i
K
n
a
n
d
C
a
r
t
a
p
c
l
Building a world
that works better
for everyone
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
f
o
r
t
h
e
y
e
a
r
e
n
d
e
d
2
0
2
3
C
o
m
p
a
n
y
n
u
m
b
e
r
:
1
0
5
5
2
1
1
3
Kin and Carta plc
The Spitfire Building
71 Collier Street
London
N1 9BE
Telephone
+44 (0) 20 7928 8844
Email
Website
cosec@kinandcarta.com
www.kinandcarta.com
Find us online @kinandcarta
Company number: 01552113
Building
a world
that works
better for
everyone
Kin and Carta plc
Annual Report and Accounts
For the year ended 31 July 2023
Company number: 01552113
Welcome
to the 2023
Annual
Report
Kin + Carta is a London Stock
Exchange listed global digital
transformation consultancy
working responsibly with
enterprise clients to build a world
that works better for everyone.
Kin + Carta’s 1,800+ 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.
Contents
Overview
Highlights
Our business at a glance
Our purpose framework
Chairman’s statement
Our business proposition
Strategic Report
Chief Executive Officer’s statement
Market overview
Business model
Strategy
Strategy in action - Service lines
Strategy in action - Sectors
Strategy in action - Partners
Our global delivery model
Strategic progress
Key performance indicators
Chief Financial Officer’s review
A responsible business
(including Section 172 statement)
Risk management
Governance
Board of Directors
Governance at a glance
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 auditor's report to the
members of Kin and Carta plc
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated statement of changes in equity
Consolidated balance sheet
Consolidated statement of cash flows
Notes to the Group financial statements
Company balance sheet
Company statement of changes in equity
Notes to the company financial statements
Other information
Alternative performance measures ("APMs")
Shareholder information
Glossary
2
4
6
8
11
14
18
22
24
26
28
30
32
34
36
40
44
112
124
129
132
140
148
152
178
183
186
194
195
196
197
198
200
268
269
270
279
284
285
| 01
We work with enterprise
businesses to deliver
technology, data, and
experience transformation
with a focus on value
creation, inclusion,
and environmental
stewardship.
kinandcarta.com
Building a world that works better for everyone
Overview
Highlights
Financial review
Continuing operations1
Revenue
£195.9m -1%
Net revenue2
£192.0m +1%
Adjusted operating profit3, 4
£18.5m -17%
Adjusted profit before tax3, 4
£15.8m -23%
Adjusted basic earnings per share3, 4
8.7p -20%
Statutory operating (loss)5
(£19.3m)
Statutory (loss) before tax5
(£20.7m)
Statutory basic (loss) per share5
(10.8p)
Net debt (bank covenant basis)6
£21.0m (2022: £0.2m)
ESG highlights
• First double-materiality assessment
• TCFD reporting progress
•
IDEA launched in new markets, now active wherever
Kin + Carta has a presence
Recommended Cash Offer for Kin and Carta Plc
On 18 October 2023, it was announced that the boards of
directors of Kelvin UK Bidco Limited ("Bidco"), a newly formed
company owned indirectly by funds advised by Apax Partners
LLP ("Apax"), and Kin + Carta had reached agreement on the
terms and conditions of a recommended cash offer made by
Bidco to acquire the entire issued share capital of Kin + Carta
(the "Acquisition") . Under the terms of the Acquisition, Kin
+ Carta shareholders will be entitled to receive 110 pence in
cash for each Kin + Carta share, valuing Kin + Carta at £203
million on a fully diluted basis. This represents a premium of
41% to the closing price on 17 October 2023. The Acquisition
is conditional inter alia on approval by the Company's
shareholders and certain regulatory approvals. Completion of
the Acquisition is currently expected to take place in the first
quarter of 2024.
1 All consolidated income statement measures reflect the results from
continuing operations. Discontinued operations in 2022 include the results
of three businesses, Incite, Edit and Relish, which were divested in the
period. Refer to note 8 of the Consolidated Financial Statements for details
of discontinued operations.
2 Net revenue is defined as revenue less project-related costs as shown
on the consolidated income statement. Project-related costs comprise
primarily of certain third-party expenses directly attributable to a project.
3 Adjusted results exclude adjusting items to reflect how management
assesses and monitors the ongoing financial performance of the Group.
Refer to note 7 of the Consolidated Financial Statements for further
details.
4 Adjusted results for the year to 31 July 2022 have been restated to reflect
the reclassification of the share-based payments charge from adjusted
results to adjusting items and the restatement of depreciation on
investment property. The latter arose from an accounting policy change
to measure investment property using a fair value model, which has been
applied retrospectively. Refer to note 1 of the Consolidated Financial
Statements for further details.
5 Statutory results for the year to 31 July 2022 have been restated to reflect
the restatement of depreciation on investment property, which arose
following an accounting policy change to measure investment property
using a fair value model, which has been applied retrospectively.
6 Net debt as a measure for bank covenant purposes. The reconciliation and
definition is set out in the adjusted performance measures section.
7 Like-for-like growth in relation to net revenue is defined as the net
revenue from continuing operations at constant currency and excluding
acquisitions when comparing the current period to the prior period.
8 The reconciliation and definition is set out in the adjusted performance
measures section.
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 weighted value
of the qualified and targeted sales funnel.
Financial review
Operational review
• Net revenue² of £192.0 million from continuing operations
up 1% year-on-year (“YoY”) and down 11% on a like-for-
like7 basis (“LFL”) due to macroeconomic challenges
• Net revenue from key financial services,
public sector, and agriculture industry
sectors grew 21% YoY
•
•
•
•
•
•
•
•
•
Americas net revenue² grew 2% YoY (8% decline on a
LFL basis7) to £134.8 million, representing 70% of Group
net revenue
Europe net revenue² declined 1% YoY (16% decline on a
LFL7 basis) to £57.2 million, representing 30% of Group
net revenue
Sales backlog9 of £97 million, up 1% YoY, sales pipeline9
of £110 million (FY22: £174 million) down in total, but up
on a like-for-like basis which excludes the prior year’s
two unusually large but low probability opportunities in
the UK
Adjusted operating profit3 of £18.5 million (FY224: £22.4
million) reflecting previously announced market volatility
and headwinds
Statutory operating loss of £19.3 million (FY225: loss £14.1
million) driven by non-cash goodwill impairment in the UK
and acquisition-related charges of £34.1 million which are
recorded as adjusting items
Adjusted EBITDA3 £22.8 million (FY224: £26.3 million)
Statutory basic loss per share was 10.8p (FY225: 8.0p
loss). Adjusted basic earnings per share3 decreased by
20% from prior year to 8.7p4
Adjusted operating cash inflow before working capital,
interest and tax8 of £23.9 million (FY22: inflow of £26.0
million)
Statutory operating cash outflow before working capital,
interest and tax of £1.1 million (FY22: inflow of £19.2
million). Reduction driven by FY23 acquisition-related
deemed remuneration payments of £16.2 million (FY22:
nil) and FY23 customer litigation costs of £3.6 million
(FY22: £0.4 million)
• Net debt for bank covenant purposes6 of £21.0 million
(FY22: £0.2 million); net debt to adjusted EBITDA ratio 1.04
times (FY22: 0.01 times)
• The Group’s client concentration
increased year on year. This includes the
Company’s largest client which comprises
25% of total net revenue compared to 12%
in prior year
• The market slowed significantly in
Q2, presenting fewer new business
opportunities as companies scrutinised
their project spending. Widespread
macroeconomic volatility led to extended
sales cycles, cautious client spending, and
intense competition
• New client wins including America's
largest automotive manufacturer,
Japanese multinational technology
company, S&P 400 automotive group, US
National Veterinary Associates and £44.2
million of UK Public Sector contracts
• Acceleration of margin efficient nearshore
delivery in Latin America and South East
Europe to 40% of total delivery headcount
• c.£2 million annualised reduction in selling
and admin costs improves cost structure
• Data & AI proposition scaled as priority
launch partner for Google’s generative
AI platform, and as one of the first
businesses to access Microsoft’s
generative AI platform
• Kin + Carta awarded 2023 Google Cloud
Industry Solution Services Partner of
the Year Award for Retail Digital Growth,
and Sustainability Changemaker 2023
Microsoft US Partner of the Year Award
• Completion of Forecast Data Services
acquisition, deepening data & AI
capabilities
• Successful execution of Double
Materiality Assessment and further ESG
improvements
02 |
kinandcarta.com
Building a world that works better for everyone
| 03
Overview Our business at a glance
Kin + Carta is a digital
transformation consultancy
We provide high-value digital transformation services
to enterprise clients, using an efficient distributed
delivery model, in partnership with the world’s leading
technology companies.
Providing business
critical technology
and data services
For more info
see page 22
Identify, prioritise and
plan digital innovation and
investments
Maximise the potential
of data and artificial
intelligence
Strategy + Innovation
Data + AI
Build and modernise
mission critical cloud
applications
Design and build
intelligent experiences
powered by data
Support, grow and
optimise valuable digital
assets
Cloud + Platforms
Experience + Product
Managed Services
Net revenue by enterprise1
Net revenue by sector1
10%
Revenue from
enterprise clients*
Revenue from
non-enterprise clients**
10%
4%
3%
4%
7%
36%
90%
14%
22%
Financial services
Retail and distribution
Industrials and agriculture
Transportation
Public sector
Healthcare
Technology, digital and media
Other
* Enterprise client profiles are c.$1Bn+ in revenue and often multinational businesses.
This includes government-backed Public Sector.
** Non-enterprise client profiles are smaller in size than enterprise clients and are
high-potential catalysts to new technologies, new sectors, or new markets.
1 Continuing operations only. Discontinued operations in 2022 include the results of three businesses, Incite, Edit and Relish, which were divested in the period.
Refer to note 8 of the Consolidated Financial Statements for details of the discontinued operations.
With over 1,800 Kin across
three continents
Onshore
High-touch sales, consultancy
and domestic delivery
Nearshore
Scalable, margin-efficient,
high-quality delivery
Portland
Chicago
Denver
Colombia
Argentina
Americas
600
Onshore Kin
390
Nearshore Kin
58%+
Engineers
For more info
see page 32
Working in a diverse and
inclusive engineering culture
London
Manchester
Liverpool
Edinburgh
Bristol
New York
Netherlands
Greece
Bulgaria
North Macedonia
Kosovo
Poland
Europe
500
Onshore Kin
350
Nearshore Kin
61%+
Engineers
Why Kin + Carta?
• Digitally native
consultancy built to
change and adapt
• Market leading
data and advanced
artificial intelligence
capabilities
• Experts in modern
software design and
engineering
• Small enough to pivot
quickly to changing
market needs
• Large enough to take
on our client's biggest
challenges
• High-value domestic
consultancy with
margin efficient
nearshore delivery
• Partnered with the
world's leading
technology companies
• Social responsibility
as a supply and
demand differentiator
04 |
kinandcarta.com
Building a world that works better for everyone
| 05
Overview
Our purpose framework
Purpose: Building a world that works
better for everyone
We use business as a force for good, measuring our impact on
people, planet and profit, and ensuring inclusivity, sustainability
and accessibility are integrated in what we do and how we do it.
G
Governance
We have committed to continuous inquiry of what responsible
business can achieve as we serve all of our stakeholders.
We are legally accountable to this commitment having
changed our articles of association to become the first B Corp
certified company on the London Stock Exchange.
S
P e o p l e
Social
Empowered by people
Kin + Carta is committed to the continuous
development of our talent teams by instilling
the IDEA philosophy and principles that drive
inclusion, diversity, equity and accessibility in the
workplace.
Our values
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 to 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.
E Environmental
S Social
G Governance
E
t
e
n
a
l
P
Environmental
Respecting our planet
Understanding our contribution to
global warming and other planetary
crises is core to responsible
business conduct. Measuring
and managing our own emissions
is the foundation upon which
greater positive environmental
impact will be built.
P
r
o
f
i
t
Responsible return
Our clients want to work
with businesses that reflect
their values and operate
in a responsible way. Kin
+ Carta’s purpose and B
Corp status are demand and
supply differentiators that
help fuel the growth of
the business.
Our cultural
framework
Across Kin + Carta, we make a
significant investment in creating
a values-based environment that
supports and develops our people.
This empowering approach sets our
people up to consult with our clients for
the highest impact to customers and
communities, with a keen emphasis on
continuous improvement and learning at
the level of both IQ and EQ.
EVP
Purpose
& culture
Professional
growth
Personal
wellbeing
Recognition
& reward
Our employee value proposition (“EVP”)
is focused on enhancing culture and
employee experience.
For more info
see page 64
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.
For more info
see page 47
Governance
People
Community
Environment
Clients
06 |
kinandcarta.com
Building a world that works better for everyone
| 07
Overview Chairman’s statement
“ The leadership
team took
action to respond to
swiftly deteriorating
market conditions
by refining the
market focus of the
business and
prioritising client
success.
John Kerr
Chairman
Challenging year
The year proved to be challenging
for the global economy and for
many companies with the effects
of inflation, higher interest rates
and slowing economic growth
creating uncertainty and lowering
confidence. This had a material
effect on the technology services
market as clients re-evaluated
investment levels and pace of
delivery with far more caution and
price sensitivity, which reduced the
predictability and visibility of future
revenue.
Kin + Carta was no exception to
this trend, and the leadership team
took action to respond to swiftly
deteriorating market conditions
by refining the market focus of
the business and prioritising client
success. The team also adjusted
the business model towards lower
cost nearshore delivery centres and
adding critical skills in future-proof
services such as data and artificial
intelligence.
For a business known for its focus
on talent and culture, these steps
have required some very difficult
decisions to be taken to reduce
headcount in some areas. However,
these tough decisions have been
necessary, in order to secure the
future success of our clients and
our people.
It is encouraging that enterprise
businesses remain committed to
long-term digital transformation
roadmaps as they execute
technology-driven plans to remain
competitive. This maintained
demand enables Kin + Carta to
continue to grow pipeline. Although
there are signs that the market
environment is stabilising, we are
minded to be cautious as the
near-term environment remains
unpredictable, as widely reported
across the industry.
Focus on clients
Our continued focus on serving our
clients has served the Company
well. Large enterprise clients
account for an increasing share of
the Company’s revenue, with net
revenue from our top 20 clients
increasing by 20% year-on-year
as we partner to deliver their most
important technology initiatives.
In recent years, we have grown
our nearshore presence in Latin
America and in South East Europe.
This enables clients to access
high-value skills at a lower delivery
cost, while helping the Company to
achieve competitive rate structures
in an increasingly price sensitive
market, while maintaining high
levels of service quality.
Focus on people
As already indicated, it has
been a challenging year for our
employees, which included
headcount reductions. The volatile
market and changes we instituted
challenged many leaders to
embrace change and grow their
roles, while continuing to deliver
leading-edge work for our clients.
This has allowed many of our
best employees to gain valuable
experience, while developing
market-leading new skills. As a
Company, we have also remained
true to our B Corp principles – it
remains a priority for us to attract
and retain the best talent from all
available sources.
I would like to extend my personal
thanks and the thanks of the Board
to all of our employees for their
ongoing commitment and loyalty
this past year; their contribution
has been exceptional in a
challenging environment.
environment is stabilising, we are minded
“ Although there are signs that the market
to be cautious as the near-term environment
remains unpredictable.
• Partnerships – we have
continued to invest in
go-to-market relationships with
technology and cloud service
providers such as Microsoft and
Google.
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 processes and
systems to ensure oversight of
the business meets the standards
expected by our shareholders.
The Board and its three sub-
committees – Audit, Remuneration
and Nomination – operate
effectively.
During the year, Nigel Pocklington
was appointed Senior Independent
Director.
The entire leadership team
has demonstrated agility and
adaptability in a fast-evolving
market and in particular, I would
like to recognise the efforts of
our Chief Executive Officer, Kelly
Manthey, in her first year in the role.
Kelly was confronted with the most
challenging market environment the
Company has faced in quite some
time, and she responded in a way
that underscored both her qualities
and her ability to deliver at the
highest level.
Focus on performance
In previous communications to
you, I have emphasised three key
priorities, which remain unchanged:
• Focus – the Company has
completed the transition to a
pure-play digital transformation
business following the
divestment of non-core
activities. The principle has
been underlined by the
continued focus on our most
important clients.
• Geographic expansion – the
Company has invested in
acquiring lower cost nearshore
capabilities in South East
Europe and in building key
capabilities in Latin America.
As a result, the percentage
of the Company’s headcount
based in nearshore locations
increased to 40% during the
year. We expect that this trend
will continue.
08 |
kinandcarta.com
Building a world that works better for everyone
| 09
Overview Chairman’s statement
continued
Our business proposition
Recommended Cash Offer for
Kin and Carta Plc
On 18 October 2023, it was
announced that the boards of
directors of Kelvin UK Bidco Limited
("Bidco"), a newly formed company
owned indirectly by funds advised
by Apax Partners LLP ("Apax"), and
Kin + Carta had reached agreement
on the terms and conditions of a
recommended cash offer made by
Bidco to acquire the entire issued
share capital of Kin + Carta (the
"Acquisition") . Under the terms
of the Acquisition, Kin + Carta
shareholders will be entitled to
receive 110 pence in cash for each
Kin + Carta share, valuing Kin +
Carta at £203 million on a fully
diluted basis. This represents a
premium of 41% to the closing price
on 17 October 2023. The Acquisition
is conditional inter alia on approval
by the Company's shareholders
and certain regulatory approvals.
Completion of the Acquisition is
currently expected to take place in
the first quarter of 2024.
We believe the offer to acquire
Kin + Carta by Apax represents
an excellent opportunity for
the Company to accelerate
ambitious growth plans and
scale the business, building on
the acquisition and integration
of leading data and technology
companies, the development of
valuable technology partnerships,
and the creation of a strong
portfolio of enterprise clients.
I would like to thank the Board for its
hard work and support to the new
leadership team over the past year.
John Kerr
Chairman
1 November 2023
Our long-term drivers for scaling a successful,
high performance DX consultancy
Marketplace
Approach
Growth History
Pure play digital
transformation with a focus
on data transformation
and modern app
development. Going to
market at the intersection
of industry sectors, digital
transformation services,
and the world’s leading
technology partners.
The first certified B Corp
company on the London
Stock Exchange, Kin +
Carta believe in business
as a force for good, actively
measuring impact on
people, planet and profit,
as a diverse and inclusive
business.
Kin + Carta has grown
organically at 15% CAGR*
from FY17 through to the
end of FY23.
* Compound annual net revenue growth
rate from the start of FY17 to the end
of FY23, excluding the impact of exiting
non-digital-transformation business in
Europe between FY17 and FY19.
Clients
Capability
Delivery
Kin + Carta serves a blue
chip enterprise client base
of global private sector
businesses and national
public sector government
programmes. 90% of net
revenue is from resilient
enterprise clients.
Strategic acquisition and
Data & AI proposition
development have put Kin
+ Carta at the forefront
of the high-demand data
transformation market
with advanced and proven
artificial intelligence
capabilities in partnership
with Microsoft and Google.
Margin efficient distributed
global delivery with high-
quality nearshore delivery
centres in Latin America
(Argentina and Colombia),
and South East Europe
(Bulgaria, North Macedonia,
Kosovo, and Poland).
Culture
A differentiated and
responsible approach to
attracting, developing, and
retaining the best talent
in the market. Recognised
as ‘Best large firm to work
for’ 2023 by Consulting
Magazine for a third
consecutive year.
For more info on Data & AI see page 26
For more info on Global Delivery Model see page 32
For more info on our culture see page 66
For more info on Market overview see page 18
10 |
kinandcarta.com
Building a world that works better for everyone
| 11
Overview Strategic
Report
Strategic Report
Contents
Chief Executive Officer’s statement
Market overview
Business model
Strategy
Strategy in action - Service lines
Strategy in action - Sectors
Strategy in action - Partners
Our global delivery model
Strategic progress
Key performance indicators
Chief Financial Officer’s review
A responsible business
Risk management
14
18
22
24
26
28
30
32
34
36
40
44
112
Read more about our
responsible business
on page 44
Read more about our data
case study
on page 27
12 |
kinandcarta.com
Building a world that works better for everyone
| 13
Chief Executive Officer’s
statement
“ As the digital
transformation
market experienced
widespread
volatility, Kin + Carta
used the disruption
to accelerate
operational change.
Kelly Manthey
Chief Executive Officer
FY23 was undoubtedly a
challenging year. As the digital
transformation market experienced
widespread volatility, Kin + Carta
used the disruption to accelerate
operational change.
The market slowed significantly in
the first half as clients responded
to fears of a global recession and a
prospective banking crisis.
Sales-cycles lengthened, project
ramp-up times extended and
revenue slowed with the weakest
areas comprising sub-enterprise
scale-up clients or those
companies more exposed to a drop
in consumer spending. There were
substantially fewer new business
opportunities in the market as
many companies paused spending.
Fewer opportunities led to more
intense price competition as our
larger peers leveraged their scale
and offshore operations. The
net impact required a material
reduction to our previous growth
expectations.
Despite the volatile markets, we
began the second half with a
stronger order backlog and an
expectation that organic growth
and profitability would improve in
H2. Net revenue grew sequentially
in Q3 and Q4 in line with reduced
expectations, whilst the
bottom-line beat expectations
with a combination of assertive
cost controls and a strong focus
on clients. Net revenue for the year
came in at £192.0m and although
this was only marginally ahead
of the FY22 result, it represents
a resilient performance in what
was an unexpectedly challenging
marketplace. Statutory revenue for
the year was £195.9m.
Focus on enterprise
client foundation
Our focus on clients was paramount.
The client base strengthened,
reflected in the makeup of our Top
20 clients and 90% of total revenue
derived from enterprise grade
businesses (organisations with
excess of $1 billion net revenue). In
a highly competitive new business
environment we took steps to better
reflect our client’s ecosystems with
a connected go-to-market strategy
across sectors, services, and
technology partners. Consistency
of high-performance consulting
and delivery was enhanced by the
development and application of
the ‘Kin + Carta Way’, a proprietary
global delivery methodology built
for our client’s success that we will
continue to expand in FY24.
While demand from existing
enterprise clients was more
resilient than the churn
experienced from our smaller
clients, winning new business
remained challenging compared
to prior years and we experienced
continued volatility within the
enterprise client base. Many of our
top enterprise clients maintained or
increased investment in their digital
transformation roadmaps, and we
saw a 20% increase in net revenue
from our Top 20 global clients
this year compared to our Top 20
clients in the prior year. Our largest
client grew from 12% of net revenue
last year to 25% of net revenue
in FY23 which has been both a
testament to their confidence in us
and a risk to manage going forward.
By continuing to focus on delivering
for our clients, we also hope to
manage the potential instability
caused by executive turnover at
some enterprise clients.
Adding new enterprise wins
Despite the tougher new business
market, significant wins were
achieved. These included America's
largest automotive manufacturer, a
Japanese multinational technology
company, S&P 400 automotive
group, US National Veterinary
Associates in the Americas, and
£44.2 million of public sector wins in
Europe including the UK Department
for Education, Department for
Work and Pensions, Department
for Levelling-Up, Housing and
Communities, and the BBC.
“ Data & AI has been our fastest growing
service line and we continue to see
increased demand for the transformational data
services that increase revenue, drive efficiencies
and enable AI ambitions.
Accelerating cost reductions
Reorganisation around key industry
sectors with sales, subject matter
experts and delivery closer to
clients, and an acceleration and
expansion of nearshore delivery
and operations capabilities
helped to preserve our margins
and improve our cost base. Latin
America headcount scaled by 44%
to 390 employees bolstered by the
opening of new offices in Colombia
and Buenos Aires. The integration
of the prior year’s acquisition
of the Melon Group in Bulgaria,
Kosovo and North Macedonia has
progressed well, and we’ve opened
a new shared services centre
in Bulgaria to further improve
operational costs.
Leading with what’s next:
Data and AI
Last year I told you that the
importance of data transformation
services would continue to rise.
In FY23, Data & AI has been our
fastest growing service line and
we continue to see increased
demand for the transformational
data services that increase revenue,
drive efficiencies and enable AI
ambitions. Kin + Carta’s data & AI
capabilities have deepened with
the acquisition of Forecast Data
Services in Europe, bringing high
performance data scientists and
engineers, an enterprise client
base, specialist nearshore teams in
Poland, and valuable relationships
with the universities that fuel supply
of talent.
In spite of the volatile conditions,
we continued to innovate. As a
priority launch partner for Google
generative AI, and with early access
to Microsoft’s generative AI platform,
our engineers guided enterprise
clients through the use cases that
make generative AI a viable and
powerful tool for their businesses.
Our role is to assess, enhance and
deploy technologies that drive
value for our clients, and we will
continue to be at the forefront
of the generative AI wave by
favouring building, experimentation
and optimisation over thought
leadership and hype cycle.
AI is not a standalone technology. It
is dependent on a complementary
data ecosystem, and this is where
generative AI enthusiasm will
translate to material revenue in
the short to medium term.
Kin + Carta’s data & AI proposition
is a direct enabler of generative
AI ambitions, starting with core
data foundations and governance,
then the application of enterprise
analytics and insights, building
custom data products that provide
differentiation for our clients,
and the deployment of machine
learning and artificial intelligence to
enterprise use cases. It is because
of Kin + Carta’s end-to-end
capabilities across this domain,
developed with the world’s leading
technology partners Microsoft and
Google, that we are being trusted to
lead the development of generative
AI strategy and execution for global
enterprise clients.
14 |
kinandcarta.com
Building a world that works better for everyone
| 15
Strategic Report Chief Executive
Officer’s statement
continued
The Company’s employee
experience, founded on a
high-performance and
conscientious engineers’ culture,
was widely recognised across our
regions and offices including:
• Consulting Magazine’s ‘Best
firms to work for’.
• Women’s Choice Awards ‘Best
companies to work for’.
• Great Places to Work Awards
‘Best workplaces for tech,
wellbeing and as a large
organisation’.
• Top Places to Work, for
‘leadership, purpose and values,
professional development,
employee wellbeing,
compensation and benefits’.
The speed and effectiveness of our
response to market disruption is
a measure of the professionalism
and agility that our leadership
team have embodied this year. I am
deeply proud of their innovation,
empathy and resolve during an
extremely complex period.
Kelly Manthey
Chief Executive Officer
1 November 2023
Strengthened technology
partner relationships
Big Tech is quickly evolving to
put themselves in the strongest
position to capitalise on AI and
the strength of Kin + Carta’s
relationships with technology
partners continues to be a key
value driver. This year Kin + Carta
was named Cloud Partner of the
Year in Retail by Google, while
Microsoft awarded Kin + Carta
Partner of the Year Sustainability
Changemaker for the second
consecutive year. Further progress
in the MACH partner ecosystem
(micro-services, API-led, cloud
native and headless), and data
domain specialists like Databricks
ensure that our clients benefit from
leadership in the most progressive
platforms.
A winning and
responsible culture
Kin + Carta’s commitment to
B Corp principles and operating
as a higher standard, more
responsible consulting business
continues to shape progress.
MSCI and Sustainalytics ESG
ratings have improved in FY23,
climate disclosure TCFD (Task
force for Climate-related Financial
Disclosure) reporting has been
delivered, and the Company has
successfully completed its first
double materiality assessment.
Kin + Carta’s vibrant IDEA
(Inclusion Diversity Equity
and Accessibility) programme
focused on ‘responsibility in the
everyday’ driving progress in
IDEA engagement, standards and
integration across the business.
16 |
kinandcarta.com
Building a world that works better for everyone
| 17
Strategic Report Market overview
Market context
Macro headwinds
Global economic volatility slowed growth across the
market as sales cycles lengthened and projects took
longer to ramp-up. Cautionary client spend resulted
in smaller, more incremental deals as businesses
moved to protect cash. Enterprise organisations seized
the opportunity to fast-track reorganisation and
restructuring, further tempering progress. As global
interest rates rose, tech scale-ups lost funding, and
lowering consumer confidence affected budgets in
industry sectors closest to the disruption. Conversely,
well-funded and resilient sectors like financial services
and the public sector continued to deliver their digital
transformation roadmaps.
Our response
Improvements to the cost structure were executed in
all regions. Selling and administrative costs were driven
by the acceleration of nearshore delivery and migration
of operations headcount nearshore, bolstered by a
restructure of domestic US/UK headcount to further
drive nearshore adoption. Pricing power was negotiated
with clients with a focus on high demand capabilities
increasing pricing leverage. The business accelerated
its organisation around resilient industry sectors, and
strengthened the portfolio mix with a higher percentage
of enterprise client profiles. Investment was increased
in the high-demand Data & AI capability, including the
acquisition of Forecast Data.
Market drivers
Regional context
Europe
Despite a challenging UK economy abruptly impacting
business in the first half, notably in the tech scale-up
sector, significant wins were achieved in the resilient UK
Public Sector, including notable Data & AI projects. Data
capabilities were also bolstered with the acquisition of
Forecast Data.
Americas
While cautionary client spend symptoms remained
consistent in the Americas, the US economy proved
more resilient. Key clients continued to increase
their digital transformation investments with
Kin + Carta, notably in financial services, agriculture,
and distribution, with high capability demand for Data &
AI services.
Link to FY24 strategic priorities
Optimise our
foundation
Focus
on core
Focus on what
clients need next
Trend
Description
Impact
How we are responding
Link to strategy
Digital first-
consumers
Acceleration of digitally-led
experiences as enterprise businesses
rethink bricks and mortar investments
As digitally native brands set the pace, customer expectations
are rapidly evolving. Cross-platform speed, efficiency, connected
experience, and secure predictive data applications have
become the baseline.
Kin + Carta builds intelligent experiences, powered by data and enabled by cloud computing. We
create the technical foundations for our client’s success and continuously run, grow and optimise those
products and services to meet changing consumer and enterprise needs.
Increased
efficiency
Products and services that drive
revenue and operational efficiency
Global economic pressure, volatile economies, high interest
rates and tempered consumer confidence are increasing
the importance for modern digital products and services to
contribute to top and bottom lines.
Kin + Carta provide cost-saving efficiencies and distributed global delivery with speed to value and
clear return on investment to clients. Our innovation is shaping the future of our clients businesses and
defining how they differentiate and grow in a competitive market and pressured economic climate.
Distributed
delivery
Increased demand for
margin-efficient delivery
Tightened budgets have heightened expectations that digital
transformation consultancies can provide high-quality nearshore
and offshore delivery resources at competitive rates.
Kin + Carta deploy a distributed global delivery model that blends high-performance domestic
leadership close to our clients with high-quality, margin efficient technical delivery from nearshore
delivery centres in Latin America and South East Europe.
Data
foundations
Increased demand for high-quality
data services
Enterprise businesses need to secure, organise, democratise and
deploy their commercial and operational data, but face outdated
and siloed systems that limit progress and return.
Artificial
intelligence
Increased demand for artificial
intelligence
High profile advances have placed artificial intelligence,
generative artificial intelligence, and machine learning on
executive agendas.
Kin + Carta offers enterprise clients full-service data capabilities from critical data foundations
through to differentiating intelligent experiences. Partnering with Microsoft, Google and Databricks, we
build repeatable, high-value data solutions and enable our clients to establish high-performance data
organisations within their businesses.
Kin + Carta have a proven track record of delivering advanced artificial intelligence applications that
answer valuable enterprise use cases. Working in partnership with Microsoft and Google, Kin + Carta
have early access to the world’s leading generative artificial intelligence platforms that are disrupting
what we are able to build for our clients, and how we are able to build it.
18 |
kinandcarta.com
Building a world that works better for everyone
| 19
Strategic Report
Market overview
continued
Sector overviews
Financial services
Largest sector in the digital
transformation market with
enhanced buying power in the
year ahead.
Financial services proved resilient
across the market through FY23
and a source of growth for Kin +
Carta in Europe and the Americas.
Looking to FY24, high interest
rates are generating significant
net interest income, bolstering
financial services sector budgets
for transformational digital services
as financial brands continue
to accelerate their technology
roadmaps.
Public sector
Long-term multi-year contracts
prove resilient against backdrop
of economic volatility.
Government-backed UK Public
Sector was one of Kin + Carta’s
fastest growing sectors in FY23,
with the expectation that this
momentum will continue in FY24.
Multi-year, large scale contracts
focused on the digitisation
and efficiency of sustainable
public services continue to be
commissioned and delivered in-line
with long-term government policy.
Agriculture
Data-driven technology is the
future of the rapidly evolving
agriculture sector.
Market conditions in Kin +
Carta’s third largest vertical are
a catalyst to new companies and
new technology in the sector
as deglobalisation drives higher
domestic production. Market
leaders are commissioning and
deploying practical applications of
artificial intelligence and machine
learning at scale to improve crop
efficiency, manage productivity and
reduce risk.
Retail
Partner innovation is driving
revenue and efficiency in a
complex trading environment for
the sector.
After the post-pandemic boom,
the retail sector has been impacted
by tightened consumer spending
and investment in transformation
roadmaps has eased. Kin + Carta
serve retail clients with leading
partner innovation like
revenue-driving cloud retail search,
and were awarded Google Cloud
Industry Solution Services Partner
of the Year Award 2023 for Retail
Digital Growth.
20 |
kinandcarta.com
Building a world that works better for everyone
| 21
Strategic Report Business model
Summary
Our resources
What we do
How we do it
Kin + Carta provide high-value
digital transformation services
to enterprise clients by
deploying specialist teams in
an efficient distributed delivery
model, in partnership with the
world’s leading technology
companies.
Kin + Carta’s ability to deliver
across the full project
life cycle from strategy
to execution, deploying
seamlessly across multiple
service lines is a key
differentiator.
Strategy + Innovation
Identify, prioritise and
plan digital innovation and
investments.
Data + AI
Maximise the potential of data
and artificial intelligence.
Cloud + Platforms
Build and modernise mission
critical cloud applications.
Experience + Product
Design and build intelligent
experiences powered by data.
Managed Services
Support, grow and optimise
valuable digital assets.
Our people
Kin + Carta has a strong and
diverse engineering culture
and employee proposition that
attracts, develops and retains
the best technology talent in
the market.
Our expertise
A pure-play digital
transformation consultancy
focused on high-value
capabilities and outcomes with
over 1,800 high performance
specialists across three
continents.
Our partnerships
Kin + Carta partners with
Microsoft, Google, Amazon and
the world’s leading technology
companies to drive innovation,
funding, early access to new
technologies, and commercial
opportunities.
Our sustainable mindset
We believe in using business as
a force for good. Kin + Carta is
the first certified B Corp on the
London Stock Exchange.
Our ESG enablers
•
Inaugural double-materiality
assessment
• The B Corp framework
•
IDEA policy and global
programme
Kin + Carta go-to-market at the intersection of industry sectors,
transformational services and technology partnerships, driven
by the Kin + Carta Way, a proprietary delivery methodology
that increases growth and provides a competitive advantage for
clients. Work is delivered through high-quality, margin efficient
distributed global delivery hubs across US, Latin America, UK,
and South East Europe.
Kin + Carta Way
Delivery Methodology:
For more info
see page 33
Sector
Service
Partner
Distributed
Global Delivery:
For more info
see page 32
The value
we create
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 approach
to measuring and managing
our impact on people,
planet and profit as a
globally certified B Corp
Company.
22 |
kinandcarta.com
Building a world that works better for everyone
| 23
Strategic Report Strategy
Our long-term strategy
Scaling a high-performance global DX
consultancy through:
• Delivering high-value data transformation and modern
application development outcomes for enterprise
clients in resilient industry sectors
• Going to market at the intersection of services,
sectors, and partnerships
• With margin-efficient distributed global delivery
• As a responsible B Corp Company
Our growth levers
Services
As digital transformation
rapidly evolves, we
continually evaluate new
opportunities to add
complementary service
offerings or capabilities
that enhance client
outcomes. In FY23,
Kin + Carta continued
to deepen Data & AI
capabilities with the
acquisition of Forecast
Data and the expansion
of Generative Artificial
Intelligence practices.
Sectors
Industry vertical growth
is approached 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. In
FY24, focus will increase
on financial services,
public sector and
agriculture.
Partners
Kin + Carta’s
partnerships with
Microsoft, Google,
Amazon 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.
FY24 will see an increased
maturity in our Microsoft
relationship as we
execute our strategy to
serve enterprise clients in
resilient sectors.
Territories
Geographic growth that
brings access to a new
market, clients, capability
or technology. In FY23,
Kin + Carta continued
to expand organically in
Latin America (Argentina
and Colombia), and
further integrated the
FY22 acquisition of the
Melon Group in South
East Europe (Bulgaria,
North Macedonia and
Kosovo), bolstered by the
acquisition of Forecast
Data, including their
Polish delivery hub.
Data & AI
Financial Services
Google
Experience & Product
Public Sector
Microsoft
Cloud & Platforms
Retail & Distribution
Amazon
United States
Latin America
United Kingdom
Strategy & Innovation
Agriculture
Databricks
South East Europe
Managed Services
Manufacturing
CommerceTools
24 |
kinandcarta.com
Building a world that works better for everyone
| 25
Strategic Report Strategy in action
– Service lines
Overview
In FY23, Data & AI has been our fastest growing service line and we
continue to see increased demand for the transformational data
services that drive revenue, optimise margins and enable artificial
intelligence ambitions. Kin + Carta’s Data & AI capabilities have
been deepened with the acquisition of Forecast Data in Europe,
bringing high-performance data scientists and engineers, an
enterprise client base, specialist nearshore teams in Poland, and
valuable relationships with the universities that fuel supply.
As a priority launch partner for Google generative AI, and with early
access to Microsoft’s generative AI platform, our engineers guide
enterprise clients through the use cases that make generative AI a
viable and powerful tool for their businesses. Our role is to assess,
improve and deploy technologies that drive value for our clients,
and we will continue to be at the forefront of the generative AI
wave by favouring building, experimentation and optimisation over
thought leadership and hype cycle.
Deep dive – Data & AI
Data foundations are the enabler of
artificial intelligence ambitions
Artificial intelligence is not a standalone technology. It is dependent
on a complementary data ecosystem, and in the short to medium
term, this is where generative AI enthusiasm will translate to
material revenue. Kin + Carta’s Data & AI proposition is a direct
enabler of generative AI ambitions, starting with core data
foundations and governance, then the application of enterprise
analytics and insights, building custom data products that provide
differentiation for our clients, and the deployment of machine
learning and artificial intelligence to enterprise use cases. It is
because of Kin + Carta’s end-to-end capabilities across this
domain, developed with the world’s leading technology partners,
that we are being trusted to lead the development of generative AI
strategy and execution for global enterprise clients.
Our Data & AI solutions:
Data foundations & governance:
Critical infrastructure, data
processing and quality that
increase efficiency and enables
innovation
Analytics and insights:
Reporting and dashboards that put
business intelligence in the hands
of decision makers
Data COE and enablement:
High performance, centralised
data teams that increase velocity,
accelerate data maturity, develop
standards and practices, and
de-risk the pace of progress
Data products:
Bespoke data tools that create
competitive advantage
Artificial intelligence &
machine learning:
Algorithms that automate
decisioning, personalise customer
experiences, and optimise
operations
Strategic Report
Case study
Automotive data transformation
Challenge
This automotive giant designs,
builds and distributes a wide range
of vehicles. Headquartered in the
U.S., it operates on a global scale.
Even though the company had
C-level commitment to adopt
Azure and cloud infrastructure,
organisational and technical issues
slowed its migration progress.
As cloud platforms matured
and became access points for
emerging tech such as Large
Language Models ("LLMs"), and
with thousands of data scientists,
analysts, engineers and other
employees needing centralised
storage for petabytes of data and
scalable compute, accelerating
modernisation efforts became a
high priority.
Outcome
Users have confidence in the
integrity of organisational data and
are empowered to make informed
decisions that support business
goals. The power of Azure provides
a secure data foundation and a
launch pad for various impactful
data products:
• Powerful data syndication
capabilities
• Automated monitoring of data
quality
• Well-documented and
discoverable data assets
• Reduced development and
delivery time, with less time
spent procuring required data
• Traceable data lineage provides
ability to identify issues and
mitigate compliance risk
• Stringent data security
processes and requirements
limit the exposure of sensitive
data
• Kin + Carta continues to
support the automotive
company as it explores the
potential for new use cases and
further innovation on its Azure
data platform
Approach
Building on a previous project to
evaluate how to maximise business
value with a strategic focus on data,
Kin + Carta was engaged to provide
the blueprint and best practices
to drive the Azure migration. By
leveraging technologies such as
Unity Catalog for Azure Databricks,
MLflow and Azure DevOps and the
company’s existing Azure Data Lake,
our solution included:
• Establishing and running a Kin +
Carta Data Centre of Excellence
integrated into the client’s
data organisation, enabling the
deployment, governance and
value-optimisation of enterprise
data
• Reusable patterns, processes
and tooling to implement
common workflows for pipeline
orchestration
• Targeted inventory of core data
assets to enable projects and
teams that were cloud-ready at
project inception but hindered
by platform immaturity
• Socialisation plan to educate
data practitioners on platform
features and best practices to
prepare teams for onboarding
• Onboarding hundreds of
data practitioners (analysts,
scientists and engineers) for
daily Azure and Databricks
usage
26 |
kinandcarta.com
Building a world that works better for everyone
| 27
Strategy in action
– Sectors
Overview
Kin + Carta focus on resilient industry sectors with the use cases and
funding to invest in large-scale digital transformation programmes.
Our biggest sector is Financial services, the largest sector in the
global digital transformation market, with enhanced buying power
going into FY24. We serve Retail with leading partner innovation
like Cloud Retail Search with Google. Agriculture is a technology
led sector investing in de-risking crop-production through artificial
intelligence and machine learning innovation. UK Government
Public Sector is Kin + Carta’s fastest growing sector with significant
framework qualifications and multi-year contract wins.
Deep dive – Public Sector
Collaborating with you to transform our public sector
Kin + Carta is a trusted digital supplier to the public sector,
dedicated to growing your capability and empowering your teams.
We understand that delivering exemplary digital transformation
isn’t just about technology, it’s about transforming the way we
deliver public services to meet the needs of citizens and our
institutions alike.
In the real world, you don’t need big promises about transformation,
or the endless “exploratories” that accompany them. You need
progress. You need new products and experiences to be designed,
built, deployed, and improved in less time and with greater insight.
You need better ways to collect, analyse and leverage your data to
inform the future.
By combining deep industry expertise, data-intelligence, world-class
engineering and seamless delivery, we’re setting out to prove why
it’s time for a new approach to making progress.
How we add value:
GDS compliance:
We test for quality at every stage
to meet and beat GDS standards
so our clients can be confident that
their project will pass assessment
every time
Reliability:
Our clients trust us to deliver at
pace and within the Technology
and Code of Practice, protecting
their budgets and timescales
Creativity and innovation:
Compliant shouldn’t mean dull.
We always consider where we
can embed simplicity through
innovation with the touches that
enhance user experience
Diverse, cross-functional teams:
Sharing extensive public sector
experience, our cross-functional
blended teams offer a complete
service with increased learning
opportunities for our client's teams
Data-driven decision making:
Data is at the heart of our decision
making, and we are leading the
charge in the use of machine
learning and AI to deliver insights
Inclusivity:
Using data doesn’t remove bias and
that is why we intentionally build
products with inclusivity as part of
the foundation
Strategic Report
Case study
Public Sector strategy
Challenge
The UK has a legally binding target
to achieve net zero carbon by
2050, and interim targets to reduce
public sector carbon emissions
by 78% by 2035. Government
departments report publicly on
their progress against these targets
via the Greening Government
Commitments ("GGCs"), as well as
their own published Annual Report
and Accounts.
Kin + Carta partnered with net
zero carbon experts from fellow
B Corp, Gemserv, to give a large
government department (the
"department") the insight it needed
to make informed decisions on
how it can achieve net zero carbon
for all three emissions scopes, and
how soon this can realistically be
achieved.
Approach
Between January and
September 2023, we worked
with representatives from across
the department to review its
developing Sustainability Strategy,
specifically with regards to net zero
carbon, enabling the department
to begin measuring, reporting
and reducing the full range of its
Scope 3 carbon emissions. We
analysed current emissions data,
recommended improvements and
created a reporting and reduction
plan to support the department’s
strategy. Finally, we helped the
department tackle the lack of
clarity and understanding about
how to contribute to net zero
reductions, by providing material
and guidance for their sustainability
champions, and detailed awareness
engagement exercises with their
senior leadership team.
Outcome
The renewed clarity and
enthusiasm that we have helped
to foster will underpin changes in
approach within the department
itself. As the department is one
of the largest in government,
they can have a major impact
in carbon reduction and helping
the government meet its carbon
targets. Through our partnership,
the department will go even
further by incorporating our
recommendations into their action
plans around major hotspot areas.
28 |
kinandcarta.com
Building a world that works better for everyone
| 29
Strategy in action
– Partners
Overview
Kin + Carta’s relationships with the world’s leading cloud and
Platform vendors continues to be a catalyst for growth at Kin +
Carta. As partnerships move into it’s fourth year of consistent
growth, new revenue in existing accounts and new account
acquisitions driven by our partnerships is a continuous focus.
We retained Managed Partner status across all three cloud
platforms, becoming a multi-winning partner of the year with
awards coming from both Google and Microsoft for our channel
practices built around them and became a launch partner for
many new services across Data & AI, and app development. We
continue to focus on the products that are seeing the highest
demand from our clients and wrapping our consulting services
around them, aligning to our partners’ core verticals and to working
collaboratively to drive value mutually for our clients.
Leveraging AI and augmenting our client’s data
is the game changer
Kin + Carta’s existing footprint in the AI and Search space has put
us in a strong position to support our clients with the biggest move
forward in new technology since the launch of the Apple App Store.
Our Global Strategic partners, Microsoft and Google, are at the
forefront of this change and our clients are looking for us to be
connected to help them access the benefits of this emerging
technology. As a result of this, we have added additional cloud
ecosystem partners to support our strategy with the addition of
Databricks, MongoDB, Starbust and Nvidia, all which are addressing
the need to move to, and modernise, data in the cloud.
Aligning platforms to our core services
Platform modernisation continues to be a need for our clients
particularly in the Content and Commerce space. We have a
new range of options available to our clients depending on their
requirements and we have continued our partnerships with SAP,
Optimizely, Contentstack, Contentful, Commercetools and VTex to
make sure we have the strongest understanding and alignment to
the technology stacks of choice for the enterprise customer. We
have also continued our relationship with the MACH alliance and its
community of partners that is gaining accelerated traction in the
market. Our platforms are all underpinned by our Cloud Partners
Google, Microsoft and AWS.
