the Company, the terms of the
Group’s revolving credit facility
require the consent of the lenders
to continue the overall facility.
During the year, the Group
successfully extended the credit
facility of £85 million that will
expire in September 2025 on terms
broadly in line with the previous
agreement. Subsequent to 31 July
2022, the Group extended the
credit facility for one extra year to
September 2026. The banking group
consists of Bank of Ireland, Citigroup
Global Markets, Fifth Third Bank, and
HSBC UK Bank plc.
Corporate governance
The corporate governance
statement as required by the
FCA’s Disclosure Guidance
and Transparency Rules (DTR
7.2) comprises the “Additional
Information” section of the
Directors’ report and the Corporate
governance report on pages 118 to
129 of this Annual Report.
Directors’ and Officers’
liability insurance and
Directors’ indemnities
The Company maintains Directors’
and Officers’ liability insurance,
which gives appropriate cover for
legal action brought against its
Directors. The Company has also
granted indemnities to each of its
Directors (on identical terms) who
served during the period, to the
extent permitted by law and the
Company’s articles of association,
in respect of liabilities incurred
by virtue of their office. Qualifying
third-party provisions for the
benefit of its Directors (as defined
by section 234 of the Companies
Act 2006) were in force during the
year ended 31 July 2022 and to the
date of this report.
Kin + CartaBuilding a world that works better for everyone.Governance Directors’ report
continued
Human rights
Information relating to human rights
is set out in our “A responsible
business” section on page 74.
Going concern
The Group’s business activities,
together with the factors likely
to affect its future development,
performance and position are
set out in the Strategic Report,
which can be found on pages 16
to 111. The financial position of the
Group, its cash flows, liquidity
position and borrowing facilities
are described in the Chief Financial
Officer’s review on pages 52 to 54.
In addition, note 29 to the financial
statements includes the Group’s
objectives, policies and processes
for managing its interest rate risk,
foreign exchange risk, credit risk,
liquidity risk and capital risk.
In order to assess the Group’s
ability to continue to trade as a
going concern and to be viable
over the medium term, detailed
business and cash flow forecasts
covering a three-year period from
1 August 2022 have been prepared
based on “bottom up” inputs from
the individual business units. The
resulting projected debt levels,
debt leverage and interest cover
ratios have been compared to limits
prevailing under current borrowing
facilities in order to ensure that
the Group has sufficient liquidity
to continue to trade over this time
horizon.
In addition to the detailed central
business forecast, a number of
stress scenarios have also been
modelled to assess the Group’s
ability to cope with such scenarios
without breaching covenant ratios
or debt volume limits (see the
viability statement on pages 176
and 177 for further information).
The Group projects that it will
continue to operate within lender
limits in the central forecast case
and would also stay within limits
in the stress scenarios even where
all of the stress scenarios occur
simultaneously.
The Directors have, at the time of
approving the financial statements,
a reasonable expectation that the
Company and the Group have
adequate resources to continue
in operational existence for the
foreseeable future, a minimum of 12
months from the date of approval
of these financial statements. Thus
they continue to adopt the going
concern basis of accounting in
preparing the financial statements.
Internal control and risk
management systems
A description of the main features
of the Group’s internal control and
risk management systems in relation
to the financial reporting process
can be found in the Strategic Report
on pages 100 to 110.
174
Directors and their
share interests
The Directors of the Company who
were in office during the financial
year, including Director changes
that have occurred during the year
and up to the date of this report,
are named on pages 114 to 117, along
with the biographical details of the
current Directors.
The Directors’ interests in ordinary
shares of the Company are set out
in the table on page 170 within the
Directors’ remuneration report.
Employment policies,
equal opportunities,
employee
communication
and diversity
The Group is committed to
providing equal opportunities with
regard to employment, free from
discrimination and harassment
and in a healthy and safe working
environment. Details of how we
deliver on these commitments to
our employees are provided in our
“A responsible business” section
on pages 65 to 71.
Environment
Information relating to the
environment, greenhouse gas
emissions and energy consumption,
including climate-related disclosures
consistent with the Task Force on
Climate-Related Financial Disclosures
(“TCFD”) recommendations and
recommended disclosures, is set
out in our “A responsible business”
section on pages 75 to 85.
FCA Listing Rules –
compliance with Listing
Rule 9.8.4R
There are no disclosures required
by LR 9.8.4R.
Major interests in shares
The Company had been notified, in accordance with the FCA’s Disclosure Guidance and Transparency Rules (DTR 5),
of the holdings of voting rights in its shares set out in the following table.
Abrdn plc
Aegon N.V.
Allianz Global Investors GmbH
Cannacord Genuity Group Inc.
FIL Limited
Jupiter Fund Management plc
Kabouter Management, LLC
Lombard Odier Asset Management (Europe) Limited
M&G plc
NN Group N.V.
* Percentage based on ordinary shares in issue, excluding treasury shares, as at 31 July 2022.
As at 31 July 2022
175175
Percentage of
issued share
capital carrying
voting rights*
Number of
voting rights
15,078,864
9,042,907
8,415,289
8,817,770
12,633,518
17,410,845
6,814,194
8,560,377
8,666,293
8,051,366
8.48%
5.08%
4.73%
4.96%
7.10%
9.79%
3.83%
4.81%
4.87%
4.53%
Between 1 August 2022 and 12 October 2022, the Company received notifications of interests pursuant to the FCA’s
Disclosure Guidance and Transparency Rules (DTR 5):
• We received a further notification from Cannacord Genuity Group Inc. on 19 August 2022, which notified an
increase in their voting rights to 9,231,752 (representing 5.19% of Kin + Carta’s issued share capital carrying
voting rights).
Kin + CartaBuilding a world that works better for everyone.Governance 176
Directors’ report
continued
Political donations
The Company made no political
donations during the year
(2021: £nil) and the Board has no
intention to seek shareholders’
approval to permit the Board to
make political donations.
Share capital
As at 31 July 2022, the Company
had 177,960,679 ordinary shares in
issue with a nominal value of 10p
each, representing 100% of the total
issued share capital. The Company
holds 90,637 of its ordinary shares
in treasury. Therefore, the total
number of voting rights in the
Company as at 31 July 2022 was
177,870,042.
Between 1 August 2022 and 11
October 2022, the Company
allotted a total of 30,228 ordinary
shares. Following these allotments,
at 11 October 2022, the Company
had 177,990,907 ordinary shares
in issue with a nominal value of
10p each, representing 100% of
the total issued share capital. The
Company continues to hold 90,637
of its ordinary shares in treasury.
Therefore, the total number of
voting rights in the Company as at 11
October 2022 was 177,900,270.
Powers of Directors to issue or
buy back the Company’s shares
At the 2021 AGM, shareholders
approved authorities:
•
for the Directors to allot shares
up to an aggregate nominal
amount of £5,753,386 generally,
with a further authority to allot
additional shares up to an
aggregate nominal amount of
£5,753,386 where the allotment
is in connection with a rights
issue only. Under this authority,
the Company allotted a total
of 3,519,290 shares relating
to consideration payments
for Melon Group and Loop
Integration and 1,895,668 shares
to satisfy share award vestings
and exercises during the year
(2021: 3,755,961); and
•
for the Company to make
market purchases of its own
shares up to a maximum of
17,260,158 shares. The Company
did not purchase any of its own
shares, nor has it reissued shares
held in treasury during the year
(2021: nil).
These authorities expire at the
conclusion of the forthcoming AGM
and approval will be sought from
shareholders for similar authorities
to be given for a further year.
Strategic Report
The Strategic Report can be found
on pages 16 to 111. The Strategic
Report includes a description of the
business model, KPIs, section 172
statement, disclosures regarding
environmental matters (including
carbon emissions and energy
consumption reporting) and the
principal risks affecting the Group.
Certain sections of this Annual
Report contain forward-looking
statements with respect to the
strategy, financial condition, results,
operations and businesses of the
Group or markets in which the
Group operates. These statements
involve risk and uncertainty because
they depend on circumstances
that occur in the future and relate
to specific events, not all of which
are within the Group’s control.
Although the Group believes that
the expectations reflected in such
forward-looking statements are
reasonable, there are a number
of factors that could cause actual
results or developments to differ
materially from those expressed or
implied by these forward-looking
statements. The Group undertakes
no obligation to update any
forward-looking statement. Nothing
in the Annual Report should be
construed as a profit forecast or
an invitation to deal in the ordinary
shares of Kin + Carta.
Results and dividends
The Group’s statutory loss before
taxation from continuing operations
for the year amounted to
£15.9 million (2021: statutory loss
of £5.8 million). The Directors
have decided not to recommend
the payment of a final dividend
for 2022; the Group is prioritising
growth and its Capital Allocation
framework reflects the focus on
both organic growth investments
and selective acquisition targets,
while keeping dividends on hold for
the foreseeable future.
Viability statement
In accordance with provision 31
of the Code, the Directors have
assessed the Group’s viability
over a three-year period, having
taken account of the Company’s
current position and principal risks.
Given the fast-changing nature of
many of the markets in which the
Company operates, a three-year
assessment period, which is in
alignment with our medium-term
planning horizon, was selected to
provide management and the Board
sufficient visibility of the future.
At the balance sheet date, the
Group had a multicurrency revolving
credit facility of £85 million with
an expiry date of September
2025. Subsequent to the balance
sheet date, the Group successfully
extended the credit facility of £85
million that will expire in September
2026 on the same terms as the
previous agreement. The Directors
believe that the revolving credit
facility, expiring in September
2026, is at a level sufficient to
meet the liquidity requirements
of the business through to at least
July 2025.
177177
In addition to the stress scenario
outlined previously, other scenarios
were also modelled, including a
decline of up to five basis points
in the gross margin percentage
achieved by the Group over the
course of the forecast period arising
from salary cost inflation pressures
that might not be passed on to
customers. A further scenario was
modelled reflecting an increase of
five days in the average time taken
by customers to settle trading
balances due to the Group.
In addition to an assessment of the
impact that the stress scenarios
could have on the Company’s
debt leverage ratio and absolute
level of net debt if they were to
occur individually, the impact of a
combination of the stress scenarios
occurring simultaneously was also
modelled to test the results of a
particularly high-stress, combined
case. This combined case also took
account of potential mitigations
available to the business.
There were no breaches of the
covenants in any of the scenarios
modelled, either individually or
combined. The Directors, therefore,
concluded that the Group is viable
over the three-year assessment
period.
By order of the Board
Daniel Fattal
Company Secretary
12 October 2022
The viability analysis was performed
by preparing a high-level,
integrated financial forecast over
the three-year period and running
a number of potentially stressful,
yet plausible, scenarios against
this base case scenario, starting
from 31 July 2022. The base case
model prepared by the Directors
was based on management’s best
estimates of future trading at
the time of the assessment. The
base case assumed strong net
revenue growth in the financial
year ending in 2023 compared to
the financial year ended in 2022,
with a commensurate increase
in operating profit. The related
scenarios reflected the estimated
financial impact of adverse events
associated with the principal risks
outlined in the Risk management
section on pages 100 to 110, and
included mitigating actions where
these would be under the Group’s
control.
The event reflected in the stress
scenarios with the greatest financial
impact on the Group comprised
a general reduction of up to 20%
in net revenue, relative to the
base case scenario, across all the
businesses to reflect continuing
challenging and uncertain economic
conditions. The majority of the
Group’s costs relate to staff and,
in such a scenario, the Group
would undertake cost avoidance
measures by delaying new hires and
staff commissions linked to sales
growth, and staff bonuses linked to
operating profit would be payable
at a substantially reduced level. In
addition, the Group would avoid
other costs by reducing expenditure
on IT and capital items. Amounts
payable to the legacy St Ives
Defined Benefit Pension Scheme are
linked to free cash flow generated
by the Group for FY22.
Kin + CartaBuilding a world that works better for everyone.Governance Statement of Directors’
responsibilities in respect of the
financial statements
178
The Directors are responsible
for preparing the Annual Report
and Accounts and the financial
statements in accordance with
applicable law and regulation.
Company law requires the Directors
to prepare financial statements
for each financial year. Under that
law the Directors have prepared
the Group financial statements
in accordance with UK-adopted
international accounting standards
and the Company financial
statements in accordance with
United Kingdom Generally Accepted
Accounting Practice (United
Kingdom Accounting Standards,
comprising FRS 101 “Reduced
Disclosure Framework”, and
applicable law).
The Group has also prepared
financial statements in accordance
with international financial reporting
standards adopted pursuant to
Regulation (EC) No 1606/2002 as it
applies in the European Union.
Under company law, Directors must
not approve the financial statements
unless they are satisfied that they
give a true and fair view of the state
of affairs of the Group and Company
and of the profit or loss of the Group
for that period. In preparing the
financial statements, the Directors
are required to:
• select suitable accounting
policies and then apply them
consistently;
• state whether applicable UK-
adopted international accounting
standards and international
financial reporting standards
adopted pursuant to Regulation
(EC) No 1606/2002 as it applies
in the European Union have
been followed for the Group
financial statements and United
Kingdom Accounting Standards,
comprising FRS 101 have been
followed for the Company
financial statements, subject
to any material departures
disclosed and explained in the
financial statements;
• make judgements and
accounting estimates that are
reasonable and prudent; and
• prepare the financial statements
on the going concern basis
unless it is inappropriate to
presume that the Group and
Company will continue in
business.
The Directors are responsible for
safeguarding the assets of the Group
and Company and hence for taking
reasonable steps for the prevention
and detection of fraud and other
irregularities.
The Directors are also responsible
for keeping adequate accounting
records that are sufficient to
show and explain the Group’s
and Company’s transactions and
disclose with reasonable accuracy
at any time the financial position of
the Group and Company and enable
them to ensure that the financial
statements and the Directors’
remuneration report comply with the
Companies Act 2006.
The Directors are responsible for the
maintenance and integrity of the
Company’s website. Legislation in
the United Kingdom governing the
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
Directors’ confirmations
Each of the Directors, whose names
and functions are listed in the “Board
of Directors” section of the Annual
Report on pages 114 to 117 confirm
that, to the best of their knowledge:
•
the Group financial statements,
which have been prepared in
accordance with UK-adopted
international accounting
standards and international
financial reporting standards
adopted pursuant to Regulation
(EC) No 1606/2002 as it applies
in the European Union, give a
true and fair view of the assets,
liabilities, financial position and
profit of the Group;
the Company financial
statements, which have been
prepared in accordance with
United Kingdom Accounting
Standards, comprising FRS 101,
give a true and fair view of the
assets, liabilities and financial
position of the Company; and
the Strategic Report includes a
fair review of the development
and performance of the business
and the position of the Group
and Company, together with a
description of the principal risks
and uncertainties that it faces.
•
•
In the case of each Director in office
at the date the Directors’ report is
approved:
• so far as the Director is aware,
there is no relevant audit
information of which the Group’s
and Company’s auditors are
unaware; and
•
they have taken all the steps
that they ought to have taken
as a director in order to make
themselves aware of any relevant
audit information and to establish
that the Group’s and Company’s
auditors are aware of that
information.
This responsibility statement was
approved by the Board of Directors
on 12 October 2022 and is signed on
its behalf by
Kelly Manthey
Chief Executive Officer
12 October 2022
Chris Kutsor
Chief Financial Officer
12 October 2022
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181181
Contents
Financials
Independent auditors’ report to the members
of Kin and Carta plc
Consolidated income statement
Consolidated statement of
other comprehensive income
Consolidated statement of changes in equity
Consolidated balance sheet
Consolidated statement of cash flows
Notes to the consolidated financial statements
Company balance sheet
Company statement of changes in equity
Notes to the Company financial statements
Shareholder information
Glossary
182
194
195
196
197
198
199
264
265
266
276
277
Building a world that works better for everyone.
Kin + CartaBuilding a world that works better for everyone.Financial Statements
Independent auditors’ report to the
members of Kin and Carta plc
Report on the audit of the financial statements
Opinion
In our opinion:
182
• Kin and Carta plc’s Group financial statements and Company financial statements (the “financial statements”)
give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 July 2022 and of the
Group’s profit and the Group’s cash flows for the year then ended;
•
•
the Group financial statements have been properly prepared in accordance with UK-adopted international
accounting standards;
the Company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced Disclosure
Framework”, and applicable law); and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”),
which comprise: the Consolidated and Company Balance Sheets as at 31 July 2022; the Consolidated Income
Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements
of Changes in Equity and the Consolidated Statement of Cash Flows for the year then ended; and the notes to the
financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Separate opinion in relation to international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union
As explained in Note 1 to the financial statements, the Group, in addition to applying UK-adopted international
accounting standards, has also applied international financial reporting standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union.
In our opinion, the Group financial statements have been properly prepared in accordance with international financial
reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard
were not provided.
Other than those disclosed in Note 5, we have provided no non-audit services to the Company or its controlled
undertakings in the period under audit.
Our audit approach
Overview
Audit scope
• Overall Group materiality: £853,000 (2021: £730,000), based on 5% of adjusted profit before tax from continuing
activities (2021: 5% of the three-year average adjusted profit before tax from continuing activities).
183183
• Overall Company materiality: £810,000 (2021: £694,000), based on 0.5% of the net assets of the Company
capped at 95% of Group overall materiality.
• The Kin and Carta plc Group consists of trading entities in the United Kingdom, the United States and Eastern
Europe, in addition to smaller operations in South America, and various holding companies and dormant entities.
• We performed a full scope audit over the financially significant components of the Group: Kin and Carta UK
Limited (“K&C UK”), Kin and Carta Scotland Limited (“K&C Scotland”), Solstice Consulting LLC (“Solstice”),
SpireMedia, Inc. (“Spire”), Cascade Data Labs LLC (“Cascade”) and Kin and Carta plc due to their financial
significance to the consolidated results. To ensure sufficient coverage obtained over the Group’s results and
balance sheet, audit procedures were also performed over specific financial statement line items in the opening
and closing balance sheet for Melon AD and its subsidiaries (“Melon”).
• Our audit scoping resulted in coverage of 93% of adjusted profit before tax from continuing operations.
Key audit matters
• Revenue recognition (Group)
• Carrying value of goodwill and other intangible assets (Group)
• Valuation of retirement benefit obligations and scheme assets (Group and Company)
• Accounting for acquisitions (Group)
• Carrying value of investments and recoverability of intercompany receivables (Company)
Materiality
• Overall Group materiality: £853,000 (2021: £730,000) based on 5% of adjusted profit before tax from continuing
activities (2021: 5% of the three-year average adjusted profit before tax from continuing activities).
• Overall Company materiality: £810,000 (2021: £694,000) based on 0.5% of the net assets of the Company
capped at 95% of Group overall materiality.
• Performance materiality: £640,000 (2021: £547,000) (Group) and £608,000 (2021: £520,000) (Company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the
audit of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Kin + CartaBuilding a world that works better for everyone.Financial Statements Independent auditors’ report to the
members of Kin and Carta plc continued
Key audit matter
How our audit addressed the key audit matter
Key audit matter
How our audit addressed the key audit matter
Revenue recognition (Group)
Refer to Note 2 (Accounting Policies) and Note 3
(Revenue).
184
The Group recognises revenue either on a time and
materials basis or in accordance with the stage of
completion of the contract activity. There is limited
judgement involved in the time and materials
contracts, but more judgement in connection with
stage of completion revenue. The stage of completion
is determined relative to the total number of hours
expected to be required to complete the work or
provide the services, or alternatively, to the project
milestones achieved as at year-end compared to
the contracted project milestones. Where recorded
revenue exceeds amounts invoiced to clients, the
excess is classified as accrued income and where
recorded revenue is less than amounts invoiced to
clients, the difference is classified as deferred income.
Consideration needs to be given to projects
in progress at year end requiring significant
judgement in respect of the stage of completion
and the associated revenue and profit margin to be
recognised.
We understood management’s policies and their controls for
recording revenue through performance of walkthroughs of the
finance and operational processes.
We performed substantive testing of revenue contracts across
the full scope components as follows:
• Reviewed a sample of the terms and conditions attached
to revenue contracts to understand the existence of
the enforceable right to be paid for work and evaluated
management’s judgements used to determine the timing of
recognition of revenue.
• Target tested a number of contracts, including those with
significant revenue recognised in the year or with significant
contract assets or contract liabilities at the year end, and
a further non-statistical sample was tested, selected on a
haphazard basis.
• For contracts where revenue is recognised based on time
spent by staff with fixed contract fees: we tested the hours
completed and obtained an understanding from project
managers as to the basis for the budgeted hours, challenged
management’s assumptions, evaluated the outturn of
management’s previous estimates and agreed the actual
hours incurred post-year end to the forecast for the period.
The total amount of revenue and margin to be
recognised under a contract can be affected by
changes in conditions and circumstances over time,
such as:
• For contracts where revenue is recognised based on time
spent by staff at agreed contractual rates: we tested the
hours spent by agreeing to timesheets and agreed the
hourly rates applied to the contract terms.
•
variations to the original contract terms;
• For contracts where revenue is recognised based on
• cost overruns; and
•
scope changes that require further negotiation
and settlement.
Variations can arise from changing client
specifications, changes in pricing (including discounts
given), changes to the job based on unforeseen
circumstances, as well as from inefficiencies on the
part of either party.
There is therefore judgement to be applied in
determining the impact of these changes and the
timing of recognising amounts to be recovered from
such changes and any additional work performed.
Thus there is a risk that contract revenue is not
recognised in the correct period or that revenue and
associated profit margin is misstated.
Revenue recognition has been included as a key
audit matter as this is an area of significant audit
effort to ensure sufficient testing is performed
across the underlying client contracts, and that the
judgement applied in terms of revenue recognition for
incomplete projects and/or contract modifications is
appropriate.
project milestones: we tested that milestones had been
delivered to the clients by obtaining evidence of delivery
from project managers, obtained an understanding of the
status of milestones in progress, challenged management’s
assumptions and evaluated the outturn of previous
estimates.
• We also assessed how the project managers determined
that the stage of completion was correctly calculated by
obtaining their calculations and agreeing the inputs to
supporting evidence and correspondence with customers.
• To assess whether revenue and profit is accurately recorded
and to test the timing of recognition of revenue, we
challenged management’s judgements on the completeness
of work for a sample of contracts by checking original
contracts, amendments to contracts, where applicable (e.g.
due to agreed changes in scope), and checking that there
was evidence that the contractual milestones had been
reached.
For those contracts with significant modifications in the year,
we challenged management’s judgement on whether the
remaining services are distinct from those already performed on
ongoing contracts with the same customer.
No significant issues arose from the results from our work.
Carrying value of goodwill and other intangible
assets (Group)
Refer to Note 2 (Accounting Policies) and Note 18
(Goodwill and Other Intangible Assets).
At the year end, the Group had goodwill of £76.9m
and other intangible assets of £20.4m.
The Group operates in competitive markets, where
customers’ discretionary expenditure on marketing,
communications and innovation is subject to
budgetary constraints and market pressures. As
such the business is subject to the risk of loss of key
customers and/or decline in demand and pressures
on pricing.
Management has performed an impairment
assessment by calculating the value in use (‘VIU’)
for the cash generating unit (‘CGU’) to support the
carrying value of the goodwill and other intangible
assets. We focused on this area as the determination
of whether an impairment charge is necessary
involves significant estimates about the future results
of each CGU.
185185
We considered the carrying value of the Group’s intangible
assets compared to its market capitalisation which gives an
indication of the overall value of the Group, noting that the
market capitalisation as at the year-end supports the overall
valuation.
Our work over the impairment assessment included the
following procedures:
• We tested the mathematical accuracy of the underlying
calculations.
• We compared past results to those budgeted to assess
the quality of management’s forecasting. We considered
management’s ability to forecast was appropriate to support
the basis upon which the future cash flows have been
prepared.
• We assessed the key assumptions in the calculations being
revenue growth and expected profit margin. In assessing
these assumptions, we considered external market growth
forecasts as well as internal analysis of the forecast revenue.
We considered the forecasts had been prepared on a
supportable basis.
We also tested:
• management’s assumption in respect of the long- term
growth rates in the forecasts by comparing them to long
term average growth rates of the UK and US economies and
obtaining advice from our valuations specialists; and
•
the discount rates applied, by assessing the cost of capital
used in the forecasts and comparable organisations and
obtaining advice from our valuations specialists.
We performed sensitivity analysis in respect of key assumptions
to determine at what level changes in these would result in
impairment and reviewed management’s disclosures in relation
to reasonable possible changes in assumptions and the impact
on headroom.
We were satisfied the assumptions used in the assessment of
impairment of goodwill and other intangibles were reasonable
and that adequate disclosure is provided in the financial
statements.
Kin + CartaBuilding a world that works better for everyone.Financial Statements Independent auditors’ report to the
members of Kin and Carta plc continued
Key audit matter
How our audit addressed the key audit matter
Key audit matter
How our audit addressed the key audit matter
Valuation of retirement benefit obligations and
scheme assets (Group and Company)
186
Refer to Note 2 (Accounting Policies) and Note 27
(Retirement Benefits)
Gross pension assets as at 31 July 2022 are £341.3m
(2021: £419.8m) and gross pension liabilities are
£302.6m (2021: £400.5m) resulting in a net surplus of
£38.7m (2021: £19.3m).
The Group’s adviser, Buck Consulting, has performed a
valuation of the pension scheme assets and liabilities
as at 31 July 2022 in accordance with IAS 19.
We focused on this area as the valuation of retirement
benefit liabilities involve significant judgement and
estimation with regards to the setting of assumptions
(including inflation, discount rate, GMP and mortality
rates), and small changes in these assumptions can
result in material impacts on the liabilities.
Additionally, the St Ives Defined Benefits Pension
Scheme includes investments in a number of Pooled
Investment Vehicles (‘PIVs’), a number of which are
deemed to be complex funds resulting in a lack of
independent data against which to validate valuations
supplied by the underlying investment managers and
accordingly the valuation of these assets was also an
area of focus.
Given the complexity involved in the valuation of retirement
benefit obligations and the size and nature of the assets and
liabilities, we engaged our subject matter experts to assist us in
the audit of this matter.
We reviewed the assumptions and methodologies used by
the Group’s adviser, Buck Consulting, to value the pension
scheme liabilities as at 31 July 2022 in accordance with IAS
19 to ensure these were appropriate given the composition
of the scheme. This included understanding the underlying
methodology applied and ensuring this was in line with
acceptable methodology for the type of scheme and reviewing
key assumptions in line with our expected ranges. We also
considered the sensitivity of the overall liability to changes
in these underlying assumptions. With regards to the GMP
adjustment, we obtained data from the scheme actuary and
reperformed calculations at an aggregated level to confirm
appropriateness of the assumption applied.
We concluded that the assumptions used in the valuation of
the liabilities are materially within our indicative ranges, both
individually and in aggregate, for the duration of the scheme.
For the valuation of the pension scheme assets, and in
particular the PIVs, our procedures included:
• Testing of the fair value of assets through agreement
of each asset category to independent sources where
possible, considering both corroborative evidence and
contradictory evidence; and
• Where independent data supporting asset valuations
was not available due to the nature of the assets, we
performed additional procedures including reviewing the
most recent audited financial statements of the fund.
Our work did not identify any significant adjustments in
this area.
Accounting for the acquisition of Melon and step-up
accounting in Loop (group)
Refer to Note 2 (Accounting Policies) and Note 12
(Acquisitions).
During the year two material acquisitions have been
completed. The Group acquired 100% of the issued
stock of Melon AD, a software development business
with operations in Bulgaria, North Macedonia and
Kosovo. The Group also increased its holding in
Loop from 50% to 100% which changed from a joint
arrangement which would be fully disposed of with
the subsequent full acquisition recognised.
Management have determined the valuation of
acquired intangible assets at the acquisition date
using a number of significant assumptions and
judgements, including selection of the discount
rate, forecasting of after-tax cash flows and the
attrition rates used in multi-period excess earnings
method (MEEM) approach. These assumptions and
judgements impact the allocation of the purchase
price on the balance sheet.
Management also exercised judgement and used
accounting estimates when determining the deferred
consideration treated as deemed remuneration.
We consider this to be a key audit matter due to
the level of judgement applied by management in
calculating the value of goodwill and other intangibles
recognised on acquisition.
187187
We obtained management’s fair value calculations and
evaluated the key judgements and estimates made by
management in determining the fair value of the net assets
acquired:
• We engaged valuation experts to assess the
methodology and key assumptions applied by
management to identify and value the intangible assets
acquired;
• We verified the consideration paid and payable under
the terms of the transaction to the Share Purchase
Agreement;
• We assessed the appropriateness of the fair value of the
contingent consideration at the acquisition date;
• We assessed underlying forecasts supporting the
valuation of intangible assets; and
• For the assets and liabilities acquired, we tested a
sample of items to supporting documentation and
recalculated estimates to gain assurance over the fair
value of the opening balance sheet.