Our partnerships can be
categorised into three areas:
Platform partners:
Microsoft, Google Cloud and
Amazon Web Services (“AWS”) –
these are the public clouds that our
clients want us to build and host
their services in
Product partners:
SAP, Optimizely, Commercetools,
Vtex, Contentstack Contentful
and Databricks – 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 and Appian
– these are the technical tools we
use to create our solutions for our
clients
Strategic Report
Case study
Scaling data with Google Cloud
Outcome
Not only does this solution save
GFS money, but can be scaled up
and down when required. Data is
accessed via a standardised API
layer built and deployed within
GKE. This takes advantage of
the automated scaling and
high-availability across regions and
multiple zones.
• 20% increase in segment of
users ordering 90% or more
online
• 99% improvement to customer
feature requests
• 25% to 96% adoption increase
in Canada
Challenge
Gordon Food Service ("GFS") is the
largest family-operated broadline
food distribution company in North
America. A commitment to great
products and quality service has
been the recipe for success with
a client base of around 100,000
customers including schools,
hospitals and restaurants.
GFS’s challenge was that its data
was coming from a variety of
consumer applications directly
connected to multiple data sources
drawn from both the cloud and the
business premises. The end result?
Varying views and dependencies
for database administration,
causing rigidity. GFS had a real
operational need for this data,
including the ability to:
• Manage pricing and promotions
• Track historical product price
changes
• Analyse purchase behaviour
But the difficulty in accessing the
numbers that mattered meant that
opportunities were being missed.
Approach
Our solution was to bring
everything together in one place.
We created data pipelines to
supply an Integrated Consumption
Data Store ("ICDS") that supported
GFS’s operational and analytical
needs. In essence, everything
collected flowed into one place
where it could be viewed, used
and analysed to add real value for
decision makers. Understanding the
technology available and working
closely with those who create it
means the optimum solution can
be delivered. To build the ICDS, we
utilised our long-term partnership
with Google Cloud. After careful
analysis and consultation, we
agreed that Google Cloud’s
Dataflow would be ideal as a
serverless execution engine for
Apache Beam SDK to do batch
data processing. Data is extracted
from BigQuery and stored in Cloud
SQL. This allows GFS to achieve
data syndication, speed and
accessibility for various operational
needs.
30 |
kinandcarta.com
Building a world that works better for everyone
| 31
Our global delivery model
Distributed delivery
Expectations have changed. Enterprise clients expect
to be able to make the most of their budgets by
accessing technical resource beyond the domestic
workforce. Kin + Carta continue to invest in high-
quality technical delivery both onshore and nearshore,
with margin efficient delivery hubs in Latin America
(Argentina and Colombia) and South East Europe
(Bulgaria, North Macedonia, Kosovo and Poland).
Core benefits
Market scope
Demand for high-quality,
efficiently priced nearshore
delivery is increasing.
Margin efficient
Blended teams
Lower cost resources from
vibrant nearshore territories
with strong technical
talent supply creates high
gross margin efficiency for
delivery and shared services
resource.
Kin + Carta blend high-touch
onshore leadership closest
to clients with high-quality
nearshore delivery to ensure
optimum performance and
avoid cultural misalignment.
High-quality nearshore delivery
South East Europe
The FY22 acquisition of Melon Group is now fully
integrated into the Europe region, delivering UK
projects and winning standalone work. South
East Europe delivery has since been bolstered
by the FY23 acquisition of Forecast Data with the
addition of delivery capacity in Poland.
340
Total staff
Latin America
Argentina and Colombia continue to scale
organically in Latin America, both opening new
offices in FY23 and serving Americas delivery and
shared service needs.
390
Total staff
Cultural context
The strength of the innovative engineering cultures in each and every Kin + Carta delivery
hub is key to our success. Cultural initiatives include local culture packs, client visits to
nearshore locations, quarterly business reviews, and two-way learning across locations.
For more info
see page 66
l
i
u
B
l
s
k
c
o
b
g
n
d
i
The Kin + Carta Way
Distributed global delivery is enabled by a unifying
proprietary delivery methodology called the
Kin + Carta Way.
Core benefits
Quality
All delivery teams are
trained in the learning and
development modules of the
Kin + Carta Way to ensure
the highest quality and most
advanced delivery practices
for our clients. This ambition
is encapsulated in our gold
standard Seven-Star client
experience.
Efficiency
Consistency
Aligned delivery teams in
all locations, fluent in the
practical processes and
standards of the Kin + Carta
Way accelerate speed to
value for our clients.
Central and distributed
project governance
processes and reporting
ensure that all clients receive
the same high standards,
while challenges can be
identified early, and learnings
shared quickly.
Consistently delivering a Seven-Star client experience that drives growth and competitive
advantage for Kin + Carta and our clients.
y
r
e
v
i
l
e
D
s
e
s
a
h
p
Sales
Discovery
Delivery
– start
Delivery
– middle
Delivery
– last mile
Delivery
– launch
Run, grow,
optimise
Sell
well
Sell well to
set us up for
success
Consult
well
Become
trusted
experts
through
consulting
Define
well
Set us up
for delivery
success
Govern
well
Clear and
transparent
view of how
we measure
and track
success
Engage
well
Multi-
layered, well
orchestrated
engagement
strategy
Build
well
The right
tools,
processes
and people
to deliver on
the project
vision
32 |
kinandcarta.com
Building a world that works better for everyone
| 33
Strategic Report
Strategic progress
Our strategic priorities
FY23 Strategic priorities
Our progress
FY24 Strategic priorities
Client success
Delivery and implementation of
the Kin + Carta Way, a globally
consistent proprietary delivery
methodology
The Seven-Star client experience and the Kin + Carta Way, a consistent set
of delivery and engagement frameworks, were defined and implemented with
improvements in client satisfaction and delivery team health as a result.
The Kin + Carta Way has been rolled out as a part of new hire induction
and Kin + Carta Way principles are being embedded in all client projects.
The goals of the Kin + Carta Way are to increase client conversion, increase
client satisfaction, increase revenue growth, increase client advocacy,
increase client retention, and increase opportunities for Kin. Success has
been measured via newly-implemented Client Satisfaction and Delivery
Health frameworks, both of which have had continuous positive trends since
implementation in both regions.
Global delivery
Increasing the percentage of
margin efficient distributed
(nearshore) delivery
With the successful integration of the Melon Group in South East Europe
("SEE") and the organic growth of Latin America ("LatAm") high-quality
delivery resource, the percentage of revenue delivered nearshore in both
regions has increased, and it’s been proven that we are able to deliver
effectively with LatAm and SEE on some of our largest clients.
Americas nearshore revenue went from 10% at the start of FY23 to 24% at the
end of the fiscal year. Europe grew nearshore revenue to 7% by deploying
SEE resources.
Data
Increasing the high strategic
relevance Data & AI pipeline and
percentage of net revenue
The data pipeline is strong. Data literacy training has been rolled-out across
the organisation, and the successful acquisition of Forecast Data has
bolstered Data & AI capabilities, capacity and enterprise clients.
Americas Data & AI net revenue held steady, and Europe increased to 16%
of total net revenue. The pipeline of new data sales opportunities grew
significantly in FY23 and we expect this trend to continue in FY24.
Foundation
Strategic initiatives aligned to driving Client Success
with expanded deployment of Kin + Carta Way training
to further ensure consistency and quality in delivery;
Kin Success through the enhancement of employee
experience, performance management, and learning and
development; and continued deepening of enterprise
grade data security, Information Governance, and cyber
risk.
Link to risks
Link to double-
materiality themes
2 6 7
10 11 12 13
9 10
Core
Next
Focused Execution of key growth drivers in resilient
industry sectors, with key capabilities and core
technology partners. Increased Global Delivery to
drive efficiency and resilience.
2 3 4
9 10 12 13
16 17
Targeted Innovation aligned to key industry sectors,
capabilities and technology partners. Continued efforts
to embed Responsibility in the everyday, with an
emphasis on pathways to B Corp recertification and net
zero.
2 4 7
9 10 11 13
8
Link to risks:
1 Economy and volatility
5 Client concentration
8 Being a responsible business
2 Growth
3 Scalability
4 Operational resilience
6 Laws and regulations
7 Our people
9 Data protection
10 Information, cyber security and systems
Link to double-materiality themes
1 Labour rights
2 Biodiversity
6 Public policy
7 Tax
11 Data security
16 Economic contribution
12 Employee retention and recruitment
17 Community impact
3 Water and effluents
8 Responsible marketing and labelling
13 Upskilling
4 Responsible procurement
9 Energy and emissions
5 Materials and waste
10 Business conduct
14 Diversity and equal opportunity
15 Consumer health and safety
34 |
kinandcarta.com
Building a world that works better for everyone
| 35
Strategic Report Key performance indicators
Link to FY24
strategic priorities
Optimise our
foundation
Focus
on core
Focus on what
clients need next
Measuring our performance
Financial highlights
Link to risks:
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
1. Like-for-like net revenue (decline)/growth at
2. Adjusted operating profit margin
3. Net revenue predictability
4. Number of £1 million clients
constant currency
FY23
(11%)
FY22
FY21
13%
37%
FY23
FY221
FY21
9.6%
9.5%
11.8%
FY23
FY22
FY21
77%
76%
71%
FY23
FY22
FY21
32
30
40
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.
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.
Performance this year
On a like-for-like basis, net revenue declined by 11%
from FY22, reflecting macroeconomic challenges.
Link to Directors' remuneration
Executive compensation has a net revenue growth
target.
Performance this year
Group adjusted operating margin was 9.6% for the
period (2022: 11.8%) with higher gross margins offset
by higher selling and IT costs.
Link to Directors' remuneration
Executive compensation has a profit before tax target
as well as improving operating margin initiatives in
strategic objectives component.
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.
Performance this year
Having focused on growing long-term established
relationships with our top clients, some £140.2 million
(77%) of our net revenue comes from existing clients
who had a tenure of three years or more (2022: £144.0
million/76%).
Link to Directors' remuneration
Executive compensation has a net revenue growth
target.
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.
Performance this year
In 2023, there were 32 clients from whom Kin + Carta
generated more than £1 million revenue individually
(2022: 40). Although this represents a slight decline
in the year, the diversity remains strong and provides
a robust foundation for growth. For FY23, there
was an increase in the proportion of enterprise
clients generating more than £1 million revenue, with
enterprise clients representing 30 of the 32 (2022: 31
of the 40).
Link to Directors' remuneration
Executive compensation has a net revenue growth
target.
Link to risks
1 2 3
Link to risks
1 3 4
Link to risks
2 3 5
Link to risks
3 6
Link to FY24 strategic priorities
Link to FY24 strategic priorities
Link to FY24 strategic priorities
Link to FY24 strategic priorities
1 The results for the year to 31 July 2022 have been restated to reflect the
reclassification of share-based payments from adjusted results to adjusting
items and the restatement of depreciation on investment property. The latter
arose from an accounting policy change to measure investment property using
a fair value model which has been applied retrospectively. Refer to note 1 of the
Consolidated Financial Statements for further details.
36 |
kinandcarta.com
Building a world that works better for everyone
| 37
Strategic Report
Key performance indicators
continued
Non-Financial highlights
Link to FY24
strategic priorities
Optimise our
foundation
Focus
on core
Focus on what
clients need next
Link to risks:
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
5. Mean gender pay gap
6. US ethnicity
7. Positive impact work
FY23
FY22
FY21
9%
18%
14%
FY23
FY22
FY21
35%
28%
24%
Definition
An equity measure that shows the difference in
average earnings between men and women.
Performance this year
This year has seen a significant improvement in our
gender pay gap, decreasing from 18% to 9% globally,
exceeding our target by 7ppts. This reflects the
cumulative effects of multiple initiatives across the
regions.
Definition
A measure to demonstrate our commitment to
diversity, where we aim to have teams that are
representative of the communities in which they work.
Performance this year
Work across FY23 achieved progress of 7ppts on last
year with 35% diversity of ethnicity in the US.
FY23
FY22
FY21
10%
9%
6%
Definition
Revenue that has a demonstrable beneficial
environmental or social impact.
Performance this year
In a year of market contraction, to have met and
exceeded our target speaks to the potential for
greater focus in partnering with our clients on work
that makes the world work better for everyone.
Link to risks
2 9
Link to risks
2 9
Link to risks
9
Link to FY24 strategic priorities
Link to FY24 strategic priorities
Link to FY24 strategic priorities
38 |
kinandcarta.com
Building a world that works better for everyone
| 39
For an overview of our
Alternative Performance
Measures see pages
279 to 283
Strategic Report
Chief Financial Officer’s
review
“ FY23 was a
challenging
year for Kin + Carta
and we look to the
future with cautious
optimism.
Chris Kutsor
Chief Financial Officer and
Chief Operating Officer
by 43% to £2.6 million (2022: £1.8
million), driven by increased net
debt levels and higher interest
rates.
Prior period restatements
and reclassifications
During the period there was a
change of accounting policy
to account for the investment
property, which is now accounted
for using the fair value model
instead of the cost model
previously used. This change has
been applied retrospectively from
1 August 2021 and resulted in a
£0.3 million increase to adjusted
operating profit in FY22.
A credit of £1.3 million has been
adjusted in opening retained
earnings at 1 August 2021 relating to
the restatement of an income tax
charge on loan forgiveness arising
in the FY21 year.
The Group’s share-based
payment charge is excluded
from adjusted results in a similar
way to the Company’s publicly
listed peer group companies
in digital transformation, aiding
comparability. The FY22 results
have been restated to reclassify the
share-based payment charge to
adjusting items in the Consolidated
Income Statement. There is no
impact on the statutory loss for
either period.
Further details are set out in note
1 of the Consolidated Financial
Statements.
Key adjusting items are as follows:
• Amortisation, deemed
remuneration and other
acquisition-related charges
related to acquisitions: £9.3
million related to the non-
cash amortisation of acquired
intangibles, £9.8 million of
contingent consideration
required to be treated as
remuneration, a credit of £0.3
million in respect of deferred
consideration adjustments, and
£0.7 million of acquisition and
integration-related costs.
• A non-cash impairment goodwill
charge of £14.6 million relating
to the ‘UK excluding Kin and
Carta Data’ cash generating unit.
• A charge, net of associated
insurance proceeds, of £3.6
million related to two client
disputes and associated legal
costs. This includes the full
and final settlement costs and
related external advisor costs
associated with the resolution
of two client disputes which
were significant in value and
which are expected to be non-
recurring in nature. We expect
to record a credit of £3.3m
in FY24 in respect of further
reimbursement of costs by
our insurer. The net revenue
and cost impacts of the client
delivery are included in adjusted
results.
• A net credit of £7.8 million
relating to the renegotiation of
the Chicago office lease that
will result in a smaller, lower
cost space in the same building
from January 2024 under a new
lease. The prior year charge
of £6.3 million comprised an
impairment of the right-of-
use asset and a provision for
onerous costs related to a
portion of the Chicago lease,
both of which reflected the
costs of the portion of the lease
which no longer had economic
value.
Further details are provided within
note 7 of the Consolidated Financial
Statements.
Regional performance
The Americas segment delivered
£19.0 million of adjusted operating
profit (2022: £23.5 million) on net
revenue of £134.8 million (2022:
£132.2 million). Americas’ organic
net revenue at constant currency
declined by 8.4%, reflecting
macroeconomic weakness that
caused client spending caution
and elongated sales cycles noted
across the industry. Gross margin
percentage was unchanged year-
on-year. Adjusted operating margin
declined from 17.8% to 14.1% due to
the effect of investment in selling
and marketing functions and in
information technology. Statutory
revenue was £158.0 million (2022:
£154.0 million).
The Europe segment delivered
£3.8 million of adjusted operating
profit (2022: £4.4 million) on net
revenue of £57.2 million (2022: £58.1
million). Like-for-like net revenue
declined by 15.8%, primarily as a
result of macroeconomic weakness
in the UK, which accounts for 84%
of Europe’s net revenue. Public
sector net revenue grew 220% to
£11.9 million on several multi-year
contract wins. While there was
a modest increase in the gross
margin percentage year on year,
the operating margin declined
from 7.6% to 6.6% due to planned
investment in selling staff and
information technology. Statutory
revenue was £62.1 million (2022:
£61.8 million).
Net finance costs
Adjusted net finance costs, which
exclude the Defined Benefit
Scheme pension costs, increased
This report comments on the
key financial aspects of the
Group’s 2023 results. The report
includes adjusted results which
exclude adjusting items to reflect
how management assesses and
monitors the ongoing financial
performance of the Group. The
definition and reconciliation of
adjusted measures is set out in the
adjusted performance measures
section.
Group performance
Group net revenue from continuing
operations of £192.0 million (2022:
£190.3 million), including favourable
effects from currency movements
and acquisitions, was broadly in
line with the prior period. Statutory
revenue decreased from £197.1
million to £195.9 million. On a like-
for-like basis, net revenue declined
by 10.6%. On a like-for-like basis,
net revenue declined by 10.6%. The
Americas region makes up 70% of
net revenue and Europe 30%. Net
revenue by client sector includes
Transportation (10%), Industrials
and Agriculture (14%), Retail &
Distribution (22%) and Financial
Services (36%). The Company’s
largest client makes up 25% of net
revenue, and is part of the Financial
Services sector.
Group adjusted operating margin
was 9.6% for the period (2022:
11.8%) with higher gross margins
offset by higher selling and IT costs.
The Group’s delivery staff in Latin
America and Southeast Europe
near-shore locations grew from 9%
of delivery staff last period to over
40% this period, and is expected to
continue to grow and improve the
Group’s profitability profile. Whilst
this nearshore delivery enhances
client retention and improves the
Company’s gross margins, it is
delivered at a lower price point than
onshore (domestic) delivery, and
therefore impeded organic growth
in each region. The lower operating
margin in the period also includes
the impact of unusual client
disputes from two non-enterprise
clients with related net revenue at
much lower than average margin.
Adjusting items
The statutory total loss before tax
from continuing operations in the
period was £20.7 million (2022: loss
of £15.6 million), which is stated
after net adjusting cost items of
£36.5 million (2022: net costs of
£36.1 million).
40 |
kinandcarta.com
Building a world that works better for everyone
| 41
Strategic Report Chief Financial Officer’s
review continued
Acquisitions
On 5 May 2023, the Group acquired
100% of the issued share capital
of Kin and Carta Data Limited
(formerly known as Forecast Data
Services Limited), a data and
artificial intelligence business
based in Edinburgh, Scotland
and its Polish subsidiary based in
Wroclaw, Poland. The initial cash
consideration, net of cash acquired,
was £2.2 million, with the potential
for further payments of up to £10.1
million over the next two years
contingent upon achieving EBITDA
growth targets. Based on current
forecasts we estimate further
payments totalling £4.3 million will
be made. Further details are set
out in note 12 of the Consolidated
Financial Statements.
Balance sheet and cash flow
Net assets of £73.4 million
decreased by £53.0 million versus
31 July 2022, driven by the actuarial
loss, net of tax, on the Pension
Scheme surplus of £21.2 million;
the net loss after tax of £18.8
million which included a non-cash
impairment of £14.6 million on
goodwill; non-income movements
in equity related to net share
repurchases and settlements of
£8.0 million; transfers from equity
to liabilities in respect of contingent
deferred payments for acquisitions
made in prior periods of £10.6
million following the Company’s
decision to settle in cash rather
than equity; and foreign exchange
losses and other movements of
£1.0 million; partially offset by
£6.5 million of credits to equity in
respect of share-based payments,
net of tax.
Operating cash outflow before
working capital, interest and tax
was £1.1 million (2022: inflow of
£19.2 million), which includes £16.2
million of deferred payments
related to acquisitions completed
in prior periods (2022: £nil). The
related income statement charge
is treated as an adjusting item.
The cash outflow also includes
other outflows linked to adjusting
items before working capital of
£8.7 million (2022: £7.8 million),
principally related to the settlement
of customer disputes of £3.6
million, and legacy pension-related
outflows of £2.7 million. The net
operating cash inflow before
adjusting items, working capital,
tax and interest was £23.9 million
(2022: £26.0 million). After the year
end, the Group’s insurers confirmed
that a further £3.3 million of costs
related to the settlement of the
final client dispute would be
reimbursed. This is expected to be
received in the first half of FY24
and the associated credit will be
recorded as an adjusting item in the
Consolidated Income Statement.
The working capital inflow of £1.6
million (2022: outflow of £7.1 million)
includes an inflow of £12.2 million
from movements in receivables, net
of deferred income, which reflects
a strong focus on billing and
collection in the period, offset by an
outflow of movement in payables
of £10.6 million linked principally
to a reduction in the liability for
employee bonuses.
The investing cash outflow of
£5.2 million (2022: inflow of £21.0
million) includes £2.2 million related
to the acquisition of Forecast
Data Services Ltd as well as
capital expenditure of £2.4 million
(2022: £1.3 million), and deferred
consideration payments relating
prior period acquisitions of £0.7
million (2022: £nil). FY22 included
a cash inflow of £34.3 million of
proceeds from the divestment of
subsidiaries.
Financing cash flows included
market purchases of the
Company’s shares by the Employee
Benefit Trust of £8.4 million (2022:
£5.6 million) to satisfy expected
future vesting under employee
share-based payment schemes.
Lease payments were broadly
in line with the prior period at
£4.0 million (2022: £3.8 million).
Following the renegotiation of the
Chicago lease in the period, Group
lease payments are forecast to
reduce to c.£3.3 million in FY24,
excluding further acquisitions.
Credit facility and net debt
The Group ended the period with
a net bank debt position of £20.0
million measured at 31 July 2023
closing currency exchange rates.
For bank covenant purposes,
net debt is measured at average
currency exchange rates through
the period rather than closing,
resulting in an adjusted debt figure
of £21.0 million (2022: £0.2 million).
Bank leverage remains modest with
net debt at 1.04 times adjusted
EBITDA for bank covenant purposes
at 31 July 2023 (2022: 0.01 times).
Interest cover for bank purposes
was 10.5 times (2022: 18.5 times)
compared to a minimum covenant
of 4 times.
Our liquidity position remains
solid, with modest claims on future
operating cash flows beyond
growth-related investments in
working capital, operational capital
expenditures at similar levels
to prior years and the schedule
of contingent and deferred
consideration payments related
to acquisitions in prior periods.
There remains substantial undrawn
capacity on the Company’s credit
facility of £85.0 million committed
until September 2026.
As at 31 July 2023, the Company
had loans of £29.8 million drawn on
the facility (2022: £13.1 million). The
undrawn portion of this facility at
31 July 2023 was £55.2 million
(2022: £71.9 million).
Pension
The IAS 19 pension accounting
surplus decreased during the
period to £13.0 million from £38.7
million at 31 July 2022.
The lower surplus is due to a
decrease in the value of Scheme
assets of £82.7 million, driven
primarily by the reduction in the
value of the gilt portfolio which
comprises a large proportion of
Scheme assets, following the large
increase in UK gilt yields in the
period. This was partially offset by
a decrease in the Scheme liabilities
of £56.9 million, driven by increases
in the AA corporate bond yield
which is used to discount the
Scheme liabilities.
The Scheme remains fully hedged
against interest rate and inflation
rate risk measured on the basis of
the technical liability, which has a
different discount rate profile to
the accounting liability. At 31 July
2023, approximately 35% of the
Scheme’s assets were allocated to
growth assets (reduced from 40%
at 31 July 2022), of which less than
half were allocated to equities. The
non-growth assets are invested
in liability matching and cash flow
matching assets.
Excluding trustee expenses,
sponsor cash contributions to
the Scheme will reduce to £0.6
million in FY24 and £0.4 million in
FY25. In addition, the Company is
committed to make a contribution
of £0.4 million per annum towards
trustee expenses until FY27. The
levy payable by the company to the
Pension Protection Fund will reduce
significantly from £0.6 million in
FY23 to £0.04 million in FY24 as a
result of the Scheme’s improved
funding status.
Chris Kutsor
Chief Financial Officer and Chief
Operating Officer
1 November 2023
42 |
kinandcarta.com
Building a world that works better for everyone
| 43
Strategic Report A responsible
business
Overview of our approach
In a time of volatility, focus and collaboration is key. This
year was about operationalising our responsible business
commitments to directly and positively impact our
performance and our stakeholders.
The strategic exercises that we have invested in equip
us to better account for what are usually treated as
externalities, and instead appreciate and leverage the
interdependencies between people, profit and planet.
As collective ESG maturity continues at pace,
Kin + Carta is strongly placed to contribute as a force
for good.
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
Read more about our
responsible business
on page 46
Read more about B Corp
on page 47
44 |
kinandcarta.com
Building a world that works better for everyone
| 45
Strategic Report Strengthening our
responsible business
Operationalising our triple bottom line structure
G
Governance
Environmental
E
The foundation of our
triple bottom line, listed
Company structure
Social
S
P e o p l e
t
e
n
a
l
P
P
r
o
f
i
t
Environmental
Social
Governance
Our Planet
Our environmental framework
How we are measuring, and
reducing carbon emissions
Energy and carbon reporting
Task Force on Climate-
related Financial
Disclosures ("TCFD")
76
76
76
78
64
64
66
People
Onboarding process
Employee experience
Our culture
IDEA (Inclusion, Diversity,
68
Equality and Awareness)
Health and safety management 72
73
Human Rights
74
Clients
Governance
Articles of association
Committees and working
groups
Policies
56
56
58
Bringing our purpose to life
Over the past 12 months, our ESG focus has been powered by data as
we strengthen and mature the inputs and insights behind our triple
bottom line approach.
Completing our first double-materiality assessment has highlighted
the strength of our governance structure. Our established diversity
and inclusion programmes are a differentiating factor in attracting
and retaining talent, and we have innovated for improved carbon
accounting.
This combination of achievements strengthens the foundation of
our purpose, equipping us to invest in sustainability as a lever for
profitability in due course and scale our pre-competitive collaborations
to building a world that works better for everyone.
B Corp
We have been proud to increase our contribution to the UK and
global B Corp movement; our sponsorship of the Better Business
Act in April 2023 reflected our support of stronger regulation and
legislation.
We are proud to have directly consulted with B Lab on their digital
transformation roadmap, deploying our expertise and skills in
service of B Corp’s theory of change.
People
Planet
Profit
People
Community
Environment
Clients
Governance
Triple bottom line initiative
This year saw us complete our first double-materiality assessment
evaluating the importance of ESG topics relevant to financial
and impact materiality. Financial materiality looks at ESG topics
material to Kin + Carta’s ability to create sustained revenue, while
impact materiality maps the ESG topics material to “Building a
world that works better for everyone”.
Our progress over
the last 12 months
With renewed investment
in our responsible business
platform, we have contributed
to greater Company-wide
understanding of our ESG
strategy and stakeholder-led
approach. Indeed, investing
in sustainability is a lever to
profitability as client and
society-wide expectations
of businesses increases. We
are committed to creating
the conditions for every Kin in
every country to feel proud of
their skills-based, consulting
contribution.
integrate ESG
“ Continuing to
thinking into our
business strategy
creates value for all
our stakeholders,
from clients to
shareholders.
Jennifer Crowley
Global Director of
Responsible Business
46 |
kinandcarta.com
Building a world that works better for everyone
| 47
Strategic Report A responsible business
Our progress, achievements and notable activities
AUGUST 2021
New climate strategy and
action plan
SEPT-DEC 2021
B Corp certification
JUNE 2022
Awarded Microsoft
Sustainability Changermaker
Partner of the year
FEBRUARY 2022
Long-term goal to help
clients save carbon
established
JULY 2022
DECEMBER 2022
Scope 3 added to emissions
measured
Fully accounted for
global Scope 1, 2 and 3
emissions through offsetting
investment in carbon
removal technology
MAY 2023
JANUARY 2023
ESG ratings improvement
(MSCI and Sustainalytics)
Launched IDEA across SEE
region
JULY 2023
AUGUST 2023
Completion of first double-
materiality assessment
Pilot of an IDEA chat-bot to
educate and support Kin in
their education and allyship
Rigorous reporting for the
Taskforce on Climate-related
Financial Disclosure
AUGUST 2023
AUGUST 2023
Addition of four new
categories to Scope 3
emissions, resetting of base
year to FY22 as part of SBTi
commitment to net zero
Pause in tracking against the
client carbon goal but with
methodology developed
48 |
kinandcarta.com
Building a world that works better for everyone
| 49
Strategic Report A responsible business
continued
Double-materiality assessment recommendations
Context
Guided by our commitment to the
triple bottom line, we carried out a
comprehensive double-materiality
assessment to help orient our
ESG commitments and strategic
priorities.
Adopting a double-materiality
perspective enables us to identify
ESG priorities double-dividend:
they are important to the health
of our business, as well as to
our people, communities and
environmental footprint.
This section outlines the results
and presents our initial strategic
priorities.
Methodology:
Double-materiality unlocks
value creation and future-
proofs ESG disclosures
Assessing impact and financial
materiality can guide the
identification of opportunities that
create business value, while having
a positive impact on people and
planet.
Additionally, ESG reporting
standards are moving towards
including both inbound and
outbound ESG implications. For
instance, TCFD gold standard and
B Corp recertification leverage
double-materiality assessments.
Key findings
• Our people are at the core of
our value proposition for clients
and investors alike.
• Client decarbonisation yields
multiple onward benefits including
a positive contribution to our
investors’ net zero targets and
timelines, as well as
Kin + Carta’s own.
• All stakeholders, but notably
investors and clients, place
increasing value on data security
and privacy, where risks have both
financial and community wellbeing
safeguarding implications.
•
Internal employee insights (financial and impact lens)
• Expert opinion (financial and impact lens)
• Shareholder and client insights (financial lens)
• Client materiality assessments, annual reports and
• External research, including peer benchmarking
(financial and impact lens)
ongoing interviews
Key
1 Labour rights
2 Biodiversity
3 Water and effluents
4 Responsible procurement
5 Materials and waste
6 Public policy
7 Tax
11 Data security see page 51
12 Employee retention and recruitment see pages 64 to 67
13 Upskilling see pages 64 to 67
14 Diversity and equal opportunity see pages 68 to 71
15 Consumer health and safety
16 Economic contribution
17 Community impact
8 Responsible marketing and labelling
9 Energy and emissions see page 76 onwards
10 Business conduct see page 50 and pages 56 to 63
Environment
Social
Governance
Derived from the set of GRI indicators, selected to represent the main categories across E, S and G. This approach is aligned with incoming CSRD regulation.
High
y
t
i
l
a
i
r
e
t
a
m
l
i
a
c
n
a
n
F
i
9
See page
76 onwards
See page 51
11
12
See pages page
64 to 67
13
See pages page
64 to 67
ESG topics most
material to Kin + Carta
10
See page 50 and
pages 56 to 63
1
2
3
4
5
6
7
8
14
See pages
68 to 71
15
16
17
Low
Impact materiality
Higher
Culture
We will continuously strive
to deliver on maintaining
an engaging and inspiring
environment for our Kin.
To keep hearts and minds
engaged we will focus on:
•
Improving communication.
More frequent and varied (in
structure) communications
will contribute to a unified
sense of connection, while
also allowing for regional
nuances.
• Tapping into the double-
dividend of upskilling. We
are revisiting our values and
behaviours and investing
in consulting training and
upskilling.
• Bridging the gap. We
intentionally strive to
close any gaps in our Kin’s
perception of who we say we
are, what we do, and how we
do it.
Data security
We are committed to providing
clients and investors the certainty
that their privacy and data is safe
with us.
• On our internal data security:
we strive for our systems
to meet strict safeguarding
needs against data leaks and
cyber attacks, lowering our
risk profile to investors and
clients.
• On our client’s data security:
given our vertical focus (public
sector, financial services,
enterprise clients) we ensure
that we are playing our part in
safeguarding public wellbeing
by keeping data safe.
• On our data governance:
honouring our investors’
emphasis on data governance,
we ensure our processes are
fit-for-purpose to effectively
manage both internal and
client data security and
privacy risks.
Governance
We take pride in our existing
responsible business governance
functions, while also striving to
match the evolving expectations
on governance.
Lenders and investors are
increasingly recognising the
importance of enhanced
governance practices for
future-proofing businesses and
maintaining enterprise value.
We will respond to this by:
• Supporting the monitoring
and reporting of our ESG
objectives and targets with
data and evidence.
• Striving to meet a gold
standard in internal
communication by clearly
demonstrating how feedback
is being implemented.
• Maintaining clear
communication of
decision-making processes
to bolster transparency for
employees and investors.
50 |
kinandcarta.com
Building a world that works better for everyone
| 51
Strategic Report
A responsible business
continued
Responsible business KPIs
As a business, we plan in three-year cycles and having first set non-financial KPIs in 2021 we are now evolving these
key business metrics. Informed by the themes and insights of our first double-materiality assessment as well as this
next stage of growth for our Company we will refine our focus from eight to six non-financial KPIs.
In doing so we will cease to report on net new jobs, promotions and charitable donations. We will instead add
diversity of leadership and Scope 1 and 2 reductions as important people and planet KPIs respectively.
These ambitious KPIs contribute to the value and values of Kin + Carta.
+21
FY23 Outcome
+35
FY23 Target
+32
FY22 Outcome
+23-27
FY24 Target
Link to stakeholders
S
Employee net promoter score (“eNPS”)1
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.
This metric is, based on responses to the following statement in our
twice-yearly engagement survey, "I would recommend Kin + Carta as a
place to work to my friends and family". The score is calculated based
on responses to the statement, on a scale of 1-10 - responses of 9 and
10 are considered "promoters", 7 or 8 as "passives" and 6 or below as
"detractors". The score is reported with a number ranging from +100 to
-100 (calculation is % of promoters minus % of detractors).
Performance commentary
Our Kin have felt the effect of external volatility and internal
responsiveness to that.
The most difficult of business decisions, redundancies understandably
affected Kin morale.
We are confident in our path to a stronger global eNPS in FY24 and beyond.
Percentages of employees promoted per annum1
Definition
A metric for career progression, which is an important part of our
responsibility as an employer.
Performance commentary
In a year of constrained client demand, we have been intentional about
how best to invest in, and reward, the skills of our Kin.
Through FY24/25 we will define a new global career growth matrix and
adjust our performance review process.
26%
FY23 Outcome
20%
FY23 Target
N/A
FY24 Target
29%
FY22 Outcome
Mean gender pay gap1
Definition
An equality measure that shows the difference in average earnings
between women and men.
Performance commentary
This year has seen a significant improvement in our gender pay gap,
decreasing from 18% to 9% globally, exceeding our target by 7ppts. This
achievement reflects the maturity of our EX (employee experience)
capability across our regions from talent attraction to continuous
engagement and talent retention. There were also notable nuances in
the country by country workforce demographics that have made this
year particularly favourable.
We foresee an interim reversal in this progress as we incorporate new
regional teams.
Our FY24 target is ambitious in the context of our regional growth plans
and we model for the short and medium term.
We are proud to publish our UK Gender Pay Gap Report for the first time
this year, before doubling down on regional and country-specific trends.
Percentage of employees identifying as Asian,
Black, Latinx or other non-white1 (USA only)
Definition
A measure of our commitment to diversity, where we aim to have teams
that are representative of the communities in which they work.
Performance commentary
This year’s marked improvement is in part because of stronger data that
empowered better decision making.
Such is our ambition in this area that this specific KPI will be replaced
with a new KPI striving for greater diversity of leadership across Kin +
Carta.
9%
FY23 Outcome
16%
FY23 Target
13%
FY24 Target
18%
FY22 Outcome
Link to stakeholders
S
35%
FY23 Outcome
31%
FY23 Target
28%
FY22 Outcome
Diversity of leadership in FY24 with the
target of establishing global and regional
benchmarks.
Link to stakeholders
S
In the interim we will pause reporting on promotions as a standalone
non-financial KPI.
Link to stakeholders
S
Link to stakeholders:
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
Community
Environment
Clients
Suppliers
E Environmental
S Social
G Governance
52 |
kinandcarta.com
Building a world that works better for everyone
| 53
Strategic Report
A responsible business
continued
Net number of jobs added per annum
as a percentage of total1
Definition
Providing new careers in emerging areas of technology is the most
meaningful way we contribute to the prosperity of our communities.
This measure excludes job growth through acquisitions.
Performance commentary
Prudent management of the business this year saw a regrettable but
necessary reduction, not growth, of headcount. As future headcount
growth may well come from future acquisition activity, we will cease to
report on this metric.
4%
FY23 Outcome
19%
FY23 Target
N/A
FY24 Target
17%
FY22 Outcome
Carbon intensity1
Definition
Tonnes of CO2e per £m revenue – allows us to measure our carbon
footprint as we grow.
Performance commentary
The increase in carbon intensity from our previous financial year is
largely due to calculating emissions from a larger range of (Scope 3)
business activities and improved data collation.
Link to stakeholders G
5.68
FY23 Outcome
5
FY23 Target
5
FY24 Target
5.2
FY22 Outcome
Link to stakeholders
E S G
Equivalent percentage of net profit raised for charity1
Definition
An indication of our philanthropic contribution, comprising cash
donations, funds raised in Company initiatives and time volunteered at
charge-out rates.
Performance commentary
The difficult decision to prioritise business stability through the year
means that we were unable to meet the target this year.
As we reset our global philanthropy strategy we will cease measuring
against this specific metric and better account for the contribution of
Kin time and skills in addition to donations.
<1%
FY23 Outcome
2.0%
FY23 Target
N/A
FY24 Target
1.5%
FY22 Outcome
Total revenue from positive impact projects1, 2
Definition
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.
Performance commentary
Despite a challenging landscape, intentional focus on particular positive
impact revenue areas has resulted in exceeding our FY23 target by 1ppt
with a 10% positive impact revenue outcome. We commit to a bolder
target in FY24 as measurement, and Kin commitment to using business
as a force for good, accelerate.
Link to stakeholders
E
£19m/ 10%
FY23 Outcome
£19.25m
/9%
FY23 Target
£16.5m
/9%
FY22 Outcome
£35m/17%
FY24 Target
Link to stakeholders E
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 Updated KPI to include percentage of net revenue earned from positive impact projects in addition to total cash amount.
Link to stakeholders:
People
Community
Environment
Clients
Suppliers
E Environmental
S Social
G Governance
54 |
kinandcarta.com
Building a world that works better for everyone
| 55
Strategic Report
A responsible business
continued
G
Governance
Overview
The Board is collectively
responsible for leading Kin + Carta,
promoting its long-term
success, and generating value
for its stakeholders, including
shareholders and the 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 133 to 134, to establish
clear expectations and common
understandings of the roles,
responsibilities 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 107 to 111.
Articles of association
Kin + Carta’s articles of association
illustrate our commitment to
cultivating a 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. Also, during the
year, Kin + Carta sponsored
the Better Business Act, which
demonstrates our commitment
and the importance we place on
stakeholder engagement.
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, our internal
Climate Task Force led the TCFD
reporting, contributed to our
double-materiality assessment and
added a further four Scope 3 sub-
categories to our overall emissions
reporting for FY23.
The structure of this group is
currently under review as the
business prioritises net zero
feasibility more widely.
Responsible business governance highlights
Through conducting our double-materiality assessment and
engaging with ESG specialists within our key investor groups,
we have gained a fresh insight on their perspective and views
on ESG investment, and their expectations of Kin + Carta.
We continually monitor and educate ourselves on proposed
and new legislation that concerns Kin + Carta and ensure we
are prepared to be compliant with such upcoming changes.
Environmental and social risk
review task force
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.
The panel includes the global
and regional CEOs, the Global
Director of Responsible Business,
the Global Director of Commercial
Legal and Global Chief Strategy
Officer. During the year, informed
by briefing papers with input from
internal subject matter experts,
the review panel recommended
the progression of the majority
of opportunities. 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. During FY23,
we have made eight referrals to
the review board’s triage process.
The associated Environmental and
Social Risk Policy for Client and
Partner Engagements is described
on page 61.
56 |
kinandcarta.com
Building a world that works better for everyone
| 57
Strategic Report A responsible business
continued
G
Governance
Non-financial and
sustainability information
statement
Non-financial and sustainability
reporting required under the
Companies Act 2006 is included in
the Strategic Report as referenced
below:
Our business model is set out on
pages 22 to 23.
Our policies, due diligence
processes and outcomes in
relation to:
•
Anti-bribery and corruption -
see pages 58 to 59
• Environmental, social and
community matters -
see pages 59 to 61
• Our people -
see page 62
• Human rights -
see page 63
The principal risks and risk
management in relation to the
matters above are set out on pages
112 to 121.
Our non-financial KPIs are set out
on pages 52 to 55.
Our climate-related financial
disclosures are set out on pages 76
to 106.
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.
Anti-bribery and corruption
Associated
stakeholders
Policy
Anti-Bribery and
Corruption
Description
Sets out standards in areas
such as the prohibition of
bribery, facilitation payments,
political donations, and
minimum standards in relation
to charitable donations, gifts and
entertainment and conflicts of
interests. It sets out obligations
under the UK Bribery Act 2010
and the US Foreign Corrupt
Practices Act 1977.
Policy embedding, due
diligence and outcomes
Issued Group-wide with recipients
required to confirm they acknowledge
and understand the policy and is
accessible on our intranet.
Senior management team are
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.
2023 annual review found all
businesses within Kin + Carta to be
deemed low risk.
Link to stakeholders:
People
Community
Environment
Clients
Anti-bribery and corruption
Policy
Speak Up
(whistleblowing)
Description
Outlines the procedures and
channels for our people and
third parties to confidentially
raise any concerns about
suspected misconduct in
confidence without fear of
retaliation.
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 in alignment with
our Anti-Bribery and Corruption
Policy.
Associated
stakeholders
Associated
stakeholders
Policy embedding, due
diligence and outcomes
Issued Group-wide with recipients
required to confirm they acknowledge
and understand the policy and that is
accessible on our intranet.
During the year, there were no formal
whistleblowing investigations or
notifications, however, this policy was
consulted when conducting internal
investigations in accordance with
applicable policies.
Policy embedding, due
diligence and outcomes
Due diligence undertaken on charity
partnerships that involve donations,
fundraising or volunteering over
specified thresholds.
While we did not undertake formal
partnerships for the full 12 months
of FY23 we did fund and execute
a number of regional events that
contributed to community needs
e.g. continuing our long-standing
partnership in the US with Volunteers
of America by supporting their efforts
for veterans and foster children, and
partnering with Fundación Casa
Grande in Argentina to support a
key project to provide housing to
vulnerable women.
Further, we reviewed the funding and
planning approach to philanthropy,
agreeing upon new principles
that will be detailed in first half of
FY24 via a revised policy and Kin
communications.
58 |
kinandcarta.com
Building a world that works better for everyone
| 59
Strategic Report A responsible business
continued
G
Governance
Environmental, social and community matters
Associated
stakeholders
Environmental, social and community matters
Associated
stakeholders
Policy
Ethical and
Sustainable
Procurement
Associated
stakeholders
Policy
Environmental
and Social Risk
Policy for Client
and Partner
Engagements
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.
Policy embedding, due
diligence and outcomes
In the second half of FY23, work
was undertaken to improve the
responsible procurement practices
as a new supplier management team
was set up. This involved evolving
the supplier question to ask more
direct questions about carbon
measurement and management,
adapting the format to make it
easier to interact with, and refining
the communications to help the
supplier understand our context
and motivations as a responsible
business.
Description
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.
Policy embedding, due
diligence and outcomes
Policy and process revised and
improved during 2023 following
employee feedback and deepening
the connection with our carbon
commitments across our full value
chain. 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.
Associated
stakeholders
Policy
Supplier Code of
Conduct
Policy
Health Safety
+ Environment
Framework
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 2023
completed the assessment and,
in the majority of cases, met our
criteria. Where any non-compliance
with mandatory requirements has
been flagged, escalation steps were
followed and direct dialogue with the
supplier determined if alternative,
equal standards could suffice.
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 72.
Description
Sets high mandatory standards
and behaviours required from
our suppliers related to their
treatment of employees, health,
safety and environmental
responsibility and sustainable
procurement, 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 a
net zero plan wherever possible).
Description
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.
Link to stakeholders:
People
Community
Environment
Clients
Suppliers
60 |
kinandcarta.com
Building a world that works better for everyone
| 61
Strategic Report A responsible business
continued
G
Governance
Our people
Policy
Code of Ethics
Our people
Policy
Inclusion, Diversity,
Equity and
Awareness (“IDEA”)
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.
Description
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.
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
68 for information on our 2023 IDEA
progress.
Link to stakeholders:
People
Community
Environment
Clients
Suppliers
Associated
stakeholders
Human rights
Policy
Modern Slavery
Associated
stakeholders
Associated
stakeholders
Policy embedding, due
diligence and outcomes
Suppliers confirm via Supplier Code
of Conduct assessment that they
comply with all applicable human
rights and equality laws, and laws
prohibiting slavery, human trafficking
and any form of child labour, 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 that management is to act
accordingly. No incidents of Modern
Slavery were reported or identified
during the year.
Description
Sets our zero-tolerance approach
to any form of modern slavery
and child labour in recognition
that slavery, forced labour,
human trafficking and child labour
are 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 child labour in our
operations, supply chain, and
customer and client relationships.
Our 2023 Modern Slavery
Statement is available to view on
our website kinandcarta.com/
en/modern-slavery-act/ and
published on the Modern slavery
statement registry (https://
modern-slavery-statement-
registry.service.gov.uk/statement-
summary/E7nEbrAK/2023).
62 |
kinandcarta.com
Building a world that works better for everyone
| 63
Strategic Report A responsible business
continued
S
People
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.
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 onboarding
experiences welcome and
celebrate new Kin globally,
highlighting opportunities to learn,
connect and build confidence.
This year we reintroduced in-
person onboarding in our offices
to strengthen the opportunity for
connection and learning.
Results across 2023 demonstrate
that our new starters are both
engaged and content with the
experience, showing over 80%
satisfaction.
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.
This year we have continued to strengthen our Shared Service
offering, transferring transactional work to Shared Service teams and
creating space for projects that create moments that matter for our
people.
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.
EVP
Purpose
& culture
For more information
see page 65
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:
• Global pay equity programme.
• An extended pool of employees
eligible for LTIP awards.
Personal wellbeing:
Recognising the healing power
of connections and enabling
wellbeing initiatives.
• A wellbeing support programme
for our people in Europe,
providing access to wellbeing
and mental health support,
including on-demand therapy
and coaching.
• Employee assistance
programme.
• Emergency response protocols
launched in the Americas to
provide better support for
our people in the event of an
external emergency situation.
• Mindfulness sessions.
• Hosting a range of talks and
Purpose and culture:
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.
• Creation of a career growth
matrix to provide clarity of
expectations and better
support development.
• 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 and inclusive
leadership training.
• 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.
• Participation rates in our
engagement survey continued
to grow, which helped retain us
as a “Great place to work”.
• Enhancements to our
onboarding experience were
made-automating aspects of
the process and introducing
face-to-face sessions.
The above range of investments
and activities is over and above
continuous communication
and dialogue with Kin about the
performance of the business,
in the context of financial and
economic performance. These
happen as frequently as monthly
at regional meetings led by the
regional finance directors and
CEOs and quarterly at all-company
meetings, led by CSO, CFO and
CEO. At key points in the year or at
critical events, detailed emails are
shared recapping what is shared in
scheduled 'town hall' meetings.
Professional
growth
Personal
wellbeing
Recognition
& reward
Case study
Supporting disability inclusion
1,849
Number of employees
as at 31 July 20231
14.93%
Staff turnover for the year
ended 31 July 20231
1 For these purposes, employee refers to an
individual engaged under a contract of service
and, therefore, does not include our contingent
workforce.
1,822
Full time
27
Part time
With the launch of the Universal
Access Affinity Group, we formed
a global community whose aim
is to break down access and
inclusion barriers for disabled
and neurodivergent people at
Kin + Carta. It became clear that
there was still work to be done
and an important element of
enabling disabled people to be
successful within the business
is understanding the gaps that
ensure inclusion in the recruitment
process.
Therefore, we commissioned an
external specialised company
(Celebrating Disability) to
undertake an audit and gap analysis
for the recruitment and onboarding
process. As a result, providing us
with a report, recommendations
and tangible outcomes that will
enable us to develop a robust
recruitment and onboarding
process that welcomes and
engages disabled candidates and
employees.
Since the gap analysis was
completed, a global taskforce has
been launched between all our
Talent Acquisition teams, Universal
Access Affinity Group, and our
Global IDEA team to prioritise and
deliver on the recommendations
from Celebrating Disability and our
employees.
64 |
kinandcarta.com
Building a world that works better for everyone
| 65
Strategic Report A responsible business
continued
S
People
Our 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.
Examples of how we are embedding this for our people include:
Purpose and culture
Professional growth
• We support communities of purpose
and practice, and we strive to facilitate a
borderless organisation.
• Leadership development in various forms
including Coaching.
• Creation of a career growth matrix to
provide clarity of expectations and better
support development.
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 52 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.
Personal wellbeing
Recognition and reward
• A wellbeing support programme for our
people in Europe, providing access to
wellbeing and mental health support,
including on-demand therapy and coaching.
•
Iterating on our performance framework to
provide meaningful growth conversations,
evaluation of values and clear expectations,
celebrating progression and rewarding
people fairly and equitably.
• Global pay equity programme.
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.
“ In the ever-evolving
landscape of DEI, the journey
from good to great requires
proactive vigilance. While
governments and companies
may lag behind, society surges
forward. By continuously
tracking global and country-
specific DEI trends, we stay
ahead of the curve, ensuring our
programs not only keep pace
but anticipate societal shifts.
Sheeren Barros
Global Head of Diversity and Inclusion
66 |
kinandcarta.com
Building a world that works better for everyone
| 67
Strategic Report A responsible business
continued
S
People
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.
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 at:
kinandcarta.com/en/idea/
Our IDEA vision
Strategic action
objective
Progress in 2023
Our teams are
as diverse as the
population in the
regions in which we
operate.
Both gender and ethnic diversity will always be a priority in hiring. Alongside these, this year we
chose to review our hiring and onboarding processes and practises from the lens of someone with a
disability. We partnered with Celebrating Disability, a company that specialises in disability inclusion,
to complete a full gap analysis of our hiring practises. Once the review was complete, we invited
our Talent Acquisition teams to complete comprehensive training and have launched a taskforce to
deliver the actions.
People are paid
equitably
for equal work.
We continue to run a full pay equity analysis every six months alongside 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). This year we prioritised understanding our gender pay
gap in all regions, increasing the frequency of reporting and the quality of the data.
Employees feel as if
they can bring their
authentic selves to
work.
The IDEA theme for the year was "By removing borders and forming bonds we will create meaningful
connections". To meet this theme, we ensured all our events and activities were available to all
regions, launched an internal global Hub with information on how to get involved alongside quarterly
all-hands. This year, we have run over 50 events leading to 85% (global average) of our Kin stating
that they can be themselves at work.
IDEA is a
sustainable and
ingrained part
of how we do
business.
We are IDEA leaders
in the technology
community.
As our true skill at Kin + Carta is creating new technology, we wanted to use that skill to enhance
our IDEA programme. The responsibility and engineering teams partnered to create a bot which
integrated fully with our Slack channels. This bot contains a comprehensive DEI glossary, an
anonymous ask me anything, and an anonymous feedback form, all managed by the IDEA team.
This year we worked closely in our Latin America region to promote diversity and inclusion initiatives
with strategic partners. In Argentina specifically, we were able to join a professional networking net
that promotes inclusive work spaces for sexual diversity and generates ties to attract LGBTQIA+
talent to the different organisations that comprise it. We are actively looking to join the same
network in Colombia. In addition to this, we were able to lock different educational spaces with
a separate partner in the Latin America region, who undertook three different workshops: one
centre in inclusive communication, another space specifically during Pride Month for awareness
of the violence the LGBT community faces, and a final workshop on sexual diversity and identities,
where we got the certification for our Buenos Aires office as being a safe environment for the LGBT
community.
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.
The affinity groups, listed below, are always evolving and are empowered to make substantial changes to Kin + Carta
as a whole by influencing Company policy, compensation and delivery.
People of the Global
Majority (previously
called BAME)
Purpose: to provide
support to Kin + Carta
employees from Black,
Asian, mixed and other
minority ethnic groups.
Black + Kin
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.
Pride+ (previously
called LGBTQIA+)
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 Heath
Purpose: to actively
support our Kin with
their mental health and
wellbeing.
Parents’ Group
Philanthropy
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.
Children of the 60s,
70s and 80s
Purpose: bring awareness
to, and be a resource
for, Kin in their ’40s, ’50s,
and beyond and their
supporters.
68 |
kinandcarta.com
Building a world that works better for everyone
| 69
Strategic Report A responsible business
continued
S
People
The gender diversity of our Board, management
and employees as at 31 July 2023
All employees
802
1,047
Female
Male
Senior managers
13
23
Female
Male
Board
3
4
Female
Male
For these purposes:
• Employee refers to an individual engaged
under a contract of service and, therefore,
does not include our contingent workforce.
• Senior managers for these purposes
is as defined in section 414C(8) of the
Companies Act 2006 and includes
the directors of the Group’s subsidiary
undertakings.
For information on ethnic diversity, see the KPI
“Percentage of employees identifying as Asian,
Black, Latinx or other non-white” on page 53.
For information on other key demographic
information related to our people, see pages
149 to 150.
IDEA initiatives
We are committed to creating
an inclusive environment for all
employees, as part of this continual
commitment we launched the IDEA
Bot as a pilot across Europe. The
reason for the pilot is to address
feedback from our Kin who, from
time to time, struggle to keep up
to date with the latest terminology
and to reduce the fear of saying the
"wrong thing" by empowering our
Kin to discuss new topics and feel
more comfortable to ask questions
and shape our IDEA approach.
The IDEA Bot was built in
partnership with our in-house
developers and is embedded
in our internal communication
tool. It contains a comprehensive
DEI glossary and an Anonymous
Question function, which is then
answered and published by the
IDEA team. To ensure the bot adds
as much value as possible, we are
running a comprehensive pilot
in one region before rolling it out
globally.
Mental health team
and programme
We are continuing to grow the
mental health first aid team, now
to over 45 qualified individuals
across Europe. All of our Mental
Health First Aiders (“MHFA”) have
been trained by Mental Health
First Aid England. The smaller task
force has now merged with our
IDEA programme to become one
of our nine Affinity Groups. The
European Mental Health Affinity
Groups priority is 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.
• Maintaining our internal mental
health website where Kin can
access various resources to
support mental health.
• Free anonymous therapy and
coaching 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.
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.
70 |
kinandcarta.com
Building a world that works better for everyone
| 71
Strategic Report A responsible business
continued
S
People
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.
• 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.
Our Accident Severity Rate (“ASR”)
was 47 (2022: 74). 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 via Employee
Assistance Programs, Mental
Health First Aiders and wellbeing
workshops.
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.
S
Human rights
Human rights
At Kin + Carta, we are committed
to equawlity, 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:
For more information on our
Code of Ethics
see page 62
For more information on our
Inclusion, Diversity, Equity and
Awareness Policy
see page 62
For more information on our
Modern Slavery Policy
see page 63
For more information on our
Speak Up Policy
see page 59
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
Kin + Carta is proud to remain
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.
For more information on practices
related to our people and inclusion,
diversity, equity and awareness
(“IDEA”) see page 68
72 |
kinandcarta.com
Building a world that works better for everyone
| 73
Strategic Report A responsible business
continued
S
Clients
Clients
Positive impact client work
The responsible business agenda
is now a core focus for our clients
and integral for progress as leaders
in their respective sectors. Kin +
Carta’s continued commitment to
exploring how to make a positive
contribution to our clients’ own
societal and environmental targets
is both a point of differentiation
and a point of pride.
Deadlines on decarbonisation
commitments now loom large
for all companies. The need for
data, insights and digital twin
strategies to operationalise these
commitments is growing rapidly.
Across all of our verticals and
regions, 2023 saw an uplift in
discussions and debate about the
role of digital in decarbonisation
and the forcing function that
regulation is playing for our clients
and their industries.
Challenging economic conditions
did see a temporary reduction
in committed spend and so
we ourselves have paused
formal measurement of client
decarbonisation tonnage achieved
after an encouraging start with
robust methodology developed, a
number of client engagements and
industry recognition.
Our proprietary approach to
evaluating positive impact
takes into account a number
of environmental, societal, and
reputational and remit variables.
We are proud of exceeding our
non-financial KPI of 9% of total
revenue coming from positive
impact work and delivering
impact driven work with clients
globally during 2023 that
equates to 10% of our total revenue.
We strive to increasingly introduce
these elements of responsible
business into client conversations
at the earliest stage, with a view
to maximising the outcomes
and impact that we can achieve
together. New initiatives like the
Kin + Carta Way, consulting
training, automated tracking and
other initiatives will further enhance
how we work in this area and the
direct client benefit it provides.
Robust governance for client
reassurance
In addition to our project
initiatives, a core element of
implementing responsible business
practices with our clients is
maintaining well established
processes, supported by our
policies:
See pages 58 to 62 for information
on our Anti-Bribery and Corruption
Policy, Code of Ethics, and
Environmental and Social Risk
Policy for Client and Partner
Engagements.
74 |
kinandcarta.com
Building a world that works better for everyone
| 75
Strategic Report A responsible business
continued
E
Planet
Our planet
Our environmental framework
During the year no environmental
incidents were reported.
A summary of our environmental
management policies and
frameworks can be found at:
For more information on our Ethical
and Sustainable Procurement Policy
see page 61
For more information on our
Environmental and Social Risk Policy
for Client and Partner Engagements
see page 61
For more information on our health,
safety and environment framework
see page 60
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 106.
How we are measuring, and
reducing carbon emissions
We measure 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:
• Replacing core networking
equipment in Denver, Portland,
Buenos Aires and Edinburgh
with a sustainable cloud
managed network.
• Removing legacy IT
infrastructure from our London
office and migrating it to the
cloud.
• Optimising cloud resource to
avoid operating under-utilised
infrastructure.
Our ongoing work to reduce
consumption includes:
•
•
Improving corporate travel
management.
Internal training and upskilling
on how we can lower energy
consumption.
• Continuing IT infrastructure
efficiencies.
Energy and carbon reporting
Kin + Carta’s carbon emissions
for 2022/23 have been calculated
primarily using DEFRA (UK) and
EPA (America) 2023 greenhouse
gas emission factors. 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 using the pro-rata
method or based on floor area
and average consumption for
similar buildings. Travel data was
obtained through expense claims
and travel management companies.
Both distance and spend-based
methodologies were used to
calculate travel emissions.
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. No mandatory
emissions have been excluded from
the emissions data.
Carbon emissions and energy consumption 2023
Scope 1 emissions (tCO2e)
Scope 2 emissions (tCO2e)
Total Scope 1 and 2 emissions (tCO2e)
Energy consumption electric, natural gas and grey fleet (kWh)
UK and
offshore
Global
(excluding UK
and offshore)
-
37.06
37.06
14.27
112.23
126.50
192,298
464,968
% UK
-
24.82
22.66
29.26
Purchased
goods and
services
Capital
goods
Waste
generated
(including
water)
Business
travel
Employee commuting
and working from home
(equipment only)
Leased
assets
Total
Global Scope 3
emissions (tCO2e)
145.63
114.08
16.73
536
131.39
7.92
951.91
Global energy consumption split and carbon intensity
kWh energy consumed
Natural
gas
Transport
(grey
fleet)
Electricity
Total
Scope 1 Scope 2 Scope 3
tCO2
Total (of
Scopes
1 & 2)
Intensity
ratio (of
Scopes
1 & 2)
2023
488,010
78,196
91,060 657,266
2022
638,813 350,004
16,320 1,005,137
2021
632,949
41,340
5,754 680,043
14
68
9
149
124
148
956
829
N/A*
164
191
157
0.83
0.97
0.87
* Not reported in previous years.
The intensity ratio has been calculated as: tCO2e produced per million pounds of turnover.
Total (of
Scopes
1, 2 & 3)
1115
1021
Intensity
ratio (of
Scopes
1, 2 & 3)
5.68
5
N/A*
N/A*
76 |
kinandcarta.com
Building a world that works better for everyone
| 77
Strategic Report A responsible business
continued
E
TCFD
Leaning into regulation for greater business impact:
Kin + Carta’s Task Force on Climate-related Financial Disclosures ("TCFD") Annual Report 2023
Summary of TCFD
Disclosures
Kin + Carta, our industry, and the
economy are at something of a
tipping point as digital transformation
powers data and artificial intelligence
("AI") which, in turn, powers
decarbonisation. We are committed
and ambitious in playing our part in
the climate transition.
With this commitment in mind, we
are driving efforts to enhance our
climate-related disclosures and hold
ourselves to account in taking action to
contribute and build our resilience for
the transition to a low carbon economy.
While climate-related reporting is
at a relatively nascent stage across
our industry, we will continue to drive
efforts to strengthen responsible
business practices, further enhance our
climate and wider sustainability-related
disclosures and drive value for our
stakeholders including investors, clients,
supply chain, employees and the planet.
We set out in this section our climate-
related financial disclosures which
we consider to be consistent with
the TCFD recommendations and
recommended disclosures. The table
below is a summary view of the TCFD
disclosures.
TCFD pillars
Governance
Pages 81 to
84
TCFD disclosure
recommendations
a. Describe the Board’s
oversight of
climate-related risks
and opportunities.
Pages 81 to 82
Strategy
Pages 86 to
95
b. Describe
management’s role
in assessing and
managing climate-
related risks and
opportunities. Page 82
a. Describe the
climate-related risks
and opportunities
the organisation has
identified over the
short, medium, and
long term. Pages 90
to 93
b. Describe the impact
of climate-related
risks and opportunities
on the organisation’s
businesses, strategy,
and financial planning.
Pages 94 to 95
How we respond to these recommendations
• While the Board has delegated overall responsibility for the delivery of the
Group’s strategy (i.e. including its climate strategy) to the Group Chief
Executive, our Governance framework ensures that the Board maintains
oversight of the climate-related issues impacting our business.
•
The Board meets seven times annually, with climate-related matters
typically discussed in three of those meetings.
• Within the Exec, the Chief Financial Officer and Chief Operating Officer
(a split role filled by one individual) prioritises sustainability initiatives,
including regulatory and statutory compliance related to Environmental,
Social, and Governance ("ESG") standards.
• We expect all of our Kin in management positions to take responsibility
for monitoring climate-related risks and opportunities and escalating
them when necessary, with additional specific responsibilities being
allocated to the Global Director of Responsible Business and across the
Responsible Business Platform.
• We recognise that not all climate-related risks and opportunities are
foreseeable, but we are working to better identify, assess, prepare for
and adapt to these risks by carrying out qualitative scenario analysis and
building on our Climate Strategy and Action Plan.
• We have defined the short term as by 2025, medium term as by 2030
and long term as by 2050. These time frames are attached to different
climate-related risks and opportunities depending on the timeframe
within which the risk could materially impact the business.
• Our Climate Strategy and Action Plan ("CSAP") consolidates the
governance, strategy, risk management and metrics framework that we
adopt to address climate-related issues.
• We have disclosed how conducting scenario analysis has highlighted and
equipped us to prioritise climate-related issues, which may impact our
business materially. We have outlined seven strategic actions, which we
are validating and may employ to address the impact climate-related
issues have on our business and strategy.
• We recognise that to improve our adherence to the TCFD disclosures,
we will need to further assess and disclose how climate-related risks and
opportunities impact 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.
Pages 86 to 93
•
To inform our strategic planning, we have conducted qualitative
scenario analysis, which incorporates the IPCC’s Shared
Socio-economic Pathway ("SSP") narratives 1 and 5 (which account for
societal, economic and technological change) to assess different future
climate-related scenarios. These are the same pathways we used last
year, which helps us to remain consistent in our reporting.
• We recognise that, to improve our strategy, we may benefit from the use
of more than two scenarios to prepare our business for more potential
circumstances.
Foreword from our CFO
A year of intentional integration, leaning into the pace of
regulatory advancement.
I am proud of our investment in climate disclosure over the last
12 months, in particular, the detail and rigor of this Report, which
enables us to make even greater progress in the year to come.
Highlights include:
• Submission to the Science Based Targets initiative
• Scope 3 measurement added a further four subcategories
• Successful completion of inaugural double-materiality
assessment
• Evolution of supplier code-of-conduct to engage on net zero
target
A need to focus has informed the short-term pausing of our
ambitious client carbon-saving commitment, in part as a reflection
of client priorities in a time of economic challenge. We do, however,
remain excited by, and confident in, our ability to facilitate the
growing connection between digital and decarbonisation. As a
certified B Corp we adhere to their theory of change and to our
collective responsibility as business leaders.
Adhering to, and exceeding, regulatory expectations contributes
to our mission to build a world that works better for everyone.
Chris Kutsor,
Chief Financial Officer,
Chief Operating Officer
Kin + Carta Board Member
78 |
kinandcarta.com
Building a world that works better for everyone
| 79
Strategic Report A responsible business
continued
E
TCFD
TCFD pillars
Risk
Management
Pages 96 to
103
TCFD disclosure
recommendations
a. Describe the
organisation’s
processes for
identifying and
assessing climate-
related risks. Page 96
How we respond to these recommendations
• Our approach to climate risk assessment accounts for both transition
and physical risks, including the six TCFD subtypes that could affect
Kin + Carta: policy and legal, technology, market and reputation-related
transition risks, and acute and chronic physical risks.
• We identified emerging risks across each of these categories, which are
validating and may add to our Responsible Business Risk Register in future.
•
Each risk that we identify is assessed with a rating (a product of the
assessed likelihood and probability of occurrence), current and future
mitigations, and a tolerance level.
Metrics and
Targets Pages
104 to 106
b. Describe the
organisation’s
processes for managing
climate-related risks.
Pages 100 to 101
• Our risk ratings (which ascend from 1 (very low) to 25 (very high)) are
categorised into five levels, which are associated with an acceptance
level.
•
Executive Directors conduct the assessments and assign risks with
ratings of between 9 and 15 to a risk owner. Risks with ratings of 16 and
above are taken up to the Board for further consideration.
c. Describe how
processes for
identifying, assessing,
and managing climate-
related risks are
integrated into the
organisation’s overall
risk management: Page
102
• Our risk rating approach equips Senior Leaders to determine the
significance of climate-related risks relative to each other and to other
principal risks.
• We aim to integrate climate considerations more effectively into our risk
management framework and throughout our business operations.
a. Disclose the
• We have detailed the metrics we use to measure our climate and wider
metrics used by the
organisation to assess
climate-related risks
and opportunities in
line with its strategy
and risk management
process. Pages 104 to
106
b. Disclose Scope 1, Scope
2, and, if appropriate,
Scope 3 greenhouse
gas ("GHG") emissions,
and the related risks.
Pages 104 to 105
c. Describe the
targets used by the
organisation to manage
climate-related risks
and opportunities and
performance against
targets. Page 105
environmental impact and acknowledged which aspects of our business
operations are responsible for the largest shares of these levels.
• We have identified which metrics are relevant for measuring each GHG
emissions Scope and disclosed environmental impact metrics outside
of GHG emissions for water use, waste management and electricity
efficiency. Our GHG emissions results are as follows:
•
•
•
Scope 1: 14 tCO2e
Scope 2: 149 tCO2e
Scope 3: 951 tCO2e
• We have outlined remedying actions that will be taken to mitigate the risk
that these emissions sources represent.
• We outline how the metrics we disclose are necessary for understanding
our progress towards our targets; primarily, becoming net zero by 2027.
• We intend to use the SBTi methodology alongside the GHG protocol to
develop and disclose interim targets en route to net zero. And in parallel,
we intend to develop forward-looking metrics that consider our strategic
planning time horizons.
Governance
At Kin + Carta, our strong governance foundations
provide the rigour and process to further embed ESG
and the climate crisis in our strategy and operating
model. In the boardroom, across management and
all teams, climate considerations increasingly feed
into discussions ranging from strategy and risk to
acquisitions and performance objectives.
Kin + Carta’s Board, including the Executive and Non
Executive Directors, hold overall accountability for
climate-related risks and opportunities ("CROs"),
overseeing key policies concerning environmental
and climate matters such as our Climate Strategy
and Action Plan ("CSAP") and risk registers. The Kin +
Carta parent board (i.e., the "Board") has delegated
responsibility for the delivery of our strategy to the
Group Chief Executive, who can delegate further,
while retaining primary responsibility for strategic
delivery. In discharging responsibilities, the Board
takes appropriate account of the interests of our
stakeholders including clients and wider society. Our
Governance framework (Figure A) enables the Board to
have oversight of the CROs impacting our business and
address and account for climate and nature-related
matters and map the points of connection with wider
sustainability-related issues with our global director
of responsible business reporting to our global chief
strategy officer, and thus a point of connection and
continuity between the different parties.
Our Board and Management Committees provide
holistic oversight of climate-related issues, ensuring
we are all accountable for taking action to meet our
goals. The Board consults on, and approves, ambitious
medium-term goals for each aspect of the triple
bottom line: people, profit, and planet. These goals are
typically set to be achieved within five years before
being further broken down into annual initiatives with
a specific responsible business initiative set for this
coming year that includes a discovery and roadmap for
net zero 2027. Progress against this will be updated to
leadership monthly and to the Board each time they
meet.
The Board meets at least seven times annually.
Currently, climate-related matters are discussed
in three of those meetings. In September 2022, for
example, the Board approved targets to offset all
emissions from our global business by the end of FY23
and reach net zero greenhouse gas ("GHG") emissions
by the end of 2027. The Board recognised that
additional work is needed to determine the strategies
for achieving the net zero target, an action which will be
explored next year. In January 2023, the Board received
an overview of the key ESG initiatives for FY22/23
developed in collaboration with the Climate Taskforce.
Figure A: Our governance structure for climate-related issues
Kin + Carta’s Board
Board Committees
Audit
Remuneration
Nomination
Exec
CEO
1
Climate Task Force*
CFO and COO
Management Forums
3
Ops Council
2
Environmental and Social
Risk ("ESR") Review Board
Key:
Board Committees
Management Committees
Reports up to
* Climate Taskforce reports to the Board but is not a formal committee of the Board.
80 |
kinandcarta.com
Building a world that works better for everyone
| 81
Strategic Report
A responsible business
continued
E
TCFD
These initiatives range from measuring, managing and
reducing our environmental footprint, to exploring
client-facing services related to sustainable consulting
and engineering. The intention is to increase the
frequency with which board meetings discuss and
directly contribute to the net zero feasibility study and
roadmap through FY24.
A robust system of governance sits at the core
of Kin + Carta’s climate strategy
The Board assigns specific responsibilities to Board
Committees and delegates further authority to the
Group Chief Executive. The Chief Executive Officer
actively promotes the People and Responsibility
Platforms, prioritising sustainability and addressing
climate risk. She drives responsible business
practices, safeguarding the wellbeing of employees
and stakeholders involved in our activities. The CEO
assumes responsibility for monitoring Key Performance
Indicators reflecting our people, profit, planet ethos.
The Chief Financial Officer and Chief Operating
Officer (a split role fulfilled by one individual) oversees
the global Operations Platform, which encompasses
Finance, Legal, Employee Experience, Connective
Digital Services (IT), and Risk Management. Within
this platform, they prioritise sustainability initiatives
including regulatory and statutory compliance related
to ESG standards. He also ensures the implementation
of robust business conduct policies that align with
sustainability principles.
Underpinning the Board, three forums have key
responsibilities for managing climate and responsible
business-related issues (Figure B). We are committed
to ensuring that our governance structure remains
adaptable, aligned with strategy and the evolving
demands of the market. We recognise the benefits
of assessing and adjusting our governance practices
regularly to respond to changing circumstances
effectively.
Management’s role in climate-related change
Day-to-day responsibility for monitoring exposure to
CRO and responding to environmental incidents in
"real-time" sits with each member of the Leadership
Team. Currently, our Kin can escalate climate-related
incidents, risks, or concerns to management via two
processes depending on the "type" of issue (Figure
C). Responsibility for providing rigorous oversight and
management of climate-related issues that is essential
for progressing our climate goals, however, sits with
roles within the Global Responsible Business Platform
(Figure D).
Figure B: Three committees have key responsibilities relating to climate and wider "responsible business" issues
Forum name
Forum purpose
Which
climate-related
issues is the forum
responsible for?
1
Climate
Task Force
Assess and review
business-wide climate-related
risks, opportunities, metrics
and targets.
2
Environmental and
Social Risk Review Board
Assess and approve potential
new client projects or
partnership opportunities.
3
Ops
Council
Advise the Executive Directors
on matters delegated to them
by the Board and ensure
strong alignment on business
priorities and actions.
• Measuring, managing and
• Assessing the potential
• Advising the CEO, CFO
monitoring Company Scope
1, 2 and 3 emissions.
• Overseeing adherence to the
"responsibility assignment
matrix" to enable consistent
reporting.
environmental/social risks
identified in an opportunity
(e.g., through a project brief)
during the qualification
stage.
• Agreeing on whether to
approve the opportunity.
Frequently, as is required
(including when referrals are
received) (since FY23)
and COO on responsible
business matters e.g.,
ensuring they support and
uphold the development
and monitoring of ESG
commitments and initiatives
proactively.
Weekly meetings. Responsibility
Platform matters are considered
quarterly (at least) (since FY21)
Frequency and
operational since
Monthly (since FY22)
Do they report to
the Board?
Yes – Reports to the Board
No – Reports to
the Ops Council
Yes – Reports to the Board
(via reports from the CEO, CFO
and COO)
Figure C: Processes for escalating two types of climate-related issues to management
Type of issue
Process for escalating to management
Climate-related event /
potential incident (e.g.
extreme weather event
impacting Kin + Carta)
Colleague submits an Incident
Report via online incident
management system.
Incident report is received by the critical
incident team (comprised of key compliance
leads including the Head of Risk Management)
and logged automatically.
The subject matter expert from the critical incident team assesses
the incident and potential responses. They approve/recommend
an approach to the appropriate colleague or board, in accordance
with the Group’s Delegation of Authorities.
Learnings from the incident are embedded
into the appropriate framework e.g., strategy
or risk management.
Potential environmental/
climate-related risk
identified in a client project
or partner engagement
opportunity
Risk identified during weekly
high-level review of all new
opportunities.
Risk flagged to Chief Growth Officer and
Regional Business representatives.
ESR review document drafted (by
Responsible Business Rep) and sent
to the designated review group.
The designated review group
conducts an initial vote. If the vote
is split, a meeting is convened, and
second vote is taken.
Reasons for decision are captured in a
single global log of ESR cases and outcomes
(which is made available to the Board) and
communicated to relevant stakeholders.
82 |
kinandcarta.com
Building a world that works better for everyone
| 83
Strategic Report
A responsible business
continued
E
TCFD
Figure D: Key management roles with climate and environment-related responsibilities, which sit on the Global
Responsible Business Platform
Management
title
Climate-related
responsibilities
• Monitor climate-related risks and opportunities
and raise climate-related risks.
•
•
Identify and introduce strategic initiatives and
opportunities to support clients and collaborate
with partners on climate-related projects.
Lead and oversee all "responsible business"
initiatives to enhance positive impact across the
triple bottom line and build towards B Corp
re-certification in 2024.
• As a member of the ESR Review Board, assess
client / partnership opportunity briefings to
identify and advise on environmental or social
risks they may present.
All
management
positions
Global
Director of
Responsible
Business
Health,
Safety and
Environment
Advisor
Climate-related forums attended
ESR Review
Board*
Climate Task
Force
Ops Council
Dependent on the individual role
Chairs the
Climate Task
Force
Responsible
for assessing
environmental
or social
risk of client
and partner
opportunities
Chairs the
quarterly
meetings
dedicated
to the
People and
Responsibility
Platforms
Attends
quarterly
meetings
dedicated
to the
People and
Responsibility
Platforms
•
Lead the annual measurement of Scope 1, 2 and 3
emissions.
Contributes
as required
• Collaborate with the rest of the global
responsibility platform, Finance, Risk and
the Climate Task Force on maturing carbon
accounting and embedding environmental risk x
location thinking into the business.
•
Jointly lead on the net zero feasibility project with
the Global Director of Responsible Business.
Accountable
for reporting
on emissions
*Environmental and Social Risk Review Board.
84 |
kinandcarta.com
Building a world that works better for everyone
| 85
Strategic Report A responsible business
continued
E
TCFD
Strategy
The economy is undergoing multiple inter-connected
shifts, which add complexity to our business
operating environment and mission to build a world
that works better for everyone. As a triple bottom line
B Corp, we recognise that integrating considerations
of the evolving climate transition into our strategy
can empower us to understand our clients’ evolving
needs, ensure regulatory compliance, and deliver on
our purpose.
This year, we have engaged in an in-depth explorative
climate scenario analysis to build our understanding
of Kin + Carta’s exposure to climate-related physical
and transition risks and opportunities. Evaluating the
insights from the climate scenario analysis has supported
us to identify and monitor our exposure to risks and
opportunities and frame our approach to build the
resilience of our operations and strategy.
Although climate-related risks and opportunities ("CROs")
will impact Kin + Carta in ways that we may not yet be
able to identify, inaction now may lead to higher costs
and missed opportunities in the future. We believe this
assessment can inform our investment and growth
decisions so that the strategies we develop mitigate the
impact of climate-driven changes on the economy.
Although the absolute direct environmental impact
of Kin + Carta and digital consulting sector is low
relative to high emitting organisations and sectors, our
Climate Strategy and Action Plan ("CSAP", first set in
2021), acknowledges that our climate strategy will be
evaluated in the context of the nuance of our
industry’s specific pathway and with scrutiny relative
to our peers. The CSAP consolidates the
climate-related actions that we employ currently
under the four TCFD pillars (governance, strategy, risk
management and metrics and targets) and will mark
the progress we make in enhancing these in future. It
outlines how we take an inside-out approach as we aim
to commit with ambition to addressing, first, our own
operational climate-related impact before affecting
change across our value chain.
Our B Corp status is evidence of our strategic
commitment to our triple bottom line values, high
environmental performance standards, and transparent
accountability. In 2024, we will undergo the B Corp
recertification process (required every three years). As
we look to recertify, we recognise the importance of
reflecting on the approaches we take to developing and
strengthening disclosures, managing and accounting for
CRO in our strategy.
The nature of Kin + Carta’s offering to clients is such
that no specific supply chain is at risk from different
climate-related scenarios. The business strategy is
to be dynamic, nimble and responsive to the evolving
needs of clients and their value chains as affected by
climate change. This includes empowering clients to
have better command of their business performance
data in times of volatility and to move their on-prem,
physical systems to the cloud to reduce risk. The
business strategy has scale, diversification of location
and hybrid working built in and each way will support
resilience in a 2°C or lower scenario.
Climate-related scenario analysis methodology
In FY23 we undertook an in-depth climate scenario
analysis to explore potential future climate-related
conditions (social, political and economic) and hazard
events, which could impact our business, i.e., transition
and physical CROs. Following our FY22 TCFD reporting
experience, we evolved our scenario analysis approach;
the methodology and key findings are outlined below.
"Physical" methodology: The physical scenario analysis
involved assessing the exposure of 16 Kin + Carta offices
to six hazard types (wildfire, drought, heat, tropical
cyclone, riverine and coastal flooding) in two scenarios
(a baseline and warming scenario RCP8.5) across four
time horizons (pre-industrial, 2030, 2050, and 2080). The
modelled output outlines the percentage (%) of land
area within a 50km2 grid cell (in which the Kin + Carta
offices are each located) which is exposed to each
extreme event type annually.
In conducting this exercise no long term risks were
identified, with all risks being more pertinent in the
short and medium term.
"Transition" methodology: Building on last year’s
reporting assets, we first developed a schematic profile
of our operations accounting for our top and bottom
line drivers (e.g., staffing costs), global physical asset
distribution, existing risk management and climate
mitigations. We overlaid this profile with two transition
development narratives to frame plausible future
conditions in diverging global responses to climate
change.
Having assessed four publicly available scenario
frameworks (NGFS, IEA, IPCC, IPR), we chose the IPCC’s
Shared Socio-economic narratives in line with last year’s
TCFD. The SSPs provide relevant variables at a granularity
suitable for exploring the potential future business
operating context (Figure E). We selected an optimistic
warming scenario of below 2°C (SSP1) and compared this
with a ‘business-as-usual’ (4°C) pathway (SSP5).
Figure E: Overview of the IPCC Shared
Socio-economic Pathways (SSP1 & 5) applied in our
climate scenario analysis
SSP1: Sustainability (taking the green road)
• < 2°C warming.
• Optimistic outlook of a gradual but consistent
shift towards a more sustainable path, which is
driven by minimal challenges to either mitigation
or adaptation efforts.
• Very low greenhouse gas ("GHG") emissions and
lower resource and energy intensity.
• This scenario assumes swift and comprehensive
changes in policies, regulations, technologies
and markets by 2030.
• Key changes include the implementation of
carbon pricing schemes to reduce emissions
across regions and sectors, enhanced
climate–related policy and governance to
promote climate action and greater
climate-related awareness across civil society.
SSP5: Fossil-fueled development (taking the
highway)
• ~ 4°C warming.
• Significant challenges to climate mitigation
and low challenges to adaptation driven by a
reliance on technological innovation to drive
sustainability.
• Very high greenhouse gas ("GHG") emissions
driven by intensive exploitation of fossil fuel
resources and energy usage.
• This scenario assumes limited incentives, policy
or regulatory support for emission reduction.
• Key impacts include changes in the physical
environment i.e., more frequent and extreme
acute weather events and chronic changes, e.g.,
in temperature and precipitation patterns.
86 |
kinandcarta.com
Building a world that works better for everyone
| 87
Strategic Report A responsible business
continued
E
TCFD
Prioritising climate risks and opportunities: After
overlaying the SSP assumptions and representative
CO2e concentration climatic conditions on our baseline
future operating assumption, we could explore an
exhaustive list of plausible CROs: the "long-list". To
determine the materiality of the CROs on the long-
list and build horizon scanning heat maps, we defined
assessment criteria across two dimensions: impact
and likelihood. The average of these two numbers gave
us a total risk score (Figure F). Using these results,
we plotted heatmaps (Figure G) summarising (and
equipping us to prioritise) our physical and transition
CROs.
Figure F: Assessment criteria
Key scenario analysis findings
Physical CROs: Of the 24 physical risks identified, the
key sources of our physical hazard exposure by 2030
are from wildfires in our Eastern Europe and South
America offices and riverine flooding in our North
America offices.
Over the course of the mid/end-century this exposure
to wildfire and riverine flooding will rise significantly
and be joined by two emerging risks: drought in Eastern
Europe and heat in North and South America.
1
2
3
1. Level of Impact
Minimal impact on total costs and
revenues and negligible impact to
stakeholders if not addressed.
2. Probability of Occurrence
Increased costs/decreased
revenue but manageable with
current financials. Shift in
operating profile.
Significant material impact
on valuation, costs and
revenues. Critical disclosure for
stakeholders.
Medium–long
(over 2030–2050)
Short–Medium term
(2025–2030)
Short term
(2025)
Total risk score: average of "level of impact" x "probability of occurrence"
X < 1.5
1.5 < x < 2.5
X ≥ 2.5
CRO
long list
Heat
maps
CRO
short list
Physical Risks
24
Transition Risks
Transition Opportunities
15
15
High
3
e
c
n
e
r
r
u
c
c
O
f
o
y
t
i
l
i
b
a
b
o
r
P
2
1
Carbon offsets
Capability gaps
Carbon taxes (suppliers
& transportation)
Expansion (geographic
& acquisition)
Targets and
standardisation
Energy costs
US Carbon Taxes
Cost of electricity
Climate-related
commitments
Interconnected
market share
Misaligned
perceptions
Combined into 6
short-listed risks
(In)access to
green subsidies
Compliance risk
(climate-related
reporting)
Low
1
Level of Impact
3
High
6
6
4
High
3
e
c
n
e
r
r
u
c
c
O
f
o
y
t
i
l
i
b
a
b
o
r
P
2
1
N. America
E. Europe
Heatwave events will
also increase in Eastern
Europe and North
America office regions.
E. Europe
Wildfire and riverine flood events
are expected to increase in
occurrence in the Eastern Europe
office regions and North America.
S. America
E. Europe
N. America
S. America
Some of our South America
offices have elevated
exposure to heat, riverine
flooding, and wildfires.
N. America
UK
N. America
UK
E. Europe
Low
E. Europe
S. America
UK
N. America
1
Level of Impact
3
High
7 Actions
Physical Risks Key:
Transition Risks Key:
Acute – Wildlife
Acute – Coastal Flood
Policy and Legal
Market
Acute – Tropical Cyclones
Chronic – Heat
Technology
Reputation
Acute – Riverine Flood
Chronic – Drought
Figure G: These horizon scanning heatmaps present the high-level results of Kin + Carta’s
physical (left heatmap) and transition (right heatmap) climate scenario analysis
Physical Risk: our exposure to six types of hazard
across 16 offices in four regions (UK, Eastern Europe,
North America and South America).
Transition Risks: the 15 long-listed transition risks
identified across four types (policy and legal,
reputation, market and technology).
High
3
e
c
n
e
r
r
u
c
c
O
f
o
y
t
i
l
i
b
a
b
o
r
P
2
1
N. America
E. Europe
Heatwave events will
also increase in Eastern
Europe and North
America office regions.
E. Europe
Wildfire and riverine flood events
are expected to increase in
occurrence in the Eastern Europe
office regions and North America.
S. America
E. Europe
N. America
S. America
Some of our South America
offices have elevated
exposure to heat, riverine
flooding, and wildfires.
N. America
UK
N. America
UK
E. Europe
High
3
e
c
n
e
r
r
u
c
c
O
f
o
y
t
i
l
i
b
a
b
o
r
P
2
1
Carbon offsets
Capability gaps
Carbon taxes (suppliers
& transportation)
Expansion (geographic
& acquisition)
Targets and
standardisation
Energy costs
US Carbon Taxes
Cost of electricity
Climate-related
commitments
Interconnected
market share
Misaligned
perceptions
Combined into 6
short-listed risks
(In)access to
green subsidies
Compliance risk
(climate-related
reporting)
Low
E. Europe
S. America
UK
N. America
1
Level of Impact
3
High
Low
1
Level of Impact
3
High
As highlighted by the smoke and air pollution from
Canadian wildfires, which affected many North
America-based Kin in June 2023, we see a growing
need to understand the second order impacts from
physical hazards on our business. This incident
corroborated our assessment that Kin + Carta’s strong
remote working capabilities may mitigate the direct,
large-scale and long-term impacts to our business
from our exposure to hazards.
In future, we expect the main mode of impact from
physical hazards to be in lost working days, such as
due to localised failures in public telecommunications
infrastructure. We recognise that defining new metrics
(e.g., "number of working days lost equivalent") may
equip us to better understand the impact that
climate-related incidents have on our business. Based
on this year’s scope (six hazards and 16 offices), we do
not think our exposure is significant enough to warrant
changes in our locations or growth strategy. However,
this analysis could change if, in future, we extend the
scope to include additional hazards or nature-related
risks (e.g., non-GHG air and water pollution in line with
the TNFD framework), dependent public infrastructure
and/or employee residences at the postcode level.
In light of these findings, next year we intend to
explore and validate the opportunity to enhance our
climate-related risk management capabilities.
Specifically, to explore how strengthened incident
reporting and continuity planning may mitigate impact
and support our Kin in times of disruption.
Transition CROs (see Figures H and I): Of the 30 CROs
identified, one of the most significant opportunities
is the growing demand for digital decarbonisation
strategies, which Kin + Carta is strongly positioned
to partner with clients on. We intend to mature our
capability to proactively evaluate and track this
opportunity against market and client signals and
appetite.
Compared to asset-heavy industries where carbon
policy and technology drive exposure to the
low-carbon economic transition, our analysis shows
that market and reputational drivers such as investor
perception and employee satisfaction are more
critical to our transition narrative. Therefore, our key
risk exposures are from a market demand shift and
consolidation pressure (single-vendor model) and
reputational, from the potential failure to implement
strong approaches for setting and monitoring climate
commitments.
88 |
kinandcarta.com
Building a world that works better for everyone
| 89
Strategic Report
A responsible business
continued
E
TCFD
Figure H: Short list of climate-related risks and opportunities identified through scenario analysis
Risk
type
Name
Description
Climate-related risks and opportunities
Enhancing
commitments
Build on our forward-looking market position as a "responsible business" (marked by our B
Corp status and net zero target) by prioritising (climate-related) metrics standardisation
and committing to the Science Based Targets initiative ("SBTi").
Submitting our commitment to the SBTi in August 2023 (and developing our targets within
a year) demonstrates commitment to a standardised, data-led approach to metrics setting.
Providing transparency on the methodology we use in target setting and evaluating our
climate transition maturity can enhance the integrity of our sustainability commitments,
enhancing our reputation for existing and prospective clients and aligning market and
employees’ perceptions of our business.
Digital
decarbonisation
As operational efficiencies in digital technologies can reduce GHG emissions by up to
20%1, market demand is likely to grow for services at the intersection of data/digital
infrastructure and climate e.g., digital decarbonisation design.
Kin + Carta’s foundational capabilities and service offerings at the design stages of
digital infrastructure mean that we are well situated to advise on digital infrastructure
decarbonisation adaptations/transition plans for clients across different sectors to achieve
lower-carbon operations in alignment with our own values.
Sustainable
operations
Drive authentic behaviours and practices, which demonstrate commitment to triple
bottom line values (people, profit, planet) and reduce risk of greenwashing accusations.
Successful and authentic triple bottom line operations drive tangible dividends including
cultural and mission alignment between the Board, employees and market, regulatory
compliance, and the attraction and retention of talented, driven employees.
Continuity
planning
Enhance and actively manage business continuity planning approaches and capabilities,
incorporating principles of continuous resilience.
Developing consistent approaches to continuity and transition planning can showcase how
identified failure and operation modes are mitigated from the climate-related physical and
transition risks which face Kin + Carta. Embedding these capabilities can showcase our
commitment to responsible business values to our investors, employees, clients and market.
s
t
e
k
r
a
M
i
y
c
n
e
c
i
f
f
e
e
c
r
u
o
s
e
R
e
c
n
e
i
l
i
s
e
R
Impact¹
Occurrence1
Risk score¹
Time frame²
Actions
Short term
(<2025)
• Action 1) Committing to the Science Based
Targets initiative
3
3
3
2
3
3
2
3
H
H
H
H
Medium term
(2030)
• Action 6) Market and demand assessment
approach
Medium term
(2030)
• Action 2) GHG accounting and carbon
offsetting due diligence
Medium term
(2030)
• Action 7) Enhancing climate-related risk
management
1 Level of impact form 1 - 3, Probability of Occurrence from 1 - 3 (i.e., Low/Moderate/High respectively).
The Risk score is the average of these two scores categorised as Low: x ≤ 1.5; Moderate: 1.5 < x < 2.5; and High: x ≥ 2.5.
2 The timeframe within which the risk could materially impact the business, based on the IPCCs SSP1 scenarios
(warming of <2 degrees Celsius) whereby the short term is <2025, medium term is 2030 and long term is 2050.
90 |
kinandcarta.com
Building a world that works better for everyone
| 91
Strategic Report
A responsible business
continued
E
TCFD
Figure I: Short list of climate-related transition risks and opportunities identified through scenario analysis
Risk
type
Name
Description
Climate-related risks and opportunities
n
o
i
t
a
t
u
p
e
R
/
t
e
k
r
a
M
l
y
g
o
o
n
h
c
e
T
l
a
g
e
L
d
n
a
y
c
i
l
o
P
Climate-related
target setting
Climate and carbon-related target setting are complex exercises, which can be subject to
market and regulatory scrutiny.
Failing to implement well-structured, standardised approaches for setting, communicating and
monitoring publicised sustainability commitments could expose Kin + Carta to reputational damage,
loss of investor and employee trust and, potentially, legal fines. If targets are communicated poorly
and misinterpreted, the Company’s transition pathway could be undermined.
Overlooking
innovation
opportunities
The economy is undergoing multiple inter-connected shifts, which add complexity to
business operating environments and may impact our revenue potential if we fail to adapt
and innovate in line with change.
If climate transition is considered in silo from our broader (digital technology) strategy, or if
there is a failure to leverage the maximum potential of existing employees’ capabilities, our
existing and future potential revenue streams could be restricted or lost. The consulting market
is showing trends of consolidation around (climate-related) capabilities and growing likelihood
of tightening consulting budgets for non-integrated solutions. Failing to adapt or innovate could
tighten our potential revenue streams.
Carbon offsets
Voluntary carbon offset markets currently lack the transparency required for proper
auditability.
Kin + Carta’s grid dependency means that advancing our progress to carbon neutrality and net
zero will rely on carbon offsets. The effectiveness of underlying emissions offsetting techniques in
which we invest (through The Climate Vault platform) relies on existing carbon offset markets. Limits
to transparency and the lack of regulation of this market could expose us to negative publicity,
reputational damage, or greenwashing accusations if rigorous due diligence is not performed.
Capability gaps
In the context of an accelerating technology development deployment operating
environment, maintaining and growing a talent base for the digital and climate transitions
may become more challenging and expose us to capability gaps.
Capability gaps may emerge if new climate or sustainability-related processes and services (which
existing employees are not trained for) are introduced while internal upskilling is deprioritised. A sole
focus on hiring to cover new offerings can impact employee satisfaction (lowering eNPs), generate
capability mismatching and challenges for retaining and attracting talent.
Growth-related
compliance
Growth, particularly into new jurisdictions or through acquisition, presents new compliance
and reputational risks.
Expansion into new geographies will increase the (GHG) reporting burden as local requirements
might differ and require additional resource to address compliance in new jurisdictions.
Equally, expansion through acquisition could generate reputational or internal cultural risk,
increased attrition or exposure to legal fines if robust climate due diligence is not introduced to
understand the entity’s operational carbon intensity, capabilities or values.