In respect of the deferred consideration:
• We performed an analysis of IFRS 3 requirements and
concluded that the recognition of deemed remuneration
is appropriate as there is a direct link to continued
employment in the sale and purchase agreement for
certain employees.
• We reviewed the forecast results for reasonableness
versus historical performance in order to assess
management’s calculations for deferred consideration,
and concluded the assumptions are consistent with
those used in the model for evaluation of intangible
assets.
Finally, we reviewed the disclosures for compliance with IFRS 3
‘Business Combinations’.
Kin + CartaBuilding a world that works better for everyone.Financial Statements Independent auditors’ report to the
members of Kin and Carta plc continued
Key audit matter
How our audit addressed the key audit matter
188
Carrying value of investments and recoverability of
intercompany receivables (company)
Refer to Note 1 (Accounting Policies), Note 8
(Investments) and Note 10 (Debtors) of the Company
financial statements.
As at 31 July 2022, the Company has an investment in
the subsidiaries of the Group of £183.0m
(2021: £72.0m), loans to subsidiaries of £20.8m
(2021: £103.8m) and intercompany debtors of £10.1m
(2021: £7.6m).
The carrying value of the Company’s investments in
subsidiaries and intercompany receivables represents
82% of the Company’s total assets.
Due to their materiality in the context of the Company
financial statements as a whole these are considered
to be the areas on which increased audit effort is
required.
We assessed the investment values and intercompany
receivables against the net assets of the investments to identify
whether the carrying values are supported by the asset position
of the subsidiary.
Where the carrying amount exceeded the net asset
value of the subsidiary, our procedures were focused on
management’s value in use calculations including evaluation of
key assumptions used and the mathematical accuracy of the
calculations including the assessment of expected credit losses.
The value in use calculations are consistent with those assessed
in support of the carrying value of goodwill and other intangible
assets as detailed above.
The work we performed did not highlight any issues regarding
the recoverability of the carrying value of investments,
intercompany loans or intercompany debtors at the balance
sheet date.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the Group and the Company, the accounting
processes and controls, and the industry in which they operate. The Kin and Carta plc Group consists of trading
entities in the United Kingdom and the United States, in addition to smaller operations in South America, and various
holding companies and dormant entities. We performed a full scope audit over the financially significant components
(K&C UK, K&C Scotland and Kin and Carta plc in the UK, and Solstice, Spire and Cascade in the US), and testing of
significant balances within the opening and closing balance sheet for Melon in order to ensure sufficient coverage
was obtained. In addition, we also performed testing over any other untested balances that were considered material
to the consolidated balance sheet. Analytical review procedures were performed by the Group engagement team
over all out of scope components. All work was performed by the UK based Group engagement team. Our audit
scoping gave us coverage of 93% of adjusted profit before tax from continuing operations.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and
in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
189189
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
How we determined it
Rationale for benchmark applied
Financial statements - Group
Financial statements - Company
£853,000 (2021: £730,000).
£810,000 (2021: £694,000).
5% of adjusted profit before tax from
continuing activities (2021: 5% of the
three-year average adjusted profit
before tax from continuing activities)
0.5% of the net assets of the
Company capped at 95% of Group
overall materiality
Net assets is an appropriate
benchmark for determining the
materiality of the Company, which is
a holding Company and non-trading.
Adjusted profit before tax from
continuing operations is a primary
measure used by management
and shareholders in assessing the
performance of the Group and
is a generally accepted auditing
benchmark. This measure provides
us with a consistent year on year
basis for determining materiality
based on trading performance and
eliminates the impact of non-
recurring items. In the prior year, we
used a three-year average adjusted
profit before tax figure due to the
volatility in results arising from
the impacts of COVID-19 on the
business. In the current year, we
have reverted to using the adjusted
profit before tax for the year as
the impacts of COVID-19 are now
considered to be minimal.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group
materiality. The range of materiality allocated across components was between £260,000 and £694,000.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality
in determining the scope of our audit and the nature and extent of our testing of account balances, classes of
transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75%
(2021: 75%) of overall materiality, amounting to £640,000 (2021: £547,000) for the Group financial statements and
£608,000 (2021: £520,000) for the Company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end
of our normal range was appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
£42,500 (Group audit) (2021: £36,000) and £40,500 (Company audit) (2021: £34,700) as well as misstatements
below those amounts that, in our view, warranted reporting for qualitative reasons.
Kin + CartaBuilding a world that works better for everyone.Financial Statements Independent auditors’ report to the
members of Kin and Carta plc continued
Conclusions relating to going concern
Strategic Report and Directors’ Report
Our evaluation of the directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going
concern basis of accounting included:
190
• Reviewing the facility agreement to ensure we understand the associated terms including covenants;
• Reviewing management’s going concern assessment, including agreeing to board approved budgets,
understanding the key assumptions underpinning the forecasts, challenging these assumptions with reference
to past performance of the group, external data points and considering management’s historical forecasting
accuracy to ensure management’s assessment of forecast liquidity and covenant compliance is appropriate. The
mathematical accuracy of the model was also tested;
• Agreement of the net debt position used in the going concern assessment to supporting documentation;
• Discussions with management relating to potential downside scenarios and the impact these have on the
covenant and liquidity headroom, including agreeing the impact to management’s calculations; and
• Review of board meeting minutes and discussions with the Audit Committee to ensure that all known facts and
circumstances, including potential external factors, have been considered in management’s assessment.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group’s and the Company’s ability to
continue as a going concern for a period of at least twelve months from when the financial statements are authorised
for issue.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the
Group’s and the Company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether
the Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and
our auditors’ report thereon. The Directors are responsible for the other information, which includes reporting based
on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Our opinion on the financial
statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to
the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material
inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a
material misstatement of the financial statements or a material misstatement of the other information. If, based on
the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by
the UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report
and Directors’ Report for the year ended 31 July 2022 is consistent with the financial statements and has been
prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the
course of the audit, we did not identify any material misstatements in the Strategic Report and Directors’ Report.
191191
Directors’ Remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the Directors’ statements in relation to going concern, longer-term viability and
that part of the corporate governance statement relating to the Company’s compliance with the provisions of the UK
Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate
governance statement as other information are described in the “Reporting on other information” section of this
report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the financial statements and our knowledge obtained
during the audit, and we have nothing material to add or draw attention to in relation to:
• The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being managed or mitigated;
• The Directors’ statement in the financial statements about whether they considered it appropriate to adopt the
going concern basis of accounting in preparing them, and their identification of any material uncertainties to
the Group’s and Company’s ability to continue to do so over a period of at least twelve months from the date of
approval of the financial statements;
• The Directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this
assessment covers and why the period is appropriate; and
• The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to
continue in operation and meet its liabilities as they fall due over the period of its assessment, including any
related disclosures drawing attention to any necessary qualifications or assumptions.
Our review of the Directors’ statement regarding the longer-term viability of the Group was substantially less in
scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting their
statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance
Code; and considering whether the statement is consistent with the financial statements and our knowledge and
understanding of the Group and Company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following
elements of the corporate governance statement is materially consistent with the financial statements and our
knowledge obtained during the audit:
• The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for the members to assess the group’s and company’s
position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal
control systems; and
• The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the
Company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code
specified under the Listing Rules for review by the auditors.
Kin + CartaBuilding a world that works better for everyone.Financial Statements Independent auditors’ report to the
members of Kin and Carta plc continued
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
192
As explained more fully in the Statement of Directors’ Responsibilities in Respect of the Financial Statements, the
Directors are responsible for the preparation of the financial statements in accordance with the applicable framework
and for being satisfied that they give a true and fair view. The Directors are also responsible for such internal
control as they determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the group or the company or to cease
operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with
laws and regulations related to GDPR and other data protection regulations and employment legislation, and we
considered the extent to which non-compliance might have a material effect on the financial statements. We also
considered those laws and regulations that have a direct impact on the financial statements such as tax legislation
in relevant jurisdictions and Companies Act 2006. We evaluated management’s incentives and opportunities for
fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that
the principal risks were related to posting inappropriate journal entries to improve reported results and potential
management bias in accounting estimates, since management are incentivised on profit-based measures. The Group
engagement team shared this risk assessment with the component auditors so that they could include appropriate
audit procedures in response to such risks in their work. Audit procedures performed by the Group engagement
team and/or component auditors included:
•
Enquiries of management and the in-house legal team to understand internal processes with regards to
compliance with laws and regulations and to understand whether there have been any instances of non-
compliance;
• Obtained a confirmation from external legal counsel as to the status of an ongoing claim from a client;
•
•
•
•
Review of minutes of Board meetings and Internal Audit reports for identification of risks and potential non-
compliance;
Review of legal expenses incurred in the year and testing of a sample of legal expenses to underlying invoices to
understand the nature of the expense;
Review of financial statement disclosures and testing to supporting documentation to assess compliance with
applicable laws and regulations;
Identification of journal entries considered to be unusual e.g. postings to unusual account combinations or by
unexpected users and testing of these journals to supporting documentation; and
• Addressing the risk of management override of controls, through testing journal entries and other adjustments for
appropriateness, testing accounting estimates (due to the risk of management bias) and evaluating the business
rationale of any significant transactions outside of the normal course of business.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that are not closely related to events and transactions
reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example,
forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using
data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than
testing complete populations. We will often seek to target particular items for testing based on their size or risk
characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population
from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website
at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
193193
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
•
•
•
adequate accounting records have not been kept by the Company, or returns adequate for our audit have not
been received from branches not visited by us; or
certain disclosures of Directors’ remuneration specified by law are not made; or
the Company financial statements and the part of the Directors’ remuneration report to be audited are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 29 November 2018
to audit the financial statements for the year ended 31 July 2019 and subsequent financial periods. The period of total
uninterrupted engagement is four years, covering the years ended 31 July 2019 to 31 July 2022.
Other matter
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R,
these financial statements will form part of the ESEF-prepared annual financial report filed on the National Storage
Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF
RTS’). This auditors’ report provides no assurance over whether the annual financial report will be prepared using the
single electronic format specified in the ESEF RTS.
Brian Henderson (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
12 October 2022
Kin + CartaBuilding a world that works better for everyone.Financial Statements Consolidated income statement
Consolidated statement of other
comprehensive income
Profit for the period
Items that will not be reclassified subsequently to profit or loss:
Actuarial profit on defined benefits pension scheme
Tax charge on items taken through other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Transfers of losses on cash flow hedges
Losses on cash flow hedges
Foreign exchange gains/(losses)
Tax charge on items taken through other comprehensive income
Other comprehensive income for the period
Total comprehensive income for the period attributable to shareholders
of the Parent Company
Attributable to shareholders of the Parent Company
Total comprehensive income for the period
Year to
31 July 2022
£’000
Restated*
Year to
31 July 2021
£’000
9,783
2,778
195195
20,335
(6,209)
14,126
13
(54)
4,366
(1,105)
3,220
17,346
27,129
27,129
27,129
17,877
(3,401)
14,476
52
(13)
(492)
–
(453)
14,023
16,801
16,801
16,801
* The FY21 results have been restated following a change in accounting policy, from the adoption of the IFRS IC’s agenda decision on Configuration and Customisation Costs in a
Cloud Computing Arrangement. This change in accounting policy has increased the 2021 net profit by £83,000.
194
Continuing operations:
Revenue
Project-related costs
Net revenue
Cost of service
Gross profit
Selling costs
Year ended 31 July 2022
Restated*
Year ended 31 July 2021
Adjusted
Results
Note
£’000
Adjusting
Items
(Note 7)
£’000
Statutory
Results
Adjusted
Results
£’000
£’000
Adjusting
Items*
(Note 7)
£’000
Statutory
Results
£’000
3
197,123
(6,846)
190,277
(105,398)
84,879
(16,412)
–
–
–
–
–
–
197,123
137,321
(6,846)
(8,402)
190,277
128,919
(105,398)
(69,269)
84,879
59,650
(16,412)
(12,674)
–
–
–
–
–
–
137,321
(8,402)
128,919
(69,269)
59,650
(12,674)
Administrative expenses
Share of results of joint arrangement
Other operating income
Property Impairment and related empty costs
Amortisation of acquired intangibles
Contingent consideration treated as remuneration
Acquisition and integration costs
Operating profit/(loss)
Net pension finance income
Other finance expense
Profit/(loss) before tax
Income tax (charge)/credit
Net profit from continuing operations
Net profit from discontinued operations
Net profit for the period
Attributable to:
Shareholders of the Parent Company
Basic earnings/(loss) per share (p)
Continuing operations
Discontinued operations
Continuing and discontinued operations
Diluted earnings/(loss) per share (p)
Continuing operations
Discontinued operations
Continuing and discontinued operations
5
7
5
9
10
4
8
14
14
14
14
14
14
(50,016)
(7,565)
(57,581)
(39,877)
(2,723)
(42,600)
442
–
–
–
–
–
–
1,621
442
1,621
700
4,469
(6,264)
(6,264)
(6,390)
(6,390)
(13,229)
(13,229)
(1,421)
(1,421)
–
–
–
–
–
–
–
700
4,469
–
(7,527)
(7,527)
(4,956)
(4,956)
(966)
(966)
18,893
(33,248)
(14,355)
12,268
(16,172)
(3,904)
–
(1,837)
340
–
340
(1,837)
17,056
(32,908)
(15,852)
(1,949)
3,603
1,654
15,107
(29,305)
(14,198)
1,184
16,291
22,797
(6,508)
23,981
9,783
–
(1,953)
10,315
(2,175)
8,140
4,790
21
–
21
(1,953)
(16,151)
(5,836)
1,738
(437)
(14,413)
(6,273)
12,930
(10,152)
4,261
9,051
2,778
16,291
(6,508)
9,783
12,930
(10,152)
2,778
8.70
0.68
9.38
8.42
0.66
9.08
(16.87)
(8.17)
13.12
(3.75)
13.80
5.63
(16.87)
(8.17)
12.71
(3.75)
13.37
5.46
4.79
2.82
7.61
4.79
2.73
7.52
(8.48)
2.51
(5.97)
(8.48)
2.43
(5.97)
(3.69)
5.33
1.64
(3.69)
5.16
1.58
*The FY21 results have been restated to reflect:
•
•
a revised grouping of continuing and discontinued operations. Refer to note 8 for details.
a change in accounting policy, following adoption of the IFRS IC’s agenda decision on Configuration and Customisation Costs in a Cloud Computing Arrangement. This
change in accounting policy has decreased adjusted administrative expenses £103,000 with a related tax credit of £20,000.
The restatements above have consequential amendments to the amounts disclosed in note 4 Segment Reporting, note 5 Operating Profit/(loss) and note 18 Goodwill and Other
Intangible assets, note 11 Tax (charge)/ credit, note 26 Deferred Tax and note 33 Notes to the Consolidated Cash Flow Statement.
Kin + CartaBuilding a world that works better for everyone.Financial Statements Consolidated statement of
changes in equity
Consolidated balance sheet
Company number 01552113
196
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Balance at 1 August 2020
16,876
82,316
(68)
(163)
1,797
1,908
85,790
(42,954)
59,712
Change of accounting policy (net of
tax) (Note 2.(x))**
Restated total equity as at 1 August
2020
Profit for the year
Other comprehensive (expense)/
income
Total comprehensive income
Shares issued to settle
consideration for acquisitions
Shares issued to settle employee
share options
Recognition of share-based
contingent consideration deemed
as remuneration
Hyperinflation revaluation
Purchase of own shares
Settlement of share-based payment
using own shares
Recognition of share-based
payments
Tax on share-based payments
–
–
–
–
–
–
–
(507)
(507)
16,876
82,316
(68)
(163)
1,797
1,908
85,790
(43,461)
59,205
–
–
–
–
–
–
360
4,197
19
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(59)
59
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,919)
(129)
1,881
–
–
(38)
1,944
1,220
–
–
2,778
2,778
(453)
(453)
(453)
(453)
14,476
17,254
14,023
16,801
–
–
–
128
–
–
–
–
1,278
–
1,638
(129)
110
–
1,881
128
(59)
–
–
–
1,881
128
(59)
21
(21)
–
1,944
1,220
–
–
1,944
1,220
Balance at 31 July 2021
17,255
86,513
(68)
(163)
3,756
1,583
91,621
(26,118)
82,758
Profit for the year
Other comprehensive income
Total comprehensive income
Dividends paid
Shares issued to settle
consideration for acquisitions
Shares issued to settle employee
share options
Purchase of own shares
Settlement of share-based payment
using own shares
Recognition of share-based
payments
Recognition of share-based
contingent consideration deemed
as remuneration
Tax on share-based payments
Hyperinflation revaluation
Reclassification to retained earnings
–
–
–
–
–
–
–
–
352
7,843
190
303
–
–
–
–
–
–
–
–
–
–
–
–
–
(5,357)
–
–
–
–
–
(17)
(5,593)
353
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,242)
–
–
3,118
7,593
(318)
–
–
–
3,220
3,220
–
–
–
–
–
–
–
–
176
–
–
3,220
3,220
–
9,783
14,126
23,909
9,783
17,346
27,129
(38)
(38)
7,843
–
8,195
(956)
1,098
332
(5,593)
353
3,118
7,593
(318)
176
–
–
–
–
–
–
(5,357)
5,357
(5,593)
353
3,118
7,593
(318)
176
–
Assets
Non-current assets
Property, plant and equipment
Investment property
Goodwill
Other intangible assets
Investment in joint arrangement
Retirement benefit surplus
Other non-current assets
Deferred tax assets
Current assets
Trade and other receivables
Derivative financial instruments
Income tax receivable
Cash and cash equivalents
Assets held for sale
Total assets
Liabilities
Current liabilities
Lease liabilities
Loans
Trade and other payables
Derivative financial instruments
Income tax payable
Deferred income
Deferred consideration payable
Provisions
Liabilities associated with assets held for sale
Non-current liabilities
Lease liabilities
Loans
Deferred consideration payable
Provisions
Deferred tax liabilities
Total liabilities
Net assets
Capital and reserves
Share capital
Other reserves
Retained earnings/(accumulated deficit)
Total equity
Note
15
17
18
18
19
27
20
26
20
21
20
8
16
23
22
21
24
12
25
8
16
23
12
25
26
30
32
31 July
2022
£’000
10,559
4,169
76,935
20,435
–
38,748
101
7,625
158,572
45,393
2
–
12,609
–
58,004
216,576
2,806
–
32,968
454
3,168
5,159
6,944
477
–
51,976
10,052
13,148
2,155
4,206
11,334
40,895
92,871
123,705
17,797
101,700
4,208
123,705
Restated*
31 July
2021
£’000
197197
14,027
4,438
68,372
14,548
1,080
19,267
28
3,524
125,284
36,862
13
559
44,971
7,099
89,504
214,788
2,823
1,853
30,617
–
514
6,631
–
538
7,552
50,528
12,490
62,365
1,888
829
3,930
81,502
132,030
82,758
17,255
91,621
(26,118)
82,758
* The 31 July 2021 balance sheet has been restated following a change in accounting policy on adoption of the IFRS IC’s agenda decision on configuration and customisation
costs in a Cloud Computing Arrangement. This change in accounting policy decreased the group’s accumulated deficit by £83,000 in 2021. The impact of the change on other
Balance at 31 July 2022
17,797
89,302
(5,325)
(163)
12,907
4,979
101,700
4,208
123,705
intangible assets is disclosed in note 18.
* Additional paid-in capital includes share premium, merger reserve and capital redemption reserve (note 32).
** The FY21 results have been restated following a change in accounting policy, after adopting the IFRS IC’s agenda decision on Configuration and Customisation Costs in a Cloud
Computing Arrangement. This change in accounting policy has increased the accumulated deficit at 31 July 2021 by £424,000 (At 31 July 2020 £507,000).
These financial statements on pages 194 to 198 were approved by the board of directors on 12 October 2022 and
signed on its behalf by
Kelly Manthey
Chief Executive Officer
Chris Kutsor
Chief Financial Officer
Kin + CartaBuilding a world that works better for everyone.Financial Statements
Consolidated statement of
cash flows
Notes to the consolidated
financial statements
198
Operating activities
Cash generated from operations
Interest paid
Income taxes paid
Net cash generated from operating activities
Investing activities
Purchase of property, plant and equipment
Proceeds on disposal of subsidiaries
Cost of acquisitions in period
Deferred consideration for acquisitions made in prior periods
Net cash generated from investing activities
Financing activities
Purchase of own shares
Proceeds from share issues
Dividends paid
Lease payments
(Decrease)/increase in bank loans and US Government Loans
Net cash (used in)/generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Effect of foreign exchange rate changes
Cash and cash equivalents at end of the period
Year ended
31 July 2022
£’000
Restated*
Year ended
31 July 2021
£’000
12,127
(1,014)
(1,341)
9,772
(1,336)
34,269
(11,932)
–
21,001
(5,593)
332
(38)
(3,812)
(54,190)
(63,301)
(32,528)
44,971
166
12,609
10,764
(1,660)
(3,382)
5,722
(1,332)
12,630
(4,380)
(1,656)
5,262
(59)
–
–
(4,214)
15,024
10,751
21,735
24,408
(1,172)
44,971
Note
33
8
12
16
33
20
Included in the figures above are the following cash flows from discontinued operations:
Net cash (used in)/generated from operating activities
Net cash generated from investing activities
Net cash used in financing activities
Net increase in cash from discontinued operations
*Results have been restated to show a revised grouping of continuing and discontinued operations. Further details are in note 8.
Year ended
31 July 2022
£’000
Restated*
Year ended
31 July 2021
£’000
(1,862)
34,255
(542)
31,851
7,788
12,548
(1,504)
18,832
1. General information
Kin and Carta plc is a public limited company incorporated and domiciled in the United Kingdom (“UK”) and
registered in England and Wales under the Companies Act 2006. The address of the registered office is The Spitfire
Building, 71 Collier Street, London, N1 9BE. The nature of the Group’s operations and its principal activities are set out
in the “Chief Executive Officer’s” review, pages 44 to 46.
199199
Basis of preparation
The financial statements of the Company and the consolidated financial statements of the Group have been
prepared in accordance with the UK adopted international accounting standards in conformity with the requirements
of the Companies Act 2006 and international financial reporting standards adopted persuant to Regulation (EC) No
1606/2002 as it applied in the European Union. These consolidated financial statements (“the financial statements”)
are presented in Sterling as this is the currency of the primary economic environment in which the Group operates.
The consolidated financial statements have been prepared on a historical cost basis, except for the remeasurement
to fair value of investment property and certain financial assets and liabilities as described in the accounting policies
below. The accounting policies have been applied consistently throughout the Group.
The results for the year ended 31 July 2021 have been restated to reflect the results of the Incite, Edit and Relish
businesses as discontinued operations. The statutory results column (“Statutory Results”) in the Consolidated
Income Statement is presented after Adjusting Items, see note 7.
New accounting standards and interpretations adopted during the year
During the year the group adopted the IFRS IC’s agenda decision on configuration and customisation costs in a Cloud
Computing Arrangement. Refer to note 2(x) for details. The Group has not early adopted any standard, interpretation
or amendment that has been issued but is not yet effective.
At the date of authorisation of these financial statements, the following Accounting Standards and IFRCs were
applicable to companies with a July 2022 year end. The Group has not applied these standards in the preparation of
the consolidated financial statements and their impact on the group is considered immaterial:
• A number of narrow-scope amendments to IFRS 3, IAS 16, IAS 37 and some annual improvements on IFRS 1,
IFRS 9, IAS 41 and IFRS 16
− Amendments to IFRS 3, ‘Business combinations’ update a reference in IFRS 3 to the Conceptual Framework for
Financial Reporting without changing the accounting requirements for business combinations.
− Amendments to IAS 16, ‘Property, plant and equipment’ prohibit a company from deducting from the cost of
property, plant and equipment amounts received from selling items produced while the company is preparing
the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit
or loss.
− Amendments to IAS 37, ‘Provisions, contingent liabilities and contingent assets’ specify which costs a
company includes when assessing whether a contract will be loss-making.
− Annual improvements make minor amendments to IFRS 1, ‘First-time Adoption of IFRS’, IFRS 9, ‘Financial
instruments’, IAS 41, ‘Agriculture’ and the Illustrative Examples accompanying IFRS 16, ‘Leases’.
The above amendments are effective from 1 January 2022.
• Amendment to IFRS 16, ‘Leases’ – Covid-19 related rent concessions Extension of the practical expedient
As a result of the coronavirus (COVID-19) pandemic, rent concessions have been granted to lessees. In May
2020, the IASB published an amendment to IFRS 16 that provided an optional practical expedient for lessees
from assessing whether a rent concession related to COVID-19 is a lease modification. On 31 March 2021, the IASB
published an additional amendment to extend the date of the practical expedient from 30 June 2021 to 30 June
2022. Lessees can elect to account for such rent concessions in the same way as they would if they were not
lease modifications. In many cases, this will result in accounting for the concession as variable lease payments in
the period(s) in which the event or condition that triggers the reduced payment occurs.
Kin + CartaBuilding a world that works better for everyone.Financial Statements 1. General information (continued)
Going concern
2. Accounting policies
(a) Basis of consolidation
200
On 5 September 2022 the group agreed the extension of its committed GBP 85 million multicurrency revolving credit
facility with four lender banks for a further year, to 26 September 2026.
At 31 July 2022, the Group had drawn £13.1 million (31 July 2021: £62.4 million) on its credit facility, leaving an
unutilised commitment of £71.9 million (2021: £22.6 million). Refer to note 23 for details. The Group had cash and cash
equivalents of £12.6 million (2021: £45.0 million) at that date.
The proceeds from divestments of Incite, Edit and Relish businesses generated £34 million, partially offset by
acquisition outflows of £11.8 million related to £0.2 million for Octain, £1.8 million for Loop and £9.8 million for Melon
Group, net of cash acquired. The resulting free cash inflow was used to pay down bank debt. As a result, we ended
the year with a net debt position of £0.5 million compared to a net debt position of £19.2 million at 31 July 2021.
At 31 July 2022, the ratio of net debt to Adjusted EBITDA for bank covenant purposes was 0.05 times (2021: 0.99
times). The Group projects that it will continue to operate within covenant limits and has sufficient liquidity in both
the base case forecast and in the severe but plausible downside scenario.
Therefore, at the time of approving the financial statements, the Directors have a reasonable expectation that the
Company and the Group have adequate resources to continue in operational existence for the foreseeable future, a
minimum of twelve months from the date of approval of these financial statements. Thus they continue to adopt the
going concern basis of accounting in preparing the financial statements.
Viability statement
In order to assess the Group’s ability to continue to trade as a going concern and to be viable over the medium term,
detailed business and cash flow forecasts covering a three-year period (“viability period”) from 1 August 2022 have
been prepared by the Directors based on “bottom up” inputs from the individual business units.
To assess our financial viability, we have modelled a number of sensitised scenarios to assess the financial impact
of the principal business risks identified on pages 100 to 110 of this Annual Report. In addition to an assessment
of the effects on debt leverage and debt volume of individual risks, a combination of all the risk impacts occurring
simultaneously was modelled (the combined scenario) to test the results of a particularly high stress scenario. We
have assessed the stress before and after the impact of mitigating actions, which are under the control of the Group,
and which would be taken in such a scenario.
The covenants and headroom on the facility were reforecasted based on each scenario.
Conclusion
Taking into account the base forecast for the business over the three year period ending 31 July 2025, the adverse
financial impact of events linked to the principal risks identified for the Group and the mitigating actions under
its control, the Group should be able to continue to operate within the bank credit facilities available to it and the
covenants under which it operates if any of the events associated with identified risks came to pass, or if all of them
occurred simultaneously, under the assumptions we applied.
Overall, the Directors consider the Group well-placed to manage its business risks successfully, having taken into
account the current economic outlook, the possible consequences of principal risks facing the business in severe
but plausible scenarios, and the effectiveness of any mitigating actions on the Group’s profitability and liquidity.
On the basis of these and other matters considered and reviewed by the Board during the year, the Directors have
reasonable expectations that the Group will be able to continue in operation and meet its liabilities as they fall due
over the three-year period ending 31 July 2025.
The consolidated financial statements incorporate the financial statements of the Company and entities controlled
by the Company (its subsidiary undertakings) for each period. Control is achieved where the Company has the power
to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.