Value
chain-driven
carbon taxes
While the direct impact of carbon taxes on Kin + Carta (i.e., Scope 2 emissions) will be
limited, they will have a disproportional indirect effect via our value chain i.e., supply chain,
clients, employees and sector expectations.
In the short term, carbon taxes are likely to be implemented in the jurisdictions that we operate
in. Although the impact of carbon policy and prices is moderated by our absolute emissions,
establishing or maintaining relationships with carbon intensive actors may trigger carbon taxes
and inflict reputational harm if due diligence and monitoring is not maintained.
Impact¹
Occurrence1
Risk score¹
Time frame²
Actions
3
3
2
3
2
2
3
2
3
2
3
3
Short term
(<2030)
• Action 1) Committing to the Science Based
Targets initiative
Short term
(<2030)
• Action 4) Internal training and upskilling on
climate and the environment
• Action 5) Regulatory and growth (M&A)
horizon scanning and due diligence
Short term
(<2030)
• Action 2) GHG accounting and carbon
offsetting due diligence
Medium term
(2030)
• Action 4) Internal training and upskilling on
climate and the environment
• Action 5) Regulatory and growth (M&A)
horizon scanning and due diligence
Medium term
(2030)
• Action 5) Regulatory and growth (M&A)
horizon scanning due diligence
Medium term
(2030)
• Action 3) Developing an approach to
supplier engagement for climate transition
H
H
H
H
H
H
1 Level of impact form 1 - 3, Probability of Occurence from 1 - 3 (i.e., Low/Moderate/High respectively).
The Risk score is the average of these two scores categorised as Low: x ≤ 1.5; Moderate: 1.5 < x < 2.5; and High: x ≥ 2.5.
2 The timeframe within which the risk could materially impact the business, based on the IPCCs SSP1 scenarios
(warming of <2 degrees Celsius) whereby the short term is <2025, medium term is 2030 and long term is 2050
92 |
kinandcarta.com
Building a world that works better for everyone
| 93
Strategic Report
A responsible business
continued
E
TCFD
Risks and opportunities by geography and sector
Our approach incorporated assessing our CROs by
both geography and sector. The primary geographic
differentiation lies in the potential impact of physical
risks, a summary of which can be seen in Figure G. In
terms of sector-based impacts, we provide digital
transformation consultancy services to our clients.
However, we recognise that our customers, who
operate in a wide variety of sectors, will all face
differing impacts and opportunities from a low-carbon
economic transition. Each of our business areas were
closely involved in our scenario analysis and the long-
list, short-list and assessment of our CROs. Going
forward we will embed this perspective on our key
customer sectors into our strategy and planning for
where we see our business by 2030.
Actions for managing risks
and opportunities
We are committed to identifying effective actions
which progress our efforts in reducing our climate
impact. We aim, first, to build on our strategy to
improve our environmental performance before
collaborating across the supply chain to support
system-wide transition. Drawing on our scenario
analysis findings, we have identified seven actions for
change (which we are validating and may advance this
year), which have potential to address the interrelated
CRO we face (Figure J).
Action 1) Committing to the Science Based Targets
initiative: Acknowledging the reputational and market
risk that could be driven by a failure to implement
standardised climate-related targets, we submitted
a letter of commitment to the Science Based Targets
initiative in FY23. This pledge marks our strategic
decision to drive standardisation in our target setting
approach to ensure our publicly disclosed metrics are
verifiable, auditable and comparable. Within the year,
we will set rigorous targets (GHG emission reduction
commitment); a key foundational step which will
underpin other actions we mobilise to embed changes
across our operations and supply chain to reduce our
environmental footprint.
Action 2) GHG accounting and carbon offsetting
due diligence: In 2021 we offset all carbon emissions
from our operations in North America. In FY22 we offset
emissions for all business activity. In FY23, we built on
this achievement by offsetting all emissions from our
global business, extended to cover six sub-categories
Figure J: Our short-listed climate-related risks
and opportunities and their relationships with four
opportunities and seven actions
1
Actions
O p portunities
Enhancing
commitments
Risks
Climate-related
target setting
C
u
l
t
u
r
e
4
vernance
7
o
G
Continuity
planning
Short-listed
physical risks
(climate hazards)
6
5
Digital
decarbonisation
Overlooking
innovation
opportunities
Growth-related
compliance
Capability
gaps
Carbon
offsets
Value chain-driven
carbon taxes
Sustainable
operations
2
3
Business Strat e g y
Actions for mitigating and strategically managing our
short-listed climate-related risks and opportunities
1 Committing to the Science Based Targets initiative
2 GHG accounting and carbon offsetting due diligence
3 Developing an approach for supplier engagement for climate transition
4 Internal training and upskilling on climate and the environment
5 Regulatory and growth (M&A) horizon scanning and due diligence
6 Market and demand assessment approach
7 Enhancing climate-related risk management
Transition Risks
Policy and Legal
Market
Technology
Reputation
Physical (Acute/Chronic)
Transition Opportunities
Markets
Resilience
Products/Services
Resource efficiency
Energy source
regulatory, policy scanning and due diligence specific
to climate to inform our growth and M&A strategy. We
would expect detailed climate-related due diligence
to build resilience in our approach to transactions,
providing robust audit trails and enabling us to
anticipate policy and regulatory change.
Action 6) Market demand assessment approach:
A failure to account for the inter-connection of ongoing
market shifts has the potential to limit future value
generation, particularly if the market (especially in
higher risk sectors or locations) tightens on clients’
budgets for consulting services for non-integrated
solutions. While our scenario analysis findings
re-emphasised the market need for digital
decarbonisation solutions, our current and future
clients’ willingness to spend on "climate-digital
services" is not yet well understood. By building on our
governance and approaches to maintaining market
demand oversight, we may explore opportunities to
engage with clients and market participants to size
opportunities, track and understand their appetite to
inform our strategy.
Action 7) Enhancing climate-related risk
management: As detailed further in the Risk
Management section of this report, we recognise the
opportunity to enhance continuity-planning by building
on our strong existing risk management capabilities.
By integrating climate considerations holistically into
our approach to managing all risks interrelated with the
climate, we aim to mitigate their impacts, pre-empt
change and build our operational resilience.
Our evolving strategy for the transition
The exploratory nature of our scenario analysis has
supported us to understand the conditions Kin + Carta
might face in different global warming scenarios and
establish foundational assets to build on in future. We
recognise the importance of proactively monitoring
the evolving transition landscape e.g., developments
in climate pledges. The next strategic step is to fully
integrate these findings in our strategy, financial
planning and develop our normative scenario: a
Company-wide climate view to outline where we see
our business by 2030 and provide foundations for our
transition plan.
of Scope 3 (in line with our pledge to be carbon neutral
by 2023). Both sets of verifiable offsets were achieved in
partnership with "The Climate Vault" a US-based non-
profit, which purchases offsets and invests in developing
carbon removal startups.
Ultimately, we aim to leverage internal actions to
decarbonise our operations. However, carbon offsets
need to play a short to medium-term role as we
continue to depend on non-renewable grid electricity.
To mitigate the reputational risk posed by carbon
offset-reliance, we see two actions. First, understand
our footprint in greater detail through enhanced carbon
accounting. Second, explore how to enhance our due
diligence capabilities to monitor this risk proactively
and understand how to decarbonise with integrity.
Action 3) Developing an approach to supplier
engagement for climate transition: Without suitable
due diligence, carbon taxes triggered by our supply
chain could drive reputational risks and costs into our
business. Therefore, we intend to explore approaches to
fostering greater action for climate transition across our
supply chain.
A hybrid approach to supplier engagement,
incorporating an external system and direct
communication, for example, could be leveraged to
compare suppliers’ practices and targets for reducing
climate impact, while signposting the importance we
attribute to climate action in procurement. We are also
maturing our carbon attribution model to determine
which suppliers to engage first (e.g., based on spend or
emissions). Our recent transition to a new partnership
with a B Corp e-waste recycling supplier is a step in
progressing this action. This partnership with a
like-minded organisation demonstrates our
commitment to centralising sustainability
considerations in procurement and partnerships.
Action 4) Internal training and upskilling on
climate and the environment: We recognise the
short to medium-term risk of overlooking innovation
opportunities and capability gaps. To mitigate these
risks, we will continue to support business-wide
learning about climate-related risks and opportunities.
Our approach to engaging our Leadership team on
findings from our FY23 double-materiality assessment,
for example, was a significant point of progress in the
incorporation of ESG insight into business strategy.
Action 5) Regulatory and growth (M&A) horizon
scanning and due diligence: In the transition context,
maintaining rigorous due diligence will be essential for
reducing risk posed by compliance considerations as
we grow into new jurisdictions or through acquisition.
Building on our existing governance processes, this
action could involve enhancing our ability to conduct
94 |
kinandcarta.com
Building a world that works better for everyone
| 95
Strategic Report
A responsible business
continued
E
TCFD
Risk management
Over the past year, we have made significant
progress in understanding our exposure to
climate-related risks. We appreciate the increasing
interdependencies between emerging
climate-related physical and transition risks and our
existing risk register.
Our awareness of material CROs facing Kin + Carta (as
discussed in the "Strategy" section) informs our ongoing
efforts to enhance our risk management capabilities
by integrating climate into our risk management
framework. An integrated approach will strengthen
our resilience, help us sustain progress towards our
goals, business mission, and contribute to the broader
transition to a net zero economy.
Our risk management framework
Kin + Carta’s enterprise risk management framework
ensures that existing and emerging climate risks, which
may impact us in the short (<2025), medium (by 2030)
and long terms (2050), are identified, assessed and
managed consistently and at suitable levels across
the Company. These timeframes reflect our business
planning structure in the short to medium term with
our rolling five-year goals and also a LRP (long-range
plan). While the Board and Audit Committee oversee
the framework, set the Company’s risk appetite and
Figure K. Our risk management framework
ensure appropriate risk management measures are in
place, our "Three Lines of Defence" are responsible for
day-to-day risk-related actions and assurance. This
model, whereby the first line drives bottom-up risk
identification and management, the second provides
oversight and third provides assurance, is standard
across Kin + Carta (Figure K). The "lines" are each
involved in different stages of the risk management
lifecycle (i.e., identifying, assessing, escalating and
managing risks) as we recognise the importance of
assigning responsibilities to teams who have suitable
knowledge and capabilities (Figure M). To date, we
have applied the "three line" structure to climate risks
in our approach to reviewing our client project and
partnership opportunities (Figure L).
Risk terminology: the definitions below outline
the two key categories of risk we consider and
manage at Kin + Carta.
Existing: risks, which are pertinent to our
operations currently, whose impacts can be
assessed and are actively managed.
Emerging: new or unforeseen risks, which may
pose longer-term considerations for our business
and whose impacts or scale are challenging to
assess.
Line of
Defence
Third
Kin + Carta’s Board and Audit Committee
Internal Assurance and Risk
Management
Internal Assurance Team
Second
Platform Leader
Environmental and Social Risk
Review Board
First
Executive Directors and Senior
Leadership Team
Senior Leadership Team
The risk management
framework (general i.e.,
non-climate specific)
The risk management
framework applied to
the context of client and
partnership opportunities
This year saw much greater
collaboration between the
risk team and the climate
taskforce, notable with the
Head of Risk Management
contributing directly to the
risk section. Collaboration
will only increase as climate-
related risk becomes a
more pressing and constant
business concern.
Figure L. Deep dive: the "Three Lines of Defence" approach to managing
climate-related risks in our client and partnership opportunities.
Kin + Carta’s Board and
Audit Committee
The Board oversees the Risk Management Framework, which will increasingly
involve climate-risk oversight. The Audit Committee conducts a review annually
or when there are notable risk profile changes.
Third
Internal Assurance Team Responsible for providing objective oversight regarding the adequacy and
Second
Environmental and
Social Risk Review Board
effectiveness of internal controls, ensuring decision making in relation to client
and partnership-based climate-related risk is consistent.
The ESR Board convenes when a referral is received and is responsible for
evaluating the potential social and environmental risks in client and partnership
opportunities. Each case is cross referenced with the controversial industries
list, documented per the ESR case review template, assessed and a decision is
made on whether to accept the risk and introduce mitigations.*
First
Senior Leadership Team
Responsible for day-to-day risk monitoring and management including
identifying climate-related risks which could emerge from prospective client
projects or partnerships during a weekly opportunity review.
* Mitigation activities can include conducting due diligence, further discussion by the ESR board,
direct engagement with the client or partner and in some cases applying specific criteria for proceeding.
Risk ratings and acceptance criteria
"Risk rating" is a key tool for assessing and quantifying
the potential severity of risks; climate-related risks
are no exception. Our risk rating approach equips
Senior Leaders to determine the significance of
climate-related risks relative to each other and to
other principal risks. These scores enable consistent
prioritisation and decision making.
Each risk identified across Kin + Carta is allocated
a score out of five for: a) estimated impact; and b)
likelihood of occurrence (based on a market view)
(Figure N).
These scores are multiplied to produce a rating, which
falls into one of five "levels" of acceptance criteria. While
Executive Directors escalate risks with ratings of 9 to
15 to a risk owner, risks with ratings of 16 and above are
taken up to the Board for further consideration.
These criteria help us to prioritise CROs consistently
against other major risks.
Our scenario analysis has supplemented the risk
rating approach by providing a robust assessment of
quantitative and qualitative data to generate insight
into the potential materiality of each risk. In future,
scenario analysis will continue to strengthen our
approach to assessing the materiality and significance
of emerging CROs.
96 |
kinandcarta.com
Building a world that works better for everyone
| 97
Strategic Report A responsible business
continued
E
TCFD
Figure M. The key stages of the risk management lifecycle
Identification
Assessment
Escalation
Responsible: Senior Leadership Team and Executive
Directors
Responsible: Senior Leadership Team and Executive
Directors (SME input)
y
r
a
m
m
u
S
While existing risks are identified through day-to-day
operational supervision, emerging risks are flagged
through "bottom-up" mechanisms such as monthly
regional presentations (involving market and pipeline
assessments and forecasts) and recorded in
bi-annual risk registers.
Each risk recorded in the register is 1) related to the
strategy; 2) assessed based on impact and likelihood;
and 3) assigned a rating. These ratings are matched
to acceptance criteria, which inform the decision on
whether the risk is escalated and how it is prioritised.
Responsible: Executive Directors escalate to the Risk
Owner/Board
Based on the risk rating and associated acceptance criteria,
Executive Directors identify which risks should be escalated
to the a) risk owner; or b) Board (see figure D for more
details). At each Board meeting, the newly escalated risks
are reviewed, discussed and recorded.
Management
Responsible: Risk Owner
During evaluation, the Board assigns an owner to each risk.
This owner is then responsible for introducing the controls
and measures necessary for managing the risk to the
acceptance level agreed by the Board (i.e. to accept and
control or reduce the risk).
Monthly regional presentations to Executive Directors
Bi-annual Risk Register e.g., the Responsible Business Risk Register (completed by Functional Leads and CFO)
Environmental and Social Risk Policy and Review Board (for Client and Partner Engagement)
l
s
o
o
t
y
e
K
Scenario analysis
Risk rating and acceptance criteria (i.e. to inform assessment of relative significance of risks and escalation decisions)
Board-level evaluation of principal risks
l
e A new climate-related physical incident, which could
p
m
a
x
E
damage our infrastructure is identified as a risk and
recorded in the Responsible Business Register.
The risk is assessed and rated by the functional lead
based on the likelihood (based on a market view) and
impact on terms of people, reputation and profit.
As the resulting risk rating is >16, the risk is escalated to the
Board who decide whether to reduce or accept the risk.
They also nominate the risk owner.
The risk owner incorporates the new risk into continuity
planning and develops a step-by-step process informed by
EX to understand how they would respond.
98 |
kinandcarta.com
Building a world that works better for everyone
| 99
Strategic Report
A responsible business
continued
E
TCFD
Figure N. Our enterprise-wide risk rating approach
Figure O. TCFD Taxonomy of key climate-related risks
Rating
The consequences of the risk (in quantitative £ terms, number of people
impacted and reputational impact)
Risk type
Description
Tools we adopt to identify
related risks
Examples for Kin + Carta
Impact
Extreme
Major
Moderate
Minor
Insignificant
5
4
3
2
1
Catastrophic and causes unbearable damage/500 people impacted/adverse general public
comms.
Critical and causes damage (e.g., < £1m)/>250 people impacted/adverse industry rating and
effect on share price.
Moderate and causes reasonable damage (e.g., <£100k)/>100 people impacted/Industry press,
government/client litigations.
Marginal and causes minor damage (e.g., <£10k)/50 people impacted/decline in ratings from our
clients (health rating) or our people (eNPS)
Near negligible amount of damage/>10 people impacted/standard internal conversations
Likelihood
Rating
The likelihood of occurrence (for climate-related risks, this is based on a
forward-looking market view)
Certain
Likely
Possible
Unlikely
Rare
5
4
3
2
1
>80% Almost certain to occur
51-80 More likely to occur than not
21-50% Fairly likely to occur
6-20 Unlikely but possible
0-5 Extremely unlikely
Impact X Likelihood = Risk Rating
Risk Rating
1–3
Acceptance
Criteria
Accept
4–8
Accept
9–15
16–20
Reduce or Accept
(Risk Owner)
Reduce or Accept
(Board)
21–25
Reduce
Managing climate-related risks
In line with the TCFD framework, our approach to climate
risk considers transition and physical risks and their six
subtypes. We aim to implement suitable controls and
mitigations to address each "type", supported by key
tools for consistent risk identification (Figure O). While
risk registers are valuable bottom-up tools, which prompt
climate considerations, we also value feedback from
investors and stakeholders to understand their perceived
risks and address them appropriately.
In terms of the teams and roles who have specific risk
management duties, our key operational CROs are
managed by our Climate Task Force in conjunction with
the Office Experience team.
For example, our physical risks and transition
opportunities for our offices are managed by our
Health, Safety and Environment Advisor and supplier
due diligence is managed jointly by our Global Supplier
Management and Responsible Business teams; both
functions are supported by the Climate Task Force.
Transition Risks: related to the transition to a low-carbon economy and the diverse implications this process has
on market, policy, regulatory, legal, market and other socio-economic contexts.
Policy and
Legal
Technology
Market
Reputation
Risks presented by changes in
our exposure to climate-related
regulation, policy or litigation
which affect our internal, supplier
or clients’ operations or services.
Risks related to technological
advancements which support
the transition to a lower carbon
economy and the associated
costs and innovation required
to keep pace with these
developments.
Risks related to climate
change-related shifts in the
market which generate changes
in supply, demand, consumer
preferences, market signals and
costs.
Risks tied to how an organisation/
sector’s reputation is perceived
or changes in relation to its
response to climate change and
transition.
• Bi-annual risk registers (e.g.
•
Responsible Business Risk
Register)
• Monthly regional review
board
•
Environmental and Social Risk
Policy for Client and Partner
Engagements and Review
Board (the Board convenes
when a referral is received)
• Risk rating and acceptance
criteria
• Climate-related qualitative
Scenario Analysis and
planning
•
Incident reporting procedure
(for issues not previously
identified)
Increased compliance
burden across our multiple
locations
• Reduced ability to innovate in
line with clients’ demands
• Demand for upskilling and
recruiting
• Changes in demand for
clients’ service offerings
• Reduced capital available for
clients to pay for services
• Reduced eNPS score or
ability to recruit or retain
staff
• Decreased competitiveness
Physical Risks: related to the physical impacts that climate change has on our business operations or
infrastructure e.g., from extreme weather events.
Acute
Chronic
Risk from increased frequency
and severity of extreme weather
events such as flooding or
hurricanes.
Risk from longer-term changes in
weather patterns and increased
variability, including consistently
higher temperatures and related
sea level rise.
• Responsible Business and
• Damage to infrastructure
HS&E Risk Register
•
Environmental aspect and
impact assessment
• Climate-related Qualitative
Scenario Analysis
•
Incident reporting procedure
(for issues not previously
identified)
•
•
Loss of revenue e.g. through
power outages preventing
ability to work
Increased insurance costs/
claims
100 |
kinandcarta.com
Building a world that works better for everyone
| 101
Strategic Report A responsible business
continued
E
TCFD
Figure P. Enhancing our capabilities to monitor climate-related regulatory change
Risk type
Description
Over the coming years, we intend to build our internal
approach to monitoring climate-related policies and
regulations that impact our locations proactively. Doing
so will equip us to identify the appropriate controls
required for ensuring compliance. Below we outline two
regulations which we will continue to monitor:
The Taskforce on Nature-related Financial
Disclosures ("TNFD") framework was finalised in
September 2023 and likely to remain voluntary in the
short term.
The EU Corporate Sustainability Due Diligence
Directive’s ("CSDDD") new legislation (likely to be
mandatory from 2025) will apply to large companies
operating in the EU to undertake due diligence on
environmental and human rights considerations
in their value chains. We intend to monitor this
legislation to understand when we might be required
to comply.
CROs and their interdependencies
with our other principal risks
The transition to a low carbon economy, climate change
and their related risks are likely to impact most of Kin +
Carta’s principal risks in ways we may not yet be able
to understand fully.
In Figure Q, we outline some of the inter-relationships
between climate-related risks and our existing principal
risks including considerations of their potential impact
on our existing mitigation efforts.
Accounting for such interdependencies and
relationships is likely to be one facet of our future
efforts to advance our risk management approach
by integrating climate effectively into our existing
frameworks and practices across our business.
Figure Q. An overview of how climate-related change and risks may impact Kin + Carta’s existing principal risks
Risk type
Description
d
e
t
c
e
f
f
a
t
s
o
M
Principal risks
How might climate-related risks impact this existing principal risk?
Being a
responsible
Business
Economy and
Volatility
Growth
Kin + Carta’s performance against climate-related targets are key indicators of progress against and
commitment to our responsible business strategy and triple bottom line. If we do not successfully
deliver, or are perceived to fall short of delivering, on our internal and client climate commitments,
we may experience reputational damage, which could result in lost business opportunities and
decreased share price.
Increased frequency and severity of extreme weather events is likely to exacerbate the risk that
economic volatility could lead to higher inflation, which drives up our costs or reduces our earnings
if key clients, whom we rely on for recurring earnings as part of our economic risk mitigation
strategy, are unable to finance projects. Climate change may compromise the effectiveness of
our mitigation strategies e.g., in developing a robust diversification strategy as it may become
challenging to identify which industries are resilient to market instability.
Our approach to growth could be compromised if climate-related market uncertainty restricts
growth via the four levers (services, partners, sectors and territories) of our risk mitigation
approach. If we over-invest in new territories exposed to climate risk or under-invest in sectors
which may grow or are more resilient to the affects of climate change, we may reduce our ability to
generate both organic and inorganic growth.
Principal risks
How might climate-related risks impact this existing principal risk?
Client
Concentration
Scalability
Our People
Laws and
regulations
Financing
If key clients with whom we hold strategic partnerships 1) expect climate-related offerings which
we have not been able to develop in line with climate-related innovation; 2) experience financial
strain in their operations which limits their ability to finance projects; or 3) perceive us to be
greenwashing or taking insufficient climate action, they may stop financing projects with Kin +
Carta, impacting our revenue, profits and people.
Fluctuations in the market, a decreased share price and variations in our ability to access cash
funds may affect our ability to scale our investment in "green" services, tools, systems or operations
which may restrict our progress against climate-related strategic priorities.
Kin + Carta’s reputation in the eyes of the market, clients and employees may change depending
on how they perceive our contribution towards climate change and commitment to related goals.
If our reputation is damaged due to misconceptions or changes in perceptions, this could damage
our eNPS scores, reduce our ability to retain or attract talent and compromise the integrity of our
culture.
Local and transnational climate-related laws and regulations are likely to increase in number and
scope, presenting new challenges and considerations when expanding geographically (e.g. in Latin
America and Europe). These changes may compromise our growth strategy and increase the
risk that we fail to comply with relevant regulations, which could result in fines, or damage to our
reputation or financial viability.
Cost of borrowing may be impacted by climate risk e.g., in our locations which are more exposed to
climate change we may be required to pay notably higher spreads on bank loans. The access to, and
availability of, cash funds which enable us to trade may also be affected by climate-related changes:
a) to regulations which affect operating costs (e.g., via carbon prices); or b) to reputation or client
demand for our services which impacts revenue. Climate risk may impact the cost of borrowing, for
example, if our locations experience higher exposure to climate change, this may pay significantly
higher spreads on bank loans.
Information,
Cyber Security
and Systems
Power outages or physical damage affecting third-party data servers (and their back up systems)
due to extreme weather events can increase the vulnerability and exposure of our critical IT
platforms, which could compromise the ability of our Kin to deliver work and stay connected.
Data
Protection
Operational
Resilience
d
e
t
c
e
f
f
a
t
s
a
e
L
Increased incidence of power outages attributed to extreme weather-related events may expose
companies to greater risk of data breaches and incidents of data theft. If privacy laws develop
in line with climate-related change, compliance may become more challenging and result in
accidental infraction. If our exposure to data breaches grows, mitigating that risk through internal
training may also become more challenging.
A slowing rate of innovation or failure to develop service offerings in line with technological
advancements may result in reduced competitiveness and declined ability to meet our clients’
needs. Changes in the market, policy or regulations may generate challenging conditions limiting
our ability to grow our capabilities and offerings through acquisitions, which could lower clients’
appetites for our services.
Legacy Defined
Benefit Pension
Scheme
Rising temperatures and changes to weather patterns are likely to have an "upward impact" on
inflation, particularly in South America where three of our offices are located. Expected inflation
rates are key assumptions which influence our Legacy Defined Benefit scheme surplus/deficit.
Although the scheme is hedged against interest and inflation rates as a key mitigation, unexpected
inflationary rises could impact the scheme.
102 |
kinandcarta.com
Building a world that works better for everyone
| 103
Strategic Report
A responsible business
continued
E
TCFD
Metrics and targets
Metrics help us to track progress against our climate
change ambitions and hold ourselves to account in
managing and mitigating the CROs we face. We are
committed to advancing the standardisation of our
metrics, which will underpin all future actions we take to
play our part in the climate transition.
GHG emissions across Scopes 1, 2 and 3
We report on our GHG emissions across Scope 1,
2 and 3, in line with our commitment to provide an
extended analysis of our company footprint and to
drive down material emissions as part of our journey
to net zero (Figure R). Scope 1 and Scope 2 emissions,
which amount to 14.6% of our total carbon footprint
in 2023, are produced through our immediate internal
operations; either directly (using natural gas heating,
which we have in just one of our leased offices), or
indirectly (through the consumption of purchased
electricity). In the short term, we plan to minimise
these as a priority by reducing our use of fossil fuels
and increasing the share of renewable energy in our
operations.
We strive to reduce our electricity-based emissions by
procuring renewable energy tariffs where possible. In
relation to 2020 (base year), Scope 2 emissions have
been reduced from 490 tCO2e to 149 tCO2e this year.
This reduction of 69.6%, highlights our progress towards
using energy sources that are less carbon-intensive.
We have worked to reduce our GHG emissions, largely,
by reducing the emissions intensity of our energy
consumption.
Figure R. GHG Emissions data 2021–2023
GHG Data 2023
2023
2022
2021
GHG emissions by scope (tCO2e)
Scope 1
Scope 2
Scope 3
Building-related fuel and gas
Company-owned vehicles
Scope 1 Total
Electricity: Location-based
Scope 2 Total
Upstream goods and services
Business travel
Commuting (including working from home)
Water use
Waste management
Capital goods spend
Leased assets
Scope 3 Total
14
-
14
149
149
146
536
131
6
10
114
8
951
64
4
68
124
124
674
155
-
-
-
-
-
-
-
9
148
148
530
11
-
-
-
-
-
829
541
Electricity consumption
Electricity
consumed (kWh)
UK operations
Operations outside of the UK
Electricity consumption Total
192,298
464,968
264,238
374,576
-
-
657,266
638,813
632,949
Renewable energy
Renewable energy use (%)
47
-
-
Between 2020 and 2023, our GHG intensity ratio
has decreased from 3.38 tCO2e/£million to 0.83
tCO2e/£million; a reduction of 75.4% (calculated by
dividing the sum of our Scope 1 and 2 emissions
by revenue). This indicates that, despite Company
growth, we have been able to reduce our Scope 1 and 2
emissions and electricity consumption.
We have improved the emissions efficiency of our
immediate operations partly by upgrading networking
equipment and removing legacy infrastructure by using
sustainable cloud partners. We are also continuing to
improve corporate travel management and reviewing
office efficiency (e.g., adjusting HVAC settings), ensuring
our UK offices are on REGO tariffs.
Analysis of our Scope 3 emissions shows that the main
contributor to Kin + Carta’s carbon footprint at 536
tCO2e (56.4% of our Scope 3 emissions) is our indirect
business travel. Our travel emissions are calculated
based on distance travelled, per person, per mode
of transport. This total was calculated based on a
combination of data from travel agents and (where this
data was not available) estimated using a spend-based
methodology (and expenses data from internal systems).
We recognise that this can result in overestimations,
particularly for air travel data. This coming year, we
will be moving our financial data to a shared expenses
system, which will help mitigate overestimations. Despite
potential overestimations, we expect there to have
been an increase in travel emissions compared to last
year, which was still impacted by pandemic-related
restrictions to business travel.
Last year the largest source (81.3%) of our Scope 3
emissions was upstream goods and services. This
year it represents 15.4% of our Scope 3 emissions.
We calculate our upstream emissions by using ONS
industry-specific emissions intensities that are
measured in 1000 tCO2e/£million.
Internal carbon prices and revenue from products and
services designed for a lower-carbon economy have
not yet been incorporated into our business activity
and provided here.
Working from home and
commuting emissions:
In 2023, we underwent a process of collecting
relevant environmental data, in reference to the
activity of our people. This involved collecting
information on how our people work and how this
may impact the planet.
We collected data on working from home emissions
(relating to equipment and expected power used by
staff). The second was commuting emissions, which
gave us insight into how being in office can impact
the planet, compared to WFH.
• Commuting emissions: 69.29 tCO2e
• WFH Equipment emissions: 62.1 tCO2e
This year we expanded the classification of our Scope
3 emissions to encapsulate more aspects of our
operations, including emissions from: water use, waste
management and capital spend. By doing so, we hope
to report a more transparent and accurate view of our
climate impact.
In future, we intend to refer to 2021 as the new baseline
year for Scopes 1 and 2, while this year, 2023 will be
the Scope 3 base year as it is the year we have begun
reporting a holistic depiction of our Scope 3 emissions.
This year, our emissions intensity, including Scope 3, is
5.68 tCO2e/£million.
Methodology
We carry out an inventory of all relevant GHG emissions
within our operational control annually. This process
helps us understand where the risks and opportunities
relating to emissions reductions exist in our direct
and indirect operational activities. Our approach to
measuring and disclosing greenhouse gas emissions is
aligned with the environmental reporting guidelines of
the UK Government, using the DEFRA emissions factors
(and EPA factors, for our USA operations) in addition
to the revised edition of the GHG Protocol Corporate
Accounting and Reporting Standard. Meanwhile, our
Scope 1 and 2 emissions are reported in accordance
with SECR requirements and Scope 3 is reported in
line with the published reporting standard for Carbon
Reduction Plans and the Corporate Value Chain.
104 |
kinandcarta.com
Building a world that works better for everyone
| 105
Strategic Report
A responsible business
continued
E
TCFD
Wider environmental impacts
While the methodologies used for measuring
environmental impact data beyond emissions have
remained consistent, it is only this year that the
emissions from our water use and waste management
have been encapsulated in our Scope 3 data (as well as
capital spend).
Water
Year
2023
Water
Used (m3)
Water
Emissions
(tCO2e)
36.17
6.40
Electricity
Year
08/22 07/23
08/21 07/22
08/20 07/21
08/19 07/20
Electricity Use
(kWh)
Electricity
Emissions
(tCO2e)
657,266
638,813
632,949
1,915,113
149
124
148
490
Waste and a circular approach: We recognise the
importance of sustainable practices in waste disposal.
We are committed to addressing the quarter of our
waste that still goes to landfill through innovative new
supplier partnerships.
Environmental impact of our buildings: To date, our
leased offices have received the following certifications:
BREEAM (for "new constructions") and ISO 14001 in
Manchester, LEED platinum in Chicago, LEED gold in
Denver. Combined, these buildings are responsible for
35% of our building-related Scope 1 and 2 emissions.
Kin + Carta’s water use: We recognise that water
conservation can play a key role in reducing emissions.
We calculate our water usage emissions by using a
DEFRA GHG intensity figure (0.177 tCO2e/cubic metre)
and estimate our water use based on a South Staffs
Water publication which suggests that employees use
an average of 50 litres of water per day in the office.
Water
Year
2023
Recycled (t)
Landfill (t)
Waste2Energy (t)
Emissions (tCO2e)
54.98
19.85
0.33
10.33
SBTi and our "net zero by 2027" ambition
Late in FY23, our SBTi application was approved,
marking a new stage in our net zero journey as we align
with a recognised, consistent framework. In recent
years, there has been an industry-wide shift towards
the standardisation of metrics and targets, with the aim
of providing stakeholders with accessible reference
points to understand and compare businesses’
approaches to "responsible" climate-related practices.
We recognise the leading role that tech companies can
play in mitigating climate risk, which is why we have set
a medium-term goal of achieving net zero by 2027.
By August 2024, we will have established credible and
clear science-based targets (and a formal process
for developing and monitoring these numbers) and
made significant progress in defining a SBTi-approved
roadmap and monitoring framework to track our
progress towards our net zero goal.
Our Internal Assurance team will work to ensure that,
once targets are set, they are reviewed at a regular
frequency in line with SBTi.
Section 172 statement
Engaging with our stakeholders
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 statement is to
demonstrate the manner in which the
Directors have had regard to the range
of factors and stakeholders identified in
section 172 of the Companies Act in the
context of 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 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
As world-class consultants to organisations
around the world we are keen to ensure that
we are focused on what is important to all
of our stakeholders and the impact we have
on our economy and society, as a whole.
We lean into being curious, adaptive,
innovative and accountable to our
stakeholders, therefore, we have set
out an overview of how our Directors
consider stakeholders in their decision
making and the importance we place on
each of our key stakeholder groups: our
clients, our communities, our environment,
our people, our shareholders and our
suppliers. We detail the relationship with
each stakeholder group, what matters to
them, how we engaged and the impact
that such engagement has had on the
Board’s decisions. Consideration of these
stakeholders and other relevant matters are
embedded into all Board decision-making,
strategy development and risk assessment
throughout the year.
Further information can also be found
throughout the Strategic Report and in our
summary of the 2023 key focuses of the
Board set out in the Governance Report.
106 |
kinandcarta.com
Building a world that works better for everyone
| 107
Strategic Report
A responsible business
continued
Our clients
Our communities
Our environment
Why do they matter?
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.
What are their key priorities?
Our clients seek a holistic services 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).
How do we engage?
During the year the Board has met with key clients to hear
their views on the market, their needs, and how Kin + Carta is
performing.
Further, the Board has received presentations from the
Kin + Carta client account teams in both the American and
European regions.
What were the key impacts?
The Board approved the acquisition of Forecast Data, which
strengthens our data and Artificial Intelligence capabilities
globally and establishes a data hub for Europe that matches our
strong capabilities in America allowing us to be ready to serve
our clients’ business critical priorities.
The Board further approved Kin + Carta’s seven-star client
experience governance framework, which includes internal audit
on maintaining client health.
Also, following the acquisition of Melon Group in the prior year,
the Board has requested and received regular updates on the
integration into the Group as part of its nearshore strategy to
achieve a more comprehensive and cost effective experience to
our clients.
Why does it matter?
Continuing to treat the planet as an externality of
economic activity is untenable.
What are the key priorities?
The urgent transition to a low carbon economy
through innovation, carbon pricing and
purpose-led business models are among the key
planetary priorities for business.
How do we engage?
It starts with education and connection. This year the
Board has prioritised supporting the ESG roadmap
of a newly appointed global director of responsible
business. This has included contributing to Kin +
Carta’s inaugural double materiality assessment
(direct interviews and analysis of findings) and the
most in-depth reporting to date for the Taskforce on
climate-related financial disclosure.
A final point of engagement between the Board
and the environment as a key stakeholder was their
approval of a new non-financial KPI on the absolute
reduction of Scope 1 & 2 emissions in FY24 metric.
What were the key impacts?
These strategic exercises have resulted in the
inclusion of a net zero feasibility study in the FY24
strategic priorities.
Why do they matter?
The local communities surrounding our offices and
homes need to thrive in order for our professional
lives and places of work to continue to grow and
perform well. The interdependencies between public,
private and government as three key actors are now
better understood, particularly in a post-pandemic
world.
What are their key priorities?
Our community priorities include inclusive
recruitment, products and services, ethical
procurement and charitable initiatives.
How do we engage?
During a time of resetting the strategic philanthropic
priorities of the business, local community events
were prioritised across our regions and office hubs.
The primary themes of these activities spanned
across our regions and included World Blood
Donation Day (June 2023), holiday gifts to children,
veterans and people in need.
Kin from our Skopje, Prishtina and Buenos Aires
offices organised blood donation events locally.
On multiple occasions, US-based Kin partnered
with Volunteers of America to support veterans and
children-in-need be that with holiday hampers and
gifts or back-to-school packs.
In Buenos Aires where, led by our Americas CEO and
LatAm COO, Kin + Carta employees contributed to
the refurbishment of temporary accommodation for
vulnerable women (fundacioncasagrande.com.ar/).
Both Martin Luther King Day (15 January 2023) and
“Bring your kid to work day” (27 April 2023) saw
further philanthropic support achieved because
of organising and fundraising efforts by our
philanthropy affinity group.
What were the key impacts?
Community events are a win: win for those that
benefit from Kin time, skills or support, and for our
Kin who feel increased pride in their contribution to
work and the world beyond work.
108 |
kinandcarta.com
Building a world that works better for everyone
| 109
Strategic Report A responsible business
continued
Our people
Our shareholders
Our suppliers
Why do they matter?
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 we have in our teams.
What are their key priorities?
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 all employees.
• 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.
How do we engage?
Over the past year, we have considered the methods of workforce engagement proposed under the 2018 UK
Corporate Governance Code simultaneously with our existing methods of engagement. Given the nature and extent
of our workforce and the wide ranging locations in which we operate, we have evolved our approach to workforce
engagement. We now conduct extensive half-yearly employee engagement surveys with a range of fixed choice and
free choice questions. At Board meetings, presentations have been given on the results of the half-yearly employee
surveys and eNPS results presented by members of the Employee Experience team. This has included a deep dive
into the key themes affecting our people, what people are asking for and how we, as their employer, can do better for
them. We consider this to be an effective method of workforce engagement as it enables the Board to understand the
perspective of our workforce around the globe through engagement channels at all levels.
The Board has also received a presentation from the Global Head of Diversity and Inclusion.
What were the key impacts?
During the year, the Board has:
• Approved our updated Speak Up Policy and Board Diversity Policy.
• Approved the Modern Slavery Statement and in order to uphold Kin + Carta’s responsibility in respect to
human rights, we approved a Group-wide standalone Modern Slavery Policy, with associated training for our
employees, supporting our zero-tolerance policy towards any form of modern slavery or child labour.
• Approved the Global Health, Safety and Environment Policy Statement, which received sign off by the CEO
and was published.
• Approved the awarding of share plans open to all levels of employees in the UK and US.
• Delegated to the Remuneration Committee to approve LTIP targets for approximately 400 employees that
align with the Company’s strategic objectives and targets set for the Executive Directors.
• Supported pay equity initiatives underpinned by formal bandings in place and a new performance appraisal
system.
• Approved non-financial KPIs, including eNPS and gender pay gap.
Why do they matter?
Our shareholders are investors in, and owners of, our
business, providing the capital we need to invest in
and grow Kin + Carta.
What are their key priorities?
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 impacts on people and the planet, in
addition to profit. They value transparency in any
communication with them.
How do we engage?
The Chairman has engaged with the top shareholders
throughout the year to consider their views. Further,
the Chair of the Remuneration Committee has
conducted shareholder consultations on proposed
changes to the Company’s Remuneration Policy
ahead of the 2023 Annual General Meeting (with a
further consultation to be held with shareholders
who voted against specific remuneration
resolutions).
The Board has given investor presentations open to
shareholders held on the announcement of the half-
year and year-end results.
Taking part in the double-materiality assessment
(the Chairman and Executive Directors) and
approving the outcome of shareholder engagement.
What were the key impacts?
To mitigate against macroeconomic factors, the
Board has:
• continued the integration of our nearshore
businesses to achieve a more cost effective
offering to the market; and
•
introduced cost saving initiatives and efficiencies.
Why do they matter?
Our suppliers provide goods and services, and
expertise to Kin + Carta that supports our
infrastructure, internal capabilities, agility and, in turn,
our growth.
What are their key priorities?
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).
How do we engage?
We are committed to building strong working
relationships with our suppliers, ensuring that
together we are aligned on critical aspects,
including quality, ethics, delivery, innovation, risk,
environmental, social and governance compliance.
We actively engaged 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.
What were the key impacts?
The Board has approved our updated Anti-bribery
and Corruption Policy and our new Modern Slavery
Policy and Modern Slavery Statement, to support
principles contained in our new Supplier Code of
Conduct that applies in all the territories in which
we operate in order to maintain consistency and set
uniform standards across all locations.
110 |
kinandcarta.com
Building a world that works better for everyone
| 111
Strategic Report Risk management
Our approach
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.
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.
Identify risks
Risks pertinent to the business
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.
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 underakes reviews
and discussions on emerging
and existing principal 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.
Where appropriate, the Board takes
a view on a risk tolerance level
appropriate for individual principal
risks.
Our risk management framework
Accountability
Board and Audit Committee
The Board has responsibility of oversight for risk management and it sets
the risk appetite it considers appropriate and acceptable to achieve our
strategic priorities.
Actions: first line
Actions: second line
Assurance
Day-to-day management control
and internal controls
Functions that oversee and
specialise in risk management
Independent assurance
Our businesses:
Our platforms:
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.
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 placed by
the management, and advises on
potential mitigating activities and
design of controls.
e
c
n
a
r
u
s
s
a
l
a
n
r
e
t
x
E
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.
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 181 and 182.
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 pages 58 and 59).
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.
Legacy
Defined
Benefits
Pension
Scheme
Pandemic
shocks
Economy
and volatility
Financing
Growth
Information,
cyber security
and
systems
Data
protection
Scalability
Integration
Key:
Internal risk
External risk
Being a
responsible
business
Operational
resilence
Our people
Laws and
regulataions
Client
concentration
Internal and external risk
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:
• Ongoing volatility from
macroeconomic and
geopolitical events.
• Potential usage of cyber
activities to support
geo-political agendas.
•
Increased regulatory action
on personal data international
transfers.
• Climate-related risks resulting in
intense weather conditions and
natural disasters.
• Potential changes in Kin + Carta
sales and demand model to
meet client expectations and
technological advances.
The Board is also mindful of the
potential impact of the pace of
change in the DX market, emerging
technologies, and concentration of
revenue within our top 20 clients,
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.
112 |
kinandcarta.com
Building a world that works better for everyone
| 113
Strategic Report
Risk management
continued
Principal risks
The table on pages 114 to 121 details Kin + Carta’s principal risks, its risk tolerance level accepted by the Board, key
mitigating activities in place to address them and its 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.
Trend:
Increase Decrease
No change
1. Economy and volatility
2. Growth
3. Scalability
4. Operational resilience
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.
Macroeconomic headwinds including Inflation-
induced interest rate hikes in the US and UK markets,
enterprise clients remain cautious to commit to large
programmes of work in this environment, which has
slowed new business growth.
Mitigating activities:
Diversification into sectors that are capable of
delivering growth.
Offering a highly relevant suite of digital
transformation service lines across areas of
Strategy + Innovation, Cloud + Platforms, Products +
experiences, AI + Data 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.
Offering of nearshore capability to limit the impact
on Kin + Carta’s margin and an ongoing review of
Kin + Carta’s cost base.
Increase our global footprint, which will give us
the flexibility to take advantage of favourable local
economic climate.
Trend
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 monitor competition sufficiently to
meet competitive threats and take advantage of
opportunities.
Failure to offer value propositions to our clients in line
with the industry trends. This includes the choice for
onshore/nearshore offering.
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
24 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.
Expanding into new geographic markets through the
acquisition of businesses with similar ethos to Kin +
Carta and continuing to integrate the newly acquired
businesses to realise new opportunities and synergies.
Focus on a robust blend of onshore/nearshore offering
to provide competitive offering to our clients.
Trend
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 Service and Expansion
Platforms, acquisition of high-growth digital
transformation businesses and greater focus on
securing longer-term contracts and revenue from
partner-aligned managed services.
Trend
Description:
Services may not meet clients expectations with new
technological advances 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 with the business.
Failure to deliver services securely with evolving
technological advances.
Failure to achieve optimum utilisation.
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. The Regional Service
Line and Practice Leaders in the Americas and Europe
regions are senior experts in their areas and they
continue to enhance Kin + Carta’s delivery framework
with new tools and technology.
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.
Continue to monitor unutilised staff percentage to
ensure it is proportional to revenue pipeline.
Trend
114 |
kinandcarta.com
Building a world that works better for everyone
| 115
Strategic Report Risk management
continued
5. Client concentration
6. Laws and regulations
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 top ten clients
in a short time period, this could have a significant
impact on its revenue, profits and people.
The top 20 clients represented 73% of Kin + Carta’s
net revenue.
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 clients’ spend and client
longevity.
Trend
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/recertifying B Corp
certification requires Kin + Carta to adhere to
additional regulations.
Failure to comply with or promptly respond to the
applicable laws and regulations and contractual
obligations could lead to fines, penalties, restriction
in trading activities and would cause reputational and
financial damage to Kin + Carta.
Failure to comply with local labour laws would impact
our reputation in the local labour market.
Mitigating activities:
Kin + Carta maintains in-house Data Protection,
Finance, Corporate Governance, Information Security
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 responsible
business section (see pages 58 to 63), provide
guidance to our People on our “Positive Impact
Approach” to behave ethically, strive to comply with
applicable local and international laws and regulations.
We continue to develop frameworks when entering
into new sector and services as well as when moving
into a new geographic area working with external
consultants when required.
Trend
Trend:
Increase Decrease
No change
7. 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:
8. Being a responsible business
Description:
Risk of misalignment of expectations in respect of
our culture, values, our stakeholders could result
in lost business opportunities, adverse effect on
our share price and failure to attract and retain the
necessary talent. This could also compromise the
ability to successfully recertify as a B Corp business.
Mitigating activities:
Alignment throughout the business to demonstrate
that Kin + Carta’s purpose is to build a world that
works better for everyone.
Strong emphasis on culture and responsibility, which
is part of our strategic priorities where initiatives
are focused on supporting a diverse, inclusive and
responsible business, with an exceptional employee
experience.