201201
Where necessary, adjustments are made to the results of subsidiaries to bring their accounting policies into line with
those of the Group. All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
The Group had joint arrangements during the period. A joint arrangement is an arrangement over which the Group
and one or more third parties have joint control. These joint arrangements are in turn classified as:
•
Joint ventures whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets
and obligations for its liabilities; and
• Joint operations whereby the Group has rights to the assets and obligations for the liabilities relating to the
arrangement.
The consolidated financial statements include the Group’s share of results of its joint venture on an equity
accounting method. See the Joint Arrangements accounting policy note below for details.
(b) Adjusting Items
Statutory results (“Statutory Results”) presented in the Consolidated Income Statement include Adjusting Items.
Income statement items are presented in the middle column under the heading “Adjusting Items” where they do
not form part of the underlying trading activities of the Group or, in the opinion of the Directors, their separate
presentation enhances understanding of the financial performance of the Group.
The results, excluding Adjusting Items, are presented in the Consolidated Income Statement under the heading
“Adjusted Results”, in order to provide a consistent and comparable view of the performance of the Group.
Furthermore, the Adjusted Results are aligned to the Group’s strategy and are used to measure the financial
performance of the Group’s businesses and are the basis for remuneration. Further details can be found under the
Adjusted Performance Measure section and note 7.
Items included as Adjusting Items are as follows:
Costs related to acquisitions
The Group has grown both organically with the development of new operating subsidiaries and through acquisition.
However, there is significant inconsistency between the accounting treatment of the goodwill and intangibles
associated with the acquisition of businesses and those generated internally. On an unadjusted basis, a business
acquired under IFRS 3 would report substantially lower operating profits and a lower return on capital than the
businesses that have been developed by the Group, thus making comparison of performance of the group and
segment difficult.
Therefore, the following items are recorded as Adjusting Items to provide a more realistic and comparable view of the
group and enhance the clarity of the performance of the Group to readers of the accounts:
(i) Amortisation charges related to intangible assets identified through acquisition accounting;
(ii) Expenses related to contingent consideration required to be treated as remuneration for acquired businesses;
(iii) Charges and credits arising from the re-estimation of deferred consideration payable in respect of
acquisitions; and
(iv) Charges related to the acquisition and integration of businesses or the setting up of new subsidiaries (see
integration costs below).
These items are shown as part of separate captions within operating profit on the face of the income statement.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 2. Accounting policies (continued)
St Ives Defined Pension Benefit Scheme income/expense
202
The Scheme was closed to new entrants in April 2002 and to the accrual of future benefits in August 2008. Given
the substantial change in the composition of the Group over the last eight years, with a significant number of
site closures and disposals of businesses that employed Scheme members, only two scheme members were still
employed by the Group at 31 July 2022, representing less than 0.1% of the total Scheme membership. After the
closure of the Scheme, all the in-service members at that time were transferred to a defined contribution scheme.
Payments to the defined contribution scheme are expensed to the Consolidated Income Statement and are treated
as part of Adjusted Results and not as an Adjusting Item. Therefore, the Group classifies the income/(expense)
relating to the Scheme as an Adjusting Item.
Restructuring and other costs
• Redundancies, restructuring costs and empty property costs
Redundancies and restructuring costs that are non-recurring in the individual businesses, and that in aggregate are
significant in size, are recorded as Adjusting Items. Careful consideration is applied by management in assessing
whether these costs relate to the restructure of a business within the Group or redundancies in the normal course
of business, which are not treated as Adjusting Items. Redundancies and restructuring costs related to the closure
or disposal of a site are recorded within this caption. Empty property costs comprise expenses relating to the
maintenance and security of leasehold property or property owned by the Group, from which no ongoing activity
takes place (further details surrounding empty property costs can be found below). The costs do not relate to the
ongoing trading activities of the Group and are, therefore, recorded as Adjusting Items.
• Operating results of a site arising after a formal decision on its closure
Operating results from non-continuing sites, where that site does not meet the definition of a discontinued operation
under IFRS 5 – Non Current Assets Held for Sale and Discontinued Operations include revenue, operational and
overhead expenses incurred after a formal decision on a site’s closure has been taken. These items also include
settlement of onerous leases, costs related to the transfer of assets and professional fees related to closure of the
site. These items exclude the costs of redundancies and restructuring, which relate to sites from which ongoing
trading activities take place. The above items are recorded as Adjusting Items on the basis that they do not form part
of the on-going trading activities of the Group.
• Non-cash impairment charges related to goodwill and other assets
Impairment charges related to non-current assets are non-cash items which do not occur in the normal course of
business and tend to be significant in size and irregular in nature. The presentation of this item as an Adjusting Item
further enhances the understanding of the ongoing trading performance of the Group.
• Customer litigation costs
Customer litigation costs include legal costs in defence of claims from customers involving material disputes and any
related insurance recovery. The costs and potential insurance recovery are considered one-off in nature and material,
and are recorded as Adjusting Items.
• Corporate structure simplification costs
Corporate structure simplification costs include the costs of placing dormant companies into liquidation and
preparing targeted companies for liquidation. The costs are considered one off in nature and material, therefore, have
been recorded as Adjusting Items.
• Gain or loss associated with disposal of trade, subsidiaries or assets
The gain or loss on disposal of trade, subsidiaries or assets tends to be significant in size and irregular in nature. The
disposal of property, plant and equipment is primarily associated with closed sites or businesses that have been
disposed of by the Group. Therefore, the gain or loss on the disposal of these assets is treated as an Adjusting Item.
Gains or losses on business as usual (normal course of business) disposals are not considered adjusting events.
When reviewing these items, the Directors considered the guidelines issued by the Financial Reporting Council
(“FRC”) and the European Securities and Markets Authority (“ESMA”).
203203
2. Accounting policies (continued)
A reconciliation of Statutory Results to Adjusted Results can be found in the Consolidated Income Statement. Further
details relating to the Adjusting Items are available in note 7.
(c) Revenue recognition
Revenue from supply of goods and services is measured at the fair value of consideration received or receivable, and
comprises amounts receivable for goods and services, net of trade discounts, up-front payments, VAT and other
sales-related taxes.
Revenue is recognised once contractual performance obligations have been delivered, in accordance with the terms
of the contractual agreement. Contracts can have a single or series of different deliverables and, over time, revenue is
recognised as each contractual obligation is satisfied. Discounts and other incentives are recognised over the period
of the contracts to which they relate.
For services performed on an over-time basis, e.g. where the terms of the contract have provision for licensing
the product on a subscription basis, revenue is recognised evenly over the period of contractual term as the
performance obligations are satisfied evenly over the term of subscription. Generally, the performance obligations are
satisfied over time as service is rendered.
For services that are linked to delivering of goods to fulfil the contract, revenue is recognised when the goods are
delivered, in line with meeting the contractual and performance obligations. The goods can be delivered in full or in
part quantities.
For performance obligations that are satisfied over time, the Group uses either input or output methods, to measure
progress for each performance obligation, depending on the particular arrangement. In the majority of cases,
relevant output measures such as the completion of project milestones set out in the contract are used to assess
proportional performance. Where this is not the case, then an input method based on costs incurred to date is used
to measure performance. The primary input of substantially all work performed is represented by staff costs. As a
result of the relationship between labour and cost there is normally a direct correlation between costs incurred and
the proportion of the contract performed to date.
Typically, customers are not entitled to refunds across the Group, the above methods are deemed to be appropriate
in identifying the point of transfer of goods and services for revenue recognition.
Payment terms for customer payments across the Group vary, with the majority of terms being 60 to 90 days.
In some exceptional circumstances, the Group amend payment terms to between zero and 30 days. The Group
generally is paid by customers in arrears for its services; however, some work is invoiced in advance.
Net revenue:
Net revenue is calculated as revenue less project-related costs as shown in the Consolidated Income Statement.
Project-related costs comprise primarily third-party pass-through expenses and direct costs attributable to a
project. These costs typically include amounts payable to external suppliers where they are engaged, at the Group’s
discretion, to perform a specific part of the performance obligation under a contract with the client, other than the
costs of certain freelance contractors and agency staff. Cost of service includes the costs of direct employed staff,
freelance contractors and agency staff who are engaged in the delivery of performance obligations under client
contracts.
Accrued and deferred income:
Accrued income is a contract asset and is recognised when a performance obligation has been satisfied but has not
yet been billed. Contract assets are transferred to receivables when the right to consideration is unconditional and
billed per the terms of the contractual agreement.
In certain cases, payments are received from customers prior to satisfaction of performance obligations and
recognised as deferred income on the Group’s Consolidated Balance Sheet. These balances are considered contract
liabilities and are typically related to prepayments for third-party pass-through expenses and direct costs that are
incurred shortly after billing.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 2. Accounting policies (continued)
(d) Investment properties
204
Investment properties are properties that are held to earn rental income and are stated at cost less accumulated
depreciation.
Depreciation is charged on buildings at between 2% and 4% per annum, so as to write off the cost or valuation of
assets over their estimated useful lives, using the straight-line method. Land, which is part of investment properties,
is not depreciated.
An investment property is derecognised upon disposal or when the investment property is permanently withdrawn
from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition
of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the
asset) is included in the Consolidated Income Statement in the period in which the property is derecognised.
(e) Intangible assets
Goodwill
Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of the acquisition over the net
fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary at the date of the acquisition.
Fair value is finalised within 12 months of the date of the acquisition. The goodwill arising on acquisition is allocated
to the group of cash-generating units (“CGU”) that are expected to benefit from the synergies of the combination.
A cash-generating unit represents the lowest level at which goodwill is monitored by the Group’s Board of Directors
for internal management purposes. Goodwill is not amortised but reviewed for impairment annually in accordance
with the impairment of goodwill policy set out in note 2. Goodwill impairment is recorded in a separate line within
operating profit in the Consolidated Income Statement.
Other intangible assets – customer relationships
Customer relationships identified as separable intangible assets in the context of business combinations are
capitalised at their fair value at the date of acquisition. They are amortised over their estimated useful lives, which is
generally two to ten years.
Other intangible assets – proprietary techniques
Proprietary techniques identified as separable intangible assets in the context of business combinations are
capitalised at their fair value at the date of acquisition. They are amortised over their estimated useful life which is
generally three to ten years.
Other intangible assets – trademarks
Trademarks identified as separable intangible assets in the context of business combinations are capitalised at
their fair value at the date of acquisition. They are amortised over their estimated useful lives, which is generally two
to ten years.
2. Accounting policies (continued)
(f) Property, plant and equipment
Freehold buildings
Long leases
Plant and machinery
Fixture, fittings and equipment
Motor vehicles
2–4%
Period of lease
10–33.3%
10–33.3%
20–25%
205205
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. The gain or loss arising on the disposal or scrappage of an
asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is
recognised in the Consolidated Income Statement.
(g) Impairment of property, plant, equipment and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment and
intangible assets to determine whether there is any indication that those assets have suffered any impairment loss.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any).
Where the asset does not generate cash flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value-in-use. In assessing value-in-use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessment of the time value of money and the risks specific to the assets for which the estimates of future
cash flows have not been adjusted.
Fair value less costs to sell is determined by the arm’s length sale price between knowledgeable willing parties less
costs of disposal.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately as an expense in the Consolidated Income Statement and is recorded within administrative
expenses.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount, but only in so far as the increased carrying amount does
not exceed the carrying amount that would have been determined had no impairment loss been recognised for the
asset (cash-generating unit) in prior periods.
Other intangible assets – computer software
(h) Impairment of goodwill
Computer software that is not integral to an item of property, plant or equipment is classified as an intangible
asset and is held on the Consolidated Balance Sheet at cost less amortisation and impairments. These assets are
amortised over their estimated useful lives, which is generally two to five years.
All intangible assets with finite lives are amortised on a straight-line basis. Intangible assets amortisation is
recognised immediately as an expense in the Consolidated Income Statement. Amortisation of intangibles arising in
the context of an acquisition is recorded on a separate line within operating profit. Amortisation of other intangibles
is recorded within Administrative expenses.
The recoverable amount of the group of cash-generating units, to which goodwill has been allocated, is tested for
impairment annually on a consistent date during each financial period, or more frequently when such events or
changes in circumstances indicate that it may be impaired. If the recoverable amount of the cash-generating unit is
less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of
each asset in the unit.
Any impairment is recognised immediately in the Consolidated Income Statement. Impairments of goodwill are not
subsequently reversed.
On disposal of a cash-generating unit, the attributable amount of goodwill is included in the determination of the
gain or loss on disposal.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 2. Accounting policies (continued)
(i) Tax
The tax expense in the Consolidated Income Statement comprises tax currently payable and deferred tax.
206
The tax currently payable is based on the taxable profit for the period. Taxable profit differs from net profit as
reported in the Consolidated Income Statement because it excludes items of income and expense that are taxable
or deductible in other periods and it further excludes items that are never taxable or deductible. The Group’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the balance
sheet date.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the accounts and
the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet
liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available, against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if the temporary differences arise on non-
deductible goodwill or from the initial recognition (other than business combinations) of other assets or liabilities in a
transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except
where the Group is able to control the reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and is reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the
asset is realised. Deferred tax is charged or credited in the Consolidated Income Statement, except when it relates
to items charged or credited in other comprehensive income, in which case the deferred tax is also dealt with in the
Consolidated Statement of Comprehensive Income or when it relates to items that are charged or credited to the
Consolidated Statement of Comprehensive Income or directly to the Consolidated Statement of Changes in Equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current assets against
current liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
Current tax and deferred tax are recognised in the Consolidated Income Statement, except when they relate to
items that are recognised in the Consolidated Statement of Comprehensive Income or directly to the Consolidated
Statement of Changes in Equity. Where current tax or deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the business combination.
(j) Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, it is probable that the
Group will be required to settle the constructive or legal obligation, and its value can be reliably estimated. When a
provision needs to be released, the provision is taken back to the Consolidated Income Statement within the line
item where it was initially booked. Provisions are discounted to present value using a risk-free rate where the impact
of discounting is deemed to be immaterial.
Provisions for repairs
Provisions for repairs are made where the Group is committed under the terms of the lease to make repairs to
leasehold property. The provision is made for the estimated cost over the period of the lease.
2. Accounting policies (continued)
(k) Foreign currencies
The individual financial statements of each Group company are presented in the currency of the primary economic
environment in which it operates (its functional currency). For the purpose of the consolidated financial statements,
the results and financial position of each Group company are expressed in Sterling, which is the functional currency
of the Company, and the presentation currency for the consolidated financial statements.
207207
Transactions in foreign currencies other than Sterling are translated at the exchange rate ruling at the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are
translated to Sterling at the exchange rate ruling at that date.
Exchange differences are recognised in the Consolidated Income Statement in the period in which they arise
except for:
• exchange differences on transactions entered into to hedge certain foreign currency risks; and
• exchange differences on monetary items receivable from, or payable to, a foreign operation for which settlement
is neither planned nor likely to occur in the foreseeable future (therefore, forming part of the net investment in the
foreign operation), which are recognised initially in the Consolidated Statement of Comprehensive Income and
reclassified to the Consolidated Income Statement on disposal or partial disposal of the net investment.
Foreign currency differences arising on translation or settlement of monetary items are recognised in the
Consolidated Income Statement.
The results of overseas subsidiaries with functional currencies other than Sterling are translated into Sterling at the
average rate of exchange ruling in the period. The average exchange rate for each functional currency is calculated as
an average of the Sterling exchange rate ruling at the end of each monthly period.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate at the date of the transaction and not retranslated at each period end. Non-monetary assets
and liabilities denominated in foreign currencies that are stated at fair value are translated to Sterling at exchange
rates ruling at the date the fair value was determined. Exchange gains and losses arising on the retranslation of non-
monetary assets and liabilities are recognised directly in a separate component of the Consolidated Statement of
Comprehensive Income.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and
liabilities of the foreign operation and translated at the period-end closing rate.
(l) Financial instruments
Financial assets and financial liabilities are recognised in the Consolidated Balance Sheet when the Group becomes a
party to the contractual provisions of the instrument.
The Group classifies its financial instruments in the following categories:
Financial instrument category
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Derivative financial instruments
Deferred consideration payable
Bank borrowings
Note
20
20
22
21
12
23
Measurement
Amortised cost
Amortised cost
Amortised cost
Fair value through profit and loss
Fair value through profit and loss
Amortised cost
Fair value
measurement
hierarchy*
N/A
N/A
N/A
2
3
N/A
Provisions for reorganisation and onerous leases
*The fair value measurement hierarchy is only applicable for financial instruments measured at fair value.
Provisions for restructuring costs and onerous lease costs are recognised when the Group has a detailed formal
plan for the restructuring that has been communicated to affected parties or onerous contracts related to closed/
discontinued operations.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 2. Accounting policies (continued)
2. Accounting policies (continued)
Fair value measurements, where applicable, are categorised into Level 1, 2 or 3 based on the degree to which
the inputs to the fair value measurements are observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
208
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can
access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
The Group’s primary categories of financial instruments are listed below:
Trade and other receivables
All trade receivables held by the Group are financial assets held within a business model whose objective is to hold
financial assets in order to collect the contractual cash flows. Trade receivables are initially recognised at fair value
and will subsequently be measured at amortised cost less allowances for impairment.
The Group recognises a loss allowance for expected credit losses (“ECL”) on trade receivables and contract assets.
The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial
recognition of the respective financial instrument. The Group recognises expected credit losses for trade receivables
and contract assets. The expected credit losses on these financial assets are estimated using a provision matrix
based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly
liquid investments maturing within 90 days from the date of acquisition that are readily convertible into known
amounts of cash and which are subject to an insignificant risk of changes in value.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded as the proceeds receivable, net of direct issue costs.
Finance charges are accounted for on an accruals basis in the Consolidated Income Statement using the effective
interest rate method and are included in creditors to the extent that they are not settled in the period in which
they arise.
Other long-term financial assets
Unlisted shares held by the Group are classified as being other long-term financial assets and are stated at fair value.
Fair values of unlisted shares are calculated with reference to exit price. Gains or losses arising from changes in fair
value are recognised directly in equity, until the security is disposed of or is determined to be impaired, at which time
the cumulative gain or loss previously recognised in equity is included in the Consolidated Income Statement for the
period.
The Group holds investments in equity instruments and has made the irrecoverable designation to measure these at
fair value through other comprehensive income (“FVTOCI”) as they are not held for trading.
Trade and other payables
Trade payables are not interest bearing and are stated at their nominal value.
Derivative financial instruments and hedge accounting
The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and
interest rates.
The Group uses derivative financial instruments to hedge its exposure to foreign exchange for the purchase of
subsidiaries, goods and services denominated in foreign currencies and the sale of goods and services similarly
denominated.
The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which provide
written principles on the use of financial derivatives consistent with the Group’s risk management strategy. The
Group does not hold or issue derivative financial instruments for speculative purposes.
Changes in the fair value of derivative financial instruments that are designated and effective as cash flow hedges of
forecast transactions are recognised directly in equity and the ineffective portion is recognised immediately in the
Consolidated Income Statement.
If the cash flow hedge of a firm commitment or forecast transaction results in the recognition of an asset or
liability, then, at the time the asset or liability is recognised, the associated gains and losses on the derivative that
had previously been recognised in equity are included in the initial measurements of the asset or liability. For the
hedges that do not result in the recognition of an asset or liability, amounts deferred in equity are recognised in the
Consolidated Income Statement in the same period as gains or losses are recognised on the hedged item.
209209
The gain or loss on hedging instruments relating to the effective portion of a net investment hedge is recognised
in equity and the ineffective portion is recognised immediately in the Consolidated Income Statement. Gains or
losses accumulated in equity are included in the Consolidated Income Statement when the foreign operations are
disposed of.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no
longer qualifies for hedge accounting.
At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until
the forecast transaction occurs. If a hedge transaction is no longer expected to occur, the net cumulative gain or
loss previously recognised in equity is included in the Consolidated Income Statement for the period. Derivatives
embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks
and characteristics are not closely related to those of their host contracts and the host contracts are not carried at
fair value with unrealised gains or losses reported in the Consolidated Income Statement.
Those derivatives that are not designated as hedges are classified as held for trading and gains and losses on those
instruments are recognised immediately in the Consolidated Income Statement. A derivative with a positive fair value
is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability.
Deferred/contingent consideration payable
Deferred/contingent consideration payable and consideration required to be treated as remuneration in respect
of acquired businesses are typically determined based on a multiple of future incremental EBITDA, and the related
amounts are based on forecasts that have been derived from the most recent budgets and forecasts. Any change in
the fair value of the outcome is recognised in the Consolidated Income Statement as an Adjusting Item. The deferred
consideration payable and accrued contingent consideration required to be treated as remuneration are recognised
as financial liabilities, where amounts are expected or required to be cash settled. Where amounts are settled by
future issuance of Kin and Carta plc shares, amounts required to settle the liability are recorded in equity.
The Directors consider that the carrying value of all financial assets and liabilities is approximately equal to their
fair value, except for investment properties, which are recorded at amortised cost. The fair value of these assets is
disclosed in note 17.
(m) Retirement benefits
The Group operates both defined benefit and defined contribution schemes for its employees. Payments to the
defined contribution schemes are expensed to the Consolidated Income Statement as they fall due.
For the St Ives Defined Benefit Pension Scheme (the “Scheme”) full actuarial calculations are carried out every
three years using the projected unit credit method and updates are performed for each financial period end.
Actuarial gains and losses are recognised in full in the period in which they occur. They are recognised outside the
Consolidated Income Statement and presented in the Consolidated Statement of Comprehensive Income.
The retirement benefit obligation recognised in the Consolidated Balance Sheet represents the present value of the
defined benefit obligations and as reduced by the fair value of the Scheme’s assets.
Any asset resulting from this calculation is recognised in the Consolidated Balance Sheet, as the Group has an
unconditional right to a refund of any surplus in the defined benefit pension scheme at the end of the Scheme’s
duration.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 2. Accounting policies (continued)
2. Accounting policies (continued)
Past service cost is recognised at the earlier of when the planned amendment or curtailment occurs and when the
entity recognises related restructuring costs or termination benefits.
210
Given the closure of the Scheme and the change in the composition of the Group, the Board has concluded that
the Scheme’s income and expenses do not relate to the underlying trading activities of the Group. Furthermore,
the underlying assumptions used in the Scheme’s valuation are determined by reference to external market data
(notably discount and inflation rates) that are outside the Group’s control and can vary significantly between
periods. The Group’s accounting policy is, therefore, to record the income and expenses related to the Scheme as an
Adjusting Item.
Defined benefit income and expenses are split into four categories:
At transition, the lease liabilities were measured at the present value of the remaining lease payments using the
Group’s incremental borrowing rate of 5% as at 1 August 2019. The right-of-use assets were measured at their
carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the lessee’s
borrowing rate at 1 August 2019. The Group used the following practical expedients when applying IFRS 16:
• Adjusted the right-of-use assets for any onerous lease provisions immediately before the date of initial
application rather than perform an impairment review;
• Applied the exemption not to recognise a right-of-use asset or lease liability for leases of low value or with lease
terms with less than 12 months remaining at 1 August 2019; and
• Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.
211211
• gains and losses on curtailments and settlements and costs incurred in the running of the Scheme;
Changes in accounting policy for leases
• net pension finance charge;
• past service costs including Guaranteed Minimum Pension (“GMP”) costs; and
•
remeasurement of gains and losses.
The Group presents the first three components of the Scheme’s costs within Adjusting Items in its Consolidated
Income Statement and the remeasurement costs within the Consolidated Statement of Comprehensive Income.
The GMP costs reflect further adjustment in the current year following a granular member-by- member review in the
current year and, in the prior year, an adjustment to reflect the impact of GMP adjustment in respect of members
who transferred out of the scheme.
(n) Share-based payments
The Group makes equity-settled share-based payments to certain employees, which are measured at fair value at
the date of the grant. The fair value determined at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually
vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected
to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original
estimates, if any, is recognised in the Consolidated Income Statement such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to the Statement of Change in Equity reserves. The fair value of
share options issued is measured using a binomial model, for the effects of non-transferability, exercise restrictions
and behavioural considerations.
SAYE and ESPP share options granted to employees are treated as cancelled when employees cease to contribute to
the scheme. This results in accelerated recognition of the expenses that would have arisen over the remainder of the
original vesting period.
The cumulative expense is reversed when an employee in receipt of the share options terminates service prior to
the completion of vesting period. Where the terms of an equity-settled award are modified on termination of the
employment, the total fair value of the share-based payments is recorded in the Consolidated Income Statement.
(o) Employee Share Ownership Plan (“ESOP”)
As the Group is deemed to have control of its ESOP trust, it is included in the consolidated Group financial
statements. The ESOP’s assets and liabilities are included on a line-by-line basis in the Group financial statements.
The ESOP’s investment in the Group’s shares is deducted from equity in the Consolidated Balance Sheet as if they
were treasury shares and presented in the ESOP reserve.
(p) Leases
The Group applied IFRS 16 with a date of initial application of 1 August 2019. IFRS 16 requires lessees to account for all
leases on the balance sheet, recognising a right-of-use asset and a lease liability at the lease commencement date.
As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether
the lease transferred substantially all the risks and rewards of the ownership of the asset to the Group. Under IFRS
16, the Group recognised a right-of-use asset and lease liability i.e. all leases are recognised on the Consolidated
Balance Sheet.
The Group leases a number of offices and equipment, and rental contracts typically run for fixed periods of three to
eleven years. Lease terms are negotiated on an individual basis and contain a wide range of terms and conditions.
The lease agreements do not impose any covenants, but leased assets cannot be used as security for borrowing
purposes.
For any new contracts entered into on or after 1 August 2019, the Group considers whether a contract is, or contains,
a lease. A lease is defined as “a contract, or part of a contract, that conveys the right to use an asset (the underlying
asset) for a period of time in exchange for consideration”. To apply this definition, the Group assesses whether the
contract meets the following criteria:
• The contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified
by being identified at the time the asset is made available to the Group;
• The Group has the right to obtain substantially all of the economic benefits from use of the identified asset
throughout the period of use, considering its rights within the defined scope of the contract; and
• The Group has the right to direct the use of the identified asset throughout the period of use.
At the lease commencement date, the Group recognises the lease as a right-of-use asset and a corresponding
liability in the balance sheet. The right-of-use asset is measured at cost, which is made up of the initial measurement
of the lease liability, any initial direct costs incurred by the Group, an estimate of any restoration costs at the end
of the lease and any lease payments made in advance of the lease commencement date (net of any incentives
received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the
earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the
right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available, or the
Group’s incremental borrowing rate. Subsequent to initial measurement, the liability will be reduced for payments
made and increased for interest.
Each lease payment is allocated between the reduction of the lease liability and finance cost. The finance cost is
charged to the Consolidated Income Statement over the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis
as an expense in the Consolidated Income Statement. Short-term leases are leases with a term of 12 months or less.
Extension and termination options are included in a number of property leases across the Group. These options are
used to maximise operational flexibility in terms of managing contracts. In determining the lease term, management
considers all facts and circumstances that create an economic incentive to exercise an extension option, or not
exercise a termination option. Extension options (or periods after termination options) are only included in the lease
term if the lease is reasonably certain to be extended (or not terminated).
Leases that do not meet the criteria under IFRS 16 leases are classified as either short-term or low value leases.
Rental costs under these leases are charged to the Consolidated Income Statement in equal amounts over the terms
of the lease. In the event that lease incentives are received to enter into these leases, such incentives are recognised
as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line
basis over the lease term.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 2. Accounting policies (continued)
(q) Business combinations
212
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for
each acquisition is measured at the aggregate of the fair values (at the date of exchange) of assets given, liabilities
incurred or assumed by the Group, together with the equity instruments equivalent to the mid-market share price
on the date of completion, in exchange for control of the acquiree. Acquisition-related costs are recognised in the
Consolidated Income Statement as incurred.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent
consideration arrangement, measured at its acquisition date fair value. Subsequent changes in such fair values are
adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below). All
other subsequent changes in the fair value of contingent consideration classified as an asset, liability or equity are
accounted for in accordance with relevant IFRSs.
Contingent amounts payable to selling shareholders who continue to be employed by the Group, but which is
automatically forfeited upon termination of employment, is classified as remuneration for post-combination services
and is recorded in the Consolidated Income Statement. The contingent payment is satisfied in cash and equity
instruments equivalent to the mid-market share price on the date of the consideration payable.
The cash-settled contingent amounts treated as remuneration for post-combination services is recognised
in accordance with IAS 19 Employee Benefits and has been recorded as deferred consideration payable in the
Consolidated Balance Sheet. At each balance sheet date, the Group revises its estimate for the contingent amounts
payable that is to be settled in cash. The impact of the revision, if any, is recognised in the Consolidated Income
Statement such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the
Consolidated Balance Sheet.
The equity-settled contingent amounts payable treated as remuneration for post-combination services is
recognised in accordance with IFRS 2 Share-based Payments, and is recorded in equity reserves. Further details
can be found in the share-based payments accounting policy. At each balance sheet date, the Group revises its
estimate of the consideration payable that is to be settled in shares. The impact of the revision, if any, is recognised
in the Consolidated Income Statement such that the cumulative expense reflects the revised estimate, with a
corresponding adjustment to equity reserves.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under
IFRS 3 are recognised at their fair value at the acquisition date, except that:
• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised
and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;
•
liabilities or equity instruments related to the replacement by the Group of an acquiree’s share-based payment
awards are measured in accordance with IFRS 2 Share-based Payment; and
• assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations are measured in accordance with that standard.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see below), or additional assets or liabilities
are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition
date that, if known, would have affected the amounts recognised as of that date.
The measurement period is the period from the date of acquisition to the date that the Group obtains complete
information about facts and circumstances that existed as of the acquisition date, and is subject to a maximum of
one year.
2. Accounting policies (continued)
Investments in joint arrangements are carried in the Consolidated Balance Sheet at cost plus post-acquisition
changes in the Group’s share of net assets of the entity, less any provision for impairment.
(s) Non-current assets held for sale
Non-current assets classified as held for sale are measured at the lower of amortised cost and fair value less costs
of disposal. Non-current assets are classified as held for sale if their carrying value will be recovered through a
sale transaction rather than through continuing use. The Group classifies assets as held for sale and when these
conditions below have been met:
213213
• management is committed to a plan to sell;
•
the asset is available for immediate sale;
• an active programme to locate a buyer is initiated, and the sale is highly probable, within 12 months of
classification as held for sale;
•
the asset is being actively marketed for sale at a sales price reasonable in relation to its fair value; and
• actions required to complete the plan indicate that it is unlikely that plan will be significantly changed
or withdrawn.
For assets that were classified as held for sale on 31 July 2021, the conditions above were met (note 8).
(t) Discontinued operations
The Group classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered
principally through sale rather than through continuing use. A component of the Group is classified as a discontinued
operation if:
•
•
it represents a separate major line of business or geographical area of operation;
it is part of a single coordinated plan to dispose of a separate major line of business or geographical area of
operations; or
•
it is a subsidiary acquired exclusively with a view to resale as a discontinued operation.
The trading results of a discontinued operation together with any gains or loss from the disposal of the operation is
reported separately as discontinued operations in the Consolidated Income Statement. Further information can be
found in the Goodwill and other intangibles note below.
(u) Grant income
The Group recognises income from government grants only when there is reasonable assurance that the Group will
comply with any conditions attached to the grant and the grant will be received. Grant income is recognised as other
operating income in the Consolidated Income Statement.
(v) Critical accounting judgements and key sources of estimation uncertainty
In the course of applying the Group’s accounting policies, the following estimations and accounting judgements
have been made, which could have a significant effect on the results of the Group were they subsequently found to
be inappropriate.
Critical accounting judgements
Adjusting items
In the opinion of the Directors, separate presentation of Adjusting Items and APMs provides useful information in the
understanding of the financial performance of the Group and its businesses. The classification of Adjusting Items
requires management judgement after considering the nature and intentions of a transaction. The Group’s definitions
of Adjusting Items are outlined within the Group accounting policies under the “Adjusting Items” section above.
These definitions have been applied consistently period-on-period. Further details are provided in note 7.
(r) Joint arrangements
Assets held for sale
Joint arrangements are entities where no one party is able to exercise overall control in which the Group has an
interest. The Group’s share of the post-tax results of its joint arrangements is included in the Consolidated Income
Statement using the equity method of accounting. Where the Group transacts with a joint arrangement, profits and
losses are eliminated to the extent of the Group’s interest in the joint arrangement.
The reclassification of businesses as Assets held for sale involves a judgement of the likelihood of a sale taking place
within 12 months of the balance sheet date, which is not entirely within the control of the Group.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 2. Accounting policies (continued)
Key sources of estimation uncertainty
Impairment of goodwill
214
Determining whether goodwill is impaired requires an estimation of the value-in-use of the cash-generating units
for which goodwill has been identified. In arriving at the value-in-use, the forecast of future cash flows of cash-
generating units and selection of appropriate discount rates is required to calculate present values, a process
which involves estimation. The recoverability analysis indicates that the value-in-use supports the carrying amount
of goodwill. The situation will be monitored closely should future developments indicate that adjustments are
appropriate. The carrying value of goodwill at the balance sheet date was £76.9 million (2021: £68.4 million). A
sensitivity analysis can be found in note 18.
Impairment of acquired intangibles
The Group considers the recoverability of acquired intangibles, which are included within the Consolidated Balance
Sheet at £20.4 million (2021: £14.5 million). The key areas of consideration when assessing the recoverability of these
assets are in relation to the discount rates, terminal growth rates, budgets and forecasts to be applied to forecast
cash flows. A sensitivity analysis can be found in note 18.
Purchase price allocation for acquisitions
Accounting for an acquisition typically involves the allocation of a significant portion of the purchase price to the
fair value of assets, which do not have a historical cost base, such as customer relationships, proprietary techniques
and trademark, as well as the estimation of useful economic lives for these assets. The determination of value of
these assets and their useful lives involves valuation techniques dependent on estimation of future cash flows, which
are uncertain. The allocation of the purchase price for the Cascade Data Labs acquisition in the period is set out in
note 12.
Contingent Consideration
The calculation of consideration payable in relation to past acquisitions, which is contingent upon future
performance, requires the estimation of future revenues and costs and is subject to uncertainty. An analysis of
contingent consideration payable can be found in note 12.
Retirement benefit obligations
The calculation of retirement benefit obligations requires estimates to be made of discount rates, inflation rates,
future salary and pension increases, the effects of compliance with statutory provisions for GMP, and mortality. The
net surplus in the Consolidated Balance Sheet for the retirement benefit scheme was £38.7 million (2021: surplus of
£19.3 million). A sensitivity analysis can be found in note 28.
(w) Segment information
Following changes in how the Group is managed, from 1 August 2021 the Group changed the presentation of its
segment information, to a regional structure, which is made up of the following segments; Americas, Europe and
Corporate. Refer to note 4.
From 1 August 2021, the Group segments are:
• Americas - the segment generates its revenue from offering digital transformation services to clients. The
segment’s results are from the Group’s subsidiaries that provide services to clients from businesses with
operating locations in the Americas.
• Europe - the segment generates its revenue from offering digital transformation services to clients. The segment’s
results are from the Group’s subsidiaries that provide services from businesses with operating locations in
Europe.
2. Accounting policies (continued)
(x) Changes in accounting policies
Change in accounting policy in response to IFRS IC agenda decision on Configuration and Customisation (“CC”)
costs in a cloud computing arrangement
The Group previously accounted for Configuration and Customisation (“CC”) costs in a cloud computing
arrangement as ‘intangible assets – computer software’, amortised over a period of two to five years. Following the
IFRS IC agenda decision on configuration and customisation costs in a Cloud Computing Arrangement in March 2021,
the Group has reconsidered its accounting treatment. The Group has adopted the treatment set out in the IFRS IC
agenda decision not to capitalise CC costs but to record them as an expense in the Consolidated Income Statement
on the basis that the Group does not control the software that was configured and customised. This change in
accounting treatment has been accounted for retrospectively and comparative information has been restated. The
impact of this change is disclosed in the table below:
Change in accounting policy and presentation: Cloud computing
215215
Balance sheet (extract)
Other intangible assets
Deferred tax liabilities
Net assets
Accumulated deficit
Total equity
Consolidated Income Statement (extract)
Administrative expenses
Profit before tax
Income tax charge
Net profit/(loss) from continuing operations
Net profit from discontinued operations
Adjusting items after tax
Net profit for the period
Profit is attributable to:
Shareholders of the Parent Company
Statement of comprehensive income (extract)
Profit for the period
Other comprehensive income for the period
Total comprehensive income for the period
31 July
2021
£’000
Cloud Computing:
Increase/(decrease)
£’000
31 July
2021
(Restated)
£’000
15,072
(4,030)
83,182
(25,693)
83,182
31 July
2021
£’000
(39,980)
10,212
(2,013)
8,199
4,862
(10,366)
2,695
2,695
2,695
2,695
14,023
16,718
16,718
16,718
(524)
100
(424)
(424)
(424)
14,548
(3,930)
82,758
(26,117)
82,758
Impact of Cloud
Computing
£’000
31 July
2021
(Restated)
£’000
103
103
(20)
83
–
–
83
83
83
83
–
83
83
83
(39,877)
10,315
(2,033)
8,282
4,862
(10,366)
2,778
2,778
2,778
2,778
14,023
16,801
16,801
16,801
• Corporate - the segment includes the group’s investment holding companies, which include Kin and Carta plc.
Total comprehensive income for the period is attributable to:
The segment incurs the Group’s corporate costs.
Shareholders of the Parent Company
The above operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision Maker (“CODM”). The Board of Kin + Carta plc appoints the Chief Executive Officer (the “CEO”)
and the Chief Financial Officer (the “CFO”), who together assess the financial performance and position of the Group,
to make strategic decisions for the Group. The CEO and CFO have been identified as being the CODM for the Group.
Refer to note 4 Segment Reporting for details.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements
2. Accounting policies (continued)
4. Segment reporting
Basic and diluted earnings per share for the prior year have also been restated. The amount of the correction for
basic and diluted earnings per share was an increase of 0.049 pence and 0.047 pence per share respectively.
216
The restatements further affected some of the amounts disclosed in note 7 Adjusting Items, note 4 Segment
Reporting, note 5 Operating Profit/(loss) and note 18 Goodwill and Other Intangible assets, note 11 Tax (charge)/ credit,
note 26 Deferred Tax and note 33 Notes to the Consolidated Cash Flow Statement.
3. Revenue
An analysis of the Group’s revenue as defined by International Financial Reporting Standard 15 - ‘Revenue’ is as
follows:
Continuing operations:
Rendering of services
Discontinued operations:
Rendering of services
Continuing and discontinued operations:
Rendering of services
Net revenue by region is under note 4.
*Results have been restated to show a revised grouping of continuing and discontinued operations. Further details are in note 8.
2022
£’000
Restated*
2021
£’000
197,123
137,321
10,116
43,038
207,239
180,359
Following a change to a regionally focused approach to management of the Group, segment information is presented
on a regional basis, with a separate corporate segment for certain costs, which are not allocated directly to the
operating regions.
The Group reports its results through the following segments:
• Americas - this segment generates revenue from services offered to our global clients by our operating
businesses which are located in the Americas.
• Europe - the segment generates revenue from services offered to global clients by our operating businesses
which are located in Europe.
• Corporate - the segment includes the corporate costs which are not allocated directly to the operating regions,
including the costs of the Board.
The above operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision Maker (“CODM”). The CODM has been determined to be the Chief Executive Officer and Chief
Financial Officer who are primarily responsible for the assessment of the performance of the Group.
Results from continuing and discontinued operations for the current period:
217217
Continuing operations:
Revenue
Net revenue
Operating profit/(loss) before Adjusting Items
Adjusting Items
Operating (loss)/profit
Net pension finance income
Other finance expense
Statutory loss from operations
Income tax credit
Statutory loss after tax from continuing operations
Discontinued operations:
Statutory net profit for the period from discontinued operations
Continuing and discontinuing operations:
Statutory net profit for the period from continuing and
discontinued operations
Year to 31 July 2022
Europe
£’000
Americas
£’000
Corporate
costs
£’000
61,772
58,050
4,045
(5,454)
(1,409)
154,037
132,227
22,878
(21,566)
1,312
(18,686)
-
(8,030)
(6,228)
(14,258)
Total
£’000
197,123
190,277
18,893
(33,248)
(14,355)
340
(1,837)
(15,852)
1,654
(14,198)
23,981
9,783
Revenue in the corporate costs column comprises the elimination of revenue between the Americas and Europe
operating segments.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements
4. Segment reporting (continued)
Results from continuing and discontinued operations for the prior period:
218
Continuing operations:
Revenue
Net revenue
Operating profit/(loss) before Adjusting Items
Adjusting Items
Operating profit/(loss)
Net pension finance income
Other finance expense
Statutory loss from operations
Income tax charge
Statutory net loss from continuing operations
Discontinued operations:
Statutory net profit for the period from discontinued operations
Continuing and discontinuing operations:
Statutory net profit for the period from continuing and
discontinued operations
Restated*
Year to 31 July 2021
Europe
£’000
Americas
£’000
Corporate
costs
£’000
46,591
43,725
4,368
(2,648)
1,720
97,851
85,194
14,710
(10,342)
4,368
(7,121)
-
(6,810)
(3,182)
(9,992)
Total
£’000
137,321
128,919
12,268
(16,172)
(3,904)
21
(1,953)
(5,836)
(437)
(6,273)
9,051
2,778
4. Segment reporting (continued)
Geographical split of revenue
Operations
Net revenue by geographical area is based on the location where the provision of goods and services has
been provided.
219219
Continuing operations
United States of America
United Kingdom
Rest of the world
Net revenue from continuing operations
Discontinued operations
United States of America
United Kingdom
Rest of the world
Net revenue from discontinued operations
Total
United States of America
United Kingdom
Rest of the world
Total net revenue
31 July 2022
£’000
Restated*
31 July 2021
£’000
132,230
55,607
2,440
190,277
631
5,239
24
5,894
132,861
60,869
2,441
196,171
93,870
34,927
122
128,919
5,950
21,024
408
27,382
99,821
55,951
529
156,301
*The results for the year ended 31 July 2021 have also been restated following:
•
a change in accounting policy, after adopting the IFRS IC’s agenda decision on configuration and customisation costs in a Cloud Computing Arrangement. This change in
accounting policy has increased the statutory net profit from continuing operations by £83,000 in 2021. Refer to note 2x.
•
and to show a revised grouping of continuing and discontinued operations. Further details are in note 8. .
Other information
One customer contributed 11.8% (2021: 12.8%) of the group net revenue for the year.
*Results have been restated to show a revised grouping of continuing and discontinued operations. Further details are in note 8.
Capital additions
Depreciation and amortisation charges
Impairment charges
Capital additions
Depreciation and amortisation charges
Impairment charges
Year to 31 July 2022
Continuing
Operations
£’000
Discontinued
Operations
£’000
4,796
10,545
6,207
14
332
–
Restated*
Year to 31 July 2021
Continuing
Operations
£’000
Discontinued
Operations
£’000
3,388
12,065
456
120
1,126
–
Total
£’000
4,810
10,877
6,207
Total
£’000
3,508
13,191
456
*The results for the year ended 31 July 2021 have also been restated to reflect:
•
a change in accounting policy, after adopting the IFRS IC’s agenda decision on configuration and customisation costs in a Cloud Computing Arrangement. This change in
accounting policy has increased the 2021 statutory net profit from continuing operations by £83,000 in 2021. Refer to note 2(x).
•
a revised grouping of continuing and discontinued operations. Further details are in note 8.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements
5. Operating profit/(loss)
6. Staff costs
Profit/(loss) from operations, related to continuing operations has been arrived at after charging/(crediting):
The average monthly number of employees (including executive directors) was:
220
Auditor’s remuneration
Audit fees:
- Audit of the Company accounts
- Audit of the accounts of the Company’s subsidiaries
Other assurance related services
Total fees paid to the auditors
Staff costs (note 6)
Depreciation of property, plant and equipment (note 15) – continuing operations
Depreciation of property, plant and equipment (note 15) – discontinued operations
Depreciation of investment property (note 17)
Amortisation of acquired intangible assets (note 18) – continuing operations
Amortisation of acquired intangible assets (note 18) – discontinued operations
Impairment of non-current assets (note 4) – continuing operations
Operating lease rentals - land and buildings
Government Grant Income
Amounts forgiven under PPP loan scheme
2022
£’000
Restated*
2021
£’000
450
55
505
45
550
161,904
3,886
238
269
6,390
94
6,207
204
317
247
564
45
609
111,369
2,944
1,109
269
7,562
1,141
456
443
Continuing Operations
Operations
Sales
Administration
Continuing Operations
Discontinued Operations
Continuing and Discontinued Operations
*Restated to classify Edit and Relish as discontinued operations. 2021 includes Edit, Relish, Incite, Hive and Pragma as discontinued operations.
Continuing Operations
Wages and salaries
Social security costs
Other pension costs
–
(4,541)
Share-based payment charge including social security costs
Share-based contingent consideration deemed as remuneration
US Government grant income (PPP loan scheme) is credited to Adjusted Other income within the Americas Segment.
*The results for the year ended 31 July 2021 have been restated to reflect:
•
a change in accounting policy, after adopting the IFRS IC’s agenda decision on configuration and customisation costs in a Cloud Computing Arrangement. The impact of
this change is in note 2(x).
•
a revised grouping of continuing and discontinued operations. Further details are in note 8.
Continuing Operations
Discontinued Operations
Continuing and Discontinued Operations
*Restated to classify Edit and Relish as discontinued operations. 2021 includes Edit, Relish, Incite, Hive and Pragma as discontinued operations.
2022
Number
Restated*
2021
Number
221221
1,464
89
301
1,854
199
2,053
913
78
213
1,204
236
1,440
2022
£’000
136,779
9,684
4,276
Restated*
2021
£’000
98,015
6,820
2,554
150,739
107,389
7,721
3,444
161,904
3,268
165,172
1,881
2,099
111.369
16,169
127,538
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 7. Adjusting Items
Adjusting Items disclosed on the face of the Consolidated Income Statement included in respect of continuing and
discontinued operations are as follows:
222
Expense/(income)
Continuing operations
Costs related to acquisitions
Amortisation of acquired intangibles
Contingent consideration required to be treated as remuneration
Acquisition and integration costs
Fair value gain from deemed sale on step acquisition
Step up in value on notional disposal
St Ives Defined Benefit Pension Scheme costs
Scheme administrative costs
Past service cost (GMP equalisation uplift)
Other related costs
Restructuring and other charges
Impairment of property, plant and equipment
Costs associated with empty properties
Credit associated with lease modification
Redundancies and other charges
Customer litigation
Adjusting Items before interest and tax
Net pension finance income in respect of defined benefit pension scheme
Adjusting Items before tax
Income tax credit
Continuing operations Adjusting Items after tax
Discontinued operations Adjusting Items net profit after tax
Continuing and discontinued Adjusting Items after tax
2022
£’000
6,390
13,229
1,421
21,040
(1,621)
(1,621)
787
3,884
821
5,492
6,207
4,462
(4,405)
1,693
380
8,337
33,248
(340)
32,908
(3,603)
29,305
(22,797)
6,508
Restated*
2021
£’000
7,527
4,956
966
13,449
–
–
773
604
1,165
2,542
154
27
–
–
–
181
16,172
(21)
16,151
(1,738)
14,413
(4,261)
10,152
*Restated to classify Edit and Relish as discontinued operations. 2021 includes Edit, Relish, Incite, Hive and Pragma as discontinued operations.
Continuing operations
Costs related to acquisitions made in the current and prior periods
• Amortisation of acquired intangibles - charges relating to the amortisation of acquired customer relationships,
proprietary techniques and trademarks amounted to £6.4 million in the year. These are recorded within the
Americas Europe excluding Melon, and Melon’s segments.
• Contingent consideration required to be treated as remuneration - during the year, charges relating to contingent
consideration deemed as remuneration of £13.2 million (2021: £5.0 million) were recorded in the Consolidated
Income Statement as Adjusting Items. The charges in the year arose in respect of the acquisitions in the current
year; Loop £1.2 million, Melon £0.9 million and Octain £0.2 million. Cascade and Spire, which were acquired in
prior periods, had charges in the current year of £9.0 million (2021: £2.9 million) and £1.9 million (2021: £2.1 million).
These are recorded within the Americas, Europe excluding Melon, and Melon segments.
• Acquisition and integration costs - costs of £1.4 million (2021: £1.0 million) were incurred as part of the acquisition
and integration of Datorium, Loop and Melon and in respect of other acquisition and divestment-related activities
in the period.
7. Adjusting Items (continued)
Fair value gain from deemed sale on step acquisition
On 14 February 2022, the Group acquired the remaining 50% interest in Loop. Refer to note 12, Acquisitions. Loop
was carried on the Group’s balance sheet as an investment in joint arrangements, equity accounted at 50% of its net
asset value, giving a carrying value of £1.4 million. The acquisition has been accounted for as a disposal followed by a
full acquisition in line with IFRS3. The notional disposal of the existing 50% gives rise to a step up to fair value of the
investment resulting in a gain of £1.6 million, which has been recorded through the Consolidated Income Statement as
an Adjusting Item. This fair value gain is acquisition-related and material, therefore, has been included as an Adjusting
Item in the Americas segment.
223223
St Ives Defined Benefit Pension Scheme costs
The Scheme charges include administrative service costs of £0.8 million; £3.9 million of further past service costs
related to GMP equalisation following a detailed review on a member-by-member basis of the additional costs arising
out of the Lloyds case (prior year adjustment to allow for members who have transferred out of the scheme); and
costs incurred directly by the Company in relation to running the Scheme, most significantly the levy payable to the
Pension Protection Fund, of £0.8 million. Net finance income associated with the pension is classified as an adjusting
item. These items are recorded in the corporate segment.
Restructuring items and other charges
•
Impairment of right-of-use assets – following a decision to vacate a significant portion of the Group’s leasehold
property in Chicago from September 2022 and to exercise a break on the whole lease in November 2026, an
impairment charge on the related right-of-use asset of £6.2 million (2021: £nil) was taken and recorded as an
adjusting item because of its material size and non-recurring nature. The costs are recorded in the Americas
segment.
• Costs associated with empty properties - Empty property costs of £4.5 million (2021: £nil) comprise
contractually unavoidable future expenses relating to the business rates and maintenance charges of a leasehold
property in Chicago, USA following a decision to partially vacate the premises from September 2022. The costs
do not relate to the ongoing trade of the Group and are, therefore, recorded as Adjusting Items. Refer to note 25
Provisions for details. The impairment costs of £0.2 million in the prior year relate to computer equipment and a
property lease termination in the UK both under a restructuring program that commenced in the 2020 financial
year and is now complete.
• Credit associated with lease modification - following the decision to exercise a break clause on the Chicago
leased premises at the earliest break date in November 2026. The credit is recorded within the Americas
segment.
• Redundancy and other costs - £1.7 million (2021: £nil) relate to staff severance costs associated with the
initial phase of a restructure of the business in the current year following the switch to a fully regionally based
organisation, and the costs of simplifying the Group’s legal structure leading to the liquidation of a number of legal
entities. The restructuring has continued into the first quarter of FY23 and further restructuring charges including
those linked to the transition of certain roles to nearshore centres will be incurred in the first half of FY23. They are
recorded in the Americas, Europe and Corporate segments.
• Customer litigation costs - in the current year, the Group incurred £0.4 million (2021: £nil) in external legal advisor
costs in defence of a claim brought by a former client for breach of contract. The Group is resisting the claim and
the legal advice taken indicates that the Group has a reasonable chance of success. Therefore, no provision has
been made for further losses related to the claim. Given the material and non-recurring nature of these costs,
they have been classified as adjusting items. They are recorded in the Americas segment.
Tax
In the current period, the tax credit of £3.6 million (2021: £1.7 million) relates to the items noted above. In the current
and prior year no tax credit is recorded in respect of the deemed remuneration charges in respect of current or prior
year acquisitions and, or on acquisition costs.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 8. Discontinued operations
Current period divestments
8. Discontinued operations (continued)
The results of the discontinued operations for the year were as follows:
224
Discontinued operations in the current period include the results of three businesses, which were divested in
the period:
Incite - on 28 September 2021, the Group completed the sale of Incite, a strategic marketing and planning
consultancy for a consideration of £15.1 million before adjustments for cash, debt and working capital items. After
adjustments for cash, debt and working capital, and costs, net cash proceeds arose on the sale of Incite of £14.6
million at completion, with a further £1.0 million received on 31 July 2022, which is not contingent on business
performance. The net gain on divestment of Incite is £15.2 million and this has been recorded in Adjusting Items.
Relish - on 4 November 2021, the Group completed the sale of Relish, a product sampling agency specialising in the
beauty and fast-moving consumer goods sectors, for a consideration of £5.6 million before costs and customary
adjustments for cash, debt and working capital. The net gain recorded in Adjusting Items relating to the sale is £3.5
million.
Edit - on 12 November 2021, the Group completed the sale of Edit, a marketing services company, for a consideration
of £12.5 million before costs and customary adjustments for cash, debt and working capital. The net gain recorded in
Adjusting Items relating to the sale is £5.4 million.
Prior period divestments
The restated 2021 results for discontinued operations comprise the results of the five businesses divested since 1
August 2020: Pragma, Hive, Incite, Edit and Relish.
In addition to the results of the three businesses noted above, which were divested in the current period, prior period
discontinued operations include the results of Pragma, a commercial retail space consulting business and Hive, a
healthcare communications consultancy, both of which were divested in the prior period.
Pragma - on 31 August 2020, Pragma was divested for a consideration of £0.25 million, before adjustments for cash,
debt and working capital items, received in cash at completion. The loss on disposal of Pragma of £0.2 million is
recorded within Adjusting Items.
Hive - on 16 December 2020, Hive was divested for a consideration of £13.8 million before adjustments for cash, debt
and working capital items received in cash at completion. After adjustments for cash, debt and working capital, net
proceeds from Hive of £12.35 million were received in the prior year. The gain on disposal of Hive of £5.4 million is
recorded within Adjusting Items.
Revenue
Net revenue
Gross Profit
Selling costs
Administrative expenses
Operating profit before Adjusting Items
Interest charges
Profit before tax before Adjusting Items
Income tax charge
Profit after tax before Adjusting Items
Adjusting Items from discontinued operations
Gain on divestment of discontinued operations
Amortisation of acquired intangibles
Release of provision
Adjusting Items before tax
Tax (charge)/credit on Adjusting Items
Adjusting Items after tax
Profit from discontinued operations
Profit after tax before Adjusting Items
Adjusting Items
Total profit after tax
*Prior year has been restated to classify Incite, Relish and Edit as discontinued operations.
2022
£’000
10,116
5,894
3,545
(693)
(1,398)
1,454
(32)
1,422
(238)
1,184
24,059
(94)
265
24,230
(1,433)
22,797
1,184
22,797
23,981
Restated*
2021
£’000
225225
43,038
27,382
15,807
(2,989)
(6,523)
6,295
(210)
6,085
(1,295)
4,790
5,171
(1,124)
-
4,047
214
4,261
4,790
4,261
9,051
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 9. Net pension finance income
11. Income tax (charge)/credit (continued)
226
Investment income on defined benefit pension scheme assets (note 27)
Interest costs on defined benefit pension scheme obligations (note 27)
2022
£’000
6,850
(6,510)
340
2021
£’000
5,479
(5,458)
21
The increase in net pension finance income arose because of the increase in the level of the accounting surplus
under IAS19.
10. Other finance expense
Interest on bank overdrafts and loans
Finance lease interest
Bank arrangement fee relating to current bank revolving facility
2022
£’000
415
732
690
1,837
Restated*
2021
£’000
1,004
682
267
1,953
Prior year has been restated to classify Edit and Relish as discontinued operations.
During the year, the revolving credit facility was amended and extended until September 2025. After the balance
sheet date the facility was extended for a further 12 months to September 2026.
11. Income tax (charge)/credit
Income tax on the profit/(loss) as shown in the Consolidated Income Statement is as follows:
Continuing operations:
Total current tax (charge) / credit:
Current period
Adjustments in respect of prior periods
Total current tax charge
Deferred tax on origination and reversal of temporary differences:
Deferred tax credit
Adjustments in respect of prior periods
Total deferred tax credit
Total income tax credit/(charge)
2022
£’000
(2,447)
984
(1,463)
3,123
(6)
3,117
1,654
Restated*
2021
£’000
(2,209)
(50)
(2,259)
2,107
(285)
1,822
(437)
Discontinued operations:
Total current tax charge:
Current period
Adjustments in respect of prior periods
Total current tax charge
Deferred tax on origination and reversal of temporary differences:
Deferred tax credit
Adjustments in respect of prior periods
Total deferred tax credit
Total income tax charge
Continuing and discontinued operations:
Total current tax charge:
Current period
Adjustments in respect of prior periods
Total current tax charge
Deferred tax on origination and reversal of temporary differences:
Deferred tax credit
Adjustments in respect of prior periods
Total deferred tax credit
Total income tax charge
2022
£’000
(1,479)
(192)
(1,671)
–
–
–
Restated*
2021
£’000
227227
(666)
(451)
(1,117)
(158)
194
36
(1,671)
(1,081)
2022
£’000
(3,926)
792
(3,134)
3,123
(6)
3,117
(17)
Restated*
2021
£’000
(2,875)
(501)
(3,376)
1,949
(91)
1,858
(1,518)
Prior year has been restated to include Incite, Edit and Relish as discontinued operations, and include the effect of adopting the
IFRS IC’s agenda decision on configuration and customisation costs in a Cloud Computing Arrangement. Refer to note the Change in
accounting policy note 2(x).