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 grass roots
participation across the business.
Continued focus on enhancing employee experience
in all relevant areas of our EVP framework (as
detailed on page 64).
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 programs.
Integrating our Kin from newly acquired businesses
onto common platforms and cohort communities to
help them feel supported and part of Kin + Carta.
Trend
Where possible, we seek to contribute to the client's
ESG strategy within the scope of their project. In
such cases we work together with our client to
identify and deliver positive impact projects, which
takes into account a number of environmental,
societal and reputational and remit variables.
Monitoring of the Responsible Business KPIs that
are set out in the "A responsible business" section
(pages 52 to 55).
Trend
116 |
kinandcarta.com
Building a world that works better for everyone
| 117
Strategic Report Risk management
continued
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
Platforms with continuous efforts to ensure the data
we process remains secure and confidential. The
framework is reviewed on an on-going basis to ensure
Kin + Carta has robust processes to adhere to local
regulations.
Growth of 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 proper processes
are followed.
Trend
9. Data protection
Description:
Regulatory changes
The continued change in privacy laws across the
globe with standards being uplifted directly through
new legislation e.g., Argentina, Colorado, Delaware
etc. or updates to existing legislation e.g. the Data
Protection and Digital Information 2 bill in the UK
provide a slow but constantly moving environment for
the business to undertake its activities. The threat of
non-compliance or breaches are raised as Kin + Carta
has long-term engagements and as its geographical
scope widens.
Increasing complex digital business environments
The increasing number of tools and systems that can
provide specific processes during the lifecycle of data
within a digital business environment can present
increased challenges to the research, monitoring and
auditing of an increasing number of processors or
service providers.
Emerging technologies
The rapid adoption of Generative AI ("GenAI") has
presented challenges across the market, with its
inclusion in many tools and services along with best
practices being built alongside the adoption of and
use of this technology the risk levels of this fast
moving and increasing widely adopted technology
presents a risk to many organisations including Kin +
Carta.
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 changing in working practices and behaviour
has significantly increased the risk profile of our
business.
Trend:
Increase Decrease
No change
10. Information, cyber security and systems
Description:
The inability to identify the diverse asset portfolio
utilised by Kin + Carta and thus contextually control
access to critical data and platforms based upon
stakeholder persona and requirements, device
ownership and device security health is the most
significant threat to our business.
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
118 |
kinandcarta.com
Building a world that works better for everyone
| 119
Strategic Report Risk management
continued
11. Financing
12. 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 £5.8 million
as at 5 April 2022. A return to a deficit could lead
to a resumption of the need for deficit repair in cash
contributions by the Company to the Scheme.
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 (£63.7 million excluding the pension accounting
surplus at 31 July 2023) versus the Scheme’s solvency
deficit, a measure of the deficit in an insolvency
scenario (approximately £53 million at 5 October
2023).
Description:
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. As
at 31 July 2023 the unused portion of this facility was
£65 million. 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 aligns with our strategic priorities set by the Board.
The 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.
• Conduct 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 review Kin + Carta’s financial KPIs with
its bankers.
• Conduct half-yearly "going concern" reviews and
longer-term viability assessments.
Trend
120 |
Pandemic risk related to COVID-19 has reduced
significantly for Kin + Carta following the global
vaccination programs and development of applicable
treatments.
Successful integration of our acquisitions has led to
high-demand data services (Cascade Data Labs),
growth in commerce (Loop), and double-digit growth
from high-quality nearshore delivery (Melon Group).
This has lower Kin + Carta risk of failure to integrate
acquisitions into current Kin + Carta’s operations.
The Strategic Report comprising pages 12 to 121 was
approved by the Board and signed on its behalf by
Kelly Manthey
Chief Executive Officer
1 November 2023
Trend:
Increase Decrease
No change
Mitigating activities:
The Scheme was in a technical surplus at 5 April 2022
and 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 scheme asset volatility.
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.
The solvency deficit has further reduced, standing at
approximately £53 million at 5 October 2023 (£117
million at 5 April 2022). This is also an estimate of
the cost of scheme "buy out", a full transfer of the
Company’s obligations to an insurer.
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
kinandcarta.com
Building a world that works better for everyone
| 121
Strategic Report Governance
Governance Report
Contents
Board of Directors
Governance at a glance
Corporate governance report
Audit Committee report
Nomination Committee report
Directors Remuneration report
Directors’ report
Statement of Directors’ responsibilities in
respect of the financial statements
124
129
132
140
148
152
178
183
122 |
122 |
kinandcarta.com
kinandcarta.com
Building a world that works better for everyone
Building a world that works better for everyone
| 123
| 123
Governance Report Board of Directors
Career
John was appointed Non-Executive
Chairman Designate on 22 July 2019 and
subsequently Chairman on 5 December
2019. He previously acted as Chief
Executive Officer of Deloitte Consulting,
leading the creation of Deloitte Digital,
the first dedicated digital consulting
business. John grew the business
organically and by strategic acquisition.
He 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. John 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 Chair of LC Financial Holdings
Limited, CMSPI Limited, and SLR
Consulting Limited. He also serves as a
Trustee of Plan International (UK).
John Kerr
Chairman
Appointed to the Board
22 July 2019
Committee membership
N
Committee membership
Chair of the committee
N Member of the Nomination Committee
A Member of the Audit Committee
R Member of the Remuneration Committee
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
Kelly 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.
Career
Chris was appointed Chief Financial
Officer on 17 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 a Bachelor of Science in Finance
and Investments from the University
of Illinois and an MBA in Strategy and
Finance from The University of Chicago
Booth School of Business.
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 sits on the Board of Directors for
Skills for Chicagoland’s Future.
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.
Kelly Manthey
Chief Executive Officer
Appointed to the Board
1 August 2022
Committee membership
N
Chris Kutsor
Chief Financial Officer and
Chief Operating Officer
Appointed to the Board
17 June 2019
Committee membership
N
124 |
kinandcarta.com
Building a world that works better for everyone
| 125
Governance Report Board of Directors
continued
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
advisor 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.
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.
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 (‘‘Bain’’) 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. 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
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
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.
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’s Healthcare
and DEI practices, and the head of its
global DEI sub-committee and is a
member of the Bain board.
David Bell
Independent Non-Executive
Director
Appointed to the Board
4 August 2018
Committee membership
A N
Maria Gordian
Independent Non-Executive
Director
Appointed to the Board
1 November 2021
Committee membership
N R
Other roles
Michele has no other appointments to
disclose.
Career
Michele most recently served as Chief
Financial Officer of Hogg Robinson
Group plc until 2018. 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.
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.
Career
Nigel was appointed Independent
Non-Executive Director on 1 June 2016
and subsequently Senior Independent
Director on 1 December 2022. He is
the Chief Executive Officer of Good
Energy Group plc (‘‘Good Energy’’),
a green energy services and supply
company with significant interests in
the transition of heating and transport
to electrical power. On 1 August 2023,
Nigel became an Independent
Non-Executive Director of Mobico
Group plc, a global transportation
provider. 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 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, makes him well
suited to chairing the Remuneration
Committee.
Other roles
Nigel is Chief Executive Officer of
Good Energy and an independent
Non-Executive Director at Mobico
Group plc.
Michele Maher
Independent Non-Executive
Director
Appointed to the Board
15 May 2019
Committee membership
A N R
Nigel Pocklington
Senior Independent Director
Appointed to the Board
1 June 2016
Committee membership
A N R
126 |
kinandcarta.com
Building a world that works better for everyone
| 127
Governance Report Board of Directors
continued
Governance at a glance
During the year, John Kerr
(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 129.
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 Annual General
Meeting (“AGM”) and seek
re-election.
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 134. 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 on pages 107 to 111 of
our Strategic Report.
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,
Chief Financial Officer and
Chief Operating Officer, Senior
Independent Director and Non-
Executive Directors are set out on
pages 133 to 134.
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
2018 UK Corporate Governance
Code (the “Code”).
Major Board decisions
• Approved the acquisition of Forecast Data
• Approved the appointment of Nigel Pocklington as Senior Independent Director
• Approved an extension to the Group’s multi-currency credit facility agreement by a further year to
22 September 2026
• Approved recommended cash offer made by Kelvin UK Bidco Limited, a newly formed company owned
indirectly by funds advised by Apax Partners LLP, for the entire issued share capital of Kin + Carta
Governance improvements
• Approved updated Speak Up and Anti-Bribery and Corruption policies
• Appointed Jennifer Crowley as Global Director of Responsible Business, a newly created role, to increase
the reflection and consideration on responsible business attributes of Kin + Carta (including a particular
focus on ESG strategy)
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 held a number of ad hoc meetings, principally in connection
with acquisition-related activity.
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:
Meeting attendance
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
David Bell
Maria Gordian
John Kerr
Chris Kutsor
Michele Maher
Kelly Manthey
Nigel Pocklington
7 7
7 7
7 7
7 7
7 7
7 7
7 7
3 1
4
–
–
–
4 4
–
4 4
2 2
2 2
2 2
2 2
2 2
2 2
2 2
–
3 2
4
–
–
4 4
–
4 4
1 David Bell was unable to attend the meeting for personal reasons.
2 Maria Gordian was unable to attend the meeting for personal reasons.
Meetings attended
Meetings convened
This table only details attendance at meetings in the scheduled annual meeting calendar; other ad hoc Board
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.
128 |
kinandcarta.com
Building a world that works better for everyone
| 129
Governance Report
Governance at a glance
continued
Board composition as at 31 July 2023
Board gender diversity
Board ethnicity
3
1
4
Female
Male
6
Ethnic minority
White
Chair and Non-Executive
Director tenure
Independence
Key skills and experience
1
3
0–3 years
3–6 years
6+ years
1
1
4
2
3
3
5
Chair – independent on appointment
Digital innovation and technology
Executive Director
Finance, accounting and investor relations
Non-Executive Director – independent
People skills
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 2023. A copy of
the 2018 UK Corporate Governance
Code is publicly available on the
website of the Financial Reporting
Council (“FRC”), www.frc.org.uk.
During the year, we have complied
with the provisions of the Code in
all respects, save for:
• Provision 12 relating to the
appointment of a Senior
Independent Director. Following
the resignation of Helen
Stevenson, Senior Independent
Director, on 14 December
2021, the provision related to
the appointment of a Senior
Independent Director as part
of the Company’s succession
planning process and on the
Nomination Committee’s
recommendation had not
been satisfied. However, Nigel
Pocklington was appointed
Senior Independent Director
on 1 December 2022 and the
Company is therefore compliant
with this provision as of the date
of this report.
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)
128
6-7
112-121
44-111
58-63
Page(s)
130
133
138-139
Page(s)
150-151
130
138-139
149-150
Page(s)
145-147
143
112-121
Page(s)
157-164
152-177
165-177
164
130 |
kinandcarta.com
Building a world that works better for everyone
| 131
Governance Report
Corporate governance report
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 124 to 127. With
effect from 1 August 2023, Nigel
Pocklington was appointed as
an independent Non-Executive
Director of Mobico Group plc. The
Board did not consider that this
role would affect Nigel’s ability
to commit sufficient time to the
Company. Other than Nigel’s
recent appointment, 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 136 to 137.
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 Board and
committee responsibilities section
of our website:
investors.kinandcarta.com.
The Board
Key responsibilities include:
• establishing the purpose and values of Kin + Carta
• debating and agreeing the Group’s strategy,
long-term business objectives and risk appetite
• approving acquisitions, divestments and major
capital projects
• approving the Group’s annual budget, dividend
proposals and financial statements
• promoting the highest standards of corporate
governance and responsible business
• ensuring the Group has the necessary resources,
processes, controls and culture in place to deliver
Group strategy and promote long-term growth
Audit Committee
Nomination Committee
Remuneration Committee
Key responsibilities include:
Key responsibilities include:
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
• 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
•
identifying and nominating
of candidates to fill Board
and committee positions
and recommending the
re-election of Directors
132 |
kinandcarta.com
Building a world that works better for everyone
| 133
Governance Report 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 an 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.
Corporate governance report
continued
Key responsibilities
Chairman
•
•
•
•
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
Chief Executive
Officer
• 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 views 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, and the annual report and accounts
• 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
Chief Financial
Officer
and
Chief Operating
Officer
• 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
executive responsibility, in conjunction with the Chief Executive Officer, for the half-year and
preliminary results statements, and the annual report and accounts
• overseeing the scaling of operations in pursuit of further financial and operational effectiveness
Senior
Independent
Director
•
•
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 Chairman’s role in conjunction with the Nomination
Committee
• meeting with major shareholders for a balanced understanding of their issues and concerns, and
supporting the Chairman in ensuring these are shared with the Board
Non-Executive
Directors
• 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
134 |
kinandcarta.com
Building a world that works better for everyone
| 135
Governance Report
Corporate governance report
continued
2023/24 key focuses of the Board: how governance
contributes to strategy
People and responsible business
Governance, risk and controls
Strategy and business
Finance
Link to strategic
priorities
Key activities
and discussions
in 2022/23
• Received updates on responsible business
matters, including progress against KPIs.
• Received summaries on employee
engagement and experience, including culture
and IDEA initiatives.
• Considered talent matters and incentive
proposals for the wider workforce.
• Considered attrition rates and associated
matters across Kin + Carta.
• Considered salary inflation and mitigations.
Key outcomes
• Appointed Jennifer Crowley as Global Director
of Responsible Business, a newly created role,
to increase the reflection and consideration on
responsible business attributes of Kin + Carta
(including a particular focus on ESG strategy).
• Attended to regulatory disclosures, which
included the review and approval, according to
the Audit Committee’s recommendations, of
the Annual Report and Accounts 2021/22, 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.
• Oversaw the ongoing simplification of the legal
structure of the Group.
• Approved the appointment of Nigel
Pocklington as Senior Independent Director
and Chris Kutsor’s additional appointment as
Chief Operating Officer.
• Completed the process of placing dormant
legal entities in members’ voluntary
liquidation.
• Approved the settlement of two disputes with
former customers.
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.
Key priorities
for 2023/24
•
•
•
•
•
To complete and present a net zero feasibility
study and recommendations.
To prepare for B Corp recertification and strive
for quarterly score improvements.
•
•
To drive the achievement of the reset
non-financial KPIs.
To identify priority tactics to increase
leadership diversity.
To drive two eNPS cycles, with the first cycle
commencing in November 2023.
•
To collaborate with Client Success for training.
Link to FY24 strategic priorities
Optimise our
Foundation
Focus
on Core
Focus on what
Clients need next
• 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 initiatives,
including acquisitions.
• 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.
• Completed phase 1 of the new global forecasting
system, Planful.
• Completed the acquisition of Forecast Data, a data
service provider, further strengthening Kin + Carta’s
global data and artificial intelligence services.
•
•
•
To consider acquisition opportunities aligned to Kin +
Carta’s proposition and operating model.
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 FY24 strategic
priorities described on pages 34 and 35.
• 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
acquisition of Forecast Data.
• Considered macroeconomic inflationary pressure and
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.
• Considered the extension of the Group’s multi-currency
credit facility agreement for a further year.
• Approved the budget allocation, capital allocation
framework and key investment areas for 2023/24.
• Renewed the Group’s multi-currency credit facility
agreement.
• Conducted an operational expenditure and expenses
review.
• Concluded the triennial valuation of the St Ives Defined
Benefit Pension Scheme, showing a technical surplus of
£5.6m.
•
•
•
To continue to monitor the Company’s performance
versus budget, financial position, liquidity headroom,
banking covenants and realistic downside scenarios.
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.
136 |
kinandcarta.com
Building a world that works better for everyone
| 137
Governance Report
Corporate governance report
continued
In 2023, internally facilitated
effectiveness evaluations of the
Board and its committees were
undertaken via questionnaire,
led by John Kerr (Chairman)
and supported by Daniel Fattal
(former Company Secretary). Nigel
Pocklington (Senior Independent
Director) led a review of the
performance of the Chairman
and considered feedback from
the Executive and Non-Executive
Directors. A summary of the 2023
effectiveness review findings and
actions identified is disclosed
on the next page. These actions
will be carried out within the
2023/24 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.
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.
Kelly Manthey was appointed Chief
Executive Officer on 1 August 2022.
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 Kelly’s inductions, she
received a presentation from the
Company’s corporate lawyers on
listed company obligations and
directors’ duties. 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.
Each year, the Board considers
the most appropriate mechanism
for conducting its annual Board
effectiveness review.
Board
Matters arising from
the 2023 effectiveness
evaluation
Skills and experience
Actions identified
While considering future board appointments, the Board
should take into account candidates relevant experience
in future technologies and capital markets
Conduct and structure of
board meetings
Consider which Board meetings non-Board members
should attend
Introduce Board-only sessions for meetings that include
non-Board members
Board meeting
attendance
Keep Board members informed of the number of Board
meetings to be held in person throughout the year
Engagement with Board
members
Encourage dialogue between Executive and
Non-Executive Directors outside of meetings
Strategy articulation
Understanding clients
Enhance strategy papers to focus more on delivery
capability and measurable outcomes of strategic
priorities
Consider inviting clients to future Board meetings to
discuss their needs, sector trends, and our performance
as a whole
Audit Committee
No actions were identified for the Audit Committee
Nomination Committee
No actions were identified for the Nomination Committee
Remuneration Committee Process and timeline
Introduce a new HR lead to the Chair of the Committee to
assist the management and timelines of the committee
papers
138 |
kinandcarta.com
Building a world that works better for everyone
| 139
Governance Report Audit Committee report
Michele Maher
Chair of the Audit Committee
2024 areas
of focus:
In addition to the recurring matters
on the committee’s rolling agenda,
the Committee expects to review:
•
•
the implementation of “Concur”,
new expenses reporting
system and its effectiveness
in reinforcing compliance with
expense policy and driving cost
savings; and
the integration of recent
acquisitions (Melon, Loop, CDL,
Forecast Data) and impact on
planned growth and increased
scale.
Current members:
• Michele Maher (Chair)
• David Bell
• Nigel Pocklington
Meetings held:
4
For details of Audit Committee
members’ attendance at
meetings during the year, see
page 129.
2023 key
achievements:
• Reviewed management
processes around revenue
recognition to confirm robust
controls are in place including
compliance with the IFRS 15
standard as well as ensuring
there are adequate early
warning mechanisms to detect
significant changes to major
client contracts.
• Considered the control
environment in the context of
the increasing use of nearshore
resources in financial processes.
• Reviewed the recommendations
by the Assurance team following
the deferred consideration
reviews of Melon, Loop and CDL.
• Considered new disclosure
requirements and narrative
reporting guidance.
• Considered effectiveness of
the external audit process
and how the external auditor’s
objectivity and independence is
safeguarded.
Chair’s
introduction
On behalf of the Audit Committee, I
am pleased to present its report for
the year ended 31 July 2023.
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 and
KPMG, Kin + Carta’s former and
current external auditor, 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 145
to 147.
Michele Maher
Chair of the Audit Committee
1 November 2023
140 |
kinandcarta.com
Building a world that works better for everyone
| 141
Governance Report 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 carried out
a robust assessment of the Group’s
emerging and principal risks,
including:
• Regular engagement with,
and feedback from, senior
management on proposed
content.
• Feedback from external parties
(corporate reporting specialists,
remuneration advisors, and
external auditor) 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
auditor.
This work enabled the Committee
to provide positive assurance to
the Board to assist them in making
the statement required by the
Code.
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 144 and 145.
Audit Committee report
continued
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. Michele chairs 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 four meetings
in the year, at which it:
• Considered the external
auditor’s 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.
• 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.
• Received a report on
classification of share-based
payment charges as adjusting
items.
• Received a report on application
of accounting standard IFRS
15 on complex client contracts
together with evaluation and
recommendations on additional
controls to place better rigor
around the application of the
standard.
• Received updates on assurance
activities performed for
acquisition earn-outs including
first deferred consideration
for Melon and Loop and final
deferred consideration for CDL.
• Reviewed the Group’s trading
updates and half-year results
prior to release.
• Considered key mandatory
reporting requirements
for the year ended 31 July
2023, 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.
• 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 and approved revised
key controls policies, including
Anti-Bribery and Corruption,
Speak Up (whistleblowing),
and Non-Audit Services
and reported to the Board
on the operation of these
arrangements.
142 |
kinandcarta.com
Building a world that works better for everyone
| 143
Governance Report Audit Committee report
continued
Significant issues
considered
Recognition of
revenue and profit on
complex contracts
The assessment of
the carrying value
of goodwill
(£61.8 million) and
intangible assets
(£13.2 million)
The classification
of adjusting items
(£37.7 million
before tax)
How the Committee addressed these issues
Judgement is applied in recognising revenue where:
Revenue is recognised over time as distinct services delivered in respect of the input
costs incurred. Revenue is recognised as a percentage of completion as performance
obligations are delivered. This method particularly requires a judgement in respect of
estimating the cost to complete on the respective contract and the remaining risk and
associated contingency. Contingency includes revenue and cost contingency which
is considered for uncertainty remaining to deliver the remainder of the contract and
associated warranties.
The Committee considered the outcome of the assessment related to client contracts
with potential disputes and litigations in the period and agreed on the implementation of
the recommendations made by the internal Assurance team.
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 value-in-use calculations identified a shortfall of £14.6 million in relation to the UK
excluding Kin and Carta Data CGU goodwill, which has been recorded as an adjusting
item in the Consolidated Income Statement. Following discussion and challenge, the
Committee agreed with the recommendations made by management.
The Committee was satisfied with the assumptions applied to support the remaining
carrying value of goodwill of £61.8 million and intangible assets of £13.2 million. The
conclusion of the review and the key assumptions are disclosed in note 18 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 279 to 283.
The valuation of
the St Ives Defined
Benefit Pension
Scheme (£13.0 million
surplus)
The valuation of the St Ives Defined Benefit 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 to the Consolidated Financial Statements. The assumptions presented
to the Audit Committee by management are underpinned by actuarial advice. The Audit
Committee considered the suitability of the actuary.
Significant issues
considered
Going concern basis
for the financial
statements and
viability statement
How the Committee addressed these issues
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 179 and 180 and the viability statement can be
found on pages 181 and 182.
Accounting treatment
of acquisitions
Following the acquisition of Forecast Data in the year, the Committee considered the
allocation of the purchase price payable among the fair value of acquired net assets,
which includes acquired intangible assets and goodwill (which are detailed in note 12
of the Consolidated Financial Statements). In addition, the Committee considered the
treatment of contingent consideration as deemed remuneration. The Committee was
satisfied with the treatment applied.
Changes in
accounting policy
The Committee considered the change in accounting policy to hold investment property
at fair value (previously held at cost). Details of the restatement can be found in note 1 to
the Consolidated Financial Statements.
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 Senior
Internal Auditor 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.
• A review of policies related
to reimbursable expenses,
and credit card expenses,
Delegation of Authority and
signing authorities for the
Regions.
• A review of the financial model
and associated calculations
of Executive and Operations
Incentive Bonus Plans.
Additional reviews included:
• Development of Country Risk
• A review of the second
contingent consideration for
Cascade Data Labs.
• A review of the first contigent
consideration for Melon, Octain
and Loop.
• A review of completion
accounts and purchase price
allocation for Forecast Data.
•
Reviews on Revenue recognition
related to complex client
contracts and quarterly balance
sheet reviews.
• A review of spend across the
Group, covering expenses,
credit cards and supplier spend.
Profiles to support new business
development activities.
• Assessment of client contracts
with potential disputes and
litigations. Evaluation of
internal controls and provide
improvement recommendations.
• Conducted refresh training on
high risk activities, such as, IFRS
15 (Revenue Recognition).
•
Enhancement of an Internal
Incident Management
Framework.
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.
144 |
kinandcarta.com
Building a world that works better for everyone
| 145
Governance Report Audit Committee report
continued
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.
The areas covered included:
•
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.
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 2023 was supported by
the Company Secretary and
Internal Audit function. In addition,
during the year, the Committee
received regular reports from
Assurance on the effectiveness
of the Group’s internal controls
and risk management system, and
reports from the external auditor
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, advise
and to escalate, with regard
to noteworthy risk issues and
developments.
• Regular management meetings
within each Region as
appropriate.
• The Group’s Internal Audit
function, whose work plan
is closely linked to the risk
management framework.
• 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 auditor. 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 it considered
the Group had effective risk
management and internal control
processes in place.
Effectiveness of the
external auditor
In the prior year, the Audit
Committee conducted a tender
process for the external audit
engagement for Kin + Carta’s
financial year ended 31 July 2023.
This resulted in the appointment of
KPMG following the approval of the
shareholders at the 2022 AGM.
The Committee is tracking the
effectiveness of the new external
auditor’s process for the year
ended 31 July 2023 based on
the commitments made during
the tender. The results of this
assessment were discussed
with the external auditor at the
conclusion of the audit for the year
ended 31 July 2023.
The correspondence included
requests for further information
on certain aspects of the Group’s
Annual Report and Accounts
for the year ended 31 July 2022,
related primarily to deferred
tax, net investments in foreign
operations, expected credit
losses, business combinations and
leases. The Group responded fully
to all the matters raised and the
correspondence is now closed. The
Group agreed to make additional
disclosures, where appropriate,
in the 2023 Annual Report and
Accounts in respect of the areas
highlighted by the FRC, in order to
enhance users’ understanding of
those areas. No further actions are
required.
The Chair of the Committee has
been involved in reviewing the
Group’s responses to the points
raised by the FRC and is satisfied
that all the matters have been
addressed via the direct responses
to the FRC and the additional or
amended disclosures in this year’s
Annual Report and Accounts. The
FRC has published its case review
which can be found at frc.org.uk/
accountants/corporatereporting-
review/crr-reviews.
is satisfied that there are no
relationships between the
Company and KPMG, its employees
or its affiliates that may reasonably
be thought to impair the auditor’s
objectivity and independence.
The Committee met with KPMG
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 auditor 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, KPMG was appointed
as the Company’s external auditor
in 2022, with effect from the
financial year ended 31 July 2023.
The external auditor’s appointment
is reviewed regularly in accordance
with applicable law and regulation
and the FRC Ethical Standard for
Auditors. John Poole served as the
Lead Audit Partner for the financial
year ended 31 July 2023.
Interactions with the Financial
Reporting Council
During the year, the Group received
a letter from the FRC as part of its
regular review and assessment of
the quality of corporate reporting
in the UK. The review conducted by
the FRC was based solely on the
Group’s published Annual Report
and Accounts and does not provide
any assurance that the Annual
Report and Accounts are correct in
all material aspects.
Provision of non-audit
services
The Committee’s policy on the
engagement of the external
auditor 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
auditor 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 2023,
non-audit fees of £54,600 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.
Safeguarding the external
auditor’s independence
The Committee considered the
robustness of KPMG’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 KPMG’s objectivity and
independence. The Committee
146 |
kinandcarta.com
Building a world that works better for everyone
| 147
Governance Report Nomination Committee report
Current members:
• John Kerr (Chair)
• David Bell
• Chris Kutsor
• Maria Gordian
• Michele Maher
• Kelly Manthey
• Nigel Pocklington
Meetings held:
2
For details of Nomination
Committee members’ attendance
at meetings during the year, see
page 129.
John Kerr
Chair of the Nomination
Committee
2023 key
achievements:
Chair’s
introduction
• Recommended to the Board the
appointment of Chris Kutsor
as Chief Operating Officer with
effect from 1 August 2022 in
addition to his role as Chief
Financial Officer.
• Recommended to the
Board the appointment of
Nigel Pocklington as Senior
Independent Director with
effect from 1 December 2022.
• Having conducted a Board
and committees performance
evaluation during the year,
the Nomination Committee
identified no significant gaps
in the Board and committees’
effectiveness that needed
attention (see page 139).
2024 areas of
focus:
• Further consideration of
succession planning.
• Monitor the balance of diversity,
experience, knowledge and skills
of the Board.
On behalf of the Nomination
Committee, I am pleased to present
its report for the year ended
31 July 2023.
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.
Succession planning
During the year, the Committee
reviewed the diversity, experience,
knowledge and skill-set of the
Board and discharged their
principal duties by:
• ensuring that an appropriate
review of the Board, its
Committees and Directors’
effectiveness was undertaken;
• considering whether the
Non-Executive Directors were
sufficiently independent for
corporate governance purposes;
and
• approving the responsibilities
of the Chairman, the Chief
Executive Officer, Chief Financial
Officer and Chief Operating
Officer, and Senior Independent
Director.
John Kerr
Chair of the Nomination Committee
1 November 2023
Diversity targets
As at 31 July 2023, Kin + Carta met the UK Listing Rules diversity targets to
have at least 40% female Board representation, at least one senior Board
position occupied by a woman and at least one director from an ethnic
minority background, as shown in the table below (the “Diversity Targets”).
There have been no changes to the Board between 31 July 2023 and the date of
this report that have affected the Company’s ability to meet one or more of the
Diversity Targets. Each individual self-reported their gender identity and ethnic
background through a fixed choice questionnaire with possible responses
aligned to the specific categories in Listing Rule 9 Annex 2.
Gender identity
Number
of Board
members
Percentage
of the
Board
Number
of senior
positions on
the Board
(CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage
of executive
management
Men
Women
Not specified/
prefer not to say
4
3
–
57%
43%
–
3
1
–
5
2
-
71%
29%
-
Ethnic background
Number
of Board
members
Percentage
of the
Board
Number
of senior
positions on
the Board
(CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage
of executive
management
White British
or other White
(including
minority-white
groups)
Mixed/Multiple
Ethnic Groups
Asian/Asian
British
Black/African/
Caribbean/Black
British
Other ethnic
group, including
Arab
Not specified/
prefer not to say
6
–
–
1
–
–
86%
–
–
14%
–
–
4
–
–
–
–
–
5
2
–
–
–
-
71%
29%
–
–
–
-
148 |
kinandcarta.com
Building a world that works better for everyone
| 149
Governance Report 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.
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 2023
Inclusion, diversity, equity
and awareness
The Board Diversity Policy is
available to view in the reports and
policies section of our website:
investors.kinandcarta.com. The
policy takes into account DTR
7.2.8A as part of the identification
and selection of new directors and
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.
The proportion of women on the Board is 43%.
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 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, 1 November 2023.
Performance evaluation
In 2023, 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 pages
138 and 139 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
Board appointment process
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 were identified.
During the year, the Nomination
Committee recommended that
the Board approve Chris Kutsor’s
additional appointment to the role
of Chief Operating Officer effective
from 1 August 2022 and further
approved Nigel Pocklington’s
appointment to the role of Senior
Independent Director effective
from 1 December 2022.
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.
Senior managers
13
23
150 |
Female
Male
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 further develop 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
68 to 71. These initiatives are
intended to build a culture where
everyone is empowered to bring
their 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 is set out within this
Nomination Committee Report on
pages 149 to 150.
Senior managers for these purposes is as defined
in section 414C(8) of the Companies Act 2006 and
includes the directors of the Group’s subsidiary
undertakings and their direct reports.
kinandcarta.com
Building a world that works better for everyone
| 151
Governance Report Directors’ Remuneration report
Current members:
• Nigel Pocklington (Chair)
• Michele Maher
• Maria Gordian
Meetings held:
4
For details of Remuneration
Committee members’ attendance
at meetings during the year, see
page 129.
2023 key
achievements:
• Following the 2022 AGM, the
Committee reached out to
some of the Company’s largest
shareholders to continue a
dialogue and listen to their
views as significant investors of
Kin + Carta.
• Considered the remuneration
arrangements for 2022/23 and
approved the targets for the
2023/24 bonus and December
2022 LTIP awards.
Nigel Pocklington
Chair of the Remuneration
Committee
2024 areas of
focus:
• Continue to operate the
Directors’ Remuneration Policy
and welcome ongoing dialogue
with shareholders and key proxy
advisers.
• Determine the impact
on remuneration of the
recommended offer by Kelvin
UK Bidco Limited for the entire
issued share capital of the
Company, as set out in the Co-
Operation Agreement on
18 October 2023.
At a glance
Summary for Executive
Directors’ performance and
remuneration for 2023
• 2023 annual bonus pay-
out of 0%, reflecting the
Executive Directors’ proposal
to forego any bonus due to
the Company’s revision of its
trading performance during the
year.
• 2020-2023 LTIP award vesting
36% of maximum reflecting the
achievement of the ESG target
and modest growth in adjusted
net revenue and adjusted profit
before tax (“PBT”) over the
three-year performance period.
Implementation for 2024
• Given current economic
conditions, Kelly Manthey and
Chris Kutsor have not received
salary increases with effect
from 1 August 2023. The average
salary increase across the Group
for 2023/24 is 5.43% (excluding
recent Europe acquisitions); for
US resident employees only, the
average is 5.08%.
• Maximum annual bonus of up
to 150% salary, based 40% on
adjusted net revenue growth,
40% on adjusted PBT, and 20%
on strategic/personal objectives,
including ESG related measures.
Further details are disclosed on
page 70.
• Given the current expected
timing of the recommended
offer from Kelvin UK Bidco
Limited, the Committee does
not intend to grant any further
LTIP awards to employees. If any
grants are made this will be in
accordance with the Directors’
Remuneration Policy, and targets
will be disclosed at the time of
grant.
• With effect from 1 August 2023,
the annual base fee levels for
the Non-Executive Directors
increased to £50,000, with an
additional fee for the Audit and
Remuneration Committee chairs
increasing to £9,000 p.a.
Letter from the
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 2023.
This report is split into three parts:
this ‘annual statement’, a summary
of the ‘Remuneration Policy report’,
which was approved 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 2023 and
how the Remuneration Policy will be
implemented in the year ending 31
July 2024.
The 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.
Following the year end, the
Committee has determined the
impact of the recommended offer
from Kelvin UK Bidco Limited, a
newly formed company owned
indirectly by funds advised by
Apax Partners LLP, on Directors’
remuneration and our employee
share plans. The Committee agreed
outcomes in accordance with the
Directors’ Remuneration Policy
and the rules of our share plans
as outlined in the Co-Operation
Agreement.
Business context
Kin + Carta has had to respond to
deteriorating market conditions
during the year due to inflation
and increased uncertainty and
increasing risk related to our clients’
ambitious digital investment plans.
For the year ended 31 July 2023,
we saw a like-for-like net revenue
decline of 11% and adjusted PBT has
decreased from £20.6 million to
£15.8 million.
Despite challenges in the market,
we have continued integration
of Melon Group following the
acquisition last year and further
enhanced our high quality data
and artificial intelligence services
through the acquisition of Forecast
Data.
Wider workforce actions
The macro-economic headwinds
have continued to impact our
business, as well as the livelihoods
of our employees. To further
support employees, Kin + Carta
carried out a pay review for
2023/24 and increased salaries by
5.43% across the Group (excluding
recent Europe acquisitions). Kin +
Carta also has a benefits platform
which provides a range of benefits
and initiatives to support mental
and financial wellbeing. The Board,
including the Committee, will
continue to monitor the impact of
these headwinds on the livelihoods
of our employees.
152 |
kinandcarta.com
Building a world that works better for everyone
| 153
Governance Report Directors’ Remuneration report
continued
Performance and
reward for 2023
The Committee considered
performance achieved against
the annual bonus targets set for
2022/23:
• The targets for the 35%
weighting based on adjusted
net revenue and 35% weighting
based on adjusted PBT were not
met as performance was below
the threshold targets for both
measures.
• The 20% of bonus opportunity
based on strategic objectives,
relating to growth, services,
people, responsibility,
operations and expansion, was
met in full. Therefore, 20% out of
20% was achieved.
• The 10% of bonus opportunity
based on environmental, social
and governance (“ESG”) matters
was met at 37.5%. Therefore,
3.75% out of 10% was achieved.
This assessment would have
resulted in an overall annual bonus
outcome based on performance
against the formulaic targets of
23.75% of maximum. However,
given that the financial targets
were missed, the Executive
Directors voluntarily elected not to
receive an annual bonus which the
Committee accepted. Therefore
no annual bonus payment was
made for 2022/23. Full details of
performance against targets have
been disclosed on page 170.
The Committee considered
performance achieved against the
LTIP awards granted in November
2020 for Chris Kutsor, which are
due to vest in November 2023:
• 50% of the award is based
on a relative TSR target, the
threshold target was not met
therefore, this element of the
LTIP did not vest.
• The financial measures based
on growth in adjusted net
revenue from 2019/20 to
2022/23 (15% of the award) and
growth in adjusted PBT from
2019/20 to 2022/23 (15% of
the award) were partially met,
and will vest at 12% and 4% of
maximum respectively.
• 20% of the award was subject
to ESG targets which were met
in full.
Therefore, the LTIP award will vest at
36% of maximum. Kelly Manthey’s
2020 LTIP award was granted prior
to her appointment as an Executive
Director and will vest at 30% of
maximum. Further details are
provided on pages 171.
The Committee considered that
the outcomes under the bonus and
LTIP elements of the Remuneration
Policy were appropriate given the
performance achieved, and no
discretion was exercised.
Variable pay for 2023/24
For 2023/24, the annual bonus
measures have been reviewed
and updated to align with the
Company’s immediate priorities.
The weighting on financial
measures has been increased from
70% to 80%, with the remaining
20% based on strategic objectives
(inclusive of Corporate Social
Responsibility). The financial
measures will be split evenly
between total adjusted net revenue
growth and adjusted PBT growth.
As set out in the Co-Operation
Agreement, given the current
expected timing of the
recommended offer from Kelvin UK
Bidco Limited, the Committee does
not intend to grant any further LTIP
awards.
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 annual
Directors’ Remuneration Report at
the forthcoming Directors’ AGM.
Nigel Pocklington
Chair of the Remuneration
Committee
1 November 2023
154 |
kinandcarta.com
Building a world that works better for everyone
| 155
Governance Report Directors’ Remuneration report
continued
Policy report
Directors’ Remuneration Policy
This section of the report sets out
a summary of the Remuneration
Policy (the “Policy”) for Executive
and Non-Executive Directors, which
was approved at the 2022 AGM on
1 December 2022. A copy of the full
Policy is available in the 2021/22
Annual Report and Accounts, pages
148 to 157 inclusive.
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 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
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 summarised Policy table on
pages 158 to 163 sets out the
key aspects of the Company’s
Remuneration Policy for Executive
Directors.
How the 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
Clarity – remuneration arrangements should be
transparent and promote effective engagement with
shareholders and the workforce.
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.
Simplicity – remuneration structures should avoid
complexity and their rationale and operation should be
easy to understand.
The Company operates a UK market standard
remuneration structure that is familiar to all
stakeholders.
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.
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 of the 2021/22
Annual Report and Accounts.
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.
156 |
kinandcarta.com
Building a world that works better for everyone
| 157
Governance Report 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.
Basic salary
Purpose and link to strategy
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.
Maximum potential value
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;
In setting salaries, the Committee typically takes into
account the following:
• an individual’s development or performance in role;
• a change in the size and complexity of the Group;
the size and complexity of the organisation;
• significant market movement; and
•
•
•
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.
• 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.
Benefits
Purpose and link to strategy
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).
Pension
Purpose and link to strategy
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 potential value
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.
Maximum potential value
Maximum pension contribution will normally be no more
than that offered to the majority of employees (currently
5% of salary).
Performance metrics
Not applicable.
158 |
kinandcarta.com
Building a world that works better for everyone
| 159
Governance Report Directors’ Remuneration report
continued
Annual bonus
Purpose and link to strategy
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.
Maximum potential value
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 minimum bonus payment
of 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.
Long-term incentives
Purpose and link to strategy
Incentivises Executives to achieve superior financial
growth and return to shareholders over the longer term.
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.
All-employee share schemes
Purpose and link to strategy
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.
Maximum potential value
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.
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 and 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.
Maximum potential value
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.
160 |
kinandcarta.com
Building a world that works better for everyone
| 161
Governance Report Directors’ Remuneration report
continued
Maximum potential value
Not applicable.
Performance metrics
Not applicable.
Maximum potential value
Not applicable.
Performance metrics
Not applicable.
Share ownership guidelines
Purpose and link to strategy
To provide alignment between Executives and
shareholders.
Operation
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
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.
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
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.
In summary, the contractual provisions are as follows:
Executive Directors external appointments
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.
Non-Executive Directors Remuneration Policy
Chairman and Non-Executive Directors
The following sets out the fee policy for the Chairman and Non-Executive Directors:
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.
Purpose and link to strategy
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.
162 |
kinandcarta.com
Building a world that works better for everyone
| 163
Governance Report Directors’ Remuneration report
continued
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
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 full Policy as set out in the 2021/22 Annual
Report and Accounts, pages 148 to 157 inclusive.
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 and receive feedback on 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.
Annual report on remuneration
The following section provides
details of how Kin + Carta’s Policy
was implemented during 2022/23.
Details of how we intend to
implement the Remuneration Policy
for 2023/24 is detailed on pages
167 to 168. The Policy operated as
intended by the Committee.
Membership of the Committee
Michele Maher, Nigel Pocklington,
and Maria Gordian, all Independent
Non-Executive Directors, served
on the Committee during the
year. The Committee is chaired by
Nigel Pocklington. The number of
meetings held and attendances
on page 129. A description of the
principal matters considered by
the Committee in carrying out
its duties during the year are
described below.
During the year under review, the
Committee, where appropriate,
sought advice and assistance from
Daniel Fattal (former Company
Secretary), and members of
the Board, including John Kerr
(Chairman), David Bell
(Non-Executive Director), Kelly
Manthey (Chief Executive Officer),
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
2023 were £51,350 (2022: £91,500),
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 2021/22;
• approved the Directors’
Remuneration Report for
2021/22;
• approved the grant of awards
in December 2022 under
the Company’s 2020 LTIP to
certain senior managers and
the performance conditions
attached to their vesting;
• approved the structure of the
Executive Directors’ bonus
scheme for 2022/23; and
• consulted with major
shareholders following 2022
AGM.
164 |
kinandcarta.com
Building a world that works better for everyone
| 165
Governance Report Directors’ Remuneration report
continued
Summary of shareholder voting
The following table shows the results of the binding vote on the Remuneration Policy, the advisory vote on the
2021/22 Directors’ Remuneration Report and the vote to amend the Kin and Carta Long Term Incentive Plan 2020 at
the 2022 AGM:
Resolution
Votes for1
% for1
Votes
against
%
against
Total
votes cast
Votes
withheld
Remuneration Policy – 2022 AGM 104,500,984
73.10% 38,462,829
26.90%
142,963,813
445,028
Remuneration Report – 2022 AGM 134,363,376
93.69%
9,044,495
6.31%
143,407,871
970
Amend the LTIP – 2022 AGM
107,490,385
75.19% 35,473,310
24.81%
142,963,695
445,146
1
Includes”discretionary” votes.
Following the 2022 AGM, the Committee reached out to the Company’s largest shareholders who did not support
the resolutions, to continue a dialogue and listen to their views as significant investors of Kin + Carta. This has
resulted in various correspondence and a number of conversations with these shareholders. Although there was a
range of views, the primary issue raised by most of those consulted with was that while they are sympathetic to our
rationale that it was necessary to increase executive remuneration opportunities to better compete for talent in the
US technology market, the Directors’ Remuneration Policy included increases to both the maximum annual bonus
and LTIP opportunities and some shareholders would have preferred an increase to one element of the package
only or a more staggered approach. While the Committee understands the points raised by those shareholders
voting against the resolutions, the Committee continues to believe the Directors’ Remuneration Policy meets the
objectives of balancing the Company’s need to recruit and retain talent in the US technology market while reflecting
the Company’s status as a FTSE listed company.
The Committee continues to be grateful for the feedback received and the two-way engagement with shareholders,
which was extensive prior to the 2022 AGM. Given overall majority support was obtained for the remuneration
resolutions, it is not currently proposed to make any further changes to the approach to Directors’ remuneration
that was set out in the 2022 Annual Report.
Implementation of Remuneration Policy for 2023/24
The following section provides details of how we intend to implement the Remuneration Policy for 2023/24.
Basic salary
The Committee reviewed the Executive Directors’ salaries for 2023/24 and in light of the challenging financial
circumstances of the business no increases were awarded. Salaries for 2023/24 are as follows:
Kelly Manthey
Chris Kutsor
From
1 August 2023
From
1 August 2022
% increase
US$525,000
US$525,000
US$405,000
US$405,000
0%
0%
The average salary increase across the Group for 2023/24 is 5.43% (excluding recent acquisitions); for US resident
employees only, the average is 5.08%.
Pension and benefits
No changes in pension contribution rates or benefits provision to the Executive Directors are to be applied during
the year.
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.
Annual bonus
As discussed in the annual statement on page 153, 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 and strategic objectives (inclusive of Corporate Social Responsibility), weighted 80% and
20% 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
2023/24 adjusted net revenue
2023/24 adjusted PBT
Strategic objectives (inclusive of Corporate Social Responsibility)
Weighting
40%
40%
20%
In the event of any material acquisition or divestment, the Committee may 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.
166 |
kinandcarta.com
Building a world that works better for everyone
| 167
Governance Report Directors’ Remuneration report
continued
Long-term incentive awards in 2023/24
Given the current expected timing of the recommended offer from Kelvin UK Bidco Limited, the Committee does
not intend to grant any further LTIP awards to employees. If any grants are made this will be in accordance with the
Directors’ Remuneration Policy and targets will be disclosed at the time of grant.
Non-Executive Director Remuneration Policy for 2023/24
With effect from 1 August 2023, the annual base fee levels for the Non-Executive Directors will increase to £50,000,
with an additional fee for the Audit and Remuneration Committee chairs increasing to £9,000 p.a. and a fee for
acting as the Senior Independent Director remaining unchanged at £5,000 p.a.. The fee for acting as Chairman will
remain unchanged. John Kerr (Chairman) will continue to forego £10,000 p.a. of his fee, which the Company donates,
together with a matching sum from the Company, to registered charities.
Remuneration payable to Directors for the year ended 31 July 2023
Directors’ single figure table (audited)
Set out below, in a single figure, is the total remuneration of all Directors for the financial year ended 31 July 2023
and financial year ended 31 July 2022. The Policy operated as intended during the year.
Basic
salary/fee1
£’000
Taxable
benefits2
£’000
Bonus3
£’000
Share
plans
vesting4
£’000
Pension
benefits5
£’000
Total
£’000
Total
fixed
£’000
Total
variable
£’000
Director
Executive Directors
Kelly Manthey6, 10
2022/23
433.9
Chris Kutsor6
2021/22
2022/23
2021/22
Non-Executive Directors
David Bell
Maria Gordian8
John Kerr7
Michele Maher
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
Nigel Pocklington9
2022/23
2021/22
–
334.7
269.0
42.5
42.5
42.5
31.9
120.0
120.0
50.0
50.0
53.3
50.0
16.9
–
20.7
16.0
–
–
–
258.2
26.0
–
58.8
1,571.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Cash paid or payable in respect of the relevant period.