Income tax on the profit/(loss) from continuing operations before and after Adjusting Items is as follows:
Tax charge on adjusted profit before tax
Tax credit on adjusting items
Total income tax credit/ (charge)
2022
£’000
(1,949)
3,603
1,654
Restated*
2021
£’000
(2,175)
1,738
(437)
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 11. Income tax (charge)/credit (continued)
The tax credit/(charge) for continuing operations can be reconciled to the loss before tax shown in the Consolidated
Income Statement as follows:
228
Loss before tax from continuing operations
Tax calculated at a rate of 20.7% (2021: 20.6%)
Expenses not deductible for tax purposes
Effect of tax deductible goodwill
Credit on research and development activities
Re-assessment of tax losses
Adjustments in respect of prior periods
Total income tax credit/(charge)
Income tax as shown in the Consolidated Statement of Comprehensive Income is as follows:
Current tax on foreign exchange movements
Deferred tax on origination and reversal of temporary differences
Total income tax charge
2022
£’000
(15,852)
3,278
(3,579)
758
96
320
781
1,654
2022
£’000
(1,105)
(6,209)
(7,314)
Restated*
2021
£’000
(5,836)
1,200
(2,121)
707
208
19
(450)
(437)
Restated*
2021
£’000
–
(3,401)
(3,401)
The income tax charge in the current and the prior year relate to the actuarial gains arising on the St Ives Defined
Benefit Pension Scheme.
Income tax as shown in the Consolidated Statement of Changes in Equity is as follows:
Deferred tax on origination and reversal of temporary differences
2022
£’000
Restated*
2021
£’000
(318)
1,220
Income tax charges and credits in the current and prior year relate to the difference between the intrinsic value
of the vested portion of employee share options at the balance sheet date and their fair market value at the date
of grant.
Statutory UK and US tax rates
The UK statutory rate of 19% has been used for computation of UK corporate income tax liabilities and has been
reflected in the calculation of deferred tax balances at the balance sheet date. The Bulgaria statutory rate of 10% has
been used for computation of the Bulgaria corporate income tax liabilities and has been reflected in the calculation
of deferred tax balances at the balance sheet date. The tax charges related to US subsidiaries have been calculated
using a rate of 28.51% (2021: 28.51%), which includes the federal rate of 21% and the US state level income tax rates
vary from 0% to 8% (2021: 0% to 8%). We expect the Group’s FY23 effective tax rate to be 22%.
Blended tax rates
The Group’s adjusted effective rate of underlying taxes fell to 11.4% from 20% versus the prior year due to:
• Recognition and utilisation of historical UK tax losses.
• Whilst there has been an increase in US based profits which have a marginal tax rate of c.28% compared to the UK
rate of 19%, the US average tax rate is reduced by the tax deductible goodwill associated with US acquisitions. The
resulting effective US federal and state rate is 21%. The US federal statutory corporation tax rate is 21% (2021: 21%).
12. Acquisitions
Datorium
On 22 December 2021, the Group acquired 100% of the issued membership units of Datorium, LLC, a Californian
company that owns Octain, a responsible AI data platform (“Octain”). Octain provides clients advanced insight,
predictions and recommendations governed by socially responsible AI principles. The Group paid £0.2 million of
initial consideration in December 2021, in cash, and there is deferred consideration of up to £0.7 million contingent on
additional net revenue from the platform, up to 100% of which may be settled in Kin and Carta plc ordinary shares at
the Group’s discretion. The deferred consideration is payable after three years. The surplus of consideration over the
estimated fair value considered to equate to historical net assets of £0.2 million has been allocated to goodwill. The
goodwill amount is expected to be deductible for tax purposes.
229229
Loop Integration (“Loop”)
On 14 February 2022, the Group acquired the remaining 50% of the membership units of Loop Integration LLC, an
e-commerce consultancy, that it did not previously own. The total amount paid in the current period in respect of the
acquisition was £3.2 million. That comprised the initial cash consideration paid in February 2022 of £1.8 million, net
of cash acquired, and a further payment of £0.6 million was made in April 2022, both of which were determined by
reference to the adjusted EBITDA achieved by Loop for the year ended 30 December 2021.
Further amounts are payable dependent upon the growth in adjusted net revenue for the 12 months ending 31
December 2022 and 12 months ending 31 December 2023 respectively. The related deferred consideration vests
between March 2023 and December 2026. Up to 75% of the deferred consideration payable may be settled in shares
of Kin and Carta plc at the Company’s discretion. The total consideration payable, including contingent consideration
payable, which is deemed as remuneration, is capped at £6.0 million.
Provisional purchase price allocation
The amounts recognised for each class of assets and liabilities at the acquisition date were as follows:
Customer relationship portfolio
Property, plant and equipment
Trade and other receivables
Bank balances and cash
Trade and1 other payables
Net assets acquired
Total consideration*
Goodwill
*The total consideration is made up of:
2022
Historical
net assets
£’000
Fair value
adjustments
£’000
Fair value of
net assets
£’000
–
21
2,539
1,043
(968)
2,635
2,919
–
–
–
–
2,919
2,919
21
2,539
1,043
(968)
5,554
6,868
1,314
Deemed consideration following revaluation of the 50% shareholding that was held by the Group in Loop
Consideration paid during the period
Estimated future consideration payable in cash and shares
Total non-contingent
deemed consideration
£’000
3,334
3,180
354
6,868
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 12. Acquisitions (continued)
230
Prior to the purchase of the remaining 50% of Loop on 14 February 2022, the Group’s 50% shareholding in Loop was
equity accounted as an investment in joint arrangements, carried on the Group’s balance sheet at its net asset value
of £1.4 million (refer to note 19). The purchase of the remaining 50% of the shareholding in Loop was accounted for as
a step acquisition under IFRS 3. Therefore, at acquisition date, the 50% shareholding the Group previously held was
revalued to its fair value of £3.3 million. The step up in value of the pre-existing 50% stake in Loop from £1.4 million to
its fair value of £3.3 million has been recorded as a gain through the income statement as an Adjusting Item, under
the Americas segment.
The goodwill that arose on the combinations can be attributed to the value of future growth from new customers
and the assembled workforce. The gross contractual amount for trade receivables due is £2.9 million, equal to their
fair value.
Upon acquisition, a deferred tax liability arises in relation to the customer relationship portfolio and a deferred tax
asset arises in respect of the tax deductible goodwill. The deferred tax asset is recognised up to the value of the
liability and netted off against the liability where appropriate.
The fair value of the total amounts paid and payable are as follows:
Non-
contingent
consideration
£’000
Deemed
Remuneration
£’000
Total
consideration
£’000
Cash consideration payments made in the current period
Consideration paid in shares in the current period
Estimated future consideration payable in cash and shares
Total consideration
2,870
310
354
3,534
–
299
2,621
2,920
The acquisition had the following impact on cash outflows in the current period:
Cash consideration
Less cash acquired
Investing cash outflows
Revenue and profit contribution
2,870
609
2,975
6,454
2022
£’000
2,870
(1,043)
1,827
Loop contributed net revenue of £5.0 million and adjusted operating profit of £1.2 million to the group for the period
from 14 February 2022 to 31 July 2022. Loop Integration contributed adjusted operating profit of £0.4 million for the
period 1 August 2021 to 13 February 2022, while it was a joint arrangement.
If the acquisition had occurred on 1 August 2021, Loop would have contributed net revenue and adjusted operating
profit of £8.8 million and £2.1 million respectively, for the year ended 31 July 2022 to the Group.
12. Acquisitions (continued)
Melon
On 9 May 2022, the Group completed the acquisition of Melon AD, a software engineering business. The total cash
outflow in the current period in respect of the acquisition was £9.8 million. That comprised the initial consideration
paid in May 2022 of £19.4 million, net of cash acquired, of which £7.6 million was settled by the issue of 3,251,861
shares in Kin and Carta plc, with the balance of £11.4 million settled in cash, both of which were determined by
reference to the adjusted EBITDA achieved for the 12 months ended 31 December 2021.
231231
Further amounts are payable in respect of the growth in adjusted EBITDA for the 12 months ended 31 December 2022
and the 12 months ended 31 December 2023 respectively. The related deferred consideration vests between March
2023 and December 2025. Up to 60% of the deferred consideration payable may be settled in shares of Kin and
Carta plc at the Company’s discretion. The total consideration payable, including contingent consideration payable,
which is deemed as remuneration, is capped at £23.5 million.
Provisional purchase price allocation
The amounts recognised for each class of assets and liabilities at the acquisition date were as follows:
Customer relationship portfolio
Trademarks
Software
Property, plant and equipment
Trade and other receivables
Bank balances and cash
Trade and other payables
Deferred tax liabilities
Net assets acquired
Total consideration
Goodwill
2022
Historical
net assets
£’000
Fair value
adjustments
£’000
Fair value of
net assets
£’000
–
–
25
1,056
1,710
1,539
(2,295)
–
2,035
7,562
961
–
–
–
–
–
(819)
7,704
7,562
961
25
1,056
1,710
1,539
(2,295)
(819)
9,739
19,444
9,705
The goodwill that arose on the combination can be attributed to the value of future growth from new customers and
the assembled workforce. The gross contractual amounts for trade receivables due is £1.7 million, equal to their fair
value.
Upon acquisition, a deferred tax liability arises in relation to the customer relationship portfolio and the trademark.
The fair value of the total amounts paid and payable are as follows:
Cash consideration payments made in the current period
Consideration paid in shares in the current period
Estimated future consideration payable in cash and shares
Total consideration
Non-
contingent
consideration
£’000
Deemed
Remuneration
£’000
Total
consideration
£’000
11,386
7,598
460
19,444
–
–
5,623
5,623
11,386
7,598
6,083
25,067
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 12. Acquisitions (continued)
The acquisition had the following impact on cash outflows in the current period:
232
Cash consideration
Less cash acquired
Investing cash outflows
2022
£’000
11,386
(1,539)
9,847
Investing cash outflows related to the acquisitions
The three acquisitions (Melon, Loop and Octain) had the following impact on investing cash outflows in the current
period:
Melon
Loop
Octain
Investing cash outflows related to acquisitions
Revenue and profit contribution
2022
£’000
9,847
1,827
258
11,932
Melon contributed net revenue of £2.4 million and adjusted operating profit of £0.4 million to the group for the period
from 9 May 2022 to 31 July 2022.
If the acquisition had occurred on 1 August 2021, the pro forma contribution to the consolidated net revenue and
adjusted operating profit for the year ended 31 July 2022 would have been £9.6 million and £2.0 million respectively.
Contractual commitments for consideration linked to acquisitions:
At 31 July 2022, the Group had the following contractual commitments in relation to acquisitions:
Cascade
Data Labs
£’000
Octain
£’000
Acquired entity
Accrued as a liability as at 31 July 2022
Recorded in equity as at 31 July 2022
FY23 estimated charge
FY24 estimated charge
FY25 estimated charge
FY26 estimated charge
Spire
£’000
2,783
2,722
5,505
1,306
-
-
-
4,731
6,064
10,795
3,565
1,025
139
-
Total estimated future charges for deemed
remuneration
Total estimated future payments in respect of
past acquisitions
Expected to be settled in cash
Expected to be settled in shares
Total
1,306
4,729
6,811
15,524
3,494
3,317
6,811
6,127
9,397
15,524
Loop
£’000
638
738
1,376
877
480
140
18
Melon
Group
£’000
801
513
1,314
2,434
1,531
345
-
Total
£’000
9,099
10,037
19,136
8,415
3,269
712
18
1,515
4,310
12,414
2,891
5,624
31,550
722
2,169
2,891
2,249
3,375
5,624
13,292
18,258
31,550
146
-
146
233
233
88
-
554
700
700
-
700
12. Acquisitions (continued)
All amounts shown will be determined initially in US Dollars or Euros and are, therefore, subject to future currency
fluctuation when measured in British pounds. Total amounts for each acquisition are subject to maximum caps
measured in Pounds Sterling. The level of deferred consideration is contingent upon future performance for all
acquisitions other than Spire, so actual amounts payable may be less than the amounts shown if performance is less
than expected. Completion amounts and deferred amounts in respect of those acquisitions, which have already been
settled in the current or prior periods, are not included in the table above.
233233
The amounts shown as “expected to be settled in shares” correspond to the maximum proportion that may be
settled in shares of Kin and Carta plc, assuming the maximum contracted consideration amount is payable. The
Company may alternatively, at its sole discretion, settle any portion of the “expected to be settled in shares” amounts
in cash, other than the amounts related to the remaining Spire deferred consideration, which must be settled in
shares. The shares in respect of the share amount shown for Spire were allotted in February 2021, but are subject to
a reverse vesting mechanism and will be fully vested in February 2023. No shares have been allotted in respect of the
other “expected to be settled in shares” amounts.
13. Dividends
No final dividend is proposed. The total dividend for the year is nil per share (2021: £nil per share). Where employee
share options which accrued dividends from prior periods were exercised in the period, the dividends were paid to
the staff upon exercise of the options. £38,000 of such option-linked dividends were paid in the year, as noted in the
cash flow statement.
14. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
2022
Number of
shares
‘000
2021
Number of
shares
‘000
Weighted average number of ordinary shares for the purposes of basic earnings/(loss) per share
173,700
169,985
Effect of dilutive potential ordinary shares:
Share options
Weighted average number of ordinary shares for the purposes of diluted earnings/(loss) per
share
5,628
5,419
179,328
175,404
On 14 February 2022, the Group allotted 267,429 shares in Kin and Carta plc to the former shareholders of Loop and
on 16 May 2022, 3,251,861 shares were allotted to the former shareholders of Melon, in both cases to settle a portion
of the consideration payable in respect of their acquisition by the Group (refer to note 12).
A further 1,895,743 shares were issued to settle employee share option exercises in the year. All the allotted shares
have been included in the calculation of the weighted average number of shares for the year ended 31 July 2022.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 14. Earnings per share (continued)
15. Property, plant and equipment
234
Continuing Operations:
Earnings/(loss) and basic earnings/(loss) per share
Adjusted earnings and adjusted basic earnings per shares
Adjusting Items
Loss and basic loss per share
2022
Earnings/
(loss)
£’000
Earnings/
(loss)
per share
pence
Restated
2021
Earnings/
(loss)
£’000
Earnings/
(loss)
per share
pence
15,107
(29,305)
(14,198)
8.70
(16.87)
(8.17)
8,140
(14,413)
(6,273)
4.79
(8.48)
(3.69)
Loss and diluted loss per share
As there is a statutory loss after tax, the effect of the dilutive potential ordinary shares has been disregarded for the related diluted
loss per share calculations, since its incorporation into the calculations would be anti-dilutive.
Discontinued Operations:
Earnings/(loss) and basic earnings/(loss) per share
Adjusted earnings and adjusted basic earnings per share
Adjusting Items
Earnings and basic earnings per share
Earnings/(loss) and diluted (loss)/earnings per share
Adjusted earnings and adjusted diluted earnings per share
Adjusting Items
Earnings and diluted earnings per share
Continuing and discontinued operations
Earnings/(loss) and basic earnings/(loss) per share
Adjusted earnings and adjusted basic earnings per share
Adjusting Items
Earnings and basic earnings per share
Earnings/(loss) and diluted earnings/(loss) per share
Adjusted earnings and adjusted diluted earnings per share
Adjusting Items
Earnings and diluted earnings per share
1,184
22,797
23,981
1,184
22,797
23,981
16,291
(6,508)
9,783
16,291
(6,508)
9,783
0.68
13.12
13.80
0.66
12.71
13.37
9.38
(3.75)
5.63
9.08
(3.75)
5.46
4,790
4,261
9,051
4,790
4,261
9,051
12,930
(10,152)
2,778
12,930
(10,152)
2,778
2.82
2.51
5.33
2.73
2.43
5.16
7.61
(5.97)
1.64
7.37
(5.79)
1.58
Adjusted earnings is calculated by adding back Adjusting Items, as adjusted for tax, to the (loss)/profit for the period.
Prior year figures have been restated to include the effect of adopting the IFRS IC’s agenda decision on configuration and customisation costs in a Cloud Computing
Arrangement, and the to show a revised grouping of continuing and discontinued operations. Further details are in note 8.
235235
Land and
buildings
Long leases
£’000
Plant and
machinery
£’000
Fixtures,
fittings,
equipment
and motor
vehicles
£’000
Right of use
buildings
£’000
Right of use
plant and
machinery
£’000
Right of use
vehicles
£’000
3,962
46
(1,238)
56
–
(467)
(70)
2,289
15
–
(1,257)
59
–
60
1,166
2,264
333
–
48
(1,231)
–
(336)
(50)
1,028
136
55
(436)
–
–
28
811
355
1,261
2,935
1,125
(1,485)
149
(44)
–
(245)
2,435
1,211
155
(696)
293
140
236
3,774
1,818
849
45
84
(1,485)
(22)
–
(156)
1,133
947
159
(623)
–
119
227
1,962
1,812
1,302
2,190
161
(636)
85
44
(819)
(126)
899
109
166
(268)
44
–
224
1,174
1,289
340
111
26
(625)
22
(698)
(88)
377
297
35
(229)
–
–
178
658
516
522
28,676
2,094
(491)
–
–
(4,698)
(873)
24,708
3,475
640
(9,380)
–
–
2,042
21,485
14,698
2,512
300
–
(491)
–
(3,024)
(228)
13,767
2,743
–
(9,791)
6,207
–
683
13,609
7,876
10,941
42
–
–
–
–
–
–
42
–
–
(42)
–
–
–
–
27
14
–
–
–
–
–
–
41
1
–
(42)
–
–
–
–
–
1
16
–
–
–
–
–
–
16
–
–
(16)
–
–
–
–
11
5
–
–
–
–
–
–
16
–
–
(16)
–
–
–
–
–
–
Cost or valuation:
At 1 August 2020
Additions
Disposals
Revaluation
Reclassification
Reclassified to assets
held for sale
Foreign exchange
At 31 July 2021
Additions
Acquisitions
Disposals
Revaluation
Reclassification
Foreign exchange
At 31 July 2022
Accumulated
depreciation and
impairment:
At 1 August 2020
Charge for the period
Impairment
Revaluation
Disposals
Reclassification
Reclassified to assets
held for sale
Foreign exchange
At 31 July 2021
Charge for the period
Revaluation
Disposals
Impairment
Reclassification
Foreign exchange
At 31 July 2022
Net book value:
At 31 July 2022
At 31 July 2021
Total
£’000
37,821
3,426
(3,850)
290
–
(5,984)
(1,314)
30,389
4,810
961
(11,659)
396
140
2,562
27,599
20,107
4,053
456
158
(3,832)
–
(4,058)
(522)
16,362
4,124
249
(11,137)
6,207
119
1,116
17,040
10,559
14,027
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 15. Property, plant and equipment (continued)
16. Leases (continued)
The following expenses/(incomes) were recognised in the Consolidated Income Statement for continuing operations:
The disposal lines include fully depreciated property, plant and equipment. Details of the Group’s divestments are in
note 8.
236
Acquisitions include the property, plant and equipment consolidated following through the acquisition of Melon
and Loop.
Revaluation relates to the hyperinflation adjustment recorded against property plant and equipment in Argentina.
Impairment of right-of-use buildings – following the decision to partially vacate premises in Chicago, USA and to
exercise a break on the same lease earlier than anticipated at the inception of the lease, an impairment charge on the
related right-of-use assets of £6.2 million (2021: £nil) was taken and recorded in adjusting items under the Americas
Segment, as set out in note 7.
16. Leases
The Group has leases for land and buildings, and plant and machinery. These leases are included in Property Plant
and Equipment, with the exception of short-term and low value leases, the costs of which are expensed as they arise.
The movement in the lease liabilities relating to right-of-use assets for the Group is as follows:
Continuing operations
Short-term lease expense
Depreciation of right-of-use assets
Reduction in lease liability due break clause
Impairment of property-related assets
Net charges to operating profit
Interest expense
Net charges included in adjusted profit before tax
*Restated to classify Edit and Relish as discontinued operations. 2021 includes Edit, Relish, Incite, Hive and Pragma as discontinued operations.
2022
£’000
204
2,596
(4,401)
6,207
4,606
732
5,338
The following lease- related cash flows were recognised in the Consolidated Cash Flow Statement:
At 1 August
Acquisitions
Additions
Repayments
Disposals
Modification: increase due to extension
Modification: reduction due to planned exercise of break clause
Interest expense
Reclassified to liabilities relating to assets held for sale
Foreign exchange
At 31 July
- Current liabilities
- Non-current liabilities
2022
£’000
15,313
640
1,928
(3,812)
(763)
1,547
(4,401)
756
–
1,650
12,858
2,806
10,052
2021
£’000
19,779
–
2,094
(4,114)
–
–
(306)
893
(2,212)
(821)
15,313
2,823
12,490
Continuing operations
Discontinued operations
Total cash outflow for leases
The maturity of lease obligations were as follows:
Amounts payable:
Within one year
In two to five years
After five years
Lease liabilities at 31 July
Acquisitions in the current period include leases over premises in Sofia, Bulgaria; Skopje, North Macedonia; and
Pristina, Kosovo brought into the Group with the acquisition of Melon in the period. Disposals in the current period
reflect the removal of leases connected to the Edit business, which was divested in the period. Additions in the
current period relates to the inception of a new lease in Denver, USA. The modification due to extension relates to a
lease in London, UK following the decision not to exercise a break, which had been anticipated at the inception of the
lease. The modification leading to a reduction is due to the decision to exercise a break clause on the lease of the
premises in Chicago, USA, which had not been anticipated at the inception of the lease.
2022
£’000
(3,267)
(545)
(3,812)
2022
£’000
2,806
10,051
-
12,857
Restated*
2021
£’000
237237
443
1,811
(306)
–
1,948
682
2,630
Restated
2021
£’000
(3,462)
(752)
(4,214)
2021
£’000
2,823
7,171
5,319
15,313
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 17. Investment property
18. Goodwill and other intangible assets (continued)
238
Cost:
At 1 August 2021
Additions
At 31 July 2022
Accumulated depreciation:
At 1 August 2021
Charge
At 31 July 2022
Net book value:
At 31 July 2022
At 31 July 2021
Investment
Property
£’000
8,144
–
8,144
3,706
269
3,975
4,169
4,438
As at 31 July 2022, the Directors consider that the fair value of the investment property is not materially different
from its net book value of £4.2 million. An amount in relation to rental income from investment properties of £0.8
million (2021: £0.8 million) has been recognised in the Consolidated Income Statement, recorded as a credit to
Adjusted administrative expenses.
The Group has freehold land included within the £4.2 million with a net book value of £0.2 million (2021: £0.2 million).
These assets have not been depreciated.
18. Goodwill and other intangible assets
Cost and carrying amount of goodwill:
At 1 August 2020
Acquisition of businesses
Reclassified to assets held for sale
Foreign exchange
At 31 July 2021
Acquisition of businesses
Disposals
Foreign exchange
At 31 July 2022
£’000
68,010
2,182
(601)
(1,219)
68,372
11,244
(5,990)
3,309
76,935
Acquisition of businesses in the year comprises the balances arising on the purchase of Octain, Loop and Melon
(refer to note 12). Disposal movements relate to the goodwill associated with Edit, which was divested in the year. The
positive exchange rate movement of £3.3 million (2021: negative £1.2 million) is associated with the goodwill balance
held in respect of the Americas and Melon, which are denominated in US Dollars and Euros respectively.
Changes in the Group’s cash generating units
Following the move to manage the Group regionally completed in the year (refer to note 4), the level at which
operating performance and cash flows are forecast and monitored has consequently changed to regional reporting.
Therefore the historical goodwills associated with acquisitions in each of the regional segments have been
consolidated into a single cash generating unit (“CGU”) for each region with the exception of Melon, which arose
following the acquisition in the year. For the year ended 31 July 2022, the Group had three CGUs: Americas, Europe
excluding Melon and Melon.
The goodwills for Solstice, Spire, Cascade, Octain and Loop were combined into a single figure and tested in the current
year against a single CGU, Kin + Carta Americas (“Americas”) corresponding to the level at which cash flows are
budgeted, reported and monitored for that region. Similarly, the goodwills for AmazeRealise and The App Business were
consolidated into one figure for testing at the level of CGU called “Europe excluding Melon”, corresponding to the level
at which cash flows are budgeted, reported and monitored for that region. The Melon goodwill (refer to note 12) was
tested for impairment under a separate CGU, “Melon”, as its cash flows are independently budgeted and monitored.
239239
At 31 July 2022, the individual goodwill balances aggregated to the three CGUs were:
Goodwill
Solstice
Spire Digital
Cascade Data Labs
Loop
Octain
Americas CGU
AmazeRealise (previously referred to as Connect)
The App Business (previously referred to as Create)
Europe excluding Melon CGU
Melon CGU
Edit CGU
Total
2022
£’000
15,564
7,891
2,493
1,383
257
27,588
31,294
8,378
39,672
9,675
-
76,935
2021
£’000
13,633
6,907
2,182
-
-
22,722
31,294
8,378
39,672
-
5,978
68,372
The Group tests goodwill annually for impairment or more frequently if there are indicators that goodwill might
be impaired.
Assumptions
The recoverable amount of CGUs is determined using a value-in-use calculation. The key assumptions for the value-
in-use calculations are those regarding discount rates, terminal growth rates and cash flow forecasts in the medium
term. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time
value of money and the risks specific to the CGUs. The Group prepares cash flow forecasts derived from five-year
forecasts. These include Board-approved two-year forecasts for the financial periods 2023 and 2024, and forecasts
based on a nominal revenue growth rate of 2.0% for the financial periods 2025, 2026 and 2027. A terminal nominal
growth rate of 2% (2021: 2%) has been used in the value-in-use calculation to derive the terminal value for each CGU.
The terminal growth assumption was applied for all CGUs tested via a value-in-use calculation.
The pre-tax discount rate used for Kin + Carta Europe excluding Melon (the CGU which includes the goodwills arising
on the businesses formerly known as AmazeRealise and The App Business respectively), was 13.5% (2021: 10.8%).
The pre-tax discount rate used for Kin + Carta Americas ( the CGU which contains the goodwills arising on the
acquisitions of Solstice, Spire, Cascade, Loop and Octain was 15.2% (2021: 11.4%). The pre-tax discount rate used for
Melon was 13.2%.
The key assumptions used in the value-in-use calculations and the sensitivities to short-term revenue growth and
pre-tax discount rate assumptions are detailed below. Revenue drives the underlying profitability of the CGUs and is
a KPI we use to measure growth. The pre-tax discount rate measures the Group’s cost to capital. Capital is needed to
drive growth through acquisitions and funding of working capital.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 18. Goodwill and other intangible assets (continued)
18. Goodwill and other intangible assets (continued)
240
Americas
Europe excluding Melon
Melon
Value-in-use assumptions:
Sensitivity of value-in-use to changes in key
assumptions:
Revised excess of value-in-use over carrying
value arising from:
Pre-tax
discount rate
Excess of value-in-use
over carrying value
(£’000)
A reduction of the
growth in revenue of 5%
(£’000)
An increase in pre-tax
discount by 2%
(£’000)
15.2%
13.5%
13.2%
247,443
37,976
3,732
216,932
26,672
2,035
209,775
25,320
456
Reasonably possible changes in key assumptions:
The impairment test did not highlight any impairment of goodwill. The table above shows the impact on the value-in-
use of a reduction of 5% in the growth of revenue and, separately, of an increase in the pre-tax discount rate to 17.2%
for the Americas CGU, 15.5% for the Europe excluding Melon CGU and 15.2% for Melon. The table shows that neither
a reasonably possible reduction in the revenue growth rate of 5% nor an increase in the discount rate by 2% would
result in an impairment of any of the CGUs.