2 Taxable benefits constitute additional payments in lieu of the provision of a company car.
3 This is the amount of cash bonus paid in respect of the financial year.
21.7
–
16.7
13.4
–
–
–
–
–
–
–
–
–
–
498.5
472.5
–
430.9
2,128.5
42.5
42.5
42.5
31.9
120.0
120.0
50.0
50.0
53.3
50.0
–
372.1
298.4
42.5
42.5
42.5
31.9
120.0
120.0
50.0
50.0
53.3
50.0
26.0
–
58.8
1,830.1
–
–
–
–
–
–
–
–
–
–
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 2021/22 Directors’
remuneration report, 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. For
Chris Kutsor, whose 2019 LTIP award vested during the year, the 2019 LTIP figures in the table above have been restated to reflect the actual number of 2019 LTIP awards,
which vested on 17 December 2022 using the share price on the day of vesting (being 232.5p). The restated value of £973.6k provides a difference of 33.3p per vested
share in comparison to the estimate contained in the 2021/22 Directors’ remuneration report on page 164, which was £834.2k. The proportion of the restated value in the
single figure table for these awards which is attributable to share price growth is 16.7%. For Chris Kutsor, the 2021/22 figure 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
but have not been exercised as at 31 July 2023. These were made in connection with his appointment to the Board in 2019 as detailed on page 171. For these two awards,
the value shown is based on the share price on vesting of 249.5p.
The 2020 LTIP award is expected to vest at 30% for Kelly Manthey and 36% for Chris Kutsor of maximum, detailed further on page 171. The potential value of the 2020 LTIP
award was calculated using the average share price for the three months ending 31 July 2023, being 67.2p. The awards were granted on 27 November 2020, when the five-
day average share price prior to the date of grant was 100.8p. Therefore no element of the value shown in the table above represents share price appreciation.
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
Kelly Manthey and Chris Kutsor.
6 The remuneration of Kelly Manthey 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 1.21 (2022: 1.32).
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.
8 Maria Gordian was appointed to the Board as Non-Executive Director on 1 November 2021. Her 2021/2022 remuneration in the single figure table above is from this date.
9 Nigel Pocklington was appointed as Senior Independent Director on 1 December 2022.
10 Kelly Manthey was appointed as Chief Executive Officer with effect from 1 August 2022.
168 |
kinandcarta.com
Building a world that works better for everyone
| 169
Governance Report Directors’ Remuneration report
continued
Incentive outcomes for the year ended 31 July 2023 (audited)
Annual bonus
2020 LTIP vesting in November 2023 (audited)
For the 2020 LTIP award granted on 27 November 2020, the awards are subject to the achievement of performance
measures. Vesting of the 2020 LTIP awards is detailed in the table below:
Executive Directors’ bonuses for the year ended 31 July 2023 provided for a payment of up to 150% of salary, with
the performance measures weighted as follows:
Measure
Weighting
Targets
Measure
2022/23 adjusted net revenue
2022/23 adjusted PBT
Strategic objectives
ESG
Weighting
35%
35%
20%
10%
TSR relative to the
FTSE All-Share
50%
ESG
20%
The following provides the performance measures targets, together with the outturns for 2022/23.
Financial measures (70% of maximum)
Performance
period
1 August 2020
to 31 July 2023
(three-month
averaging)
Outcome
Below the
median
quartile1
Vesting
%
0%
1 August 2020
to 31 July 2023
100%
20%
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
Achieve and maintain B Corp certification
across geographies over the full
performance period. B Corp assessment
and certification is a recognised
independent framework for measuring
performance in areas such as governance,
communities, the environment and the
impact on society of our work with clients.
Threshold
target
(25% of
maximum)
Mid-target
(50% of
maximum)
Maximum
target
(100% of
maximum)
Actual
performance*
Bonus earned
as a % of
base salary
£23.5 million £24.2 million £26.2 million
£15.7 million
Measure
Adjusted PBT
0%
0%
0%
Adjusted net revenue
£228 million £236 million £252 million £190.8 million
Total
* Actual performance excludes Forecast Data, which was acquired during the year. This approach reflects our remuneration principles and is consistent with practice in prior
years.
The adjusted net revenue and adjusted PBT measures were not met and therefore no bonus was paid in respect of
these measures.
Strategic objectives (20% of maximum)
Each Executive Director may earn up to 20% of salary for the achievement of stretching strategic objectives, which
for 2022/23 related to the following initiatives: Client Success; Global Delivery; and Data. Both Executive Directors
were assessed as having achieved their objectives in full, with the Committee noting in particular the following:
• For the Client Success objective, we successfully launched the Seven Star Client Experience and the
Kin + Carta Way, a set of delivery and engagement frameworks, and have seen improvements in client
satisfaction and delivery team health as a result.
• For the Global Delivery objective, the percentage of revenue coming from nearshore in both regions has
increased. Americas nearshore revenue increased to 24% in 2022/23 and Europe nearshore revenue increased
to 7% in 2022/23 through the deployment of resources in South East Europe.
• For the Data objective, we successfully rolled out data literacy training across the Group and the acquisition of
Forecast Data bolstered our data proposition. In the Americas, Data made up 16% of adjusted net revenue and in
Europe it made up 16% of adjusted net revenue in FY23.
ESG (10% of maximum)
In addition to the adjusted net revenue growth, adjusted PBT, 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 37.5% achieved; the outcome of each target is disclosed on pages 52 to 55. Therefore, 3.75% out of 10%
was achieved.
Based on these achievements, the Committee determined that performance against the targets set would have
resulted in an annual bonus award of 35.6% of salary (23.75% of the maximum) in respect of 2022/23. However, as
the threshold target for both financial measures was not met, the Executive Directors voluntarily decided to waive
any annual bonus award for the year, so no bonus award was made for 2022/23.
Growth in
adjusted net
revenue (“CAGR”)
Growth in
adjusted PBT
Total vesting
15%
0% vesting below 7% p.a.
15% vesting for 7% p.a.
100% vesting for 13% p.a. or more
Straight-line vesting between these points
15%
0% vesting below 10% p.a.
15% vesting for 25% p.a.
100% vesting for 25% p.a. or more
Straight-line vesting between these points
Net revenue
in 2022/23 as
compared to
2019/20
Adjusted PBT
in 2022/23 as
compared to
2019/20
81.4%2
12%
27.3%3
4%
36%
1 The Company achieved a TSR ranking of 306th out of 539 companies, below the median of the group.
2 Net revenue in 2022/23 of £192 million versus net revenue in 2019/20 of £135 million, both values have been adjusted to take into account performance of divested and
acquired entities.
3 Adjusted PBT in 2022/23 of £15.8 million versus adjusted PBT in 2019/20 of £11.3 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 169, is detailed in the table below.
Date of
grant
Total number
of shares
% shares
vesting
Number
of awards
vesting
Total value
on vesting1
Kelly Manthey2
Chris Kutsor
27 November
2020
27 November
2020
128,968
30
38,690
£26,000
241,897
36
87,567
£58,845
Transfer of
award/earliest
vesting date
27 November
2023
27 November
2023
1 The potential value of the 2020 LTIP award was calculated using the average share price for the three months ending 31 July 2023, being 67.2p.
2 The LTIP figure in the single figure has been prorated to reflect the LTIP value from the date of appointment (1 August 2022). Kelly Manthey’s award was granted prior to
her appointment as an Executive Director, with 80% of the award subject to meeting performance conditions (70% relative TSR and 10% ESG measures– using the same
targets as for the November 2020 awards made to Executive Directors, as shown above).
The Committee believed the vesting outcome of the 2020 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.
170 |
kinandcarta.com
Building a world that works better for everyone
| 171
Governance Report Directors’ Remuneration report
continued
Scheme interests awarded during the 2023 financial year (audited)
Long-Term Incentive Plan (“LTIP”)
On 19 December 2022, Kelly Manthey and Chris Kutsor were granted awards under the Company’s LTIP, as follows:
Kelly Manthey
Chris Kutsor
Date of
grant
19 Dec 2022
19 Dec 2022
Shares over
which awards
granted
Face value of
share awards
granted (£) 1
407,431
314,304
£961,537
£741,757
% of salary
awarded
222%
222%
1 Face value is based on a share price of 236p (the five-day average prior to the date of grant). For both Kelly Manthey and Chris Kutsor, the award level was calculated using
a similar five-day average £:$ exchange rate of 1: 1.2285.
Awards granted vest on relative TSR, ESG metrics, growth in adjusted net revenue and growth in adjusted PBT,
assessed over the three years to 31 July 2025. Any vesting will be subject to the Committee’s overall discretion.
Vested shares will be subject to a two-year holding period.
A summary of the performance conditions is shown in the table below:
Deferred Bonus Shares (“DBS”)
As reported last year, the 2021/22 annual bonus was achieved at 96% 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 2021/22 on 1 November 2022,
details of the grant are disclosed in the Directors’ outstanding share incentive awards table on pages 176 and 177.
Percentage change in remuneration of Directors and employees
The table below 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, 2021 to 2022 and 2022 to
2023.
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 Kelly Manthey and Chris Kutsor is reported on a constant
currency in the table below to eliminate the impact of exchange rate fluctuations.
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
Performance
measurement period
1 August 2022 to
31 July 2025
(three-month averaging)
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
1 August 2022 to
31 July 2025
Growth in
adjusted
net revenue
(“CAGR”)
Growth in
adjusted PBT
(“CAGR”)
15%
15%
0% vesting below 12% p.a.
25% vesting for 12% p.a.
100% vesting for 18% 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
Net revenue in 2024/25
as compared to 2021/22
Adjusted PBT in 2024/25
as compared to 2021/22
In the 2022/23 Directors’ Remuneration Report, the growth in adjusted net revenue target for 100% vesting
disclosed for the 2023 LTIP grant was misstated due to a typesetting error. The correct target of 18% p.a. is stated in
the table above.
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.
Salary/fees
Taxable benefits2
Annual bonus3
2023
2022
2021
20201
2023
2022
2021
2020
2023
2022
2021
Average
employee
Kelly
Manthey5
10.0%
7.0%
9.1%
4.0%
15.6%
3.7%
(6.4)%
–
N/A
–
–
–
N/A
–
–
–
Chris
Kutsor
14.0%
9.0%
–
–
18.5%
10.0%
(9.9)%
5.9%
(62.0)%
N/A
(100)%
(9.6)%
231.4%
2020
(91.0)%
–
–
–
4.6%
N/A
N/A
David
Bell
John
Kerr
Michele
Maher
Nigel
Pocklington⁴
Maria
Gordian5
–
–
–
–
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
–
–
–
–
(0.4)%
0.4%
2.5%
18.0%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
7.0%
N/A
–
–
7.0%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
–
–
–
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1 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. 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.
3 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.
4 Nigel Pocklington was appointed as Senior Independent Director on 1 December 2022. The increase in 2022 to 2023 reflects his additional responsibilities.
5 Kelly Manthey was appointed to the Board on 1 August 2022 and Maria Gordia was appointed to the Board on 1 November 2022. Therefore no year-on-year comparison is
possible.
172 |
kinandcarta.com
Building a world that works better for everyone
| 173
Governance Report Directors’ Remuneration report
continued
Review of past performance
The chart below illustrates the Company’s Total Shareholder Return for the ten years ended 31 July 2023, 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.
250
200
150
100
50
0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Kin + Carta
FTSE SmallCap
FTSE All-Share
The table below details the Chief Executive Officer’s single figure of remuneration over the same ten-year period:
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
2023
Kelly
Manthey
1,648.4
1,133.5
477.8
478.2
878.6
582.9
469.4
1,790.4
1,675.0
498.5
100.0
69.7
Nil
Nil
100.0
25.0
Nil
100.0
96.0
Nil
98.5
100.0
Nil
Nil
Nil
N/A
Nil
70.0
86.0
30.0
Total remuneration
£’000
Annual bonus as
a percentage of
maximum
LTIP vesting as
a percentage of
maximum
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
166,616
167,202
Dividends paid in the year (including share buy backs)
–
–
(1%)
–
2023
£’000
2022
£’000
Percentage change
performance
Chief Executive Officer pay ratio
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 2023 and includes basic salary,
pension, and the value received from incentive plans. On average, the Group employed 448 UK employees during
the financial year ended 31 July 2023 (2022: 503).
Financial year
2023
2022
2021
2020
Calculation
methodology
Lower quartile
(P25)
Median
(P50)
Upper quartile
(P75)
Option A
Option A
Option A
Option A
9.5:1
36.4:1
39.2:1
12.1:1
6.9:1
25.4:1
28.0:1
8.6:1
5.2:1
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 2023 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 2023 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 2023 compared to 2022 and 2021 primarily due to variations in variable
pay received by the Chief Executive Officer.
A summary of the salaries and total single figures of remuneration for the relevant individuals is included in the table
below for 2023:
Pay level
Salary
Single figure of remuneration
Chief Executive
£433,884
£498,513
Lower quartile
(P25)
£46,797
£52,444
Median
(P50)
£65,781
£72,646
Upper quartile
(P75)
£87,212
£96,167
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)
No payments for loss of office to former Directors were made in the year.
Payments to past Directors (audited)
There have been no payments to past Directors other than those disclosed in previous years.
174 |
kinandcarta.com
Building a world that works better for everyone
| 175
Governance Report
Directors’ Remuneration report
continued
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
2023 were as follows:
Unvested LTIP
awards (subject
to performance
conditions)
Unvested
deferred
bonus share
awards
Unvested
ESPP
awards
Beneficial
holding
31 July
2023
Beneficial
holding
31 July
2022
Expressed as
a percentage
of annual basic
salary1
Unexercised
share options
Executive
Kelly Manthey
Chris Kutsor
Non-Executive
David Bell
John Kerr
Michele Maher
Nigel Pocklington
Maria Gordian
85,000
358,803
609,235
735,714
–
–
294,754
110,341
2,449
812,734
294,754
388,972
45.9%
186.4%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
84,486
112,359
28,089
21,235
–
84,486
112,359
28,089
21,235
–
–
–
–
–
–
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 31 July 2023 (67.6p), being the last business day of the financial year; and the Director’s annual rate of basic salary. The basic salary of Kelly Manthey 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 1.21.
From 31 July 2023 to 1 November 2023, there were no changes to the above stated holdings.
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
award1
Date of
award
Exercise
price for
options
Balance
at
31 July
2022
Awarded
during
year
Exercised
during
year2, 3
Lapsed
during
year3
Balance
at
31 July
2023
Vesting
date Expiry date
Status
Kelly Manthey
LTIP4
17 Dec 19
– 125,000
– (125,000)
–
– 17 Dec 22
17 Dec 29
MV2
4 Sep 20
£0.67
85,000
LTIP3
LTIP4
LTIP4
27 Nov 20
7 Dec 21
19 Dec 22
– 128,968
72,836
–
–
–
–
–
–
–
–
–
– 85,000 4 Sep 23
3 Sep 30
– 128,968 27 No 23
27 Nov 30
–
72,836 7 Dec 24
7 Dec 31
Vested and
exercised
Vested and
unexercised
Unvested
Unvested
–
407,431
– 407,431 19 Dec 25 19 Dec 32
Unvested
411,804
407,431 (125,000)
– 694,235
Vested and
unexercised
Vested and
exercised
Type
of
award1
Date of
award
Exercise
price for
options
Chris Kutsor
Balance
at
31 July
2022
Awarded
during
year
Exercised
during
year2, 3
Lapsed
during
year3
Balance
at
31 July
2023
Vesting
date Expiry date
Status
OPT5
17 June 19
£1.105 358,803
–
–
– 358,803 14 Mar 22 17 June 29
– 486,946
– (418,773)
(68,173)
- 17 Dec 22 17 Dec 29
LTIP4
LTIP3
LTIP4
DBS6
17 Dec 19
27 Nov 20
7 Dec 21
1 Nov 21
–
–
–
241,897
179,513
44,652
ESPP6
15 Nov 21
$3.315
1,809
DBS6
1 Nov 22
-
ESPP7 2 Dec 22
$2.45
LTIP4
19 Dec 22
-
-
-
-
65,689
2,449
314,304
–
–
–
–
–
–
–
-
-
-
-
– 241,897 27 Nov 23 27 Nov 30
Unvested
–
–
179,513
7 Dec 24
44,652
1 Nov 23
7 Dec 31
1 Nov 31
Unvested
Unvested
(1,809)
-
2 Dec 22
2 Dec 22
Lapsed
-
-
65,689
1 Nov 24
1 Nov 31
Unvested
2,449 2 Dec 23
2 Dec 23
Unvested
- 314,304 19 Dec 25 19 Dec 32
Unvested
1,313,620 382,422 (418,773)
(69,982) 1,207,307
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, MV = Market Value Option Award.
2 A market value option award, pursuant to the LTIP 2010, was granted to Kelly Manthey prior to her appointment as Chief Executive Officer on 1 August 2022. The Award
vested on 4 September 2023 at 85%.
3 Details of the Nov 20 LTIP, which was tested for performance at the year end and expected to vest at 30% of maximum for Kelly Manthey and 36% of the maximum for
Chris Kutsor in Nov 23, is included on pages 171.
4 2018 LTIP, 2019 LTIP, 2020 LTIP, 2021 LTIP and 2022 LTIP award performance conditions are detailed on the Company’s Investor site: https://investors.kinandcarta.com/
governance/remuneration/default.aspx. Details of the December 2019 LTIP was included in the 2021/22 Annual Report and Accounts.
5 Details of OPT performance conditions are disclosed on page 89 of the 2018/19 Annual Report and Accounts.
6 Awards are subject to continued employment over two-years.
7 Details of the right to acquire shares pursuant to the ESPP are included on page 177.
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 31 July 2023, being the last business day of the
financial year, was 67.6p and the range during the financial year 2023 was 58.0p to 253.5p.
Share options – Sharesave Scheme and Employee Stock
Purchase Plan (audited)
There are no outstanding Sharesave options in respect of Directors.
Chris Kutsor has the right to acquire 2,449 shares in the Company on 2 December 2023 at a purchase price of
US$2.45 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 2023, excluding lapsed options and options exercised and satisfied from utilising existing issued
shares, options of 14,856,737 shares (8.35% 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
1 November 2023
176 |
kinandcarta.com
Building a world that works better for everyone
| 177
Governance Report
Directors’ report
The Directors present their
Directors’ Report and the audited
Consolidated Financial Statements
for the year ended 31 July 2023.
The Corporate Governance Report
set out on pages 128 to 139 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 33. 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.
Annual General Meeting
The 42nd AGM of the Company
will be held on 7 December 2023.
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.
In accordance with section 489
of the Companies Act 2006, a
resolution for the re-appointment
of KPMG as auditor of the
Company is to be proposed at
the forthcoming Annual General
Meeting.
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 was
due to expire in September 2025
on terms broadly in line with the
previous agreement. The credit
facility is now available until
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 128 to
139 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 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 2023
and to the date of this Report.
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 124 to 127,
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 176 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 44 to 111 of this Annual
Report.
Employees, customers
and suppliers
Information relating to the
Directors’ regard for employee
interests and to business
relationships with customers,
suppliers and others is set out
in our “A responsible business”
section on pages 44 to 111 of this
Annual Report
FCA Listing Rules – compliance with Listing Rule 9.8.4R
The following disclosures required by LR 9.8.4R are contained in the Annual
Report as set out below and are incorporated into the Directors’ Report:
Listing rule requirement
Location in Annual Report
Details of any long-term incentive
schemes as required by LR 9.4.3R.
Directors’ Remuneration Report
on pages 152 to 177
Details of any arrangements under
which a director of the company
has waived or agreed to waive any
emoluments from the company or any
subsidiary undertaking.
Directors’ Remuneration Report
on pages 152 to 177
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 12
to 121 of this Annual Report. 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 40 to 43 of this Annual
Report. 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 2023 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 181 to
182 of this Annual Report 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.
On 18 October 2023, the Board of
Kin and Carta plc recommended
an offer for the Group to be
acquired by Apax. The Board
have considered the statements
in Apax’s announcement made
pursuant to rule 2.7 of the Takeover
Code in respect of the proposed
acquisition, and discussions
with Apax senior management
178 |
kinandcarta.com
Building a world that works better for everyone
| 179
Governance Report Directors’ report
continued
regarding Apax’s intention to
ensure continuity of the Group’s
existing business. Although the
Group’s current bank credit
facility includes a provision
which allows the lender banks to
withdraw the facility under certain
circumstances after a change of
control. The Directors believe that
Apax would ensure that appropriate
bank facilities would continue to
be made available to the group
after completion of the deal.
Considering this, the Directors have
concluded that the completion of
this acquisition would not impact
the appropriateness of the going
concern basis of preparation for
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 145-147
of this Annual Report.
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.
Coast Capital Management, LP
FIL limited
Jupiter Fund Management plc
Kabouter Management, LLC
Lombard Odier Asset Management (Europe) Limited
M&G plc
NN Group N.V.
As at 31 July 2023
Percentage of
issued share
capital carrying
voting rights*
Number of
voting rights
below 5%
below 5%
9,042,907
8,415,289
9,231,752
9,805,255
12,633,518
8,537,419
6,814,194
8,560,377
8,666,293
8,051,366
5.08%
4.73%
5.19%
5.51%
7.10%
4.79%
3.83%
4.81%
4.87%
4.53%
Sanne Fiduciary Services Limited in its capacity as trustee of the Kin and Carta Plc
Employee Benefit Trust
Wasatch Advisors, Inc.
* Percentage based on ordinary shares in issue, excluding treasury shares, as at 31 July 2023.
5,054,118
below 3%
5,326,496
below 3%
Between 1 August 2023 and 1 November 2023, the Company received the following notifications of interests
pursuant to the DTR 5:
• a notification from BlackRock, Inc. on 18 August 2023, which notified an increase in their voting rights to
9,502,499 (representing 5.33% of Kin + Carta’s issued share capital carrying voting rights); and
• a notification from Kabouter Management, LLC on 7 September 2023, which notified a decrease in their voting
rights to 5,156,200 (representing 2.90% of Kin + Carta’s issued share capital carrying voting rights).
Political donations
The Company made no political
donations nor incurred any political
expenditure during the year (2022:
£nil) and the Board has no intention
to seek shareholders’ approval
to permit the Board to make
political donations or incur political
expenditure.
Share capital
As at 31 July 2023, the Company
had 178,021,997 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 2023 was
177,931,360.
Powers of Directors to issue
or buy back the Company’s
shares
At the 2022 AGM, shareholders
approved authorities:
•
•
for the Directors to allot shares
up to an aggregate nominal
amount of £5,930,009 generally,
with a further authority to allot
additional shares up to an
aggregate nominal amount of
£5,930,009 where the allotment
is in connection with a rights
issue only; and
for the Company to make
market purchases of its own
shares up to a maximum of
17,790,027 shares. The Company
did not purchase any of its
own shares, nor has it reissued
shares held in treasury during
the year (2022: 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 12 to 121 of this Annual
Report. 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 this 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 £20.7
million (2022: statutory loss of
£15.6 million). The Directors have
decided not to recommend the
payment of a final dividend for
2023; 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 multi-currency
revolving credit facility of £85
million with an expiry date of
September 2026. 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 31 July
2026.
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 1 August
2024. 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 modest
revenue growth in the financial
year ending in 2024 compared to
the financial year ended in 2023,
with a commensurate increase
in operating profit. The related
scenarios reflect the estimated
financial impact of a of adverse
events associated with the
principal risks outlined in the Risk
management section on pages
112 to 121, 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
180 |
kinandcarta.com
Building a world that works better for everyone
| 181
Governance Report Directors’ report
continued
Statement of Directors’
responsibilities in respect of the
financial statements
of up to 25% 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 employees and,
in such a scenario, the Group
would undertake cost avoidance
measures by removing roles and
delaying new hires while employee
commissions linked to sales growth,
and employee bonuses linked to
operating profit would both also be
payable at a substantially reduced
level. In addition, the Group would
avoid other costs by reducing
expenditure on IT and capital items.
In addition to the stress scenario
outlined previously, other scenarios
were also modelled, including the
loss of the Group’s most significant
customer; and 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 price reductions
given to maintain customer volumes.
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, have a
reasonable expectation that the
Company will be able to continue
in operation and meets its liabilities
as they fall due over the three-year
assessment period.
Approved by Board and signed on
its behalf by
Lucy Maxwell
Company Secretary
1 November 2023
182 |
•
•
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 and
Directors’ 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.
This responsibility statement was
approved by the Board of Directors
on 30 November 2023 and is
signed on its behalf by
Kelly Manthey
Chief Executive Officer
1 November 2023
Chris Kutsor
Chief Financial Officer and Chief
Operating Officer
1 November 2023
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).
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 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 a 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 124 to 127
confirm that, to the best of their
knowledge:
•
•
the Board confirms that
the Annual Report and the
financial statements, taken as
a whole, are fair, balanced and
understandable and provide
the information necessary
for shareholders to assess
the Group’s position and
performance, business model
and strategy;
the Group financial statements,
which have been prepared in
accordance with UK-adopted
international accounting
standards, give a true and fair
view of the assets, liabilities,
financial position and profit of
the Group;
kinandcarta.com
Building a world that works better for everyone
| 183
Governance Report Financials
Financial Statements
Contents
Independent auditors’ report to the
members of Kin and Carta plc
Consolidated income statement
Consolidated statement of 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
186
194
195
196
197
198
200
268
269
270
184 |
184 |
kinandcarta.com
kinandcarta.com
Building a world that works better for everyone
Building a world that works better for everyone
| 185
| 185
Financial Statements Independent auditors’ report to the
members of Kin and Carta plc
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Kin and
Carta Plc. (the “Company”) and its consolidated
undertakings (the “Group”) for the year ended 31 July
2023 set out on pages 194 to 278, which comprise
the Consolidated Income Statement, Consolidated
Statement of Consolidated Income, Consolidated
Statement of Financial Position, Consolidated
Statement of Changes in Equity, Consolidated
Statement of Cash Flows, Company Balance Sheet,
Company Statement of Changes of Equity and related
notes, including the summary of significant accounting
policies set out in note 2.
The financial reporting framework that has been applied
in the preparation of the Group Financial Statements is
UK Law, UK-adopted international accounting standards
and, as regards the Company financial statements, UK
Law and FRS 101 Reduced Disclosure Framework.
In our opinion:
•
•
•
•
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 2023 and of the Group’s loss 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 FRS 101
Reduced Disclosure Framework issued by the UK’s
Financial Reporting Council; and
the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs
(UK)”) and applicable law. Our responsibilities
under those standards are further described in the
Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the
audit evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit opinion is
consistent with our report to the Audit Committee.
We were appointed as auditor by the shareholders
on 1 December 2022. We have fulfilled our ethical
responsibilities under, and we remain independent of
the Group in accordance with UK ethical requirements,
including the Financial Reporting Council (“FRC”)’s
Ethical Standard as applied to listed public interest
entities. No non-audit services prohibited by that
standard were provided.
Conclusions relating to going concern
The Directors have prepared the financial statements
on the going concern basis as they do not intend to
liquidate the Group or the Company or to cease their
operations, and as they have concluded that the Group
and the Company’s financial position means that this
is realistic. They have also concluded that there are no
material uncertainties that could have cast significant
doubt over their ability to continue as a going concern
for at least a year from the date of approval of the
financial statements (the “going concern period”).
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. Our evaluation of the
Directors’ assessment of the entity’s ability to continue
to adopt the going concern basis of accounting
included:
• Obtaining an understanding of the inherent risks to
the Group’s and Company’s business model and
analysed how those risks might affect the Group
and Company’s financial resources or ability to
continue operations over the going concern period.
• Obtaining an understanding of the Directors’
use of the going concern basis of preparation.
This included inspecting their going concern
assessment and associated underlying forecasts
and assumptions, and performing inquiries of
management and those charged with governance.
• Testing the mathematical accuracy of the going
concern model including the data used in stress
testing.
• Assessing base case and downside scenarios
relevant to covenant metrics. In particular,
whether downside scenarios applied mutually
consistent and severe assumptions in aggregate,
using our assessment of the possible range of
each key assumption and our knowledge of inter-
dependencies.
• We also compared the budget to actual results to
assess the Directors’ ability to budget accurately.
• We inspected the facility letter from the lender of
•
the level of committed financing, and the associated
covenant requirements. This included obtaining
evidence to support the going concern assessment
in the context of the change in control clause noted.
• We considered whether the going concern
disclosure in note 1 to the Group Financial
Statements gives an appropriate and sufficient
description of the Directors’ assessment of going
concern.
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 or the Company’s ability
to continue as a going concern for a period of at least
12 months from the date when the financial statements
are authorised for issue.
In relation to the Group and the Company’s 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.
However, as we cannot predict all future events or
conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that
were reasonable at the time they were made, the
absence of reference to a material uncertainty in this
auditor’s report is not a guarantee that the Group or the
Company will continue in operation.
Detecting irregularities including fraud
We identified the areas of laws and regulations that
could reasonably be expected to have a material
effect on the financial statements and risks of material
misstatement due to fraud, using our understanding
of the entity’s industry, regulatory environment and
other external factors and inquiry with the directors. In
addition, our risk assessment procedures included:
•
Inquiring with the Directors and other management
as to the Group’s policies and procedures regarding
compliance with laws and regulations, identifying,
evaluating and accounting for litigation and
claims, as well as whether they have knowledge of
non-compliance or instances of litigation or claims.
Inquiring of Directors, internal audit and
management as to the Group’s high-level policies
and procedures to prevent and detect fraud,
including the Group’s channel for “whistleblowing”,
as well as whether they have knowledge of any
actual, suspected or alleged fraud.
•
Inquiring of Directors, internal audit regarding their
assessment of the risk that the financial statements
may be materially misstated due to irregularities,
including fraud.
• Reading Board, Audit Committee, Remuneration
Committee and Nomination Committee meeting
minutes.
• Performing planning analytical procedures to
identify any usual or unexpected relationships.
We discussed identified laws and regulations, fraud risk
factors and the need to remain alert among the audit
team.
Firstly, the Group is subject to laws and regulations
that directly affect the financial statements including
companies and financial reporting legislation, taxation
legislation and distributable profits legislation. We
assessed the extent of compliance with these laws and
regulations as part of our procedures on the related
financial statement items, including assessing the
financial statement disclosures and agreeing them to
supporting documentation when necessary.
Secondly, the Group is subject to many other
laws and regulations where the consequences of
non-compliance could have a material effect on
amounts or disclosures in the financial statements, for
instance through the imposition of fines or litigation.
We identified the following areas as those most likely
to have such an effect: health and safety, anti-bribery,
employment law, environmental law, regulatory capital
and liquidity and certain aspects of company legislation
recognising the nature of the Group’s activities.
Auditing standards limit the required audit procedures
to identify non-compliance with these non-direct laws
and regulations to inquiry of the Directors and other
management and inspection of regulatory and legal
correspondence, if any. These limited procedures did
not identify actual or suspected non-compliance.
We assessed events or conditions that could indicate
an incentive or pressure to commit fraud or provide an
opportunity to commit fraud. As required by auditing
standards, we performed procedures to address the
risk of management override of controls and the risk of
fraudulent revenue recognition.
186 |
kinandcarta.com
Building a world that works better for everyone
| 187
Financial Statements Independent auditors’ report to the
members of Kin and Carta plc
continued
In response to the fraud risks, we also performed
procedures including:
and cannot be expected to detect non-compliance
with all laws and regulations.
•
Identifying journal entries to test for all full scope
components based on risk criteria and material post
close adjustments, comparing the identified entries
to supporting documentation.
• Assessing significant accounting estimates for bias.
• Assessing the disclosures in the financial
statements.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some
material misstatements in the financial statements,
even though we have properly planned and performed
our audit in accordance with auditing standards. For
example, the further removed non-compliance with
laws and regulations (irregularities) is from the events
and transactions reflected in the financial statements,
the less likely the inherently limited procedures
required by auditing standards would identify it.
In addition, as with any audit, there remains a higher
risk of non-detection of irregularities, as these may
involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls.
We are not responsible for preventing non-compliance
Key audit matters: our assessment of risks of
material misstatement
Key audit matters are those matters that, in our
professional judgement, were of most significance
in the audit of the financial statements and include
the most significant assessed risks of material
misstatement (whether or not due to fraud) identified
by us, 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 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.
In arriving at our audit opinion above, the key audit
matters, in decreasing order of audit significance, were
as follows:
Group key audit matters
Revenue recognition £195.9 million (2022: £197.1 million)
Refer to page 205 (accounting policy) and page 218 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
The Group recognises revenue either on a
time and materials basis or in accordance
with the stage of completion of the
contract.
Revenue may be overstated in a period
due to an incentive to achieve revenue
forecasts to meet investor expectations
and in order to achieve targets as part
of performance-based compensation
arrangements.
There is limited judgement involved in the
time and materials contracts and those
contracts which are completed at the year
end. However, there is more judgement
in connection with stage of completion
revenue contacts open at the year end.
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,
which results in a significant risk of
error along with fraud for those specific
contracts.
We considered the size and composition
of the account balance as well as the
subjectivity included in a number of
revenue contracts.
We also considered the extent of audit
effort required and considered this to be
an area that has significant impact on our
overall audit of the Group
Our procedures included, amongst others:
Control operation
• We obtained and documented our understanding of the process
for recording the recognition of revenue and tested the design
and implementation of the relevant controls.
Test of detail
• We have evaluated the Group’s revenue accounting policies in
accordance with the requirements of IFRS.
• We selected a sample of revenue transactions recognised during
the year and agreed this to supporting documentation, including
invoice and evidence of payment.
• For revenue transactions that are in progress at year end, we
selected a sample, agreed this to supporting documentation
and assessed that revenue was recognised in accordance with
the terms of the contract and the Group’s accounting policy on
revenue recognition. Supporting documentation included: the
contract, approved time records confirmed by the appropriate
person, invoices and evidence of customer payment and were
required this was supplemented by enquiry of project managers.
• For a sample of revenue contracts calculated on a stage of
completion basis, we assessed and recalculated the degree of
completion of contracts at year-end, based on total contract
value, approved time records confirmed by the appropriate
person and estimated time to complete made by the project
managers. We held updated discussions on estimated time to
complete fixed price contracts that were subject to our sample
testing, prior to the signing of the Annual Report.
• We inspected a listing of credit notes issued after the year end
and noted no credit notes greater than performance materiality
had been issued.
• We assessed the level of deferred revenue and accrued revenue
recognised at the year end and tested a sample of deferred
revenue and accrued revenue balances to ensure they were
recognised in accordance with the Group’s revenue recognition
accounting policies.
Disclosures
• We considered the adequacy of the Group’s disclosures
presented in the financial statements over revenue recognition,
including key sources of estimation uncertainty and judgements
being applied.
Our results
• The results of our testing were satisfactory and we found the
amount of revenue recognised to be appropriate.
188 |
kinandcarta.com
Building a world that works better for everyone
| 189
Financial Statements Independent auditors’ report to the
members of Kin and Carta plc
continued
Carrying value of goodwill and other intangible assets £75.0 million (2022: £97.4 million)
Company key audit matter
Refer to page 217 (accounting policy) and pages 237 to 240 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
• Goodwill and intangible assets are
material and the assessment of
the carrying value of goodwill and
intangibles involves complex and
subjective judgements about the future
results of the business.
• As the business is subject to the risk of
loss of key customers and/or decline
in demand and pressures on pricing an
impairment assessment is undertaken
by calculating the value-in-use (“VIU”)
for each cash generating unit (“CGU”)
to support the carrying value of the
goodwill and other intangible assets.
• The current economic environment
may result in increased uncertainty
in forecasting the Group’s future cash
flows. Taken together with potential
changes in selecting an appropriate
discount rate, as a result of Company
and market factors– including higher
base interest rates and risk premiums
generally– there is a potential for a
greater level of subjectivity in the
discounted cash flow model used to
support the carrying value at 31 July
2023.
Our procedures included, amongst others:
Control operation
• Obtained and documented our understanding of the impairment
process and test the design and implementation of the relevant
control therein.
Test of detail
• Evaluated the methodology applied in determining the CGUs
and the estimate of the recoverable amount of goodwill to
determine if they are in line with the requirements of IFRS.
• Made inquiries of management regarding the indicators they
assess as possible indicators of impairment for CGUs.
•
Inspected management’s assessment and considered whether
further indicators should have been assessed based on our
knowledge of the business, its operating environment, industry
knowledge, current market conditions and other information
obtained during the audit.
• Compared the sum of the discounted cash flows to the Group’s
market capitalisation to identify if any indicator of impairment
existed.
• Evaluated the valuation techniques, assumptions and data used
by management to make their accounting estimates (and range
thereof) used for value in use. This involved using our valuation
specialists in the assessment of the discount rates used in
each CGU and sourced independent data, where possible. We
have also challenged management’s assumption of growth rate,
revenue backlogs and margin.
Disclosures
• Evaluated the completeness, accuracy and relevance of
disclosures required by IAS 36, including disclosures about
sensitivities and major sources of estimation uncertainty.
Our results
• Based on evidence obtained, we found that the assumptions
applied in management’s cash flow forecast models used in the
determination of value in use were appropriate. We read the
disclosures made and found them to be appropriate.
Carrying value of investment in subsidiaries £177.3 million (2022: £183.0 million)
Refer to page 270 (accounting policy) and page 274 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
The investment in subsidiary undertakings
is carried in the Balance Sheet of the
Company at cost less impairment.
There is a risk in respect of the carrying
value of these investments if future
cash flows and performance of these
subsidiaries is not sufficient to support the
Company’s investments.
Our procedures included, amongst others:
Control operation
• We obtained and documented our understanding of the process
around investment in subsidiaries and tested the design and
implementation of the relevant controls therein.
Test of detail
• We considered management’s assessment of impairment
indicators across the Group.
• We compared the carrying value of investments in the
Company’s Balance Sheet to the net assets of the subsidiary
financial statements.
• We compared the carrying value of subsidiaries to the market
capitalisation of the Company at 31 July 2023 to identify if any
indicator of impairment existed.
• We evaluated the methodology applied in determining the
recoverable amount calculated by a value-in-use model and
ensure this is in line with the requirements of IFRS.
• We considered the audit work performed in respect of cash flow
forecasts and profitability as part of the valuation of goodwill
and intangible assets.
Disclosures
• We evaluated the completeness, accuracy and relevance of
disclosures required by IAS 36, including disclosures about
sensitivities and major sources of estimation uncertainty.
Our results
• Based on evidence obtained, we concluded that the carrying
value of investments in subsidiaries were appropriate at the
balance sheet date.
Our application of materiality and an
overview of the scope of our audit
Materiality for the Group Financial Statements as a
whole was set at £1.56 million. This has been calculated
based on 0.8% of the Group revenue of £195.9 million.
In applying our judgement in determining the most
appropriate benchmark, the factors, which had the
most significant impact were our understanding that
revenue is a key measure for shareholders in assessing
the financial performance and the stability of this
measure year on year.
The materiality for the prior year Group Financial
Statements as a whole was set at £853k. This was
calculated based on 5% of adjusted profit before tax
from continuing activities.
Materiality for the Company financial statements as
a whole was set at £910k, determined with reference
to a benchmark of Company total assets of which it
represents 0.65% capped at 60% of Group materiality.
The materiality of the Company financial statements
for the prior year was £810k based on 0.5% of the
net assets of the Company capped at 95% of Group
materiality.
In applying our judgement in determining the
percentage to be applied to the benchmark for Group
and Company, the following qualitative factors, had the
most significant impact, decreasing our assessment of
materiality and included:
190 |
kinandcarta.com
Building a world that works better for everyone
| 191
Financial Statements Independent auditors’ report to the
members of Kin and Carta plc
continued
— the Group has a high public profile; and
— the Group has external debt.
We applied Group materiality to assist us determine the
overall audit strategy.
As this was the first year as auditor for the Group,
our ability to assess the factors which impact on our
determination of performance materiality was reduced.
In response to this uncertainty in the aggregation risk,
we considered it appropriate to reduce performance
materiality to 65% of Group and Company materiality.
In the prior year, performance materiality for the Group
and Company was set at 75%.
We applied performance materiality to assist us
determine what risks were significant risks for the
Group and Company.
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £78k (2022: £76k) for the Group or £45.5k
(2022: £40.5k) to the Company, in addition to other
identified misstatements that warranted reporting on
qualitative grounds.
Of the Group’s reporting components, we performed
a full scope audit over 4 of the financially significant
components of the Group due to their financial
significance. These components and consolidation
adjustments contributed to 87% of revenue and 88% of
total assets.
The remaining 13% of total Group revenue and 12%
of total Group assets is represented by a number of
components, none of which individually represented
more than 4% of total Group revenue or 9% of total
Group assets.
For the residual components we performed analysis
at an aggregated group level to re-examine our
assessment that there were no significant risks of
material misstatement within these.
Our audit was all performed by a single engagement
team in KPMG Ireland.
We have nothing to report on the other
information in the Annual Report
The Directors are responsible for the other information
presented in the Annual Report together with the
Financial Statements. The other information comprises
the information included in the Strategic Report
including the Responsible Business Report and the
Governance Report including the Directors’ Report. The
financial statements and our Auditor’s Report thereon
do not comprise part of the other information. Our
opinion on the financial statements does not cover the
other information and, accordingly, we do not express
an audit opinion or, except as explicitly stated below,
any form of assurance conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether, based on our financial
statements audit work, the information therein is
materially misstated or inconsistent with the financial
statements or our audit knowledge. Based solely on that
work we have not identified material misstatements in
the other information.
Opinions on other matters prescribed
by the Companies Act 2006
Strategic Report and Directors’ Report
Based solely on our work on the other information
undertaken during the course of the audit:
• we have not identified material misstatements in the
Directors’ Report or the strategic report;
•
•
in our opinion, the information given in the strategic
report and the Directors’ Report is consistent with
the financial statements;
in our opinion, the Strategic Report and the
Directors’ Report have been prepared in accordance
with the Companies Act 2006.
Directors’ Remuneration Report
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
We have reviewed the Directors’ statement 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 by
the Listing Rules.
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:
• Directors’ statement with regards the
appropriateness of adopting the going concern
basis of accounting and any material uncertainties
identified set out on page 179;
• Directors’ explanation as to their assessment of
the Group’s prospects, the period this assessment
covers and why the period is appropriate set out on
pages 183;
• Director’s statement on whether it has a reasonable
expectation that the Group will be able to continue
in operation and meets its liabilities set out on
pages 183;
Group or the Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s 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, other irregularities or error, and to issue an
opinion in an auditor’s report. 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, other irregularities
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.
A fuller description of our responsibilities is
provided on the FRC’s website at www.frc.org.uk/
auditorsresponsibilities.
The purpose of our audit work and to
whom we owe our responsibilities
Our report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s
members those matters we are required to state to
them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the
Company and the Company’s members, as a body, for
our audit work, for this report, or for the opinions we
have formed.
John Poole (Senior Statutory Auditor)
for and on behalf of KPMG, Statutory Auditor
The Soloist Building
1 Lanyon Place
Belfast
BT1 3LP
2 November 2023
• Directors’ statement on fair, balanced and
understandable and the information necessary for
shareholders to assess the Group’s position and
performance, business model and strategy set out
on page 183;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks and
the disclosures in the Annual Report that describe
the principal risks and the procedures in place to
identify emerging risks and explain how they are
being managed or mitigated set out on page 183.;
• Section of the Annual Report that describes the
review of effectiveness of risk management and
internal control systems set out on pages 146 and
147; and
• Section describing the work of the Audit Committee
set out on page 142.
We have nothing to report on the other matters on
which we are required to report by exception
Under the Companies Act 2006, we are required to
report to you if, in our opinion:
• 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
•
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; or
• certain disclosures of Directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
We have nothing to report in these respects.
Respective responsibilities and
restrictions on use
Responsibilities of Directors for the financial
statements
As explained more fully in the Directors’ Responsibilities
Statement set out on page 183, the Directors are
responsible for: the preparation of the financial
statements including being satisfied that they give
a true and fair view; 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; assessing
the Group and 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 they either intend to liquidate the
192 |
kinandcarta.com
Building a world that works better for everyone
| 193
Financial Statements Consolidated statement of
comprehensive income
For the year ended 31 July 2023
Net (loss)/profit for the period
Items that will not be reclassified subsequently to profit or loss:
Year to
31 July 2023
£’000
Year to
31 July 2022
£’000
Note
(18,765)
10,007
Remeasurement of defined benefit scheme surplus
27
(28,295)
Tax credit/(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 (losses)/gains
Tax credit/(charge) on items taken through other comprehensive income
Other comprehensive (loss)/income for the period
7,074
(21,221)
54
(43)
(1,477)
129
(1,337)
(22,558)
20,335
(6,209)
14,126
13
(54)
4,366
(1,105)
3,220
17,346
Total comprehensive (loss)/income for the period attributable to equity
holders of the Parent Company
(41,323)
27,353
196
Consolidated income statement
For the year ended 31 July 2023
Year to 31 July 2023
Restated¹
Year to 31 July 2022
Revenue
Project-related costs
Net revenue
Cost of service
Gross profit
Selling costs
Administrative expenses
Adjusted
results
Note
£’000
3
195,870
(3,858)
192,012
(104,871)
87,141
(20,382)
(48,303)
Adjusting
items
(note 7)
£’000
–
–
–
–
–
Statutory
results
Adjusted
results
£’000
195,870
£’000
197,123
(3,858)
(6,846)
192,012
190,277
(104,871)
(105,398)
87,141
(20,382)
(4,113)
(52,416)
–
(3,749)
(3,578)
–
(3,749)
(3,578)
(14,598)
(14,598)
(9,256)
(9,256)
(9,588)
(9,588)
(655)
(655)
7,802
7,802
–
–
84,879
(16,412)
(46,513)
442
–
–
–
–
–
–
–
–
Adjusting
items
(note 7)
£’000
–
–
–
–
–
–
Statutory
results
£’000
197,123
(6,846)
190,277
(105,398)
84,879
(16,412)
(7,565)
(54,078)
–
442
(3,234)
(3,234)
–
–
–
–
(6,390)
(6,390)
(13,229)
(13,229)
(1,421)
(1,421)
(6,264)
(6,264)
1,621
1,621
–
–
–
–
–
–
–
–
–
18,456
(37,735)
(19,279)
22,396
(36,482)
(14,086)
–
(2,626)
1,376
(140)
1,376
(2,766)
–
(1,837)
340
–
340
(1,837)
15,830
(36,499)
(20,669)
20,559
(36,142)
(15,583)
(810)
2,714
1,904
(1,802)
3,411
1,609
15,020
(33,785)
(18,765)
–
–
–
18,757
1,406
(32,731)
22,575
(13,974)
23,981
15,020
(33,785)
(18,765)
20,163
(10,156)
10,007
8.67
–
8.67
8.50
–
(10.83)
–
10.80
0.81
(10.83)
11.61
(10.83)
–
10.46
0.78
14
8.50
(10.83)
11.24
(8.04)
13.80
5.76
(7.79)
13.37
5.58
Share of results of joint arrangement
35
Share-based payment charges
Customer disputes and litigation
Impairment of goodwill
Amortisation of acquired intangibles
Contingent consideration treated as
remuneration and adjustments to
consideration
Acquisition and integration costs
Property impairment and related empty
credits/(charges)
Other operating income
Operating profit/(loss)
Net pension finance income
Other finance costs
Profit/(loss) before tax
Income tax (charge)/credit
Net profit/(loss) from continuing
operations
Net profit from discontinued operations
Net profit/(loss) for the period
attributable to equity holders of the
Parent Company
Basic earnings/(loss) per share
(pence)
Continuing operations
Discontinued operations
Continuing and discontinued
operations
Diluted earnings/(loss) per share
(pence)
Continuing operations
Discontinued operations
Continuing and discontinued
operations
9
10
11
8
14
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 for further details.