Other intangible assets
Restated*
Computer
software
£’000
Customer
relationships
£’000
Proprietary
techniques
£’000
Trademarks
£’000
Restated*
Total
£’000
All research and development costs were expensed in the current and prior period. Acquisitions in the current period
consist of assets arising in the context of the acquisitions of Loop and Melon.
Customer relationship assets include customer contracts, order backlogs and non-contractual customer
relationships. Proprietary techniques include models, algorithms and processes that are used to generate revenue
from customers. These assets are recorded at fair value at the date of acquisition and are amortised over their
estimated useful lives. Material customer relationships and proprietary techniques are disclosed below.
241241
Customer relationships:
Melon
Loop
Cascade
Spire
AmazeRealise
Edit
Remaining Amortisation
Period (Months) at 31 July
2022
33
31
17
-
-
-
2022
£’000
6,988
2,732
1,252
–
–
–
10,972
2021
£’000
–
–
1,870
285
321
95
2,571
Customer relationships related to Melon and Loop arose in the context of the acquisition of these entities in the
current period as detailed in note 12.
Cost:
At 1 August 2020*
Acquisitions
Additions*
Disposals
Foreign exchange
At 31 July 2021
Acquisitions
Disposals
Reclassification
Foreign exchange
At 31 July 2022
Accumulated amortisation:
At 1 August 2020*
Charge for the period*
Disposals
Foreign exchange
At 31 July 2021
Charge for the period
Disposals
Reclassification
Foreign exchange
At 31 July 2022
Net book value:
At 31 July 2022
At 31 July 2021
4,690
–
19
(3,031)
(7)
1,671
–
(1,426)
(140)
15
120
4,651
35
(3,031)
(6)
1,649
–
(1,426)
(119)
16
120
31,455
2,322
–
(11,713)
(208)
–
–
(15,066)
(917)
21,856
36,296
10,871
(11,241)
–
726
22,212
28,228
2,937
(11,713)
(167)
19,285
2,565
(11,241)
–
631
–
(214)
–
2,203
38,285
34,615
5,336
(15,066)
(544)
24,341
3,703
(214)
–
1,736
11,240
29,566
52,279
3,895
–
–
(1,296)
(126)
2,473
972
(344)
–
291
92,319
2,322
19
(31,106)
(1,258)
62,296
11,843
(13,225)
(140)
3,235
Proprietary techniques:
The App Business
AmazeRealise
Solstice
Spire
3,392
64,009
Trademarks:
Melon
Trademarks arose from the acquisition of Melon (refer to note 12).
3,504
395
(1,296)
(130)
2,473
216
(344)
–
303
2,648
70,998
8,703
(31,106)
(847)
47,748
6,484
(13,225)
(119)
2,686
43,574
Remaining Amortisation
Period (Months)
42
19
31
4
Remaining Amortisation
Period (Months)
9
2022
£’000
4,301
1,387
2,820
211
8,719
2022
£’000
744
744
2021
£’000
5,533
2,263
3,424
735
11,955
2021
£’000
–
–
* The FY21 results have been restated following a change in accounting policy, after adopting the IFRS IC’s agenda decision on configuration and customisation costs in a Cloud
Computing Arrangement. This change in accounting policy has resulted in the net book value of computer software assets being reduced by £524,000.
-
22
10,972
2,571
8,719
11,955
744
–
20,435
14,548
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 19. Investment in joint arrangement
21. Derivative financial instruments
242
Balance at 1 August 2021
Disbursement from joint arrangement
Share of results of joint arrangement
Disposal
Foreign exchange
Balance at 31 July 2022
2022
£’000
1,080
(147)
442
(1,401)
26
–
The Group previously held a 50% interest in Loop Integration LLC (“Loop”), incorporated in Illinois, USA. The business
is an e-commerce consultancy specialising in Hybris software integration. On 14 February 2022, the Group acquired
the remaining 50% interest in Loop and accounted for the step acquisition as a disposal followed by a purchase of
100% of the equity of Loop. The deemed disposal gave rise to a gain of £ 1.6 million, corresponding to the step up
in value from the share of book equity to fair value for the 50% stake already held at the point of purchasing the
remaining 50%. The gain is recorded as an Adjusting Item within other income and expense within the Americas
segment. The entity’s results have been fully consolidated in the Group’s results from the date of acquisition of the
remaining 50%.
20. Other financial assets
Trade and other receivables
Amounts receivable for the sale of goods and services
Less: provision for impairment of trade receivables
Trade receivables
Accrued income
Other receivables
Prepayments and other assets
2022
£’000
30,094
(2,996)
27,098
15,195
110
2,990
45,393
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
Non-current assets
Other receivables
Cash and cash equivalents
Cash and cash equivalents
2022
£’000
101
2022
£’000
12,609
2021
£’000
23,161
(1,768)
21,393
13,196
52
2,221
36,862
2021
£’000
28
2021
£’000
44,971
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity
of three months or less. The carrying amounts of these assets approximate their fair value.
Derivative financial assets
Forward foreign currency contracts
Derivative financial liabilities
Forward foreign currency contracts
2022
£’000
2
2022
£’000
454
2021
£’000
13
2021
£’000
–
243243
All forward foreign currency contracts are designated and effective as hedging instruments. Further disclosures can
be found under note 29.
22. Trade and other payables
Trade payables
Accruals for goods and services
Other taxes, social security and employee related liabilities
Other payables
2022
£’000
4,693
7,713
20,076
486
32,968
2021
£’000
6,565
7,178
16,275
599
30,617
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
23. Loans
Loans
Current liabilities
US Government loans
Non-current liabilities
Bank loans – revolving credit facility
Total loans
Bank loans – revolving credit facility
2022
£’000
2021
£’000
–
1,853
13,148
13,148
62,365
64,218
The Group’s revolving multi-currency credit facility of £85.0 million was renewed in September 2021, until September
2025 and extended in August 2022 for a further year to September 2026. Up to £10.5 million can be drawn as an
overdraft facility. As at 31 July 2022, Interest on loan drawdowns is charged at SOFR plus a margin of 1.70% (LIBOR
plus a margin of 1.75%). The interest rate on loan drawdowns depends on the ratio of the Group’s net debt Adjusted
EBITDA on a pre-IFRS 16 basis including the pro forma effect of acquisitions and disposals. Interest on overdraft
drawdowns is charged at an average rate of 2.00% (2021: 2.00%) over the UK base rate.
As at 31 July 2022, the Group’s outstanding loans within this facility were £13.1 million (2021: £62.4 million). The
undrawn portion of this facility at 31 July 2022 was £71.9 million (2021: £22.6 million).
US Government loans
In May 2020, the Group received £6.7 million in unsecured loans under the Paycheck Protection Program (“PPP”)
provided by the US Government, provided as part of the US CARES Act. £4.5 million of the PPP loan was forgiven by
the US Government in FY21 and was recorded in adjusted other income. The remaining loan balance of £1.9 million
after currency effects outstanding at 31 July 2021, and which bore an interest rate of 1%, was repaid by May 2022.
The Directors consider that the carrying amount of the loans approximates to their fair value.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 24. Deferred income
26. Deferred tax
Deferred income
244
2022
£’000
5,159
2021
£’000
6,631
Deferred income taxes are calculated in full on temporary differences under the liability method using a principal tax
rate of 25% for UK operations (2021: 19%) and 28.51% for US operations (2021: 28.51%).
Deferred tax assets and liabilities are classified in the balance sheet as follows:
All the deferred income recorded at 31 July 2021 was recognised as revenue in the current reporting period and
all deferred income recorded at 31 July 2022 is expected to be recognised as revenue in the 12 months after 31
July 2022.
25. Provisions
Deferred tax assets
Deferred tax liabilities
245245
2022
£’000
(7,625)
11,334
3,709
Restated*
2021
£’000
(3,524)
3,930
406
*The 31 July 2021 balance sheet has been restated following a change in accounting policy on adoption of the IFRS IC’s agenda decision on configuration and customisation
costs in a Cloud Computing Arrangement. Refer to note 2(x).
The net movement in the net deferred tax liabilities is as follows:
At the beginning of the period 1 August 2020
Acquisitions
Disposal
Credit to the Consolidated Income Statement
Items taken to Other Comprehensive Income
Items taken directly to equity
Reclassified to liabilities relating to assets held for sale
Foreign exchange
At the end of the period 31 July
2022
£’000
406
1,021
(82)
(3,118)
6,210
(250)
–
(478)
3,709
2021
£’000
19
–
8
(1,858)
3,401
(1,220)
60
(4)
406
Balance at 1 August 2020
Charged to the Consolidated Income Statement
Utilised during the period
Release
Transfer
Reclassified to liabilities held for sale
Currency
Balance at 31 July 2021
Charged to the Consolidated Income Statement
Utilised during the period
Divested
Released
Balance at 31 July 2022
Current
Non-current
Provision for repairs
Provision for
repairs
£’000
Provision for
reorganisation
£’000
1,080
46
(246)
–
(130)
(129)
–
621
32
(203)
–
(225)
225
–
225
225
1,429
120
(797)
(133)
130
–
(3)
746
4,458
(32)
(614)
(100)
4,458
477
3,981
4,458
Total
£’000
2,509
166
(1,043)
(133)
–
(129)
(3)
1,367
4,490
(235)
(614)
(325)
4,683
477
4,206
4,683
Where the Group is committed under the terms of a lease to make repairs to leasehold premises, a provision for
repairs is made for these estimated costs over the period of the lease. It is anticipated that these liabilities will
crystallise between 2023 and 2026.
Provision for reorganisation
The provision for reorganisation comprises onerous property, redundancy and other costs. The provision will be
utilised when the restructuring completes or where the obligations associated with onerous properties are fully
discharged.
During the year, a provision was made for the onerous property costs of premises occupied in Chicago, USA, following
the decision in July 2022 to partially vacate the premises in September 2022 and to exercise a break clause to
terminate the lease in 2026 earlier than originally anticipated, which will trigger a penalty payable at the modified exit
date in 2026. The long-term provisions have been recorded at a value discounted at the time value of money, using a
discount rate of 5%.
The divested movement figure relates to provisions carried in the Edit business, which was divested in the
current period as detailed in note 8.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements
26. Deferred tax (continued)
The individual movements in deferred tax liabilities/(assets) are as follows:
27. Retirement benefits
Defined contribution schemes
246
Accelerated
tax
depreciation
£’000
Retirement
benefit
obligations
£’000
Rolled over
capital
gains
£’000
Revenue
tax losses
£’000
Short-term
timing
differences
£’000
Share
options
£’000
Acquired
intangible
assets
£’000
Balance at 1 August 2020
(1,066)
(280)
77
Total
£’000
19
8
The Group operates defined contribution schemes for all qualifying employees. The assets of the schemes are
held separately from those of the Group in funds under the control of the trustees. Payments to the schemes are
expensed to the Consolidated Income Statement as they fall due. The total expense recognised in the Consolidated
Income Statement for continuing operations of £4.3 million (2021: £2.9 million) represents contributions payable
to these schemes by the Group at rates specified in the rules of the schemes. At 31 July 2022, contributions of
£1.0 million (2021: £1.0 million) due in respect of the 2022 reporting period had not been paid over to the schemes.
The amounts were paid over subsequent to the balance sheet date, within the requisite time limits.
247247
Disposal – discontinued
operations
(Credit)/charge to the
Consolidated Income
Statement
Items taken directly to
Other Comprehensive
Income
Items taken directly to
equity
Reclassified to liabilities
relating to assets held
for sale
Foreign exchange
8
–
513
242
–
–
–
124
3,401
–
–
–
Balance at 31 July 2021
(421)
3,363
Disposal – discontinued
operations
(Credit)/charge to the
Consolidated Income
Statement
Items taken directly to
Other Comprehensive
Income
Items taken directly to
equity
Acquisitions
Foreign exchange
Balance at 31 July 2022
(82)
–
188
135
–
–
–
(81)
(396)
6,210
–
–
–
–
–
–
–
–
–
–
–
–
(204)
–
(2)
–
1,494
–
(455)
(542)
(1,616)
(1,858)
–
–
60
–
–
(1,220)
–
–
(599)
(1,764)
–
–
–
(128)
(250)
3,401
(1,220)
60
(4)
406
–
–
–
(82)
(103)
(1,525)
(242)
(1,571)
(3,118)
–
–
–
–
–
–
–
–
–
(250)
–
–
–
–
1,021
(397)
6,210
(250)
1,021
(478)
–
–
–
–
–
–
77
–
–
–
–
–
–
9,708
77
(103)
(2,124)
(2,256)
(1,197)
3,709
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.
On 23 September 2022, the UK Government announced that the main rate of corporation tax would no longer
increase to 25% with effect from 1 April 2023, but would instead stay at 19%. This change was not substantively
enacted by the balance sheet date and therefore the deferred tax remains measured at 25%. Had the change been
enacted, this would have decreased the deferred tax charge in other comprehensive income by £2.3m. It would also
have decreased the deferred tax liability at 31 July 2022 by £2.3m.
Unrecognised gross tax losses, all of which have an unlimited life, are as follows:
Unrecognised trading losses
Unrecognised capital losses
2022
£’000
–
15,357
15,357
2021
£’000
1,891
15,357
17,248
St Ives Defined Benefit Pension Scheme
The Group operates the St Ives Defined Benefit Pension Scheme (the “Scheme”) with assets held in separate trustee
administered funds. Pension benefits are linked to a member’s final salary at retirement and their length of service.
The Scheme was closed to new entrants from 6 April 2002, and closed to future benefit accruals with effect from
31 August 2008. The Scheme is a registered scheme under UK legislation and is contracted out of the State Second
Pension. The Scheme has one current participating employer, Kin and Carta plc. The Scheme was established from
30 September 1988 under trust and is governed by the Scheme’s trust deed and rules dated 23 April 1991 and
subsequent amendments. The directors of St Ives Pension Scheme Trustees Limited (the “Trustees”) are responsible
for the operation and the governance of the Scheme, including making decisions regarding the defined benefit
pension scheme’s funding and investment strategy in conjunction with the Company.
The Scheme’s triennial technical valuation prepared by XPS Pensions Limited determines the cash deficit repair
contributions payable by the Group. The last formal valuation showed a technical surplus of £5.6 million at 5
April 2022.
The bid value of the scheme’s assets as at 31 July 2022 was provided by Schroders Solutions.
The present value of the defined benefit obligation, and the related current service cost and past service cost, were
measured using the projected unit credit method.
The principal assumptions used for the purpose of the actuarial valuations are as follows:
Discount rate
Expected rate of inflation
Expected rate of salary increases
Future pension increases
Assumed life expectancies for retirement at age of 65 are as follows:
2022
per
annum
3.50%
3.15%
nil
3.05%
2021
per
annum
1.65%
3.20%
nil
3.10%
Members retiring immediately
Members retiring in 20 years time
2022
2021
Male
20.7
22.0
Female
23.5
25.0
Male
21.1
22.4
Female
23.1
24.6
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 27. Retirement benefits (continued)
27. Retirement benefits (continued)
The amount recognised in the Consolidated Balance Sheet in respect of the Scheme is as follows:
The Group has an unconditional right to a refund of any surplus at the end of the Scheme’s duration.
248
Present value of funded obligations
Fair value of scheme assets
Retirement benefit surplus
2022
£’000
2021
£’000
302,586
400,514
341,334
38,748
419,781
19,267
Changes in the fair value of the Scheme assets are as follows:
Opening fair value of scheme assets
Interest income on scheme assets
Amounts recognised in the Consolidated Income Statement in respect of the Scheme as Adjusting Items are as
follows:
Return on assets, excluding interest income, recorded in the Consolidated Statement of
Comprehensive Income
Scheme administrative costs (note 7)
Interest costs on defined benefit pension scheme obligations (note 9)
Investment income on defined benefit pension scheme assets (note 9)
Past service cost (note 7)
2022
£’000
787
6,510
2021
£’000
773
5,458
(6,850)
(5,479)
3,884
4,331
604
1,356
Contributions by employer
Benefits paid
Scheme administrative cost
Closing fair value of scheme assets
The fair value of the Scheme assets at the balance sheet date is analysed as follows:
249249
2022
£’000
419,781
6,850
(75,964)
3,477
(12,023)
(787)
2021
£’000
396,628
5,479
28,196
1,665
(11,414)
(773)
341,334
419,781
Value at
31 July 2022
£’000
Value at
31 July 2021
£’000
46,514
218,724
76,096
341,334
109,652
266,194
43,935
419,781
Amounts recognised in the Consolidated Statement of Comprehensive Income in respect of the Scheme are as
follows:
Net measurement – losses / (gains) – financial
Net measurement – losses / (gains) – experience
Net measurement – (gains) / losses – demographic
Return on assets, in excess of interest income recorded in the Consolidated Income Statement
Changes in the present value of the Scheme obligations are as follows:
Opening defined benefit obligation
Interest cost
Net measurement – losses – financial
Net measurement – (gains)/losses – demographic
Net measurement – losses/(gains) – experience
Benefits paid
Past service cost
Closing defined benefit obligation
2022
£’000
102,115
5,986
(11,802)
(75,964)
20,335
2021
£’000
(7,827)
(3,755)
1,263
28,196
17,877
2022
£’000
2021
£’000
400,514
395,547
6,510
(102,115)
(5,986)
11,802
(12,023)
3,884
5,458
7,827
(1,263)
3,755
(11,414)
604
302,586
400,514
Equity instruments
Bonds
Other
The Scheme’s assets do not include any of the Group’s own financial instruments, nor any property occupied by, or
other assets used by the Group. Included within the scheme assets noted above are £146.0m (2021: £175.3m) relating
to pooled investment vehicles under a fiduciary management arrangement.
The Scheme exposes the Group to actuarial risks such as market (investment) risk, interest rate risk, inflation risk and
longevity risk. The defined benefit pension scheme does not expose the Group to any unusual scheme-specific or
company-specific risk.
Investment risk: the Scheme holds some of its investments in asset classes, such as equities, which have volatile
market values and, while these assets are expected to provide the best returns over the long term, any short-term
volatility could cause additional funding to be required. Derivative contracts are used from time to time, which would
limit losses in the event of a fall in equity markets.
Interest rate risk: the Scheme’s liabilities are assessed using market rates of interest to discount the liabilities and are
therefore subject to any volatility in the movement of the market rate of interest. The net interest income or expense
recognised as an Adjusting Item in the Consolidated Income Statement is also calculated using the market rate of
interest. The Scheme’s swap investments are expected to provide a degree of protection from any movement in the
market rate of interest.
Inflation risk: a significant proportion of the benefits under the Scheme are linked to inflation. Although the Scheme’s
assets are expected to provide a hedge against inflation over the long term, rising inflation over the short term could
lead to an increase in the deficit. The Scheme’s swap investments are expected to provide a degree of protection
from any short-term inflationary movements.
Longevity risk: in the event that members live longer than assumed, the liabilities may be understated, thus increasing
any deficit.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 27. Retirement benefits (continued)
28. Financial instruments
The financial instruments by category and maturity profile as at 31 July 2022 are as follows:
A sensitivity analysis of the principal assumptions used to measure the defined benefit pension obligation as at
31 July 2022 is analysed as follows. Based on the assumptions set out above, the impact on the present value of
the defined benefit obligations of changing the following individual assumptions (with all other assumptions
remaining unchanged) is set out below. Assumption changes in the opposite direction would reduce liabilities by
a similar magnitude.
250
Discount rate
Rate of Inflation (RPI)
Assumed life expectancy at age 65
Change in
assumption
Change
£’000
31 July 2022
£’000
Reduce by 0.25%
Increase by 0.25%
Increase by 1 year
11,389
9,014
11,854
313,975
311,600
314,440
Approximately 40% of the plan assets were invested in return-seeking assets at 31 July 2022, providing a higher level
of return over the longer period.
Derivative instruments are in place to protect against significant falls in asset values and changes in interest and
inflation rates. The fiduciary managers of the Scheme’s assets maintain sufficient levels of liquidity reserves to
be able to meet collateral calls from derivative counterparties linked to fluctuations of the market value of those
derivatives. This liquidity reserve helps the Scheme to avoid having to sell those assets which provide strategic
hedges on interest rate and inflation rate risk. As part of the scheme’s liability driven investment strategy, c. 50%
of the scheme’s assets were held in UK government debt instruments at 31 July 2022. There was an unusually high
level of volatility in UK government bond markets in the latter part of September 2022. Despite this high volatility, the
scheme held the inflation and interest rate hedging in this period. The Scheme’s fiduciary managers estimate that
UK 10 year gilt yields would have to increase to 7.5% before the gilt collateral, which provides security to derivative
counterparties and which contributes to the interest rate hedging function, is exhausted.
The liabilities of the Scheme are based on the current value of expected benefit payment cash flows to members of
the Scheme over the next 75 years. The average duration of the liabilities is approximately 16 years. The Group paid
deficit repair contributions of £3.0 million in 2022 (2021: £1.0 million). The sponsor is currently in discussions with the
trustees about a secondary funding objective for the Scheme, to set a target date for the Scheme to be funded on
a “low dependency” basis, which would involve further derisking of Scheme assets and, consequently, a significantly
reduced probability of the Scheme falling back into a technical deficit due to risk asset performance. The funding
assumption to measure the Scheme’s liability on this basis is gilts +0.5%. Although there was a technical surplus at
5 April 2022, the date of the last triennial valuation, the Company has agreed to pay voluntary fixed contributions
of £1.5 million in FY23, £0.6 million in FY24 and £0.4 million in FY25. These should help to accelerate the Scheme’s
journey to a state of low dependency, and reduce the proportion of assets allocated to return-seeking investments
further. The Company also paid £0.4 million towards the cost of running the Scheme and £0.1 million of contributions
in respect of the additional cost of staff who took early retirement on unreduced pensions, an option available to a
small portion of the membership.
The Scheme has one current participating employer: Kin and Carta plc, (the “sponsor”) which is responsible for
paying all contributions to the Scheme. The sponsor has an unconditional right to a refund of any surplus in the
defined benefit pension scheme at the end of the Scheme’s duration. The sponsor is also liable for all the liabilities
on wind-up or withdrawal from the Scheme in accordance with the Scheme’s trust deed and rules. The strong trading
of the Company in the current year, the reduction of its financial debt, and the Scheme’s move into a technical
surplus improved the strength of the Group’s covenant over the Scheme. The value of the s75 solvency deficit, which
represents the estimated cost of a full transfer of all the sponsor’s obligations for the Scheme to an insurer ( a ‘buy
out’), as measured at the most recent value reduced to £117 million at 5 April 2022 compared to £238 million at the
previous valuation date, 5 April 2019. Recent movement in gilt rates have likely reduced the buy out value further
since 5 April 2022, and other risk transfer solutions are coming onto the market that might, in time, allow all the
Scheme risks to be transferred from the Company at a lower cost than an insurer buy out.
Financial instrument category
Note
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Derivative financial instruments –
assets
Derivative financial instruments –
liability
Deferred consideration payable
Deferred consideration payable
US Government loans
Bank borrowings
20
20
22
21
21
12
12
23
23
2022
Amortised
cost
£’000
45,393
12,609
32,968
2021
Amortised
cost
£’000
36,862
44,971
30,617
–
–
–
–
–
13,148
–
–
–
–
1,853
62,365
–
–
–
2
454
6,944
2,155
–
–
2022
Fair value
through
profit and
loss
£’000
2021
Fair value
through profit
and loss
£’000
251251
Maturity profile
Less than 12 months
Less than 12 months
Less than 12 months
–
–
–
13
Less than 12 months
–
–
Less than 12 months
Less than 12 months
1,888
More than 12 months
–
–
Less than 12 months
Less than 12 months
The maturity profile is based on the remaining period between the balance sheet date and the contractual maturity
date of the Group’s financial assets/liabilities at 31 July 2022, based on contractual undiscounted receipts/payments.
29. Financial risk management
The Group’s Treasury function is responsible for managing the Group’s exposure to financial risk and operates within
a defined set of policies and procedures reviewed and approved by the Board.
These risks include market risk (including currency risk, fair value interest rate risk and price risk, credit risk, liquidity
risk and cash flow interest rate risk). The Group does not enter into or trade financial instruments, including derivative
financial instruments for speculative purposes.
At the 2022 period end, the Group’s borrowings consisted of loan drawdowns under the Group’s revolving multi-
currency credit facility. As at 31 July 2022, the Group’s revolving multi-currency borrowings were set to mature within
one to three months. The loan drawdowns are interest bearing and are recorded on an undiscounted basis. Under the
terms of the facility, the Group has the right to renew these borrowings until the expiration of the facility.
Interest rate risk
The Group carries a cash flow risk where there are changes in the interest rate levied on the Group’s borrowings as
currently interest on the Group’s borrowings is at floating rates. The Group finances its operations through a mixture
of retained earnings and bank borrowings. Group policy is to constantly review the exposure risk to interest rate
fluctuations in relation to the risk as a proportion of Group earnings and, wherever possible, with matching short-
term deposits of surplus funds. The Group is not subject to fair value interest rate risk as the majority of debt is at
floating rates.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 29. Financial risk management (continued)
Interest rate management
An analysis of financial assets and liabilities exposed to interest rate risk by currency is set out below:
252
Financial assets subject to interest rate risk
US Dollar
Sterling
Euro
Argentine Peso
Other
The Group’s financial assets comprise cash and cash equivalents, all of which attract interest.
Financial liabilities subject to interest rate risk are as follows:
Sterling bank loans
US Dollar bank loans
2022
£’000
10,090
788
924
623
184
2021
£’000
9,911
34,096
340
616
8
12,609
44,971
2022
£’000
–
13,148
13,148
2021
£’000
30,000
32,365
62,365
The Group’s bank liabilities comprise loan borrowings, which bear interest at floating rates based upon Sterling and
US Dollar SOFR, and overdraft borrowings, which bear interest at floating rates based upon UK bank base rate.
The Group’s finance lease liabilities are not subject to interest rate risk.
Interest rate sensitivity analysis
The analysis shows the additional charge to the Consolidated Income Statement assuming that the amount of
the liability outstanding at the balance sheet date was outstanding for the entire period. This analysis excludes US
Government loans (see note 23):
Assumed Sterling SONIA (2021: GBP LIBOR) change of 1%
Assumed US Dollar SOFR (2021: USD LIBOR) change of 1%
2022
£’000
–
131
2021
£’000
300
324
The changes would not have impacted other equity reserves as all interest bearing financial assets and liabilities are
subject to floating interest rates and their fair values do not fluctuate with changes in interest rates.
Foreign exchange risk
From time to time, the Group enters into contracts to supply material services to customers trading in the
following regions:
• Europe at prices denominated in Euros
• USA at prices denominated in US Dollars
29. Financial risk management (continued)
Forward foreign exchange contracts
The Group enters into forward foreign exchange contracts to cover specific foreign currency payments and receipts
and to manage the risk associated with anticipated sale and purchase transactions. Forward foreign exchange
contracts have been used to hedge the exchange rate risk arising from these commitments, which are designated
as cash flow hedges. As at 31 July 2022, the aggregate amount of unrealised gains under forward foreign exchange
contracts deferred in the hedging reserve relating to the exposure on trade receivables and anticipated sale
transactions amounted to £39,000. It is anticipated that the sales receipts will occur in the 12 months following the
balance sheet date.
253253
The Group also hedges, in certain circumstances , amounts payable to the former shareholders of companies it has
acquired in respect of deferred consideration payable, where the value of such consideration is calculated based
on a currency other than the functional currency of the acquiring entity. During the year, the Company hedged the
amounts payable in respect of deferred consideration of Cascade Data Labs, the value of which was effectively fixed
in British pounds, with a forward exchange contract. The hedge maturity date is the end of September 2022 and
“mark-to-market” revaluation of the derivative instrument has been recorded as an Adjusting Item expense in the
income statement as part of the Americas segment, under the contingent consideration caption.
The following table details the forward currency contracts outstanding at the period end:
Sell Euros (up to 12 months)
Sell US dollars (up to 12 months)
Sell US dollars (up to 12 months)
Exchange rate sensitivity analysis
Average contracted
exchange rate
Sterling: foreign
currency
Foreign
currency
LC ‘000
Contract
value
£’000
Notional
value
£’000
1.20
1.21
1.26
500
843
417
696
419
693
15,799
12,529
12,983
As at 31 July 2022, 16.0 million US Dollars were drawn on the revolving credit facility.
The Group also faces foreign currency exposures on other assets and liabilities denominated in currencies other
than the functional currency of its subsidiaries. In the normal course of business, the Group closely monitors its
subsidiaries’ net asset balances dominated in other currencies and where a potential and material foreign exchange
loss risk is identified, the Group will hedge this exposure with its financial institutions.
Credit risk
The Group’s principal financial assets are bank balances and cash, trade and other receivables, which represent
the Group’s maximum exposure to credit risk in relation to financial assets. The Group’s credit risk is primarily
attributable to its trade receivables. The amounts presented in the Consolidated Balance Sheet are net of provision
for impairment of trade receivables, estimated by the Group’s management based on prior experience and their
assessment of the current economic environment. The Group’s credit risk is relatively low as the Group maintains
credit insurance for all of its UK and US operations up to a maximum aggregate claim in any one year of £7.5 million. In
addition, its UK subsidiaries’ sales are principally with a large number of counterparties and customers in the UK, and
are denominated in Sterling.
Before accepting any new customers, the Group uses an external credit scoring system to assess the potential
customer’s credit quality and defines credit limits by customer. Limits and scoring attributed to customers are
reviewed regularly.
Included in the Group’s trade receivables balance are debtors with a carrying amount of £10.5 million (2021: £2.4 million),
which are past due at the reporting date for which the Group has not provided as there has not been a significant
change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral over
these balances.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 29. Financial risk management (continued)
Ageing of impaired receivables:
254
Between 0 and 59 days
Between 60 and 89 days
Between 90 and 119 days
120 days and above
Movement in provision for impairment of trade receivables
Balance at the beginning of the period
Impairment losses recognised
Impairment losses reversed
Balance at the end of the period
Consideration of expected credit losses
2022
£’000
2021
£’000
499
86
21
133
739
2022
£’000
928
95
(284)
739
159
252
11
506
928
2021
£’000
1,031
93
(196)
928
In determining the recoverability of a trade receivable, the Group considers any change in the quality of the trade
receivable from the date the credit was initially granted up to the reporting date. The concentration of credit risk is
limited due to the customer base being large and unrelated, and being covered by credit insurance arrangements.
Accordingly, the Directors believe that there is no further credit provision required in excess of the provision for
impairment of trade receivables already recognised.
Liquidity risk
The Group’s policy is to maintain flexibility with respect to its liquidity position, by utilising short-term cash deposits
and, where necessary, short-term bank borrowings for working capital and longer-term borrowings for capital
expenditure requirements. The Group has access to a revolving credit facility of £85.0 million. Up to £10.5 million of
this facility can be drawn as an overdraft facility. The facility will expire in September 2026. The contractual maturities
of drawn down borrowings, as well as undrawn facilities, are detailed in note 23.
Capital risk management
The Group manages its capital to ensure that entities in the Group will each be able to continue as a going concern,
while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital
structure of the Group consists of debt, which includes the borrowings disclosed in note 23, cash and cash
equivalents, and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained
earnings as disclosed in the Consolidated Statement of Changes in Equity. The Board have reviewed and discussed
the Group’s funding requirements and concluded that the Group is well served by its current funding arrangements
and do not see any need to adjust the Group’s capital in order to meet its objectives.
Interest on loan drawdowns is charged at LIBOR plus a margin of 1.70%. The interest rate on loan drawdowns depends
on the ratio of the Group’s net debt to Adjusted EBITDA on a pre-IFRS 16 basis. Interest on overdraft drawdowns is
charged at an average rate of 2.00% (2021: 2.00%) over the UK base rate, and nil% (2021: nil%) over the US base rate,
dependent on the currency of the loan. There were no USD denominated overdrafts during the year.
The Group is subject to covenants on its borrowings (further discussed in the financial review section, in the CFO
Report), which could be considered an externally imposed capital requirement. The Board continually monitors
the Group’s performance against its banking covenants and undertakes monthly reviews of working capital, cash
forecasts, and headroom on banking covenants.
At the period end, the Group’s leverage ratio for bank covenant purposes was 0.05 times (2021: 0.99 times) against
a maximum limit of 2.5 times, and interest cover was 18.5 times (2021: 14.7 times) against a minimum of 4 times. The
Group has fully complied with the requirements of these covenants during the period under review and expects to
continue to do so.
30. Share capital
Issued and fully paid:
At 1 August 2021
Issued during the period
At 31 July 2022
Ordinary
shares of 10p
each
£’000
Number of
shares
172,545,721
5,414,958
177,960,679
17,255
542
17,797
255255
All authorised and issued share capital is represented by equity shareholdings. The number of authorised and issued
Kin and Carta plc ordinary shares as at 11 October 2022 was 177,990,907. 3,251,861 fully vested shares were issued in
the period to satisfy consideration payable to the former shareholders of Melon AD and 267,429 fully vested shares
were issued in the period to satisfy consideration payable to the former shareholders of Loop Integration LLC, both
of which were acquired in the current year. 1,895,688 shares were issued in the year to satisfy employee share option
exercises under LTIP, SAYE and ESPP plans.
31. Additional paid-in capital
Balance at 1 August 2020
Shares issued during the period
Balance at 31 July 2021
Reclassification to Retained Earnings
Shares issued during the period
Balance at 31 July 2022
Share
premium
£’000
71,888
4,197
76,085
–
303
76,388
Merger
Reserve
£’000
9,190
–
9,190
(5,357)
7,843
11,676
Capital
redemption
reserve
£’000
1,238
–
1,238
–
–
Total
£’000
82,316
4,197
86,513
(5,357)
8,146
1,238
89,302
The additional paid in capital includes share premium, the capital redemption reserve and the merger reserve.
The capital redemption reserve represents the purchase by the Company of Kin and Carta plc ordinary shares
in prior periods. The merger reserve is derived from acquisitions made in prior periods as well as reflecting the
premium on shares issued for consideration on acquisition during the period. During the current period, there was a
reclassification from the merger reserve to retained earnings following the divestments of entities, which accounted
for a portion of the merger reserve in prior periods. The addition to the merger reserve in the period related to the
share premium on share issues for consideration as part of the acquisition of Loop, and Melon: £0.6 million and
£7.2 million respectively.
Additional details of the shares issued are in note 32 Other reserves.
32. Other reserves
Other reserves in the Consolidated Statement of Changes in Equity is made up of additional paid in capital as
detailed in note 31 above along with the following:
ESOP reserve representing Kin and Carta plc ordinary shares held in the Company’s Treasury and the Company’s
Employee Benefit Trust (“EBT”). Treasury shares consisting of 90,637 Kin and Carta plc ordinary shares were held
at 31 July 2022 (31 July 2021: 90,637 shares). In addition, 2,489,665 Kin and Carta plc ordinary shares (31 July 2021:
40,756 shares) were held by the Kin and Carta Employee Benefit Trust as at 31 July 2022. 1,957,692 Kin and Carta plc
ordinary shares were purchased by the EBT after 31 July 2022 to satisfy future vesting of employee awards. All shares
held in the EBT are expected to be used to settle awards vesting in the 24 months following the balance sheet date.
Share option reserve representing the cumulative charge related to the unvested options granted to Group’s
employees over Kin and Carta plc ordinary shares.
Hedging and translation reserve, which includes amounts relating to foreign translation differences arising on the
retranslation of reserves due to the Group’s presentation in Sterling and the mark to market of hedging instruments
designated as cash flow hedges.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 33. Notes to the consolidated cash flow statement
Reconciliation of cash generated from operations
33. Notes to the consolidated cash flow statement (continued)
Analysis of financing liabilities
256
Operating (loss) / profit from continuing operations
Operating profit from discontinued operations
Operating profit
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Impairment loss
Loss on disposal of property, plant and equipment
Share of profit from joint arrangement
Disbursement from joint arrangement
Share-based payment charge
Forgiveness of US Government loans
Gain on disposal of subsidiaries
Fair value gain from deemed sale on step acquisition
Non-cash reductions in lease liabilities
Increase/(decrease) in retirement benefit obligations
Net increase in contingent consideration required to be treated as remuneration
Increase/(decrease) in provisions
Operating cash inflows before movements in working capital
Increase in receivables
Increase in payables
Increase in deferred income
Cash generated from operations
2022
£’000
(14,355)
25,684
11,329
4,392
6,484
6,207
72
(442)
147
3,118
–
(24,059)
(1,621)
(4,401)
1,194
13,228
3,551
19,199
(8,054)
939
43
12,127
Restated*
2021
£’000
2,818
3,433
6,251
4,322
8,870
456
-
(700)
440
1,944
(4,541)
(5,171)
–
(306)
(287)
3,342
(877)
13,743
(13,736)
10,379
378
10,764
* Prior year figures have been restated to include the effect of adopting the IFRS IC’s agenda decision on configuration and customisation costs in a Cloud Computing
Arrangement, and the to show a revised grouping of continuing and discontinued operations. Refer to note 5.
The table below reconciles the continuing operations adjusted operating profit to the adjusted operating cash inflow
from continuing operations before working capital. Refer to the CFO Review.
1 August 2021
£’000
Draw down
£’000
Repayment
£’000
Foreign
exchange
losses
£’000
31 July
2022
£’000
257257
Current liabilities
US Government loans
Non-current liabilities
Bank loans – Revolving credit facility
Total financing liabilities
1,853
62,365
64,218
(2,052)
199
–
23,988
23,988
(76,125)
(78,177)
2,920
3,119
13,148
13,148
Cash and cash equivalents (which are presented as a single class of assets on the face of the Consolidated Balance
Sheet) comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less.
The effective interest rates on cash and cash equivalents are based on current market rates.
34. Share-based payments
The Company operates a number of share-based payment schemes for certain employees of the Group.
Long-term Incentive Plan 2010 (“LTIP”)
Executive Directors and certain members of senior management have been granted nil-cost share options under the
Company’s LTIP. Details of the LTIP are included on pages 150, 165 and 166 of the Directors’ remuneration report.
Number of options
Outstanding at the beginning of the period
Granted during the period
Lapsed during the period
Exercised during the period
Outstanding at the end of the period
Exercisable at the end of the period
Estimated % of options vesting over next three years
2022
‘000
7,475
2,745
(1,324)
(1,305)
7,591
210
68%
2021
‘000
5,856
3,583
(1,812)
(152)
7,475
22
64%
The fair value of the options granted in the current period under the LTIP were measured using a Black-Scholes
options pricing model. The inputs to the model are:
Adjusted operating profit
Depreciation of property, plant and equipment
Share of profit from joint arrangement (note 19)
Disbursement from joint arrangement
Share-based payment charge
Forgiveness of US government loans
Adjusted operating cash inflow from continuing operations before working capital
2022
£’000
18,893
4,155
(442)
147
3,118
–
25,871
Restated*
2021
£’000
12,268
3,213
(700)
440
1,944
(4,541)
12,624
Weighted average mid-market share price (pence)
Weighted average exercise price (pence)
Expected life
Expected volatility
Risk-free rate
Dividend yield
Weighted average fair value of the options (pence)
* Prior year figures have been restated to include the effect of adopting the IFRS IC’s agenda decision on configuration and customisation costs in a Cloud Computing
Arrangement, and the to show a revised grouping of continuing and discontinued operations. Refer to note 8.
LTIP
2.91
£nil
3 years
58.34%
2.00%
0.03%
2.91
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 34. Share-based payments (continued)
CSOP incentive
34. Share-based payments (continued)
Employee Stock Purchase Plan (“ESPP Plan”)
Executive Directors and certain members of senior management have been granted share options at market value
under the Company’s CSOP. Details of the CSOP are included on pages 150 and 165 of the Directors’ remuneration
report.
258
The Company has granted share options to eligible employees under an Employee Stock Purchase Plan. Details of the
plan are included on page 150 of the Directors’ remuneration report.
A reconciliation of the movement in the related share options is shown below:
259259
Number of options
Outstanding at the beginning of the period
Granted during the period
Lapsed during the period
Exercised during the period
Outstanding at the end of the period
Exercisable at the end of the period
Estimated % of options vesting over next three years
2022
‘000
3,124
–
(785)
(194)
2,145
–
87%
2021
‘000
–
3,379
(255)
–
3,124
–
64%
The fair value of the options granted in the prior period under the CSOP were measured using a Black-Scholes
options pricing model. The inputs to the model are:
Weighted average mid-market share price (pence)
Weighted average exercise price (pence)
Expected life
Expected volatility
Risk-free rate
Dividend yield
Weighted average fair value of the options (pence)
Save As You Earn Share Option Plan (“Sharesave Plan”)
CSOP
0.67
0.67
3 years
52.48%
2.00%
0.03%
0.22
The Company has granted share options to eligible employees under an HMRC-approved all-employee Sharesave
Plan. Details of the plan are included on page 150 of the Directors’ remuneration report.
A reconciliation of the movement in the share options is shown below:
Outstanding at the beginning of the period
Granted during the period
Lapsed during the period
Exercised during the period
Outstanding at the end of the period
Exercisable at the end of the period
Number of options
Weighted average
exercise price
2022
‘000
251
426
(82)
(130)
465
46
2021
‘000
453
–
(202)
–
251
4
2022
0.83
2.33
0.83
0.83
2.18
–
2021
0.83
–
0.83
–
0.83
–
Estimated % of options vesting in the future years
100%
100%
Outstanding at the beginning of the period
Granted during the period
Lapsed during the period
Exercised during the period
Outstanding at the end of the period
Exercisable at the end of the period
Estimated % of options vesting in the future years
Number of options
Weighted average
exercise price
2022
‘000
161
148
(47)
(124)
138
–
93%
2021
‘000
–
161
–
–
161
–
88%
2022
0.92
2.46
0.92
0.94
2.72
–
2021
–
0.92
–
–
0.92
–
The grant price of the options under the ESPP is fixed in dollars and so the exercise price is subject to currency
fluctuations when measured in pounds Sterling.
The fair value of the options granted in the prior period under the ESPP were measured using a Black-Scholes options
pricing model. The inputs to the model are:
Weighted average mid-market share price (pence)
Weighted average exercise price (pence)
Expected life
Expected volatility
Risk-free rate
Dividend yield
Weighted average fair value of the options (pence)
ESPP
2.46
2.46
3 years
49.86%
2.00%
0.03%
1.22
The Group recognised a charge of £3.4 million in the current year (2021: charge of £2.0 million) relating to
equity-settled share-based payments other than in the context of acquisitions. The exercise price of options
outstanding at 31 July 2022 ranges between £nil and £2.72.
Share-based contingent consideration required to be treated as remuneration
The Group recognised a charge for share-based payment of £7.7 million (2021: £1.9 million) relating to contingent
consideration for acquisitions, which is recorded as part of deemed remuneration within Adjusting Items (note 7)
under the Americas and Melon reporting segments.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 35. Hedging and translation reserves
Hedging reserve and translation reserve
The reserve represents the cumulative amount of gains and losses on hedging instruments deemed effective in cash
flow hedges and the translation of the net assets of the Group’s foreign operations, which relate to subsidiaries only,
from their functional currency into the parent’s functional currency, being Sterling.
260
Losses transferred from the hedging and translation reserves into Consolidated Income Statement during the period
are included in the following line items in the Consolidated Income Statement:
Revenue
2022
£’000
(39)
2021
£’000
(13)
Cash flow hedge accounting has not been applied to the forward currency contract entered into in the period
to hedge CDL deferred consideration as set out in note 21 above. The mark to market revaluation of the related
derivative instrument, resulting in a loss of £456,000, has been recorded through the Consolidated Income
Statement as an adjusting item.
36. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note. No material related party transactions have been entered into during
the period, which might reasonably affect the decisions made by the users of these financial statements.
No executive officers of the Company or their associates had transactions with the Group during the period.
Loop Integration LLC
The Group previously held a 50% interest in Loop Integration LLC (“Loop Integration”), incorporated in Delaware, USA.
On 14 February 2022 the Group purchased the remaining 50% interest. Refer to note 12.
Prior to the purchase of the remaining 50% interest, the Group received distributions of £0.2 million (2021: £0.4
million) from Loop Integration. Further details of the amounts the group earned from Loop Integration prior to the
purchase are disclosed in note 12.
Simoleon LLC
SpireMedia, Inc (d.b.a. Kin and Carta Denver) a 100% subsidiary was acquired by the Group in November 2019.
Simoleon LLC (“Simoleon”) used to provide office space to Kin and Carta Denver in a lease that ended in December
2020. Simoleon LLC is partly controlled by Adam Hasemeyer and Michael Gellman with another third party, and they
also controlled Kin and Carta Denver before it was acquired by the Group. Mr Hasemeyer and Mr Gellman became
employees of the Group following the acquisition of Spire. During the year, Kin and Carta Denver paid USD Nil (2021:
USD 114,570) to Simoleon LLC for office space. There were no outstanding amounts due to Simoleon LLC at
31 July 2022.
Aggregate Directors’ remuneration
The Group considers the Directors of Kin and Carta plc to be the key management personnel whose remuneration is
disclosed in the Directors’ remuneration report, under the Corporate Governance section.
37. List of undertakings
In accordance with section 409 of the Companies Act 2006, a full list of related undertakings, the country of
incorporation and the registered office address is disclosed below, as at 31 July 2022.
Subsidiaries
The subsidiary undertakings below are wholly owned and, unless otherwise stated, the share capital disclosed
comprises ordinary shares (or the local equivalent thereof); which are directly or indirectly held by Kin and Carta plc.
These undertakings were controlled by the Group on 31 July 2022, and their results are fully consolidated into the
Group’s financial statements.
As of 31 July 2022, the principal subsidiaries were as follows:
261261
Principal subsidiaries
Cascade Data Labs, LLC
Datorium, LLC
Frakton SH.P.K
Kin and Carta Colombia S.A.S
Kin and Carta Greece Μονοπρόσωπη Ι.Κ.Ε.
Kin and Carta Partnerships Limited
Kin and Carta Partnerships LLC
Kin and Carta Scotland Limited
Kin and Carta UK Limited
Loop Integration LLC
Melon EAD
Melon Technologii DOOEL
Solstice Consulting LLC
Solstice Mobile Argentina Srl
SpireMedia. Inc.
Kin and Carta Colombia Holdings S.A.S
Kin and Carta Group Limited
Note
Place of incorporation
Nature of business
h
n, p
j
l
m, p
a
e, p
d,
a,
c,p
i,
k
e, p
f
g, q
l
a
United States of America
Digital Transformation
United States of America
Digital Transformation
Kosovo
Colombia
Greece
Digital Transformation
Digital Transformation
Digital Transformation
England and Wales
Digital Transformation
United States of America
Digital Transformation
Scotland
Digital Transformation
England and Wales
Digital Transformation
United States of America
Digital Transformation
Bulgaria
Macedonia
Digital Transformation
Digital Transformation
United States of America
Digital Transformation
Argentina
Digital Transformation
United States of America
Digital Transformation
Colombia
England and Wales
Holding company
Holding company
Kin and Carta Americas Holdings LLC
c, p, v
United States of America
Holding company
Kin and Carta Investments Limited
Kin and Carta Manager (Holding Companies) LLC
Kin and Carta Manager (Operations) LLC
Kin and Carta Manager Holdings LLC
Kin and Carta Marketing Services (Delaware) LLC
Realise Holdings Limited
Solstice Consulting Argentina LLC
Solstice Consulting Latin America LLC
a
c, p
c, p
c, p
c, p
d
c, p
c, p
England and Wales
Treasury company
United States of America
United States of America
Provision of management
services
Provision of management
services
United States of America
Holding company
United States of America
Holding company
Scotland
Holding company
United States of America
Holding company
United States of America
Holding company
Non-trading subsidiaries
Amaze Limited
Note
Place of incorporation
a
England and Wales
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements 37. List of undertakings (continued)
Amaze (Europe) Limited
Amaze Communication Services Limited
262
Amaze (Holdings) Limited
Amaze Communication Services (Holdings) Limited
Amaze Technology Limited
Branded3 Search Limited
Fripp, Sandeman and Partners Limited
Kin and Carta Advisory LLC
Kin and Carta Former HoldCo Limited
Kin + Carta Limited
Kin and Carta Marketing Planning Singapore Pte. Ltd (in
liquidation)
Kin and Carta Marketing Services (Singapore) Pte. LLC (in
liquidation)
Kin and Carta Services UK Limited
Occam DM Limited
Okana Systems Limited
Pollen Health (US) LLC
Response One Holdings Limited
SouthWest Mailing Limited (in liquidation)
St Ives Blackburn Limited (in liquidation)
St Ives Burnley Limited (in liquidation)
St Ives Direct Edenbridge Limited (in liquidation)
St Ives Direct Leeds Limited (in liquidation)
St Ives Financial Limited (in liquidation)
St Ives Pension Scheme Trustees Limited
St Ives Westerham Press Limited (in liquidation)
a
a
a
a
a
a, t
a
c, p
a
a
b
b
a, u
a, o
a, r
p
a, s
a
a
a
a
a
a
a
a
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
United States of America
England and Wales
England and Wales
Singapore
Singapore
England and Wales
England and Wales
England and Wales
United States of America
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
37. List of undertakings (continued)
a. Registered office: The Spitfire Building, 71 Collier Street, London, N1 9BE
b. Registered office: 8 Marina View, #40-04/05, Asia Square Tower 1, Singapore 018960”
c. Registered office: 200 Bellevue Parkway, Suite 210, Wilmington, Delaware 19809, United States.
d. Registered office: Exchange Tower, 19 Canning Street, Edinburgh EH3 8EH. On 22 September 2022 Kin and Carta
Scotland Limited’s and Realise Holdings Limited’s registered office address changed from Quay House, 142
Commercial Street, Edinburgh EH6 6LB.
263263
e. Registered office: 100 N. LaSalle, Suite 500, Chicago, Illinois 60602-3554, United States
f. Registered office: Solstice Argentina, Aguirre 1169, Ciudad Autonoma de Buenos Aires, Argentina
g. Registered office: 7700 E. Arapahoe Road, Suite 220 Centennial, CO 80112, United States
h. Registered office: 8130 SW Beaverton-Hillsdale Hwy, Portland, OR 97225, United States
i. Registered Office: Sofia 1113, Slatina district, 20 Kosta Lulchev Street, 3rd floor
j. Registered Office: Bekim Fehmiu Str. Arting Building, 5th Floor, Pristina, Kosovo
k. Registered Office: 1737 Street no.32, Municipality Centar, Skopje, Macedonia
l. Registered Office: Carrera 16 #97 Piso 8 Bogotá, 97-46 Edificio Torre, 97 Piso 8, Bogotá, Colombia Barrio Chicó,
Colombia
m. Registered Office: 62 Kifissias Avenul, Maroussi, 15125 , Greece
n. Registered Office: 385 Homer Ave, Palo Alto CA 94301, United States
o. Ordinary, A Preferred Ordinary, B Ordinary, C Ordinary, D Ordinary, Deferred Ordinary
p. Membership interest
q. Class A Common Stock
r. Ordinary and A Ordinary
s. A Ordinary, B Ordinary
t. Ordinary, Ordinary-A, Ordinary-B
u. On 30 August 2022, Kin and Carta Advise Europe Limited changed its name to Kin and Carta Services UK Limited
38. Contingent liabilities
During the year, a former client brought a claim against the company for breach of contract in the US. The claim,
which is for a total of USD 4.1m is currently being heard in a US court of arbitration. The Company believes it has
a reasonable chance of success based on legal advice received. The loss is thought not to be probable and no
provision has been made by the Company at 31 July 2022 for further cash costs associated with the case. £0.4
million of legal costs were incurred in the current period in respect of the claim which are recorded as an Adjusting
Item in the Americas segment.
39. Post-balance sheet events
On 5 September 2022 the Group agreed the extension of its committed £85 million multicurrency revolving credit
facility with four lender banks for a further year. The facility is now committed until September 2026.
Post year end, the Employee Benefit Trust purchased 1,957,652 ordinary shares in Kin and Carta plc to settle the future vesting of
employee share awards which are expected to vest in the next 24 months.
Notes to the consolidated financial statements continuedKin + CartaBuilding a world that works better for everyone.Financial Statements Company balance sheet
Company number 01552113
Company statement of
changes in equity
264
Fixed assets
Intangible assets
Tangible assets
Investment property
Investments
Retirement benefit surplus
Current assets
Debtors
Cash at bank and in hand
Derivative financial instruments
Creditors: Amounts falling due within one year
Trade and other creditors
Derivative financial instruments
Net current assets/liabilities
Total assets less current liabilities
Creditors: Amounts falling due after more than one year
Bank loans and overdrafts
Provisions for liabilities
Deferred taxation
Net assets
Capital and reserves
Called up share capital
Share premium account
Other reserves
Profit and loss account
Total equity
Note
6
5
7
8
13
9
10
11
10
12
14
17
15
15
16
(7,524)
(454)
6,578
253,608
–
–
(9,387)
244,221
17,796
76,389
19,185
130,851
244,221
(15,558)
–
15,252
214,998
(30,000)
(12)
(2,530)
182,456
17,255
76,085
13,878
75,238
182,456
*The 31 July 2021 balance sheet has been restated following a change in accounting policy on adoption of the IFRS IC’s agenda decision on configuration and customisation
costs in a Cloud Computing Arrangement. This change in accounting policy decreased the company’s retained earnings by £365,000 in 2021. The impact of the change on
other intangible assets is disclosed in note 6.
The profit for the financial year for the Company was £35.1 million (2021: £3.0 million).
These financial statements on pages 264 and 265 were approved by the board of directors on 12 October 2022 and
signed on its behalf by
Kelly Manthey
Chief Executive Officer
Chris Kutsor
Chief Financial Officer
31 July
2022
£’000
–
111
4,318
203,853
38,748
247,030
12,062
2,492
2
Restated*
31 July
2021
£’000
21
–
4,587
175,871
19,267
199,746
8,312
22,485
13
Balance at 31 July 2020
Change of accounting policy*
Restated total equity as at
31 July 2020
Profit for the year
Other comprehensive expense:
Actuarial gain on defined benefits
pension scheme
Total comprehensive expense
14,556
30,810
Group's acquisitions
360
4,197
l
a
t
i
p
a
c
e
r
a
h
S
0
0
0
£
’
i
m
u
m
e
r
p
e
r
a
h
S
t
n
u
o
c
c
a
0
0
0
£
’
n
o
i
t
p
m
e
d
e
R
l
a
t
i
p
a
C
e
v
r
e
s
e
R
0
0
0
£
’
e
v
r
e
s
e
r
r
e
g
r
e
M
0
0
0
£
’
s
e
r
a
h
s
y
r
u
s
a
e
r
T
0
0
0
£
’
n
o
i
t
p
o
e
r
a
h
S
e
v
r
e
s
e
r
0
0
0
£
’
e
v
r
e
s
e
r
P
O
S
E
0
0
0
£
’
t
n
u
o
c
c
a
s
s
o
l
d
n
a
t
i
f
o
r
P
*
d
e
t
a
t
s
e
R
0
0
0
£
’
0
0
0
£
’
l
a
t
o
T
265265
16,876
71,888
9,190
1,238
(68)
(163)
1,722
58,030
158,713
(422)
(422)
16,876
71,888
9,190
1,238
(68)
(163)
1,722
57,608
158,291
17,255
76,085
9,190
1,238
(68)
(163)
–
–
–
–
–
–
19
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(59)
59
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,843
–
–
–
–
(5,357)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(17)
(5,593)
353
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,919)
(129)
–
(38)
1,944
1,881
1,220
3,681
3,065
3,065
14,476
17,541
–
110
–
(21)
–
–
–
14,476
17,541
1,638
–
(59)
–
1,944
1,881
1,220
75,238
182,456
–
35,070
35,070
–
–
–
–
14,126
14,126
49,196
49,196
(38)
(38)
–
8,195
(1,242)
1,098
332
–
–
3,118
5,953
249
–
–
–
–
5,357
–
(5,593)
353
3,118
5,953
–
249
Shares issued to settle employee share
options
Purchase of own shares
Settlement of share-based payment
using own shares
Recognition of share-based payments
Recognition of share-based contingent
consideration deemed as remuneration
for a subsidiary
Tax on share-based payments
Balance at 31 July 2021
Profit for the year
Other comprehensive income
Actuarial gain on defined benefits
pension scheme
Total comprehensive income
Dividends paid
Shares issued to settle consideration for
the Group's acquisitions
352
Shares issued to settle employee share
options
189
304
Purchase of own shares
Settlement of share-based payment
using own shares
Recognition of share-based payments
Recognition of share-based contingent
consideration deemed as remuneration
for a subsidiary
Reclassification to retained earnings
Tax on share-based payments
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 July 2022
17,796
76,389
11,676
1,238
(5,325)
(163)
11,759
130,851
244,221
* The 31 July 2021 balance sheet has been restated following a change in accounting policy on adoption of the IFRS IC’s agenda decision on configuration and customisation costs in
a Cloud Computing Arrangement. The impact of the change on other intangible assets is disclosed in note 6.