194 |
kinandcarta.com
Building a world that works better for everyone
| 195
Financial Statements Consolidated statement of
changes in equity
For the year ended 31 July 2023
Consolidated balance sheet
Company number 01552113
As at 31 July 2023
n
i
-
d
a
p
i
l
a
n
o
i
t
i
d
d
A
l
a
t
i
p
a
c
e
r
a
h
S
0
0
0
£
’
1
l
a
t
i
p
a
c
0
0
0
£
’
17,255
–
86,513
–
17,255 86,513
–
–
–
–
352
190
7,843
303
–
–
–
–
–
–
–
–
–
–
–
–
–
(5,357)
17,797 89,302
–
–
e
v
r
e
s
e
r
P
O
S
E
0
0
0
£
’
(68)
–
(68)
–
–
–
–
–
(17)
(5,593)
353
–
–
–
–
–
(5,325)
–
–
–
–
3,872
(8,395)
362
–
–
–
–
–
–
–
–
45
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6
–
–
–
–
–
–
–
–
Balance at 1 August 2021
(as previously reported)
Prior year adjustment (note 1)
Balance at 1 August 2021 (restated)
Profit for the year (restated)
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 by Employee Benefit
Trust
Reclassification of share-settled amount from
liabilities
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
Balance at 31 July 2022 (restated)
Loss for the year
Other comprehensive loss
Total comprehensive loss
Dividends paid
Shares issued to settle employee share options
Purchase of own shares by Employee Benefit
Trust
Reclassification of share-settled amount from
liabilities
Recognition of share-based payments in
respect of employee share schemes
Recognition of share-based contingent
consideration deemed as remuneration
Reclassification of contingent consideration
deemed as remuneration from equity to
liabilities
Tax on share-based payments
Hyperinflation revaluation
Reclassification to retained earnings³
s
e
r
a
h
s
y
r
u
s
a
e
r
T
0
0
0
£
’
(163)
–
(163)
–
–
–
–
–
–
–
–
–
–
–
–
–
e
v
r
e
s
e
r
n
o
i
t
p
o
e
r
a
h
S
0
0
0
£
’
e
v
r
e
s
e
r
n
o
i
t
a
s
n
a
r
t
l
d
n
a
g
n
g
d
e
H
i
0
0
0
£
’
3,756
–
3,756
–
–
–
–
1,583
–
1,583
–
3,220
3,220
–
s
e
v
r
e
s
e
r
r
e
h
t
O
0
0
0
£
’
91,621
–
91,621
–
3,220
3,220
–
²
)
t
i
c
i
f
e
d
d
e
t
a
u
m
u
c
c
a
(
l
0
0
0
£
’
y
t
i
u
q
e
l
a
t
o
T
0
0
0
£
’
i
/
s
g
n
n
r
a
e
d
e
n
a
t
e
R
i
2,532
(26,118) 82,758
2,532
(23,586) 85,290
10,007 10,007
14,126
17,346
24,133 27,353
(38)
(38)
–
(1,242)
–
–
7,843
(956)
–
1,098
8,195
332
–
– (5,593)
– (5,593)
–
3,118
7,593
(318)
–
–
(163)
–
–
12,907
–
–
–
–
–
–
–
–
–
–
–
(1,660)
–
–
3,128
3,878
– (10,623)
(545)
–
–
–
(3,279)
–
–
–
353
3,118
–
–
353
3,118
–
–
176
7,593
(318)
176
– (5,357)
4,979 101,700
–
(1,337)
(1,337)
–
2,257
(1,337)
–
–
–
(1,337)
7,593
–
(318)
–
176
–
–
5,357
6,964 126,461
(18,765) (18,765)
(21,221) (22,558)
(39,986) (41,323)
(3)
52
(3)
(2,211)
– (8,395)
– (8,395)
–
–
–
362
3,128
3,878
–
–
–
362
3,128
3,878
– (10,623)
–
(545)
424
424
–
(3,279)
4,066 87,570
– (10,623)
(545)
–
424
–
–
3,279
(31,957) 73,416
Balance at 31 July 2023
17,803 89,347
(9,486)
(163) 3,806
1 Additional paid-in capital includes share premium, merger reserve and capital redemption reserve as detailed in note 31.
Assets
Non-current assets
Property, plant and equipment
Investment property
Goodwill
Other intangible assets
Retirement benefit surplus
Other non-current assets
Deferred tax assets
Current assets
Trade and other receivables
Derivative financial instruments
Current tax assets
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Lease liabilities
Trade and other payables
Derivative financial instruments
Current tax liabilities
Deferred income
Contingent and deferred consideration payable
Provisions
Non-current liabilities
Lease liabilities
Loans and borrowings
Contingent and deferred consideration payable
Provisions
Deferred tax liabilities
Total liabilities
Net assets
Capital and reserves
Share capital
Other reserves
(Accumulated deficit)/retained earnings
Total equity
Note
15
17
18
18
27
26
20
21
20
16
22
21
24
19
25
16
23
19
25
26
30
32
31 July
2023
£’000
13,693
4,790
61,759
13,244
12,964
137
4,678
111,265
31,432
31
2,074
9,847
43,384
154,649
2,574
23,534
–
624
3,479
4,955
1,984
37,150
8,193
29,815
3,604
275
2,196
44,083
81,233
73,416
17,803
87,570
(31,957)
73,416
Restated¹
31 July
2022
£’000
10,559
4,790
76,935
20,435
38,748
101
7,625
159,193
45,393
2
–
12,609
58,004
217,197
2,806
32,968
454
1,867
5,159
6,944
477
50,675
10,052
13,148
2,155
4,206
10,500
40,061
90,736
126,461
17,797
101,700
6,964
126,461
1 The Consolidated Balance Sheet at 31 July 2022 has been restated in respect of the correction of the tax treatment of income from US loan forgiveness income in FY21 and
the restatement of depreciation and associated tax of the investment property following a change in accounting policy to move from a cost model to a fair value model,
which has been applied retrospectively. Refer to note 1 for further details.
These Consolidated Financial Statements were approved by the Board of Directors and authorised for issue on
1 November 2023. They were signed on its behalf by:
2 The results for the year to 31 July 2022 have been restated to reflect the correction of the tax treatment of income from US loan forgiveness income in FY21 and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 for further details.
3 Following the full vesting in the period of shares in respect of deferred consideration for the Spire acquisition that were allotted in a prior period, related amounts have
been transferred from the share option reserve to retained earnings.
Kelly Manthey
Chief Executive Officer
Chris Kutsor
Chief Financial Officer
Chief Operating Officer
196 |
kinandcarta.com
Building a world that works better for everyone
| 197
Financial Statements
Consolidated statement of
cash flows
For the year ended 31 July 2023
Statutory loss before tax
Net finance costs
Loss from continuing operations
Profit from discontinued operations
Statutory operating (loss)/profit
Depreciation of property, plant and equipment
Amortisation of intangible assets
Other items before working capital movements:
Share-based payment charge
(Decrease)/increase in retirement benefit obligations
Charge for contingent consideration required to be treated as
remuneration
Contingent consideration paid for acquisitions made in prior periods
Cash outflow from derivatives in respect of contingent consideration paid
for acquisitions made in prior periods
(Decrease)/increase in provisions
Impairment losses on goodwill
Non-cash reductions in lease liabilities
Impairment of right-of-use asset
Loss on disposal of property, plant and equipment
Share of profit from joint arrangement
Disbursement from joint arrangement
Gain on disposal of subsidiaries
Fair value gain from deemed sale on step acquisition
Operating cash (outflows)/inflows before movements in working capital
Decrease/(increase) in receivables
(Decrease)/increase in payables
(Decrease)/increase in deferred income
Cash generated from operations
Interest paid
Income taxes paid
Net cash flows from operating activities
Investing activities
Purchase of property, plant and equipment
Acquisition of subsidiaries, net of cash acquired
Deferred consideration paid for acquisitions made in prior periods
Proceeds on disposal of subsidiaries
Net cash flows from investing activities
Note
8
15
18
7
19
7
16
7
8
7
19
Year to
31 July
2023
£000
(20,669)
1,390
(19,279)
–
(19,279)
4,361
9,256
3,749
(1,135)
9,588
(14,537)
(1,651)
(2,429)
14,598
(5,421)
1,847
–
–
–
–
–
(1,053)
13,911
(10,649)
(1,687)
522
(1,660)
(1,462)
(2,600)
(2,374)
(2,197)
(673)
–
(5,244)
Restated1
Year to
31 July
2022
£000
(15,583)
1,497
(14,086)
25,684
11,598
4,123
6,484
3,118
1,194
13,228
–
–
3,551
–
(4,401)
6,207
72
(442)
147
(24,059)
(1,621)
19,199
(8,054)
939
43
12,127
(1,014)
(1,341)
9,772
(1,336)
(11,932)
–
34,269
21,001
Financing activities
Principal element of lease payments
Interest element of lease payments
Purchase of own shares by the Employee Benefit Trust
Dividends paid
Proceeds from issue of shares
Drawdown of borrowings
Repayment of borrowings
Net cash flows from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of currency movements
Note
13
Cash and cash equivalents at end of the year
20
Year to
31 July
2023
£000
(3,344)
(636)
(8,395)
(3)
52
26,672
(8,809)
5,537
(2,307)
12,609
(455)
9,847
Restated1
Year to
31 July
2022
£000
(3,080)
(732)
(5,593)
(38)
332
23,988
(78,178)
(63,301)
(32,528)
44,971
166
12,609
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 for further details.
Included in the figures above are the following cash flows from discontinued operations:
Net cash flows from investing activities
Net cash used in financing activities
Net increase in cash and cash equivalents
Year to
31 July
2023
£000
–
–
–
–
Year to
31 July
2022
£000
(1,862)
34,255
(542)
31,851
198 |
kinandcarta.com
Building a world that works better for everyone
| 199
Financial Statements Notes to the consolidated
financial statements
1. General information and basis of preparation
The Consolidated Financial Statements (“the financial statements”) of Kin and Carta plc and its subsidiaries
(collectively, the “Group”) for the year ended 31 July 2023 were authorised for issue in accordance with the
resolution of the Directors on 1 November 2023. The Group Financial Statements consolidate those of the Company
and its subsidiaries (together referred to as the ‘Group’). The Parent Company financial statements present
information about the Company as a separate entity and not about its Group.
Kin and Carta plc (the “Company”) is a public company limited by shares incorporated in the United Kingdom under
the Companies Act 2006 and is registered in England and Wales (Company registration number 1552113) and is
listed on the London Stock Exchange. The address of the registered office is The Spitfire Building, 71 Collier Street,
London N1 9BE. The Group is principally engaged in the provision of digital transformation consultancy services.
In accordance with the Companies Act 2006, the Consolidated Financial Statements have been prepared and
approved by the Directors in accordance with UK-adopted international accounting standards (“UK-Adopted IFRS”).
The company prepares its Parent Company financial statements in accordance with Financial Reporting Standard
101 Reduced Disclosure Framework (“FRS 101”). The financial statements are presented in Pounds Sterling as this is
the currency of the primary economic environment in which the Group operates, generally rounded to the nearest
thousand, except when otherwise indicated.
The Consolidated Financial Statements have been prepared on a historical cost basis, except for the following items,
which are measured at fair value or grant date fair value:
• Share-based payment arrangements
•
Investment property
• Business combinations
• Derivative financial instruments
• Contingent consideration payable
The accounting policies set out in note 2 have, unless otherwise stated, been applied consistently to all periods
presented in these Consolidated Financial Statements and have been applied consistently by the Group.
Prior year restatements and reclassifications
(1) Correction of the taxation of income from loan forgiveness
In FY21, the forgiveness of £4.5 million of loans received under the Payment Protection Programme (“PPP”) provided
by the US Government were recorded in adjusted other income. This was treated as taxable income in the financial
statements for the year ended 31 July 2021, consistent with general US tax rules for loan forgiveness, and a current
corporate income tax charge of £1.3 million was provided for at 31 July 2021 and 31 July 2022. However, specific
tax legislation for the exclusion of such income was enacted into law within the FY21 year, which resulted in the tax
charge being overstated by £1.3 million in that year. As a result, the retained earnings for the comparative balance
sheet in these financial statements have been restated as detailed in the tables below.
(2) Change of accounting policy to hold investment property at the fair value model (previously cost model)
IAS 40 permits investment properties to be held at either the cost or fair value model. During the year to 31 July
2023, there was a change in accounting policy to move from a cost model to a fair value model. The change arose
because management judged that the fair value model was more appropriate as it better reflects the manner of
recovery of value of the asset. This change in accounting policy has been applied retrospectively from 1 August
2021, being the beginning of the earliest prior period presented, as required by IAS 8.
1. General information and basis of preparation (continued)
The previously reported carrying amount at 1 August 2021 under the cost model was £4.4 million. The fair value
at 31 July 2023, being the market value as determined by an independent property valuer during July 2023, was
£4.8 million. The fair value thus obtained was also applied as at 1 August 2021 and 31 July 2022 as management’s
assessment was that the fair value would have not been materially different to the value at 31 July 2023 at either
earlier date. The difference between the carrying amount as per the cost model previously adopted and the fair
value as at 1 August 2021 is £0.35 million, which is presented in accumulated retained earnings within equity as an
adjustment to opening equity at 1 August 2021, net of the related deferred tax adjustment.
At 1 August 2021, there was a deferred tax liability of £0.88 million in respect of the investment property. Following
the change in accounting policy, the basis for the valuation of deferred tax changed to assume a sale scenario for
determining the tax basis. In line with IAS 12, the revised accounting policy resulted in a deferred tax asset and a full
valuation allowance was taken against the asset, given the low probability of recovery. The deferred tax liability at
1 August 2021 was restated to nil through accumulated retained earnings within equity.
In the prior year to 31 July 2022, £0.27 million depreciation was previously recorded in respect of the investment
property. This has been restated to nil following the accounting policy change. In addition, there was a tax credit
of £0.05 million recorded in the year in respect of deferred tax, which has been restated to nil, resulting in a net
increase in net profit after tax for the prior period of £0.22 million.
(3) Reclassification of share-based payments from adjusting results to adjusting items
Share-based payments are transactions in which the Group issues shares to certain employees as consideration for
services received, accounted for under IFRS 2 ‘Share-based Payment’. From FY23, management decided to exclude
the Group’s share-based payment charge from the adjusted results. The inclusion of share-based payments,
together with associated employer taxes, where applicable, as an adjusting item is in line with publicly listed peer
group companies in digital transformation, and with the manner in which financial analysts tend to assess financial
performance of companies in the industry, therefore aiding the comparability of adjusted results. The FY22 have
been restated to reclassify the share-based payment charge from non-adjusting items to adjusting items in the
Consolidated Income Statement. There is no impact on statutory profit/(loss) for either period.
These three items are reflected in the tables below:
Restatements and reclassifications as at and for the prior year ended 31 July 2022
31 July
2022
(statutory-
as previously
reported)
£’000
Tax on loan
forgiveness
restatement
£’000
Share-based
payments
reclassification
£’000
Investment
property
accounting
policy
change
£’000
31 July
2022
(statutory-
restated)
£’000
Consolidated Balance Sheet (extract)
Investment property
Current tax liabilities
Deferred tax liabilities
Net assets
Retained earnings
Total equity
Consolidated Income Statement (extract)
Administrative expenses
Share-based payments
4,169
(3,168)
(11,334)
123,705
4,208
123,705
(57,581)
–
Loss before tax from continuing operations
(15,852)
Income tax (charge)/credit
1,654
Net (loss)/profit from continuing operations
(14,198)
–
1,301
–
1,301
1,301
1,301
–
–
–
–
–
–
–
–
–
–
–
3,234
(3,234)
–
–
–
621
–
834
1,455
1,455
1,455
269
–
269
(45)
224
4,790
(1,867)
(10,500)
126,461
6,964
126,461
(54,078)
(3,234)
(15,583)
1,609
(13,974)
| 201
200 |
kinandcarta.com
Building a world that works better for everyone
Financial Statements 1. General information and basis of preparation (continued)
Basic and diluted earnings per share for the year ending 31 July 2022 have been updated to reflect the share-based
payments reclassification and the restatement of depreciation following the accounting policy change to hold
investment property at the fair value model:
1. General information and basis of preparation (continued)
Standards issued but not yet effective
At the date of the approval of these financial statements, the following standards, which have not been applied in
these financial statements were in issue, but not yet effective:
Continuing and discontinued operations
Net profit for the period (£’000)
Earnings per share (pence)
Basic earnings per share
Diluted earnings per share
Restatements as at 1 August 2021
Consolidated Balance Sheet (extract)
Investment property
Current tax assets/(liabilities)
Deferred tax liabilities
Net assets
Accumulated deficit
Total equity
Adjusted earnings
Statutory earnings
Year to
31 July
2022
(as previously
reported)
Year to
31 July
2022
(restated)
Year to
31 July
2022
(as previously
reported)
Year to
31 July
2022
(restated)
16,291
20,163
9,783
10,007
9.38
9.08
11.61
11.24
5.63
5.46
5.76
5.58
1 August
2021
(statutory- as
previously
reported)
£’000
Tax on loan
forgiveness
restatement
£’000
Investment
property
accounting
policy change
£’000
1 August
2021
(statutory-
restated)
£’000
4,438
(514)
(3,930)
82,758
(26,118)
82,758
–
1,301
–
1,301
1,301
1,301
352
–
879
1,231
1,231
1,231
4,790
787
(3,051)
85,290
(23,586)
85,290
New and amended standards and interpretations
The following amendments became effective for annual accounting periods beginning on, or after, 1 January 2022,
hence are applicable to Kin and Carta plc for the financial year to 31 July 2023:
• Amendments to IAS 37: Onerous Contracts- Cost of Fulfilling a Contract
• Amendments to References to the Conceptual Framework in IFRS 3 ‘Business Combinations’
• Amendments to IAS 16: Property, Plant and Equipment- Proceeds before Intended Use
• Annual Improvements to IFRS Standards 2018-2020
These amendments have a limited impact on the Consolidated Financial Statements of the Group.
• Amended IFRS 17: Insurance contracts
• Amendments to IAS 8: Definition of Accounting Estimates
• Amendments to IAS 1: Disclosure of Accounting Policies, Classification of Liabilities as Current or Non-current
and Non-current Liabilities with Covenants
• Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
• Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture
• Amendment to IFRS 16: Lease Liability in a Sale and Leaseback
These new standards are not expected to have a material impact on the Consolidated Financial Statements. The
Group has not early adopted any standards, interpretations or amendments that have been issued but are not
yet effective.
Going concern
As at 31 July 2023, the Group had drawn £29.8 million, (31 July 2022: £13.1 million) on its credit facilities, leaving
an unutilised amount of £55.2 million (31 July 2022: £71.9 million). At 31 July 2023, the ratio of net debt/(cash) to
adjusted EBITDA for bank covenant purposes was 1.04 times (31 July 2022: 0.01 times), well within the covenant limit
of 2.5 times.
The Group has prepared a forecast of financial projections for the three-year period to 31 July 2026. The forecast
underpins the going concern assessment, which had been made for the period through to 1 November 2024, a
period of 12 months from the date of approval of the Consolidated Financial Statements.
The base case reflects the assumptions made by the Group with respect to organic growth, increased client
diversification and operating profit margin improvement. For the going concern assessment, management ran a series
of downside scenarios on the latest forecast profit and cash flow projections to assess bank covenant headroom
against funding facilities. This process involved a number of sensitised scenarios to assess the financial impact of the
Group’s principal business risks, which align with those disclosed within this Annual Report and Accounts.
These scenarios and analysis included assumptions around the Group’s products and markets, expenditure
commitments, expected cash flows and borrowing facilities, taking into account reasonable possible changes in
trading performance, and after making appropriate enquiries. In performing this assessment, consideration was
given to the current macroeconomic environment. The inflationary and rising interest rate environment has seen the
Group’s clients spending more cautiously in FY23, resulting in lower than forecast revenue growth. Revenue growth
is forecast to improve modestly in FY24 as the impact of new contract wins comes through and macroeconomic
pressures are forecast to reduce. Scenarios modelled included sales volume reductions, decreases in gross margin
and significant customer loss. None of the stress scenarios modelled show a breach of bank covenants in respect of
available funding facilities or any liquidity shortfall.
This process allowed the Board to conclude that the Group will continue to operate on a going concern basis for a
period of at least 12 months from when the Consolidated Financial Statements are authorised for issue. Accordingly,
the Consolidated Financial Statements are prepared on a going concern basis.
Recommended acquisition of Kin and Carta plc by Apax Partners LLP (“Apax”)
On 18 October 2023, the Board of Kin and Carta plc recommended an offer for the Group to be acquired by Apax.
The Board have considered the statements in Apax’s announcement made pursuant to rule 2.7 of the Takeover Code
in respect of the proposed acquisition, and discussions with Apax senior management regarding Apax’s intention
to ensure continuity of the Group’s existing business. Although the Group’s current bank credit facility includes a
provision which allows the lender banks to withdraw the facility under certain circumstances after a change of control.
The Board believes that Apax would ensure that appropriate bank facilities would continue to be made available to the
group after completion of the deal. Considering this, the Board has concluded that the completion of this acquisition
would not impact the appropriateness of the going concern basis of preparation for these Consolidated Financial
Statements.
202 |
kinandcarta.com
Building a world that works better for everyone
| 203
Financial StatementsNotes to the consolidated financial statements continued 1. General information and basis of preparation (continued)
The financial statements do not include any adjustments which would be required should it be inappropriate to
apply the going concern basis of accounting.
Climate change
In preparing the Consolidated Financial Statements, management has considered the impact of climate change.
There has been no material impact identified on the financial reporting judgements and estimates. While there is
currently no medium-term impact expected from climate change, management is aware of the risks arising from
climate change and will regularly assess these risks against judgement and estimates made in preparation of the
Group’s financial statements.
2. Accounting policies
Basis of consolidation
The Consolidated Financial Statements consolidate the accounts of the Parent and its subsidiary undertakings
to 31 July each year. Subsidiaries are entities controlled by the company. Control exists when the company is
exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. The financial statements of subsidiaries are included in the Consolidated
Financial Statements from the date on which control commences until the date on which control ceases. Where
subsidiary undertakings were acquired or sold during the year, the accounts include the results for the part of the
year for which they were subsidiary undertakings using the acquisition method of accounting. Intra-group balances,
and any unrealised income and expense arising from intra-group transactions, are eliminated in preparing the
Consolidated Financial Statements. Where necessary, adjustments are made to the results of subsidiaries to bring
their accounting policies in line with those of the Group.
Joint operations
Where the Group undertakes contracts jointly with other parties, these are accounted for as joint operations as
defined by IFRS 11 ‘Joint arrangements’. In accordance with IFRS 11, the Group accounts for its own share of assets,
liabilities, revenues and expenses measured according to the terms of the joint operations agreement. There were
no joint arrangements for the year to 31 July 2023. In the prior, year there was a joint arrangement to 14 February
2022 when the remaining 50% interest was acquired by the Group (refer to note 35).
Foreign currencies
The Group’s Consolidated Financial Statements are presented in Pounds Sterling, which is also the Parent
Company’s functional currency. For each subsidiary, the Group determines the functional currency, and items
included in the financial statements of each entity are measured using that functional currency with reference to
the primary economic environment in which it operates.
Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies of Group companies at
the spot exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at
the exchange rate at the reporting date. Non-monetary items that are measured based on historical cost in a
foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that
are measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair
value was measured. When a gain or loss on a non-monetary item is recognised in other comprehensive income,
any exchange component of that gain or loss shall be recognised in other comprehensive income. When a gain or
loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss shall be
recognised in profit or loss. Foreign currency differences are generally recognised in profit or loss and presented
within administrative expenses.
2. Accounting policies (continued)
Group companies
On consolidation, the assets and liabilities of the Group’s foreign operations are translated into Pounds Sterling at
the exchange rates at the reporting date. Income and expense items are translated at the average rate of exchange
rates for 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. Foreign currency differences are recognised in
the statement of comprehensive income and accumulated in the translation reserve until the foreign operation is
disposed of, at which point the relevant proportion of the accumulated amount is recycled to profit or loss.
Any 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.
The following key exchange rates against British Pound Sterling were applied in these financial statements:
US Dollar
Euro
2023
2022
Average
rate
Year end
rate
Average
rate
Year end
rate
1.21
1.15
1.29
1.17
1.32
1.18
1.22
1.19
The Group is also subject to currency risk in relation to the translation of the net assets of its foreign operations into
Sterling for inclusion in the Consolidated Financial Statements. These net investments include intercompany loans
for which settlement is neither planned or likely to occur in the foreseeable future. In accordance with IAS 21, these
loans form part of the net investment in foreign operations and the exchange differences on the loans are booked
through other reserves.
Revenue recognition
The Group recognises revenue when it transfers control over a product or service to its customer. Revenue from
supply of services is measured at the fair value of consideration received or receivable, and comprises amounts
receivable for services, net of volume discounts, up-front payments, VAT and other sales-related taxes. Revenue is
recognised to depict the transfer of promised services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those services. The Group has adopted the five-
step approach to the timing of revenue recognition based on performance obligations in customer contracts.
This involves identifying the contract with customers, identifying the performance obligations, determining the
transaction price, allocating the price to the performance obligations within the contract and recognising revenue
when the performance obligations are satisfied.
Due to the contracting nature of the business, all of the Group’s revenue is recognised in respect of performance
obligations that are satisfied over time. The Group primarily uses the cost input method to measure the progress of
delivery. Discounts and other incentives are recognised over the period of the contracts to which they relate.
Time and materials contracts
Contracts for the provision services generally tend to be “time and materials” contracts whereby the customer is
contractually bound to pay for services in line with the time spent delivering a contractually agreed services scope.
Such services are recognised as a performance obligation satisfied over time in line with the chargeable time and
materials which are allocated to the contracted project.
204 |
kinandcarta.com
Building a world that works better for everyone
| 205
Financial StatementsNotes to the consolidated financial statements continued 2. Accounting policies (continued)
Fixed price contracts
A small number of contracts are performed on a fixed-price basis. The stage of completion determined as a
proportion of the total effort expected for the project that has elapsed at the end of the reporting period is an
appropriate measure of progress towards complete satisfaction of the performance conditions under IFRS 15.
Where costs are anticipated to be in excess of revenues, an onerous contract will be recognised. Where contract
variations or claims may arise, which fall under the variable consideration or contract modification requirements of
IFRS 15, the recognition of revenue in respect of these is assessed on a contract-by-contract basis when evidence
supports that the contract modification is enforceable or when, in the cases of variable consideration, it is highly
probable that a significant reversal in the amount of revenue recognised will not occur.
Typically, customers are not entitled to refunds. The above methods are deemed to be appropriate in identifying
the point of transfer of services for revenue recognition. Where appropriate, an expected loss on the contract is
recognised as an expense immediately in the Consolidated Income Statement.
Invoices are generally raised either in advance of the service provided or in arrears with a monthly cadence.
Payment terms for the customer are typically 30 days from the date of issue of the invoice and according to the
contract terms.
2. Accounting policies (continued)
Investment property
Investment properties are properties that are held to earn rental income and are held at the fair value model,
which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of
investment properties are included in profit or loss in the period in which they arise. Fair value is determined based
on a valuation performed by an accredited external independent valuer applying a valuation model recommended
by the International Valuation Standards Committee.
Previously investment property was carried at historical cost less accumulated depreciation and impairment. There
was an accounting policy change during the year to hold the investment property at fair value. See note 1 for further
details.
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. When
the recognition model was changed from the cost model to fair value the gain was recognised through the profit
and loss account.
Net revenue
Goodwill
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.
Adjusting items
Statutory results (“Statutory results”) presented in the Consolidated Income Statement include adjusting items.
Adjusted items are presented in the middle column of the Consolidated Income Statement. In the opinion of the
Directors, their separate presentation aids understanding of the financial performance of the Group. Adjusting items
include acquisition and disposal-related costs, amortisation of acquired intangibles, impairments, share-based
payment charges, administrative expenses related to St Ives Defined Benefit Pension Scheme, client disputes and
litigation and associated insurance income, and restructuring charges.
The results, excluding adjusting items, are presented in the Consolidated Income Statement under the heading
“adjusted results”, to reflect the manner in which performance is tracked and assessed internally by management.
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 to the Consolidated Financial Statements.
Accrued and deferred income
Accrued income is a contract asset and is recognised when a performance obligation has been satisfied, and
revenue has been recognised, 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.
Deferred income is a contract liability and is recognised when payments are received from customers prior to
satisfaction of performance obligations and the associated revenue is recognised. Contract liabilities typically
related to prepayments for third-party pass-through expenses and direct costs that are incurred shortly
after billing.
Goodwill arising on the acquisition of a subsidiary is initially measured at cost, being the excess of the aggregate of
the consideration transferred 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.
Goodwill is reviewed for impairment annually and whenever there is an indication that the goodwill may be impaired
in accordance with IAS 36, any impairment losses are recognised immediately in the Consolidated Income
Statement.
For the purpose of impairment testing, the goodwill arising on acquisition is allocated to the group of cash-
generating units (“CGUs”) that are expected to benefit from the synergies of the combination. A CGU represents
the lowest level at which goodwill is monitored by the Group’s Board of Directors for internal management purposes.
If the recoverable amount of the CGU 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 CGU,
the attributable amount of goodwill is included in the determination of the gain or loss on disposal.
Other intangible assets
Intangible assets, other than goodwill, include those arising on acquisition comprising customer relationships,
proprietary techniques and trademarks. These are initially recognised at cost and amortised on a straight-line
basis over their useful economic lives from the date they are available for use. Intangible assets are subsequently
stated at cost less accumulated amortisation and any accumulated impairment losses. Amortisation of intangibles
arising in the context of an acquisition is recorded on a separate line within operating profit. The estimated useful
economic lives are as follows:
Customer relationships
Proprietary techniques
Trademarks
3 years
3 to 10 years
0 to 1 year
206 |
kinandcarta.com
Building a world that works better for everyone
| 207
Financial StatementsNotes to the consolidated financial statements continued 2. Accounting policies (continued)
Property, plant and equipment
Property, plant and equipment is initially recognised at cost and depreciated on a straight-line basis over
their useful economic lives from the date they are available for use. They are subsequently stated at cost less
accumulated depreciation and any accumulated impairment losses, if any. Subsequent expenditure on property,
plant and equipment is capitalised when it enhances or improves the condition of the item of property, plant
and equipment beyond its original assessed standard of performance. Maintenance expenditure is expensed as
incurred.
Depreciation is provided to write off the cost less the estimated residual value of property, plant and equipment
using the straight-line method by reference to their estimated useful lives as follows:
Freehold buildings
Long leases
Plant and machinery
Fixture, fittings and equipment
2–4%
Period of lease
10–33%
10–33%
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. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included
in the income statement when the asset is derecognised.
Hyperinflationary economies
The Argentinian economy was designated as hyperinflationary from 1 July 2018. As a result, application of IAS 29
‘Financial Reporting in Hyperinflationary Economies’ has been applied to the Argentinian subsidiary, which provides
nearshore delivery services primarily to US-based clients. Adjustments are made for the historical cost of non-
monetary assets for the change in purchasing power caused by inflation from the date of initial recognition to the
balance sheet date.
Impairment of assets other than goodwill
At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment, right-of-
use assets and other 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 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 CGU 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 CGU) is estimated to be less than its carrying amount, the carrying
amount of the asset (CGU) is reduced to its recoverable amount. An impairment loss is recognised immediately as
an expense in the Consolidated Income Statement.
Where an impairment loss subsequently reverses, the carrying amount of the asset (CGU) 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 (CGU) in
prior periods.
2. Accounting policies (continued)
Tax
The tax expense in the Consolidated Income Statement comprises current income tax and deferred tax.
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to
the taxation authorities. 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. Current income tax relating to items recognised directly in equity is recognised
in equity and not in the Consolidated Income Statement.
The Group provides for future liabilities in respect of uncertain tax positions where additional tax may become
payable in future periods. Such provisions are based on management’s best judgement of the probability of the
outcome in reaching an agreement with the relevant tax authorities.
Deferred tax
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 reporting 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 utilised.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has
become probable that future taxable profits will allow the deferred tax 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.
208 |
kinandcarta.com
Building a world that works better for everyone
| 209
Financial StatementsNotes to the consolidated financial statements continued 2. Accounting policies (continued)
Provisions
2. Accounting policies (continued)
The Group’s primary categories of financial instruments are listed below:
Provisions have been made in respect of restructuring commitments and other property-related commitments.
Trade and other receivables
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event
and where it is probable that an outflow will be required to settle the obligation and the amount of the obligation
can be estimated reliably. When a provision is released, the provision is taken back to the Consolidated Income
Statement within the line item where it was initially booked. If the effect is material, expected future cash flows are
discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to unwinding the discount is recognised as a finance cost.
Details of provisions are set out in note 25.
Contingent liabilities
Contingent liabilities are possible obligations of the Group of which the timing and amount are subject to significant
uncertainty. Contingent liabilities are not recognised in the Consolidated Balance Sheet, unless they are assumed by
the Group as part of a business combination. They are however disclosed, unless they are considered to be remote.
If a contingent liability becomes probable, and the amount can be reliably measured, it is no longer treated as
contingent and recognised as a liability on the balance sheet.
Contingent assets
Contingent assets are possible assets of the Group of which the timing and amount are subject to significant
uncertainty. Contingent assets are not recognised in the Consolidated Balance Sheet. They are however disclosed
when they are considered to be probable. A contingent asset is recognsied in the financial statements when the
inflow of economic benefits is virtually certain.
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
Note
Measurement
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Derivative financial instruments
Deferred consideration payable
Contingent consideration payable
Bank borrowings
20
20
22
21
19
19
23
Amortised cost
Amortised cost
Amortised cost
Fair value through profit and loss
Fair value through profit and loss
Fair value through profit and loss
Amortised cost
1 The fair value measurement hierarchy is only applicable for financial instruments measured at fair value.
Fair value
measurement
hierarchy¹
n/a
n/a
n/a
2
2
3
n/a
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:
• 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
• Level 3 inputs are unobservable inputs for the asset or liability
Trade receivables are initially recognised and carried at their original invoice amount. Trade receivables and
contract assets are stated at cost less expected credit losses (ECLs). At each reporting date, the Group evaluates
the estimated recoverability of trade receivables and contract assets and records allowances for ECLs based on
experience.
The Group applies the simplified approach to the measurement of ECLs, which requires expected lifetime losses to
be recognised from initial recognition of the receivable. Immediately after an individual trade receivable or contract
asset is assessed to be unlikely to be recovered, an impairment is recognised as the difference between the
carrying amount of the receivable and the present value of estimated future cash flows.
Where there are no specific concerns over recovery, other than the increasing age of a trade receivable or contract
asset balance past payment terms, the Group uses a provision matrix, where provision rates are based on days past
due. The provision matrix used reflects estimates based on past experience and current economic factors.
The information about the ECLs on the Group’s trade receivables and contract assets is disclosed in note 20.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash and short-term deposits with a maturity of three
months or less. All of the cash and cash equivalents balance is available for use by the Group.
For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and
short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of
the Group’s cash management.
Trade and other payables
Trade payables that are not interest bearing and are initially recognised at fair value and subsequently carried at
amortised cost.
Financial assets and financial liabilities are offset and the net amount is reported in the Consolidated Balance Sheet
if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a
net basis, i.e. to realise the assets and settle the liabilities simultaneously.
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.
210 |
kinandcarta.com
Building a world that works better for everyone
| 211
Financial StatementsNotes to the consolidated financial statements continued 2. Accounting policies (continued)
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.
Contingent consideration payable
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 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.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded as the proceeds receivable, net of direct issue costs.
Subsequent to initial recognition, borrowings are stated at amortised cost, where applicable. 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. Bank
borrowings are derecognised when the obligation under the liability is discharged, cancelled or expires.
The Directors consider that the carrying value of all financial assets and liabilities is approximately equal to their fair
value.
Finance income and expense
All interest income and expense is recognised in the income statement on an accruals basis, using the effective
interest method.
Retirement benefits
The Group operates a defined benefit pension scheme, and also makes payments into defined contribution
schemes. Payments to defined contribution schemes are accounted for on an accruals basis.
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.
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.
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 reflect how management assesses and monitors the ongoing financial
performance 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:
• gains and losses on curtailments and settlements and costs incurred in the running of the Scheme
• 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.
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 with a corresponding increase in equity.
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 service and 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.
Employee Share Ownership Plan (“ESOP”)
As the Group is deemed to have control of its ESOP trust, it is included in the 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.
212 |
kinandcarta.com
Building a world that works better for everyone
| 213
Financial StatementsNotes to the consolidated financial statements continued 2. Accounting policies (continued)
Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys
the right to control the use of an identified asset for a period of time in exchange for consideration.
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and
leases of low-value assets (less than £3,000). The Group recognises lease liabilities to make payments and right-
of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (ie the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes
the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before
the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-
line basis over the lease term. The Group holds right-of-use assets in respect of land and buildings which are
depreciated between one and 14 years.
Right-of-use assets are tested for impairment in accordance with IAS 36 ‘Impairment of Assets’.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value
of lease payments to be made over the lease term. The lease payments include fixed payments less any lease
incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be
paid under residual value guarantees. The lease payments also include the exercise price of a purchase option
reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term
reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a
rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease
commencement date, if the interest rate implicit in the lease is not readily determinable. The incremental borrowing
rate applied to each lease is determined by taking into account the risk-free rate of the country where the asset
under lease is located, matched to the term of the lease and adjusted for factors such as the credit risk profile of
the lessee.
After the commencement date, the amount of lease liabilities is increased to reflect the addition of interest and
reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is
a modification, a change in the lease term, a change in lease payments (e.g. changes to future payments resulting
from a change in an index or rate used to determine such lease payments) or a change in the assessment of an
option to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases (i.e. those leases that have a
lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies
the lease of low-value assets recognition exemption to leases of office equipment that are considered of low asset
value (below £3,000). Lease payments on short term leases and leases of low-value assets are recognised as an
expense on a straight-line basis over the lease term.
2. Accounting policies (continued)
Business combinations
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 and
liabilities incurred or assumed by the Group, 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 are
automatically forfeited upon termination of employment, are classified as remuneration for post-combination
services and are 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 contingent consideration payable in the
Consolidated Balance Sheet. At each balance sheet date, the Group revises its estimate for the contingent amounts
payable that are 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 are
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 acquirer’s share-based payment
awards are measured in accordance with IFRS 2 ‘Share-based Payment’
• 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 at the acquisition date, and is subject to a maximum of
one year.
214 |
kinandcarta.com
Building a world that works better for everyone
| 215
Financial StatementsNotes to the consolidated financial statements continued 2. Accounting policies (continued)
Discontinued operations
Classification as a discontinued operation occurs at the earlier of the date of disposal or when the operation meets
the criteria to be classified as held for sale. A component of the Group is classified as a discontinued operation if its
carrying amount will be recovered principally through sale rather than through continuing use, and:
•
•
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
•
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 losses from the disposal of the operation,
is reported separately as discontinued operations in the Consolidated Income Statement.
When an operation is classified as a discontinued operation, the comparative income statement and statement of
comprehensive income is represented as if the operation had been discontinued from the start of the comparative
year.
Segmental reporting
Segment information is presented on a regional basis. Corporate costs, comprising certain costs that are not
allocated to the operating regions, are disclosed separately.
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 – this segment generates revenue from services offered to our global clients by our operating
businesses which are located in Europe
Corporate costs are those that 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 Makers (“CODM”s). The CODM has been determined to be the Chief Executive Officer and the
Chief Financial and Chief Operating Officer who are primarily responsible for the assessment of the performance of
the Group. The full segmental balance sheet is not disclosed as this information is not reported to the CODM.
Significant accounting judgements, estimates and assumptions
The preparation of the Group’s Consolidated Financial Statements in conformity with IFRS requires management to
make judgements, estimates and assumptions that affect the application of policies, reported amounts of assets
and liabilities, revenue and expenses and the accompanying disclosures. The estimates are based on historical
experience and various other factors that are believed to be reasonable under the circumstances, the results of
which form the basis of making the judgements about carrying values of assets and liabilities that are not readily
apparent from other sources. Uncertainty about these assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of assets or liabilities affected in future periods. Actual results
may also differ from these estimates.
The estimates are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that and prior periods, or in the period of the revision and
future periods if the revision affects both current and future periods.
2. Accounting policies (continued)
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date,
which have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year, are described below. The Group based its assumptions and estimates on parameters
available when the Consolidated Financial Statements were prepared. Existing circumstances and assumptions
about future developments, however, may change due to market changes or circumstances arising that are beyond
the control of the Group. Such changes are reflected in the assumptions when they occur.
Carrying value of goodwill
The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy
set out above. Impairment exists when the carrying value of an asset or cash-generating unit (“CGU”) exceeds
its recoverable amount, which is the higher of its fair value less costs of disposal and its value-in-use. The Group
estimates the recoverable amount based on value-in-use calculations, a process which involves estimation. The
value-in-use calculation is based on a discounted cash flow (“DCF”) model. The cash flows are derived from the
relevant budget and forecasts for the next three years, including a terminal value assumption. The recoverable
amount is sensitive to the discount rate used for the DCF model as well as the expected future cash inflows, growth
rates and maintainable earnings assumed within the calculation. The recoverability analysis for the year to 31 July
2023 resulted in an impairment in the carry amount of goodwill for the UK excluding Kin and Carta Data CGU. For
all other CGUs, the value-in-use supports the carrying amount of goodwill. The situation will be monitored closely
should future developments indicate that adjustments are appropriate. Refer to note 18 for further information.
Carrying value of acquired intangibles
The Group considers the recoverability of acquired intangibles. 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.
Contingent consideration payable
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 19.
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 Guaranteed Minimum
Pension and mortality. The net surplus in the Consolidated Balance Sheet for the retirement benefit scheme was
£13.0 million (2022: surplus of £38.7 million). A sensitivity analysis can be found in note 27.
Revenue recognition
As detailed in the revenue recognition policy, the Group recognises revenue on a time and material basis for
the majority of contracts. Other contracts are performed on a fixed-price basis. For these contracts, revenue
is recognised based on the stage of completion, which is measured by reference to costs incurred to date as a
percentage of total estimated costs. This estimate of the stage of completion requires judgement in respect of
uncertainties around delivery of the remainder of the contract, which include potential project delays and technical
delivery challenges that may result in the requirement for credit note or onerous cost provisions.
216 |
kinandcarta.com
Building a world that works better for everyone
| 217
Financial StatementsNotes to the consolidated financial statements continued 3. Revenue
All Group revenue, in the current and prior year, is derived by the rendering of services where revenue is recognised
on performance obligations satisfied over time. Revenue and net revenue by region is under note 4.
The following table provides information about trade receivables, accrued income and deferred income arising from
contracts with customers:
Trade receivables
Accrued income (contract assets)
Deferred income (contract liabilities)
2023
£’000
16,023
11,676
(3,479)
2022
£’000
27,098
15,195
(5,159)
Accrued income (contract assets) relate to the Group’s right to consideration when a performance obligation has
been satisfied and revenue is recognised, but has not been billed at year end. It is transferred to trade receivables
when an invoice is issued to the customer. During the year, £15.2 million (2022: £13.1 million) of accrued income
recognised at 31 July 2022 was invoiced. Deferred income (contract liabilities) relates to payments received from
customers prior to satisfaction of performance obligations and the revenue being recognised. During the year, all of
the opening deferred revenue balance (2022: all) has been recognised as revenue.
The following is an analysis of the Group net revenue by sector:
Financial services
Retail and distribution
Industrials and agriculture
Transportation
Public sector
Healthcare
Technology, digital and media
Other
Total net revenue
Project-related costs
Total revenue
Project-related costs are incurred across a broad range of the sectors noted.
2023
£’000
69,043
41,409
27,314
19,054
13,729
7,627
6,837
6,999
192,012
3,858
195,870
2022
£’000
53,278
43,764
30,444
19,028
7,611
11,417
19,028
5,707
190,277
6,846
197,123
4. Segment reporting
During the year, the Group was managed on a regional basis. Corporate costs, comprising certain costs that are not
allocated to the operating regions, are disclosed separately.
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– this segment generates revenue from services offered to our global clients by our operating businesses,
which are located in Europe
Corporate costs are those that 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 Makers (“CODMs”). The CODM has been determined to be the Chief Executive Officer and the
Chief Financial and Chief Operating Officer, who are primarily responsible for the assessment of the performance of
the Group. The full segmental balance sheet is not disclosed as this information is not reported to the CODM.
Results from continuing operations for the current year ended 31 July 2023
Revenue
Net revenue
Statutory operating (loss)/profit
Adjusting items
Adjusted operating profit/(loss)
2023
Europe
£’000
62,086
57,246
(22,699)
26,450
3,751
Americas
£’000
157,995
134,766
10,097
8,918
19,015
Corporate
costs
£’000
Total
£’000
(24,211)
195,870
–
192,012
(6,677)
(19,279)
2,367
(4,310)
37,735
18,456
Results from continuing operations for the prior year ended 31 July 2022
Revenue
Net revenue
Statutory operating loss/(profit)
Adjusting items
Adjusted operating profit/(loss)
2022
Americas
£’000
154,037
132,227
Corporate
costs
£’000
(18,686)
–
Restated¹
total
£’000
197,123
190,277
660
(13,058)
(14,086)
22,848
23,508
7,507
(5,551)
36,482
22,396
Europe
£’000
61,772
58,050
(1,688)
6,127
4,439
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 for further details.
218 |
kinandcarta.com
Building a world that works better for everyone
| 219
Financial StatementsNotes to the consolidated financial statements continued 4. Segment reporting (continued)
The Group’s non-current assets (excluding deferred tax assets and the retirement benefit surplus) are located as
follows:
5. Profit/(loss) for the year
Profit/(loss) from operations has been arrived at after charging/(crediting):
Europe
Americas
Corporate costs
2023
£’000
49,616
39,129
4,878
93,623
2022
£’000
66,684
41,235
4,901
112,820
The non-current assets recorded under corporate costs comprise, principally, the Group’s investment property.