The balance of the retained profit and loss at 31 July 2020 has been restated following a change in accounting
policy, after adopting the IFRS IC’s agenda decision on Configuration and Customisation Costs in a Cloud Computing
Arrangement. This change in accounting policy has decreased retained earnings at 31 July 2021 by £365,000
(At 31 July 2020: £422,000).
Kin + CartaBuilding a world that works better for everyone.Financial Statements
Notes to the Company
financial statements
1. Accounting policies
Kin and Carta plc is a public company limited by shares incorporated and domiciled in the United Kingdom (“UK”)
and registered in England and Wales under the Companies Act 2006. The address of the registered office is The
Spitfire Building, 71 Collier Street, London, N1 9BE.
266
The separate financial statements of the company are presented as required by the Companies Act 2006 as
applicable to companies using FRS 101 ‘Reduced Disclosure Framework’. The financial statements have been prepared
in accordance with FRS 101 ‘Reduced Disclosure Framework’ as issued by the Financial Reporting Council.
The separate financial statements have been prepared on a historical cost basis, except for the remeasurement to
fair value of investment property, see note 7. The directors consider that the carrying value of all financial assets and
liabilities is approximately equal to their fair value.
Financial Reporting Standard 1 – reduced disclosure exemptions
1. Accounting policies (continued)
Going concern
The company’s net asset position increased by £61.7 million to £244.2 million. During the year the company reduced
its external loans payable by £30 million to £nil (31 July 2021: £30 million) and had a £2.5 million cash balance at
31 July 2022.
267267
The Company guarantees the loans and overdrafts of its subsidiary undertakings. At 31 July 2022, the aggregate
potential liability for the Company under this guarantee amounted to £13.1 million (2021: £67.2 million). The aggregate
value of overdraft liabilities related to those subsidiaries which are guaranteed by the Company amounted to £nil
(2021: £nil).
At 31 July 2022, there was no loan or overdraft secured against the assets of the Company (2021: £nil). The directors
consider that the carrying amount of the loans and overdrafts approximates their fair value.
The Company is taking advantage of the applicable disclosure exemptions permitted by FRS 101 in its financial
statements, which are summarised below:
The Company has guaranteed amounts payable to certain property landlords and suppliers of its trading
subsidiaries. The maximum aggregate liability under these financial guarantees is £11.4 million (2021: £16.8 million).
Standard
Disclosure exemption
IFRS 2, ‘Share-based Payment’
Para 45(b) – number and weighted average exercise prices of share options
Para 46-52 – fair value disclosures for share options
IFRS 7, ‘Financial Instruments: Disclosures’ Full exemption
IFRS 13, ‘Fair Value Measurement’
Para 91-99 – disclosure of valuation techniques and inputs used for fair value
measurement of assets and liabilities
IAS 1, ‘Presentation of the Financial
Statements’
Para 10(d) – statement of cash flows
Para 10(f) – a statement of financial position as at the beginning of the preceding period
when an entity applies an accounting policy retrospectively or makes a retrospective
statement of items in its financial statements, or when it reclassifies items in its financial
statements
Para 16 – statement of compliance with all IFRS
Para 38 – present comparative information in respect of paragraph 79(a)(iv) of IAS 1
Para 38A – requirement for minimum of two primary statements, including cash flow
statements
Para 38B-D – additional comparative information
Para 40A-D – requirements for a third statement of financial position
Para 111 – cash flow statement information
Para 134-136 – capital management disclosures
IAS 7, ‘Statement of Cash Flows’
Full exemption
IAS 8, ‘Accounting Policies, Changes in
Accounting Estimates and Errors’
Para 30 & 31 – requirement for the disclosure of information when an entity has not
applied a new IFRS that has been issued but is not yet effective
IAS 24, ‘Related Party Disclosures’
Para 17 and 18A– key management compensation
The requirements to disclose related party transactions entered into between two
or more members of a group, provided that any subsidiary which is a party to the
transaction is wholly owned by such a member
The equivalent disclosures are given in the consolidated financial statements on pages 194 to 198 and notes 1 to 39.
As permitted by section 408(3) of the Companies Act 2006, the income statement of the Company is not presented
in this Annual Report. The Company has not published its individual cash flow statement as its liquidity, solvency and
financial adaptability are dependent on the Group rather than its own cash flows.
The Company has access to the Group’s multi-currency credit facility of £85 million (2021: £85 million) that was
extended to September 2026 on 5 September 2022. The Company’s access to the credit facility is dependent on
the Group meeting the covenant requirements put in place by the Group’s lender banks. At 31 July 2022, and date of
approving the Company and Group financial statements, the Company and Group were in compliance with the lender
banks’ covenant requirements. At 31 July 2022, the Group’s ratio of net debt to Adjusted EBITDA for bank covenant
purposes was 0.01 times (2021: 0.99 times). The Group projects that it will continue to operate within covenant limits
and has sufficient liquidity in both the base case forecast and in the severe but plausible downside scenario.
The Company participates in the Group’s centralised treasury arrangements and so shares the banking arrangements
with its subsidiaries. The directors have performed an assessment on the Company’s ability to recover intercompany
debtors and recoverability of investments in its subsidiaries, concluding that they are recoverable. Considering this
and the key risks that are relevant to the Company as detailed on pages 100 to 110 of the Group’s annual report, the
Directors deemed that there were no material uncertainties surrounding going concern. On that basis, the Directors
are confident that the Company will have sufficient funds to continue to meet its liabilities as they fall due for at
least 12 months from the date of approval of these financial statements and therefore have prepared the financial
statements on a going concern basis.
The principal accounting policies adopted are the same as those set out in note 2 to the Consolidated Financial
Statements except as noted below. The accounting policies have been applied consistently throughout the
financial statements.
(a) Investments
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment. Loans to
subsidiaries are classified as investments where they are long term funding in nature.
(b) Critical accounting judgements and key sources of estimation uncertainty
In the course of applying the Group’s accounting policies the following estimations and accounting judgements have
been made which could have a significant effect on the results of the Group were they subsequently found to be
inappropriate.
Carrying value of investments
The assessment of the carrying value of investments requires the estimation of future cash flows from the businesses
owned and operated by the subsidiaries which compose the Company’s investments. These forecast cash flows are
subject to uncertainty and if the actual cash flows are lower than those forecast, this could result in an impairment in
the investments.
Retirement benefits obligations
The calculation of retirement benefits obligations requires estimates to be made of discount rates, inflation rates,
future salary and pension increases and mortality. The net surplus in the Consolidated Balance Sheet for the
retirement benefits scheme was £38.7 million (2021: £19.3 million). A sensitivity analysis can be found in note 28 to
the Consolidated Financial Statements.
Kin + CartaBuilding a world that works better for everyone.Financial Statements Notes to the Company
financial statements continued
2. Profit from operations
5. Tangible assets
As permitted by Section 408 of the Companies Act 2006, no profit and loss account of the Company is included in
these financial statements. The profit for the financial year for the Company was £35.1 million (2021: £3.0 million).
268
3. Auditors’ remuneration
Fees paid to the auditors in respect of their audit of the Company were £450,000 (2021: £317,000).
4. Employee information
The average monthly number of employees (including executive directors) was:
Administration
Wages and salaries
Social security costs
Other pension costs
2022
Number
74
2021
Number
59
2022
£’000
8,370
432
267
9,069
2021
£’000
7,370
273
251
7,894
Disclosure of individual Directors’ remuneration, share options, long-term incentive schemes, pension contributions
and pension entitlements required by the Companies Act 2006 and those elements specified for audit by the
Financial Conduct Authority are shown in the tables in the Directors’ remuneration report on pages 142 to 172 and
form part of these parent company financial statements. Further details of share-based payments are contained in
note 34 in the notes to the consolidated financial statements.
Cost:
At 1 August 2020
Disposals
At 31 July 2021
Additions
Reclassification
At 31 July 2022
Accumulated depreciation and impairment:
At 1 August 2020
Charge
Disposals
Impairment
At 31 July 2021
Charge
Reclassification
At 31 July 2022
Net book value:
At 31 July 2022
At 31 July 2021
Land and
buildings
Short leases
£’000
Plant and
machinery
£’000
822
(822)
–
–
–
–
822
–
–
375
(375)
–
124
140
264
318
12
45
Fixtures,
fittings,
equipment
and motor
vehicles
£’000
Right of use
buildings
£’000
406
(406)
2,772
(2,772)
269269
Total
£’000
4,375
(4,375)
–
124
140
264
–
–
–
–
2,772
4,208
–
–
12
155
–
–
–
–
296
–
110
(822)
(375)
(406)
(2,772)
(4,375)
–
–
–
–
–
–
–
34
119
153
111
–
–
–
–
–
–
–
–
–
–
–
–
–
–
34
119
153
111
–
Reclassification comprises plant and machinery that was previously included in software.
Kin + CartaBuilding a world that works better for everyone.Financial Statements Notes to the Company
financial statements continued
6. Intangible assets
8. Investments
Software
£’000
All of the below are unlisted investments. The principal trading subsidiaries are listed in note 37 of the consolidated
financial statements.
Cost:
270
At 01 August 2020*
Additions
Disposals
At 31 July 2021
Reclassification
At 31 July 2022
Accumulated amortisation and impairment:
At 01 August 2020*
Charge
Disposals
At 31 July 2021
Reclassification
At 31 July 2022
Net book value:
At 31 July 2022
At 31 July 2021
195
19
(74)
140
(140)
–
174
19
(74)
119
(119)
–
–
21
At 1 August 2020
Capital contribution
Reversal of impairments
Loan advances
Loan repayments
Foreign exchange revaluation
At 31 July 2021
Capital contribution
Impairments
Loan advances
Loan repayments
Foreign exchange revaluation
At 31 July 2022
Shares in
subsidiaries
at cost
£’000
Loans to
subsidiaries
£’000
Total
£’000
271271
66,590
5,000
450
–
–
–
72,040
111,453
(450)
–
–
–
183,043
142,578
209,168
–
–
12,212
5,000
450
12,212
(48,046)
(48,046)
(2,913)
103,831
(50,750)
(330)
12,126
(2,913)
175,871
60,703
(780)
12,126
(46,992)
(46,992)
2,925
20,810
2,925
203,853
*The figures at 1 August 2020 and 31 July 2021 and the prior year additions and amortisation charges have been restated following a change in accounting policy, adopting the
IFRS IC’s agenda decision on configuration and customisation costs in a Cloud Computing Arrangement. Costs which were previously capitalised and amortised over five years
are now charged to P&L as they arise. The effect of the change was to decrease intangible assets at 31 July 2020 by £520,000 and at 31 July 2021 by £450,000.
Reclassification comprises plant and machinery that was previously included in software.
7. Investment property
Cost:
At 31 July 2021 and 31 July 2022
Accumulated depreciation and impairment:
At 31 July 2020
Charge
At 31 July 2021
Charge
At 31 July 2022
Net book value:
At 31 July 2022
At 31 July 2021
Investment
Property
£’000
7,944
3,087
270
3,357
269
3,626
4,318
4,587
At 31 July 2022, the fair value of the investment property is not materially different from its net book value of
£4.3 million.
Within Investment Property, the Company has freehold land with a net book value of £0.2 million (2021: £0.2
million), these assets have not been depreciated. Rental income of £0.8 million (2021: £0.8 million) in relation to the
investment properties have been recorded to the profit and loss account in the current year.
The capital contributions made during the year relate to Kin and Carta Group Limited, Kin and Carta Investments
Limited and Kin and Carta UK Limited. This consisted of cash contributions made to the companies as well
reclassification of loans to equity.
The impairment made during the year relates to the investment in Fripp, Sandeman and Partners Limited as this
investment was deemed to be irrecoverable.
9. Debtors
Within one year
Trade Debtors
Amounts owed by Group undertakings
Other debtors
Prepayments and accrued income
2022
£’000
36
10,054
102
1,870
12,062
2021
£’000
11
7,617
74
610
8,312
Amounts owed by Group undertakings are repayable on demand. They are non-interest bearing and unsecured.
Kin + CartaBuilding a world that works better for everyone.Financial Statements Notes to the Company
financial statements continued
10. Derivative financial instruments
12. Borrowings and finance obligations (continued)
Derivative financial assets
Forward foreign currency contracts
272
Derivative financial liabilities
Forward foreign currency contracts
2022
£’000
2
2022
£’000
454
2021
£’000
13
2021
£’000
–
The company is subject to the Group covenants on its borrowings, specifically maximum permitted limits on
leverage, measured quarterly as Group net borrowings divided by trailing 12 month Adjusted Group EBITDA, and
minimum permitted limits on interest cover, measured quarterly as Adjusted Group EBIT divided by group interest
charges. Both covenants are measured on a pre-IFRS 16 ‘frozen GAAP’ basis and include pro forma adjustments for
acquisitions and disposals. At the year end, the Group’s leverage ratio for bank covenant purposes was 0.05 times
(2021: 0.99 times) against a maximum limit of 2.5 times, and interest cover was 18.5 times (2021: 14.7 times) against a
minimum of 4 times. The Group has fully complied with the requirements of these covenants during the year under
review and expects to continue to do so.
273273
In the period the Company entered into a derivative contract on behalf of Cascade Data Labs. All costs associated
with this have been recharged to Cascade.
13. Retirement benefits
11. Creditors
Trade and other creditors:
Amounts owing to Group undertakings
Trade creditors
Corporation tax payable
Tax and social security
Other creditors
Accruals and deferred income
Amounts falling due after more than one year:
Bank loans and overdrafts (note 12)
Deferred tax (note 17)
2022
£’000
1,248
720
92
227
2,740
2,497
7,524
2022
£’000
2021
£’000
8,034
900
1,755
276
375
4,218
15,558
2021
£’000
–
30,000
9,387
9,387
2,615
32,615
Amounts owed by group undertakings are repayable on demand. They are non-interest bearing and unsecured.
12. Borrowings and finance obligations
Amounts falling due after more than one year
Bank loans
2022
£’000
2021
£’000
–
30,000
The Company has access to the Group’s multi-currency credit facility of £85 million and was refinanced in
September 2021. This facility is committed until September 2026, of which up to £10.5 million can be drawn as
an overdraft facility. Interest on loan drawdowns is charged at SONIA plus a margin of 1.70%. The interest on loan
drawdowns is depending on the ratio of the Group’s net debt to EBITDA excluding Adjusting Items. Interest on
overdraft drawdowns is charged at an average rate of 2.00% (2021: 2.00%) over the UK base rate.
As at 31 July 2022, the Company had no drawing on the facility, but the Group’s outstanding loans within this facility
were £13.1 million (2021: £62.4 million). The undrawn portion of this facility at 31 July 2022 was £71.9 million
(2021: £22.6 million).
Retirement benefit surplus
2022
£’000
38,748
2021
£’000
19,267
The Company participates in both the defined benefit and defined contribution schemes operated by the Group.
The assets and liabilities of the defined benefit scheme are held in separate trustee-administered funds. The pension
costs are based on pension costs across the Group as a whole. For the defined contribution scheme, the income
statement charge represents contributions payable.
The Group is required to account for the defined benefit scheme under International Accounting Standard 19 −
Employee Benefits (‘IAS 19’). The IAS 19 disclosures are included in note 27 of the notes to the consolidated financial
statements.
14. Provisions for liabilities
Provision for repairs
2022
£’000
–
2021
£’000
12
The provision for repairs as at 31 July 2021 related to the dilapidation of a property for which the Company was
responsible. The full amount was utilised during the year.
15. Called up share capital and share premium account
Issued and fully paid at 1 August 2020
Share issue
At 31 July 2021
Share issue
At 31 July 2022
Number
of shares
168,760,056
3,785,665
172,545,721
5,414,958
177,960,679
Ordinary
shares of
10p each
£’000
Share
premium
account
£’000
16,876
379
17,255
541
17,796
71,888
4,197
76,085
303
76,388
All authorised and issued share capital is represented by equity shareholdings. The number of authorised and issued
Kin and Carta plc ordinary shares as at 11 October 2022 was 177,990,907. 3,251,861 fully vested shares were issued in
the period to satisfy consideration payable to the former shareholders of Melon AD and 267,429 fully vested shares
were issued in the period to satisfy consideration payable to the former shareholders of Loop Integration LLC, both
of which were acquired in the current year. 1,895,688 shares were issued in the year to satisfy employee share option
exercises under LTIP, SAYE and ESPP plans.
Kin + CartaBuilding a world that works better for everyone.Financial Statements Notes to the Company
financial statements continued
16. Other reserves
18. Related party transactions
The movements in reserves are disclosed in the Company’s Statement of Changes in Equity. At 31 July 2022, the
Company held a portfolio of treasury shares consisting of 90,637 (2021: 90,637) Kin and Carta plc ordinary shares.
274
During the current period there was a reclassification from the merger reserve to retained earnings following the
divestments of entities which accounted for a portion of the merger reserve in prior periods.
ESOP reserve representing Kin and Carta plc ordinary shares held in the Group’s Employee Benefit Trust. A portfolio
of treasury shares consisting of 2,489,655 Kin and Carta plc ordinary shares held by the Company as at 31 July 2022
(2021: 90,637 Kin and Carta plc ordinary shares). 2,399,018 shares were purchased in the period to satisfy awards
which are expected to vest in the 24 months following the balance sheet date.
17. Deferred tax
Deferred income taxes are calculated in full on temporary differences under the liability method using a principal tax
rate of 19% (2021: 19%).
Net deferred tax balances are classified as deferred tax liabilities in the balance sheet. The net movement in the
deferred tax liabilities is as follows:
Details on related party transactions can be found in note 36 to the Consolidated Financial Statements.
As noted under the accounting policies, the company is taking advantage of the exemption with regards to separate
disclosure of related party transactions.
275275
19. Post balance sheet events
On 5 September the Group agreed the extension of its committed £85 million multicurrency revolving credit facility
with four lender banks for a further year. The facility is now committed until September 2026.
Post-year end, the Employee Benefit Trust purchased 1,957,652 ordinary shares in Kin and Carta plc to settle the
future vesting of employee share awards which are expected to vest in the next 24 months.
19. Statement of guarantee
The Company has signed a statement of guarantee in respect of the liabilities of a number of subsidiary companies
as at 31 July 2022 under section 479C of the Companies Act 2006. As a result, the following subsidiaries are exempt
from the requirements of the UK Companies Act 2006 in relation to the audit of individual accounts for the year
ended 31 July 2022 by virtue of s479A of that Act:
At the beginning of the period 1 August
Charge to the Income Statement
Items taken to Other Comprehensive Income
Items taken directly to equity
At the end of the period 31 July
The individual movements in deferred tax liabilities/(assets) are as follows:
2022
£’000
2,530
896
6,210
(249)
9,387
Investment
Property
£’000
Retirement
benefit
obligations
£’000
Short-term
timing
differences
£’000
Share
options
£’000
Losses
£’000
(209)
(99)
(443)
Balance at 1 August 2020
Charge/(credit) to the Income
Statement
Items taken directly to Other
Comprehensive Income
Items taken directly to equity
Balance at 31 July 2021
Charge/(credit) to the Income
Statement
Items taken directly to Other
Comprehensive Income
Items taken directly to equity
Balance at 31 July 2022
897
139
–
–
1,036
83
3,401
–
3,275
(71)
247
–
–
965
6,210
–
9,732
(31)
–
(1,220)
(1,694)
–
–
–
–
–
823
(103)
896
–
(249)
(1,120)
–
–
(103)
6,210
(249)
9,387
12
–
–
(87)
-
–
–
(87)
2021
£’000
146
203
3,401
(1,220)
2,530
Total
£’000
146
203
3,401
(1,220)
2,530
Company
Amaze Limited
Amaze (Europe) Limited
Amaze (Holdings) Limited
Amaze Communication Services (Holdings) Limited
Amaze Communication Services Limited
Amaze Technology Limited
Branded3 Search Limited
Fripp, Sandeman and Partners Limited
Kin + Carta Limited
Kin and Carta Scotland Limited
Kin and Carta Services UK Limited
Kin and Carta Former Holdco Limited
Kin and Carta Group Limited
Kin and Carta Investments Limited
Kin and Carta Partnerships Limited
Occam DM Limited
Okana Systems Limited
Realise Holdings Limited
Response One Holdings Limited
St Ives Pension Scheme Trustees Limited
Company
registration
number
2830448
6418202
6417738
2670935
2051287
06385430
6479012
1284879
11403627
SC172507
11442056
6831479
08417677
00190460
09569438
05095081
3877530
SC306420
6724581
02286545
Kin + CartaBuilding a world that works better for everyone.Financial Statements Shareholder information
Glossary
Corporate information
Further information about the Group can be found on our website kinandcarta.com.
276
This year’s Annual Report and Accounts, as well as copies of past years’ Annual Reports and Accounts, half year
statements and shareholder circulars, are available to view and download from our investor website. Regulatory
announcements and press releases made during the year, and in past years, are also available to view in the
Regulatory News section of the investor website investors.kinandcarta.com.
Shareholding enquiries
The Company’s share register is maintained by Link Group, who are able to deal with shareholders’ queries, including
in respect of any of the following matters:
•
transfer of shares;
• change of name or address;
•
•
•
•
registering the death of a shareholder;
lost share certificates;
lost or out of date dividend warrants; and
the payment of dividends directly into a bank or building society accounts.
Their contact details are: Kin and Carta plc Shareholder Services, Link Group, 10th Floor, Central Square,
29 Wellington Street, Leeds, LS1 4DL United Kingdom.
Link’s shareholder helpline telephone number is 0371 664 0300. If you are outside the United Kingdom, please call
+44 (0) 371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the
United Kingdom will be charged at the applicable international rate. Link’s lines are open between 9.00am to 5.30pm,
Monday to Friday excluding public holidays in England and Wales.
Alternatively, you can email your query to our registrars at enquiries@linkgroup.co.uk although, for legal reasons, they
may subsequently require you to confirm any instruction in writing.
Unauthorised brokers (“boiler room scams”)
Shareholders should be very wary of any unsolicited calls or correspondence offering to buy or sell shares at a
discounted price. These calls are typically from fraudsters operating “boiler rooms”. Boiler rooms use increasingly
sophisticated means to approach investors and often leave their victims out of pocket. If you are concerned that you
may have been targeted by fraudsters please contact the FCA Consumer Helpline on 0800 111 6768.
Cautionary statement
This Annual Report and Accounts contains certain forward-looking statements with respect to the financial condition,
results, operations and businesses of Kin and Carta plc. These statements and forecasts involve risk and uncertainty
because they relate to events and depend upon circumstances that may occur in the future. There are a number of
factors that could cause actual results or developments to differ materially from those expressed or implied by these
forward-looking statements and forecasts.
277277
AGM
AI
API
APM
Articles
AWS
Annual general meeting
Artificial intelligence
Application programming interface
Alternative performance measure
The articles of association of Kin and Carta plc
Amazon Web Services
B Corporation or B Corp
A globally recognised assessment framework to assist companies to become more responsible
by considering the impact of their decisions on their clients, community, people, suppliers and the
environment
BIPOC
BI
Board
CAGR
Black, indigenous and people of colour
Business intelligence
The Board of Directors of Kin and Carta plc
Compound annual growth rate
Cascade Data Labs
Cascade Data Labs, LLC, a data science firm, organised in Oregon and acquired by the Group on 23
December 2020
Code
FRC’s UK Corporate Governance Code published in July 2018, a copy of which can be found on the
Financial Reporting Council’s website (frc.org.uk)
Companies Act
Companies Act 2006 (as amended)
Company
COVID-19
CDS
DBS
Kin and Carta plc, a public limited company incorporated in England and Wales with registered
number 1552113, whose registered office is at The Spitfire Building, 71 Collier Street, London, N1 9BE
The pandemic of the severe acute respiratory syndrome coronavirus 2 that causes coronavirus
disease 2019
Connective Digital Services (a team within our Operations Platform, who provide information
technology services to the Group including digital defence, digital development opportunities, and
digital experiences)
Deferred Bonus Scheme
Dollar or $
Unless otherwise specified, all references to Dollars or $ Dollar symbol are to the currency of the US
DX
Edit
eNPS
EPS
ESG
EU
EVP
EX
FRC
Digital transformation
Edit Agency Limited, a company incorporated in England and Wales with registered number
3624881, sold by the Group on 12 November 2021
Employee net promoter score
Earnings per share
Environmental, social and corporate governance
European Union
Employee value proposition
Employee experience
Financial Reporting Council
FTSE All-Share
The aggregation of the FTSE 100, FTSE 250 and FTSE Small Cap indices
GHG
GMP
Hive
HRIS
Greenhouse gas
Guaranteed minimum pensions
The Health Hive Group Limited and its subsidiaries and The Health Hive (US) LLC, being healthcare
communications businesses, sold by the Group on 16 December 2020
HR information system
Kin + CartaBuilding a world that works better for everyone.Financial Statements Glossary continued
278
IAS
IDEA
IFRS
Incite
IoT
IPCC
IT
International Accounting Standards
Inclusion, diversity, equity and awareness
International Financial Reporting Standards
Incite Marketing Planning Limited, a company incorporated in England and Wales with registered
number 3909059, and Incite New York LLC, a company formed in Delaware, sold by the Group on
28 September 2021
Internet of things
Intergovernmental Panel on Climate Change
Information technology
Kin + Carta Americas or
Americas
Cascade Data Labs, Kin and Carta Colombia S.A.S., Loop Integration, Spire, Solstice Consulting LLC,
and Solstice Mobile Argentina Srl
Kin + Carta Europe or Europe Kin and Carta Greece Μονοπρόσωπη I.K.E, Kin and Carta UK Limited and Melon Group
Kin + Carta or Group
The Company and its subsidiary undertakings
KAP
KPI
Loop Integration
LSE
LTIP
M&A
MACH
Melon Group
Kin Accelerator Programme
Key performance indicator
Loop Integration LLC, an e-commerce consultancy, formed in Delaware and previously a joint
venture until the Group’s acquisition of the remaining 50% on 14 February 2022
London Stock Exchange
Long-term incentive plan
Mergers and acquisitions
Microservices based, API-first, Cloud-native SaaS and Headless ecosystem technology
Melon EAD (incorporated in Bulgaria), Melon Tehnologii DOOEL (incorporated in North Macedonia)
and Frakton SH.P.K (incorporated in Kosovo), providers of digital transformation services, acquired
by the Group on 9 May 2022
MHFA
Mental Health First Aider(s)
Octain or Datorium
The responsible AI platform, Octain, owned by the California formed limited liability company
Datorium, LLC, acquired by the Group on 22 December 2021
Pragma
PwC
Regions
Relish
ROI
SaaS
Scheme
Pragma Consulting Limited, a leading commercial advisor for investors and operators in mixed use,
airports and retail property, sold by the Group on 31 August 2020
PricewaterhouseCoopers LLP
Kin + Carta Americas and Kin + Carta Europe
Relish Agency Limited, a company incorporated in England and Wales, with registered number
11456907, sold by the Group on 4 November 2021
Return on investment
Software as a service
St Ives Defined Benefit Pension Scheme
Solstice or
Kin and Carta U.S.
Solstice Consulting LLC (d.b.a. Kin and Carta U.S.), a digital transformation consulting firm, organised
in Illinois
Spire or Kin and Carta Denver SpireMedia Inc. (d.b.a. Kin and Carta Denver), a digital transformation consulting firm, organised in
Colorado and acquired by the Group on 26 November 2019
SSP
Shared socioeconomic pathway
Triple bottom line
Giving consideration to people, profit and planet
UI
UNSGDs
UX
Ventures
User interface
The United Nations’ Sustainable Development Goals, adopted by the United Nations in 2015 as a
universal call to action to inter alia end poverty and protect the planet
User experience
Our former Ventures arm was comprised of: Edit, Hive, Incite, Pragma and Relish. All Ventures
companies were divested between 2020 and 2021
We’re supporting responsible management of the world’s forests and
being kinder to the planet by using FSC® certified paper.
The production of this report supports the work of the Woodland Trust,
the UK’s leading woodland conservation charity. Each tree planted will
grow into a vital carbon store, helping to reduce environmental impact as
well as creating natural havens for wildlife and people.
Kin + Carta K
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Kin and Carta plc
The Spitfire Building
71 Collier Street
London
N1 9BE
Telephone +44 (0) 20 7928 8844
Email
cosec@kinandcarta.com
Website
www.kinandcarta.com
Find us online @kinandcarta