Geographical split of revenue from continuing operations
Revenue and net revenue by geographical area is based on the location where the provision of services has been
provided.
Continuing operations
United States of America
United Kingdom
Rest of the world
Significant customer
2023
£’000
2022
£’000
Revenue Net revenue
Revenue
Net revenue
140,079
45,676
10,115
195,870
139,329
42,730
9,953
192,012
139,556
52,226
5,341
197,123
132,230
55,607
2,440
190,277
Staff costs
Depreciation of property, plant and equipment– continuing operations
Depreciation of property, plant and equipment– discontinued operations
Amortisation of acquired intangible assets– continuing operations
Amortisation of acquired intangible assets– discontinued operations
Impairment of goodwill
Impairment of other non-current assets– continuing operations
Expenses relating to short leases and leases of low value
Note
6
15
15
18
18
18
15
16
The analysis of auditors’ remuneration is as follows:
Audit fees
– Audit of the Company accounts
– Audit of the accounts of the Company’s subsidiaries
Total audit fees
– Review of the interim report
Total audit-related fees
6. Staff numbers and costs
The average monthly number of employees, including Executive Directors, during the year were:
For the year ended 31 July 2023, one customer, based in the Americas Financial Services sector, accounted for
£48.0 million (2022: £22.2 million) or 24.5% (2022: 11.3%) of total Group revenue and £47.9 million (2022: £21.9 million)
or 24.9% (2022: 11.5%) of total Group net revenue. No other single customer contributed more than 10% to Group
revenue or net revenue in the current or prior period.
Continuing operations
Operations
Sales
Administration
The aggregate staff costs of the Group, including Executive Directors, during the year were:
Continuing operations
Wages and salaries
Social security costs
Defined contribution pension costs
Contractor costs
220 |
kinandcarta.com
Building a world that works better for everyone
| 221
Contingent consideration deemed as remuneration
Share-based payment charges including employer taxes
Fees payable to Non-Executive Directors totalled £0.3 million (2022: £0.3 million).
153,018
150,739
9,849
3,749
13,229
3,234
166,616
167,202
2023
£’000
2022
£’000
166,616
167,202
4,361
–
9,256
–
14,598
1,847
279
316
55
371
55
426
2023
Number
1,406
108
355
1,869
2023
£’000
131,365
11,184
3,648
6,821
3,886
238
6,390
94
–
6,207
204
450
55
505
45
550
2022
Number
1,464
89
301
1,854
2022
£’000
117,491
9,684
4,276
19,288
Financial StatementsNotes to the consolidated financial statements continued 7. Adjusting items
Adjusted items are presented in the middle column of the Consolidated Income Statement. In the opinion of the
Directors, their separate presentation aids understanding of the financial performance of the Group. These are
detailed below:
Expense/(income)
Continuing operations
Costs related to acquisitions
Amortisation of acquired intangibles
Contingent consideration required to be treated as remuneration
Deferred consideration adjustments
Acquisition and integration costs
Impairment
Impairment of goodwill
Fair value gain from deemed sale on step acquisition
Step up in value on notional disposal
Share-based payments charges
2023
£’000
9,256
9,849
(261)
655
Restated¹
2022
£’000
6,390
13,229
–
1,421
19,499
21,040
14,598
–
–
(1,621)
Share-based payments charges related to employee share schemes
3,749
3,234
St Ives Defined Benefit Pension Scheme costs
Scheme administrative costs
Other related costs
Past service cost (GMP equalisation uplift)
Client disputes and litigation
Cost of client disputes and litigation
Related insurance proceeds
Restructuring and other items
Redundancies and other charges
Impairment of right-of-use asset
(Credit)/charges associated with empty properties
Credit associated with lease modification and early termination
Other credits
Adjusting items before interest and tax
Net pension finance income in respect of defined benefit pension scheme
Interest charges related to non-pension adjusting items
Adjusting items before tax
Income tax credit
Continuing operations adjusting items after tax
715
804
–
1,519
5,033
(1,455)
3,578
3,806
1,847
(4,228)
(5,421)
(1,212)
(5,208)
37,735
(1,376)
140
36,499
(2,714)
33,785
787
821
3,884
5,492
380
–
380
1,693
6,207
4,462
(4,405)
–
7,957
36,482
(340)
–
36,142
(3,411)
32,731
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of the share-based payments charge from adjusted results to adjusting items.
Refer to note 1 for further details.
7. Adjusting items (continued)
As adjusted results include the benefits of acquisitions and restructuring programmes, but exclude significant costs
(such as significant acquisition costs, legal, major restructuring and transaction items), they should not be regarded
as a complete picture of the Group’s financial performance, which is presented in its statutory results. The exclusion
of other adjusting items may result in adjusted earnings being materially higher or lower than statutory earnings. In
particular, when significant impairments, restructuring charges and legal costs are excluded, adjusted earnings will
be higher than statutory earnings.
On the face of the Consolidated Income Statement, administrative expenses relating to adjusting items comprise
the St Ives Defined Benefit Pension Scheme costs of £1.5 million, redundancies and other charges of £3.8 million,
and other credits of £1.2 million. Contingent consideration treated as remuneration and consideration adjustments
comprises contingent consideration required to be treated as remuneration (£9.8 million), offset by a credit of
£0.3 million in respect of an adjustment to deferred consideration for a prior period acquisition. All other items in
the adjusting items table above are separately identified on the face of the Consolidated Income Statement.
Costs related to acquisitions
Charges relating to the amortisation of acquired customer relationships, proprietary techniques and trademarks
amounted to £9.3 million (2022: £6.4 million).
During the year, charges relating to contingent consideration required to be treated as remuneration of £9.8 million
(2022: £13.2 million) were recorded in the Consolidated Income Statement as adjusting items. These charges arose
in respect of the prior year acquisitions of Cascade Data Labs £4.3 million (2022: £9.0 million), Spire £1.0 million
(2022 £1.9 million), Melon Group £3.1 million (2022: £0.9 million), Loop £0.6 million (2022: £1.2 million) and Octain
£0.2 million (2022: £0.2 million); and £0.6 million in relation to the current year acquisition of Forecast Data Services
Limited (rebranded Kin and Carta Data).
During the year, deferred consideration adjustments credits relating to prior period acquisitions totalled
£0.3 million.
Acquisition and integration costs of £0.7 million (2022: £1.4 million) were incurred during the year. These relate to
advisor costs incurred in respect of acquisitions and potential acquisition targets, and one-off costs associated
with the integration of acquisitions onto Kin and Carta operating platforms. In the prior year, £1.4 million was incurred
in respect of similar activities.
Impairment of goodwill
During the year, an impairment charge of £14.6 million against the carrying value of goodwill relating to the
“UK excluding Kin and Carta Data” cash generating unit was recorded. The impairment arose due to a reduction in
actual and projected UK revenue arising from external market factors and client caution. This, coupled with a higher
cost of capital, reduced the value-in-use of the UK cash generating unit below its carrying value at 31 July 2023. The
impairment was recorded in the Consolidated Income Statement as an adjusting item within the Europe segment.
There were no impairment charges associated with goodwill in the prior year.
Fair value gain from deemed sale on step acquisition
In the prior year, the Group acquired the 50% interest in Loop it did not previously own. The acquisition was
accounted for as a disposal followed by a full acquisition in line with IFRS 3 ‘Business Combinations’. The notional
disposal of the existing 50% gave rise to a step up to fair value of the investment, resulting in a gain of £1.6 million,
which was recorded through the Consolidated Income Statement as an adjusting item within the Americas segment.
222 |
kinandcarta.com
Building a world that works better for everyone
| 223
Financial StatementsNotes to the consolidated financial statements continued 7. Adjusting items (continued)
Share-based payments
Charges of £3.7 million (2022: £3.2 million) were recorded in the year in respect of actual and potential future
settlements to staff under the Group’s share-based employee incentive schemes, including related employer taxes,
where applicable. The classification of share-based payments as an adjusting item is in line with global, publicly
listed peer group companies in digital transformation, where equity-based remuneration typically represents a
significant portion of remuneration, therefore aiding comparability of adjusted profitability. Of these costs,
£1.8 million (2022: £1.3 million) were recorded within the Americas segment, £0.7 million (2022: £0.5 million) within
the Europe segment and £1.2 million (2022: £1.4 million) within corporate costs
St Ives Defined Benefit Pension Scheme costs
The Scheme charges include service costs of £0.7 million (2022: £0.8 million) and costs in relation to levies payable
and other costs of the sponsor’s obligations towards the Scheme of £0.8 million (2022: £0.8 million). In the prior
year, £3.9 million of past service costs were incurred related to Guaranteed Minimum Pension equalisation (refer
to note 27 for further details). The costs of the Scheme are not considered to be part of the ongoing performance
of the Group. As such, they are treated as adjusting items. The costs are classified in the Consolidated Income
Statement as administrative expenses and are recorded within corporate costs.
Client disputes and litigation
Client disputes and litigation net expense of £3.6 million (2022: £0.4 million) includes the direct costs of settlement
and related external advisor costs associated with the resolution of certain client disputes which, were significant
in value and expected to be non-recurring in nature. These related to legal disputes with two legacy, non-enterprise
clients, one arising during the year and one in the prior year.
Full and final settlement amounts of £4.0 million were cash-settled in respect of these disputes in the second half
of FY23. During the year, £1.0 million (2022: £0.4 million) was incurred for external legal advisor costs in defending
the separate legal disputes.
Insurance proceeds of £1.5 million, relating to one of the claims, were received under the Group insurance policies
during the year, comprising partial recovery of the costs incurred. There were no other material client disputes
at the reporting date. The net costs are recorded within the Americas segment. After the year end, the Group’s
insurer confirmed that £3.3 million of further reimbursement will be paid in respect of the second claim. As the
reimbursement was not virtually certain at the balance sheet date no insurance income in respect of this claim were
recorded in FY23. The income will be recorded as an adjusting item in the Consolidated Income Statement in FY24
within the Americas segment. No further costs or insurance recoveries are expected in respect of these claims.
Restructuring and other items
During the year, restructuring expenses of £3.8 million (2022: £1.7 million) were incurred. These relate primarily to the
reorganisation of the Group, which commenced in 2022, following the switch to a fully regionally based organisation,
and the expenses of simplifying the Group’s legal structure leading to the liquidation of a number of legal entities.
Charges also include those linked to the set-up costs and the transition of certain roles to nearshore centres. These
costs are classified in the Consolidated Income Statement as administrative expenses and are recorded within the
Americas segment (£2.1 million), Europe segment (£1.0 million) and corporate costs (£0.7 million).
7. Adjusting items (continued)
During the prior year, a decision was made to vacate a significant portion of the Group’s leasehold property in
Chicago from September 2022 and to exercise an early break on the whole lease in November 2026. Following this
decision, a net cost of £6.3 million was recorded in adjusting items in the prior year. The net charge was comprised
of an impairment charge of the related right-of-use asset of £6.2 million; empty property costs of £4.5 million
consisting of the early termination payment and the contractually unavoidable future expenses relating to the
property tax and maintenance charges; and a credit of £4.4 million in relation to the reduction of the lease liability
as a result of the decision to exercise the early break clause. The items were recorded as adjusting items within the
America segment because of their material size and non-recurring nature.
During the current year, the Group renegotiated the lease of premises in Chicago, with the agreement signed in
February 2023. This will result in swapping the current premises for a space of less than half the size in the same
building from January 2024 under a new lease, with the term on the lease on the smaller premises extending to
December 2033. This resulted in a net credit of £7.8 million recorded during the year, consisting of: a release of the
provision for empty property costs of £4.2 million in respect of the early termination payment of the previous lease,
which was waived and a portion of the provision for contractually unavoidable future expenses that is no longer
required; a £5.4 million write-down of the lease liability to reflect the reduction in the lease term and associated
payment; and an impairment to the right-of-use asset of £1.8 million to reflect the reduction in the useful value of
the remaining asset under the old lease to December 2023, after applying the 45% impairment applied in the prior
year.
During the year, other credits of £1.2 million were recorded in respect of accrual releases associated with warranties
provided to buyers of businesses that were disposed of in prior periods. Following the expiration of related warranty
survival periods, the amounts previously provided are no longer considered necessary.
Finance (income)/expense
Net pension finance income of £1.4 million (2022: £0.3 million) is recorded in respect of the surplus in the St Ives
Defined Benefit Pension Scheme. This is recorded in corporate costs.
During 2022, a provision for empty property costs was recognised following the decision to partially vacate the
leasehold property in Chicago, USA from September 2022, and a portion of the lease was identified as onerous in
nature due to under-occupancy. During the current year, notional interest costs of £0.1 million related to the unwind
of the discounting of the onerous cost provision and the interest charge on the onerous portion of the lease liability
are recorded as adjusting items within the Americas segment.
Taxation on adjusting items
In the current year, the tax credit of £2.7 million (2022: £3.4 million credit) relates to several of the items noted
above. There is no tax charge or credit associated with other items, most significantly the goodwill impairment
charge in the current year and the portion of the deemed remuneration charge that relates to UK acquisitions in
the current year (£0.6 million). There are potential deferred tax credits associated with the deemed remuneration
charges for some of the US acquisitions, but the related deferred tax assets are reduced by valuation allowances
where this is judged to be appropriate.
224 |
kinandcarta.com
Building a world that works better for everyone
| 225
Financial StatementsNotes to the consolidated financial statements continued 8. Discontinued operations
There have been no divestments in the current year. Discontinued operations in the prior year include the results of
three businesses, Incite, Edit and Relish, which were divested in the year ended 31 July 2022.
The results of the discontinued operations for the prior year were as follows:
Revenue
Project-related costs
Net revenue
Costs of service
Gross profit
Selling costs
Administrative expenses
Gain on divestment of discontinued operations
Amortisation of acquired intangibles
Share-based payments related to employee share schemes
Release of provision
Operating profit
Other finance costs
Profit before tax
Income tax charge
Net profit for the period
Restated¹
Year to 31 July 2022
Adjusted
results
£’000
Adjusting
items
£’000
Statutory
results
£’000
10,116
(4,222)
5,894
(2,349)
3,545
(693)
(1,188)
–
–
–
–
1,664
(32)
1,632
(226)
1,406
–
–
–
–
–
–
–
10,116
(4,222)
5,894
(2,349)
3,545
(693)
(1,188)
24,059
24,059
(94)
(210)
265
(94)
(210)
265
24,020
25,684
–
(32)
24,020
25,652
(1,445)
22,575
(1,671)
23,981
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items, as detailed in
note 1.
9. Net pension finance income
Investment income on defined benefit pension scheme assets (note 27)
Interest costs on defined benefit pension scheme obligations (note 27)
2023
£’000
11,749
(10,373)
1,376
2022
£’000
6,850
(6,510)
340
10. Other finance costs
Interest on bank overdrafts and loans
Bank arrangement fee relating to the bank revolving facility
Interest on lease liabilities
Notional interest on provisions
2023
£’000
1,764
315
636
51
2,766
2022
£’000
415
690
732
–
1,837
Included in finance costs, within interest on lease liabilities and interest unwind on provisions, are £0.1 million relating
to adjusting items. Refer to note 7 for further details.
11. Income tax credit/(charge)
Income tax on the profit/(loss) as shown in the Consolidated Income Statement is as follows:
Continuing operations:
Total current tax credit/(charge):
Current period credit/(charge)
Adjustments in respect of prior periods
Total current tax credit/(charge)
Deferred tax on origination and reversal of temporary differences:
Current period credit
Adjustments in respect of prior periods
Total deferred tax credit
Total income tax credit
2023
£’000
280
1,311
1,591
482
(169)
313
1,904
Restated¹
2022
£’000
(2,492)
984
(1,508)
3,123
(6)
3,117
1,609
1 The 2022 tax credit has been restated in respect of a change in accounting policy for investment property to move from a cost model to a fair value model, which has
been applied retrospectively. Following the change, the basis for the valuation of deferred tax changed to assume a sales scenario. Refer to note 1 for further details.
UK corporation tax has been calculated at 21% (2022: 19%) being the blended rate in the period given the increase in
statutory rate to 25%, from 19%, as at 1 April 2023. Deferred tax balances at 31 July 2023 in the UK are valued using a
rate of at 25%, being the rate prevailing at the balance sheet date.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. For the US
subsidiaries, the tax charge has been calculated using a rate of 28.17% (2022: 28.51%), which includes the federal
rate of 21% and the US state and local level income tax rates, which vary from 0% to 9.5% (2022: 0% to 8%). For
Colombia and Argentina the statutory rates of 35% and 25%, respectively have been used. For Bulgaria, North
Macedonia and Kosovo, the statutory rate of 10% has been used.
226 |
kinandcarta.com
Building a world that works better for everyone
| 227
Financial StatementsNotes to the consolidated financial statements continued 11. Income tax credit/(charge) (continued)
Income tax as shown in the Consolidated Statement of Comprehensive Income is as follows:
Current tax credit/(charge) on foreign exchange movements
Deferred tax credit/(charge) on origination and reversal of temporary differences
Total income tax credit/(charge)
2023
£’000
–
7,203
7,203
2022
£’000
(1,105)
(6,209)
(7,314)
The tax credit for continuing operations can be reconciled to the loss before tax shown in the Consolidated Income
Statement as follows:
Loss before tax from continuing operations
UK corporation tax calculated at a rate of 21% (2022: 19%)
Tax charged at rates other than 21% (2022: 19%)
Effect of change in United Kingdom corporate tax rate
Expenses not deductible for tax purposes
Effect of tax deductible goodwill
Credit on research and development activities
Movements on deferred tax assets not recognised
Adjustments in respect of prior periods
Total income tax credit
Effective tax rate
2023
£’000
Restated¹
2022
£’000
(20,669)
(15,583)
4,340
(797)
877
2,961
316
–
(3,910)
(3,623)
1,141
67
(840)
1,026
1,904
9.2%
758
96
320
781
1,609
10.3%
1 The 2022 tax credit has been restated in respect of a change in accounting policy for investment property to move from a cost model to a fair value model, which has
been applied retrospectively. Following the change, the basis for the valuation of deferred tax changed to assume a sales scenario. Refer to note 1 for further details.
The Group’s effective tax rate was 9.2% (2022: 10.3%). This is driven by the blend of statutory tax rates and taxable
profit/losses in the jurisdictions in which the Group operates, adjusted for the non-taxable nature of some of the
accounting charges, most significantly the impairment of goodwill taken in the UK, the effect of tax-deductible
goodwill in the US, the revaluation of deferred tax assets in the US based on judgements of recoverability, and in the
UK based on changes in statutory tax rates.
12. Acquisitions
Current year acquisition of Kin and Carta Data Limited (formerly known as Forecast Data Services Limited)
On 5 May 2023, the Group acquired 100% of the issued share capital of Kin and Carta Data Limited (formerly known
as Forecast Data Services Limited), a data and artificial intelligence business based in Edinburgh, Scotland and,
through its Polish subsidiary, in Wroclaw, Poland. The initial cash consideration, net of cash acquired, was
£2.2 million.
Further amounts may be payable in respect of the growth in adjusted EBITDA from the acquisition date to
30 September 2024, subject to service conditions. Any further amounts payable are based on two measurement
periods: the 12 months to 30 September 2023, which will be settled in cash in the event that a payment is due,
and the 12 months to 30 September 2024, up to 75% of which may be settled in shares of Kin and Carta plc at the
Company’s discretion, with the balance settled in cash. The total further consideration payable after 31 July 2023,
all of which is accounted for as deemed remuneration because of employment service conditions, is capped at
£10.1 million. The Group currently estimates that the further consideration payable after the balance sheet date will
amount to £4.3 million.
The fair value of intangible assets acquired represent the fair value of customer relationships and of a trademark.
Goodwill arising on acquisition can be attributed to the value of future growth from new customers and the
assembled workforce. The goodwill is not expected to be deductible for tax purposes. Acquisition costs of
£0.3 million were expensed to the income statement in the period as an adjusting item.
In the period to 31 July 2023, the acquisition contributed £1.2 million to revenue and a loss before tax of £1.0 million.
The loss includes charges for deemed remuneration of £0.6 million, and amortisation of acquired intangibles of
£0.5 million (including amortisation of £0.4 million relating to the trademark, which was fully amortised in the year),
which are recorded as adjusting items in the period. Had the acquisition taken place on 1 August 2022, total Group
revenue would have been £198.9 million and statutory loss before tax for the period would have been £20.0 million.
228 |
kinandcarta.com
Building a world that works better for everyone
| 229
Financial StatementsNotes to the consolidated financial statements continued 12. Acquisitions (continued)
Purchase price allocation
The amounts recognised for each class of assets and liabilities at the acquisition date were as follows:
Assets
Customer relationships
Trademark
Property, plant and equipment
Trade and other receivables¹
Cash and cash equivalents
Liabilities
Lease liabilities
Loans and borrowings
Trade and other payables
Provisions
Other liabilities
Current tax liabilities
Deferred tax liabilities
Total identifiable net assets
Goodwill
Initial cash consideration
Satisfied by:
Initial consideration before debt and working capital adjustments
Less:
Debt and working capital adjustments
Total consideration
Acquisition of subsidiary, per the Cash Flow Statement:
Initial cash consideration (net of debt and working capital adjustments)
Less cash acquired
1 The gross contractual amounts for trade receivables due of £1.4 million is equal to their fair value.
Carrying
amount
£’000
Fair value
adjustments
£’000
Fair value
£’000
–
–
212
1,353
107
1,672
(169)
(414)
(899)
–
(34)
(3)
–
(1,519)
1,678
354
–
–
–
2,032
–
–
–
(41)
34
–
1,678
354
212
1,353
107
3,704
(169)
(414)
(899)
(41)
–
(3)
(507)
(514)
(507)
(2,033)
153
1,518
1,671
633
2,304
3,000
(696)
2,304
2,304
(107)
2,197
12. Acquisitions (continued)
The fair value of the estimated total amounts paid and payable are as follows:
Charge for
estimated deemed
remuneration
recorded in the
current year
£’000
Estimated charge
for deemed
remuneration to be
recorded in future
years
£’000
Estimated total
consideration paid
and payable
£’000
600
–
600
3,688
–
3,688
7,288
(696)
6,592
Non-contingent
consideration
£’000
3,000
(696)
2,304
Consideration
Debt and working capital
adjustments
Total
Acquisitions in the prior year ending 31 July 2022
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”).
On 14 February 2022, the Group acquired the remaining 50% of the membership units of Loop Integration LLC
(“Loop”), an e-commerce consultancy that it did not previously own.
On 9 May 2022, the Group completed the acquisition of Melon AD (“Melon Group”), a software engineering
business.
The total initial consideration paid in the prior year, the fair value of net assets acquired and goodwill are detailed
below:
Octain
Loop
Melon
Total initial
consideration
£’000
Fair value of
net assets
acquired
£’000
200
6,868
19,444
–
5,554
9,739
Goodwill
£’000
200
1,314
9,705
13. Dividends
No final dividend is proposed. The total dividend for the year is £nil per share (2022: £nil per share). Where
employee share options that accrue dividends from prior periods were exercised in the year, the dividends were
paid to the staff upon exercise of the options. £3,000 (2022: £38,000) of such option-linked dividends were paid in
the year, as noted in the cash flow statement.
230 |
kinandcarta.com
Building a world that works better for everyone
| 231
Financial StatementsNotes to the consolidated financial statements continued 14. Earnings/(loss) per share
Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of
the Parent by the weighted average number of ordinary shares outstanding during the year.
When the Group makes a profit, diluted earnings per share equals the profit attributable to equity holders of the
Parent adjusted for the dilutive impact divided by the weighted average diluted number of shares. When the Group
makes a loss, diluted earnings per share equals the loss attributable to the equity holders of the Parent divided by
the weighted basic average number of shares. This ensures that earnings per share on losses is shown in full and not
diluted by unexercised share awards.
Basic and diluted earnings/(loss) per share are calculated as follows:
Basic
Continuing and discontinued operations
Earnings/(loss) (£’000)
Adjusted earnings
Statutory (loss)/earnings
2023
15,020
Restated¹
2022
2023
Restated¹
2022
20,163
(18,765)
10,007
15. Property, plant and equipment
Cost or valuation
At 1 August 2021
Additions
Lease modifications
Acquired with businesses
Disposal of businesses
Disposals
Thousands
Thousands
Thousands
Thousands
Hyperinflation revaluation adjustment¹
Issued ordinary shares at 1 August
Less shares held in treasury
Less shares held in the Employee Benefit Trust (“EBT”)
177,961
172,546
177,961
172,546
(91)
(2,490)
(91)
(41)
(91)
(2,490)
(91)
(41)
Issued shares net of EBT and treasury at 1 August
175,380
172,414
175,380
172,414
Effect of shares purchased by the EBT in the period
Effect of share allotted out of the EBT in the period
Effect of shares issued in the period
(3,315)
1,095
50
(1,627)
887
2,026
(3,315)
1,095
50
(1,627)
887
2,026
Reclassification
Currency movements
At 31 July 2022
Additions
Acquired with businesses (note 12)
Lease modifications
Disposals
Weighted average number of ordinary shares²
173,210
173,700
173,210
173,700
Hyperinflation revaluation adjustment¹
Basic earnings/(loss) per share
8.67
11.61
(10.83)
5.76
Diluted
Continuing and discontinued operations
Earnings/(loss) (£’000)
Weighted average number of ordinary shares (basic)²
Dilutive effect of share options outstanding
Weighted average number of ordinary shares (diluted)²
Adjusted earnings
Statutory (loss)/earnings
2023
15,020
Restated¹
2022
2023
Restated¹
2022
20,163
(18,765)
10,007
Thousands
Thousands
Thousands
Thousands
173,210
3,496
176,706
173,700
5,628
173,210
3,496
179,328
176,706
173,700
5,628
179,328
Diluted earnings/(loss) per share
8.50
11.24
(10.83)
5.58
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 for further details.
2 The weighted average number of shares is stated net of those shares held in the Employee Benefit Trust and those held in Treasury.
Adjusted earnings are calculated by adding back adjusting items (note 7), as adjusted for tax, to the profit or loss for
the year.
Currency movements
At 31 July 2023
Accumulated depreciation and impairments
At 1 August 2021
Charge for the period
Hyperinflation revaluation adjustment¹
Disposal of businesses
Disposals
Impairments
Reclassification
Currency movements
At 31 July 2022
Charge for the period
Hyperinflation revaluation adjustment¹
Disposals
Impairments
Currency movements
At 31 July 2023
Net book value
At 31 July 2023
At 31 July 2022
Land and
buildings
£’000
Plant and
machinery
£’000
2,289
2,435
15
–
–
(880)
(377)
59
–
60
1,166
1,010
–
–
–
136
(142)
1,211
–
155
(696)
–
293
140
236
3,774
1,100
12
–
(42)
910
(747)
2,170
5,007
1,028
136
55
(436)
–
–
–
28
811
262
121
–
–
(127)
1,067
1,103
355
1,133
947
159
(623)
–
–
119
227
1,962
1,168
588
(42)
–
(462)
3,214
1,793
1,812
Fixtures,
fittings,
equipment
and motor
vehicles
£’000
899
109
–
166
(81)
(187)
44
–
224
1,174
264
30
–
–
105
(285)
1,288
377
297
35
(79)
(150)
–
–
178
658
315
88
–
–
(268)
793
495
516
Right-of-use
assets
£’000
Total
£’000
24,766
30,389
1,928
1,547
640
(2,306)
(7,132)
–
–
2,042
21,485
7,005
170
141
(159)
–
3,263
1,547
961
(3,963)
(7,696)
396
140
2,562
27,599
9,379
212
141
(201)
1,151
(1,083)
(2,257)
27,559
36,024
13,824
2,744
–
(2,124)
(7,725)
6,207
–
683
13,609
2,616
–
–
1,847
(815)
16,362
4,124
249
(3,262)
(7,875)
6,207
119
1,116
17,040
4,361
797
(42)
1,847
(1,672)
17,257
22,331
10,302
7,876
13,693
10,559
232 |
kinandcarta.com
Building a world that works better for everyone
| 233
1 The hyperinflation revaluation adjustment relates to property, plant and equipment in Argentina, recorded in the current and prior year.
Financial StatementsNotes to the consolidated financial statements continued 15. Property, plant and equipment (continued)
At the balance sheet date, the Group had contractual commitments for right-of-use assets relating to the Chicago
lease, commencing 1 January 2024 and a new lease in Prishtina, Kosovo, commencing 1 August 2023 (2022: none).
In the prior year, an impairment of right-of-use buildings arose following the decision to partially vacate premises in
Chicago, USA and to exercise a break on the same lease at an earlier point than anticipated at the inception of the
lease, an impairment charge on the related right-of-use assets of £6.2 million was taken and recorded in adjusting
items under the Americas segment. During H2 FY23, the Group agreed to swap the current premises for a space
of less than half the size in the same building from January 2024, with the term on the lease on the new, smaller
premises extending to December 2033. An impairment of the right-of-use asset of £1.8 million was recorded to
reflect the reduction in the useful life of the remaining asset under the previous lease to December 2023. Refer to
note 7 for further details.
16. Lease liabilities
Set out below are the carrying amounts of lease liabilities and the movements during the year:
At 1 August
Acquired with businesses
Additions
Repayments
Disposal of businesses
Contract modifications
Interest expense
Currency movements
At 31 July
Current
Non-current
2023
£’000
12,858
169
7,005
(3,980)
–
(5,520)
636
(401)
10,767
2,574
8,193
2022
£’000
15,313
640
1,928
(3,812)
(763)
(2,854)
756
1,650
12,858
2,806
10,052
16. Lease liabilities (continued)
The following amounts of expense/(income) were recognised in the Consolidated Income Statement for continuing
operations in respect of right-of-use assets and associated lease liabilities:
Continuing operations
Expenses relating to short-leases and leases of low value
Depreciation of right-of-use assets
Credit associated with lease modification and early termination
Impairment of property-related assets
Net (credit)/charges to operating profit
Interest expense
Net (credit)/charges included in profit before tax
2023
£’000
279
2,616
(5,421)
1,847
(679)
636
(43)
2022
£’000
204
2,596
(4,401)
6,207
4,606
732
5,338
The net (credit)/charges included in profit before tax include a net credit of £3.5 million during the year
(2022: £1.8 million net charge) recorded within adjusting items in the Consolidated Income Statement relating
to the Chicago lease. Refer to note 7 for further details.
The following lease-related cash flows were recognised in the Consolidated Cash Flow Statement:
Continuing and discontinued operations:
Interest element of lease payments
Principal element of lease payments
Total cash outflow for leases
2023
£’000
2022
£’000
(636)
(3,344)
(3,980)
(732)
(3,080)
(3,812)
The following table sets out the maturity analysis of lease obligations, showing the undiscounted future lease
payments:
Additions in the current period include a £6.0 million addition related to a renegotiation on a lease interest in
premises in Chicago, USA, as well as new leases in Edinburgh, Scotland; Bogotá, Colombia; and Buenos Aires,
Argentina. The lease renegotiation in Chicago resulted in swapping the current premises for a smaller space in the
same building from 1 January 2024, with a term to 31 December 2033.
Leases arising through acquisitions in the current period include leases over premises in Edinburgh, Scotland and
Wroclaw, Poland, which were brought into the Group with the acquisition of Kin and Carta Data.
Amounts payable:
Within one year
In two to five years
After five years
Undiscounted lease liabilities at 31 July
2023
£’000
3,124
5,730
4,281
13,135
2022
£’000
3,507
11,714
–
15,221
234 |
kinandcarta.com
Building a world that works better for everyone
| 235
Financial StatementsNotes to the consolidated financial statements continued 17. Investment property
Investment property comprises a commercial property in the UK that is leased to a third party. The remaining lease
length is 45 years, with a break clause in April 2025 and every five years thereafter. It is not currently expected that
the clause permitting early termination in April 2025 will be exercised.
IAS 40 permits investment properties to be held at either the cost or fair value model. The continued significant level
of maintenance of the property has sustained its fair value and this is considered likely to continue to be the case in
the future. During the year to 31 July 2023, there was a change in accounting policy to move from a cost model to a
fair value model. The fair value model was judged to be more appropriate as it better reflects the manner of recovery
of value of the asset. This change in accounting policy has been applied retrospectively from 1 August 2021, being the
beginning of the earliest prior period presented as required by IAS 8. Further detail is provided in note 1.
The fair value of the property as at 31 July 2023 was £4.8 million, based on the market value as determined by an
independent property valuer, having appropriately recognised professional qualifications and experience. The report
was finalised in July 2023. The fair value obtained was applied as at 1 August 2021 and 31 July 2022 in restating
the prior period values in line with the new policy, as management’s assessment is that the fair value would have
not been materially different at either date. The difference between the previous carrying amount, as per the cost
model previously adopted, and the fair value as at 1 August 2021 is £0.35 million, which is presented in accumulated
retained earnings within equity as an adjustment to opening equity at 1 August 2021. There was no movement in the
fair value in the year to 31 July 2022 and 31 July 2023.
18. Goodwill and other intangible assets
Cost and carrying amount of goodwill
At 1 August 2021
Acquisition of businesses
Disposals
Currency movements
At 31 July 2022
Acquisition of businesses
Adjustment to goodwill in respect of acquisitions made in the prior year
Impairment charge
Currency movements
At 31 July 2023
Impairment testing of goodwill
£’000
68,372
11,244
(5,990)
3,309
76,935
633
66
(14,598)
(1,277)
61,759
At 1 August 2021:
Cost
Accumulated depreciation
Net book value (as previously reported)
Adjustment to fair value taken to retained earnings
Fair value at 1 August 2021 (restated)
Fair value at 31 July 2022 (restated)
At 31 July 2023
Investment
property
£’000
8,144
3,706
4,438
352
4,790
4,790
4,790
The fair value measurement of investment properties has been categorised as a Level 3 fair value based on the
inputs to the valuation technique used.
An investment capitalisation method of valuation was used to arrive at the market value. An income weighted
average equivalent yield of 13% is applied to the net income, reflecting the comparable evidence within the market
for guidance on capitalisation rates and capital values per sq ft. When adopting an appropriate yield, reference is
made to the age and size of the property and its condition, the risk of the tenant exercising the lease break, and
the alternative demand for the property. The estimated fair value would increase/(decrease) if the expected market
rental growth was higher/(lower) and if the risk adjusted yield rate was lower/(higher).
An amount in relation to rental income from investment properties of £0.8 million (2022: £0.8 million) has been
recognised in the Consolidated Income Statement, recorded as a credit to adjusted administrative expenses.
For the purpose of impairment testing, the goodwill has been allocated to four different cash-generating units
(“CGUs”). The carrying amount of the goodwill allocated to each CGU are set out below, together with the pre-tax
discount rate.
CGU
Americas
UK excluding Kin and Carta Data
Melon
Kin and Carta Data
2023
2022
Pre-tax
discount
rate
%
17.4
16.1
16.0
16.1
Carrying
value
£’000
26,093
25,074
9,959
633
61,759
Carrying
value
£’000
27,588
39,672
9,675
–
76,935
Pre-tax
discount
rate
%
15.2
13.5
13.2
–
The Group tests goodwill annually for impairment or more frequently if there are indicators that goodwill might be
impaired. For the purpose of impairment testing, goodwill is allocated to the CGU, which represents the lowest level
within the Group at which goodwill is monitored.
The recoverable amount of the CGUs is determined using value-in-use calculations. These use the cash flows
derived from the Group’s budget for FY24 and long range plan for FY25 to FY27 as the basis for input into the value-
in-use calculation, with cash flows thereafter calculated using a terminal value methodology. The budget and long
range plan were approved by the Board in October 2023. A margin for historical forecasting error has also been
factored into the value-in-use model for the explicit forecast period where relevant. For all CGUs, cash flows beyond
FY28 have been extrapolated using a forecast growth rate of 2%. The discount rates used in the value-in-use
calculation are based on the pre-tax weighted average cost of capital and reflect current market assessments of
the time value of money and the risks specific to the CGUs.
Key assumptions in the value-in-use calculations are those regarding cash flow forecasts in the medium term,
terminal growth rates and discount rates. Management considers all the forecast revenues, margins and profits to
be reasonably achievable given recent performance and the historic trading results of the relevant CGUs. Forecasts
consider macro economic factors and forecast growth in the digital transformation sector.
236 |
kinandcarta.com
Building a world that works better for everyone
| 237
Financial StatementsNotes to the consolidated financial statements continued 18. Goodwill and other intangible assets (continued)
Summary of results
The impairment tests identified a shortfall of the value-in-use compared to the carrying value for the UK excluding
Kin and Carta Data CGU of £14.6 million driven by a reduction in projected UK-sourced cash flows associated
principally with an acceleration of the shift for European clients from onshore to nearshore delivery from our
operations in South East Europe (“SEE”). The cash flows associated with delivery activities from SEE are measured
under the Melon CGU. The reduction in projected UK-sourced cash flows was exacerbated by a higher cost of
capital arising from significantly higher UK bank interest rates, resulting in a higher discount rate being used to
determine the present value of the cash flows in the value-in-use calculation.
The value-in-use calculations for the other CGUs did not identify any impairments, with a substantial excess of the
value-in-use over the carrying value for the other three CGUs as set out in the table below.
There were no goodwill or acquired intangible impairments in the prior year.
Sensitivity analysis
The Group conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions.
These sensitivities do not include the UK excluding Kin and Carta Data CGU, as the base case testing resulted in an
impairment as detailed above.
The results of the sensitivity tests are detailed below:
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)
17.4
16.0
16.1
181,602
27,635
12,129
140,721
24,207
11,776
154,912
21,957
10,229
Americas
Melon
Kin and Carta Data
Management concluded that no reasonably possible change in any of the key assumptions for these CGUs would
reduce the recoverable amount below its carrying value at the balance sheet date.
18. Goodwill and other intangible assets (continued)
Other intangible assets
Cost
At 1 August 2021
Acquisition of businesses
Disposal of businesses
Reclassification
Currency movements
At 31 July 2022
Acquisition of businesses
Disposals
Currency movements
At 31 July 2023
Accumulated amortisation
At 1 August 2021
Charge for the period
Disposals
Reclassification
Currency movements
At 31 July 2022
Charge for the period
Disposals
Impairment
Currency movements
At 31 July 2023
Net book value
At 31 July 2023
At 31 July 2022
Computer
software
£’000
Customer
relationships
£’000
Proprietary
techniques
£’000
Trademarks
£’000
Total
£’000
1,671
–
(1,426)
(140)
15
120
–
–
–
21,856
10,871
(11,241)
–
726
22,212
1,678
–
(364)
36,296
–
(214)
–
2,203
38,285
–
–
(959)
120
23,526
37,326
1,649
–
(1,426)
(119)
16
120
–
–
–
–
19,285
2,565
(11,241)
–
631
11,240
4,727
–
–
(471)
120
15,496
24,341
3,703
(214)
–
1,736
29,566
3,429
–
–
(883)
32,112
2,473
972
62,296
11,843
(344)
(13,225)
–
291
3,392
354
(2,316)
(127)
1,303
2,473
216
(140)
3,235
64,009
2,032
(2,316)
(1,450)
62,275
47,748
6,484
(344)
(13,225)
–
303
2,648
1,100
(2,316)
–
(129)
1,303
(119)
2,686
43,574
9,256
(2,316)
–
(1,483)
49,031
–
–
8,030
10,972
5,214
8,719
–
744
13,244
20,435
All research and development costs were expensed in the current and prior year.
238 |
kinandcarta.com
Building a world that works better for everyone
| 239
Financial StatementsNotes to the consolidated financial statements continued 18. Goodwill and other intangible assets (continued)
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. Customer relationships and proprietary techniques are disclosed below.
Customer relationships
Kin and Carta Data
Melon
Loop
Cascade
Remaining amortisation
period (months)
at 31 July 2023
33
21
19
5
2023
£’000
1,539
4,574
1,569
348
8,030
2022
£’000
–
6,988
2,732
1,252
10,972
Customer relationships relating to Kin and Carta Data arose in the context of the acquisition in the current year as
detailed in note 12.
Proprietary techniques
Solstice
Spire
The App Business
AmazeRealise
Trademarks
Melon
Remaining amortisation
period (months)
at 31 July 2023
19
-
30
7
Remaining amortisation
period (months)
at 31 July 2023
–
2023
£’000
1,629
–
3,074
511
5,214
2023
£’000
–
–
2022
£’000
2,820
211
4,301
1,387
8,719
2022
£’000
744
744
Trademarks from the acquisition of Melon in 2022 were fully amortised during the FY23 year. The trademark
recognised on the acquisition of Kin and Carta Data of £0.4 million was fully amortised within the year.
19. Contingent and deferred consideration payable
The fair value of contingent and deferred consideration is calculated based on the amounts expected to be paid,
determined by reference to forecasts of future performance of the acquired businesses and the probability of
contingent events, including employment service conditions for the recipients.
The valuation methods of the Group’s contingent consideration carried at fair value are categorised as Level 3.
Level 3 financial assets and liabilities are considered to be the most illiquid. Their values have been estimated
using available management information, including subjective assumptions. There are no individually significant
unobservable inputs used in the fair value measurement of the Group’s contingent consideration as at
31 July 2023.
The table below reconciles the movements in the portion of consideration payable recorded under liabilities.
2023
£’000
2022
£’000
Contingent
Deferred
Total
Contingent
Deferred
Balance at 1 August
8,250
849
9,099
1,888
Charges for contingent
consideration required to be
treated as remuneration¹
Reclassification of contingent
consideration deemed as
remuneration from equity to
liabilities
Credits for consideration related
to acquisitions²
Payments³
Currency movements
Balance at 31 July
Current
Non-current
Total
4,320
10,623
–
(14,537)
(229)
8,427
4,849
3,578
8,427
–
–
(40)
(673)
(4)
132
106
26
132
4,320
6,005
10,623
(40)
(15,210)
(233)
8,559
4,955
3,604
8,559
–
–
–
357
8,250
6,346
1,904
8,250
–
–
–
849
–
–
Total
1,888
6,005
–
849
–
357
849
9,099
598
251
849
6,944
2,155
9,099
1 The total charge for the period, recorded as an adjusting item in the Consolidated Income Statement, is £9.9 million. Of this, £4.3 million is recorded as a liability and
£3.9 million recorded within equity. The remaining £1.7 million relates to the derivative, which economically hedged the currency exposure on deferred payments for the
Cascade Data Labs acquisition.
2 Relates to £0.1 million in respect of additional cash consideration in the year for the Melon acquisition in May 2022, netted against deferred consideration adjustments
credits relating to prior period acquisitions.
3
In addition to the £15.2 million noted above, £1.7 million was paid in respect of a derivative, which economically hedged the currency exposure on deferred payments for
the Cascade Data Labs acquisition.
240 |
kinandcarta.com
Building a world that works better for everyone
| 241
Financial StatementsNotes to the consolidated financial statements continued 19. Contingent and deferred consideration payable (continued)
Contractual commitments for consideration linked to acquisitions
At 31 July 2023, expected future payments accounted for, in relation to prior and current period acquisitions,
were £8.6 million, of which the entire balance was accrued as a financial liability. This followed a reclassification to
financial liabilities in the current year from the share option reserve within equity, as management now expects that
all future payments in respect of amounts outstanding on past acquisitions will be settled in cash. Further amounts
of £6.6 million, estimated at the exchange rates prevailing at 31 July 2023, are expected to accrue up to FY26 in
respect of past acquisitions, based on assumptions for time and performance vesting conditions.
Accrued charges at 31 July 2023 and estimated future charges to the Consolidated Income Statement in respect of
deemed remuneration for prior acquisitions, valued at the exchange rates prevailing at 31 July 2023, are detailed below:
Balance at 31 July 2023
Expected charged to the
Consolidated Income
Statement:
FY24
FY25
FY26
Total
Cascade
£’000
4,395
Octain
£’000
379
Loop
£’000
716
Melon
Group
£’000
2,469
Kin and
Carta Data
£’000
600
883
120
–
5,398
233
88
–
700
240
55
–
1,011
1,073
180
–
3,722
2,401
1,140
147
4,288
Total
£’000
8,559
4,830
1,583
147
15,119
Estimated future amounts payable for acquisitions, at the exchange rates prevailing at 31 July 2023, are detailed
below:
Period of acquisition
Acquired entity
Expected acquisition payments
FY24
FY25
FY26
Total estimated payments
payable after 31 July 2023
FY21
Cascade
£’000
2,699
2,699
–
5,398
FY22
Octain
£’000
–
700
–
700
FY22
Loop
£’000
FY22
Melon Group
£’000
594
417
–
2,573
1,149
–
FY23
Kin and
Carta Data
£’000
–
2,144
2,144
Total
£’000
5,866
7,109
2,144
1,011
3,722
4,288
15,119
End of final measurement period
Dec 2022
Dec 2024
Dec 2023
Dec 2023
Sep 2024
With the exception of Kin and Carta Data, which is determined in British Pounds, all other payments shown have
been, or will be, determined initially in US Dollars or Euros and are, therefore, subject to future currency fluctuations
when measured in British Pounds. Total amounts for each acquisition are subject to contractual maximum caps set
in British Pounds.
Where amounts payable are dependent on future performance, the figures are based on best estimates of such
performance. Amounts eventually payable may be higher or lower. The estimated maximum amount payable
(based on exchange rates at 31 July 2023) if all businesses were to perform to a level corresponding to their
respective contractual caps, is GBP 22.5 million. The earnout measurement periods, corresponding to the period
of determination of amounts payable based on business performance metrics, and excluding employment service
conditions on seller recipients, are still running for all acquisitions other than Cascade, and will come to an end on
the dates shown above. Extended employment service conditions means that vesting extends beyond those dates
19. Contingent and deferred consideration payable (continued)
for a portion of the amounts shown. Amounts already paid at completion and contingent amounts, which have
already been settled at 31 July 2023 for the acquisitions noted above, are not included in the table.
In accordance with IFRS 2, amounts related to payments in respect of future contingent payments are recorded
within current liabilities and non-current liabilities at the balance sheet date, based on the current likelihood that all
amounts will be settled in cash, and the vesting periods associated with the contingent consideration amounts.
The Company’s decision to pay in equity or cash is based on considerations of relative earnings dilution, capital
allocation and optimisation of the Group’s bank leverage. Taking into account these factors, in H1 FY23, a decision
was made to settle all amounts 100% in cash for:
•
•
the first instalment of the year two earn out of Cascade Data Labs, corresponding to 50% of the total year two
earn out, which was paid in February 2023
the first earn out for Loop, of which 50% was paid in May 2023, with the remaining 50% payable equally in FY24
and FY25.
•
the first earn out for Melon Group, of which 50% was paid in July 2023, with the remaining 50% payable in FY24
It had been previously assumed at 31 July 2022 that a portion of these amounts, ranging from 60% to 75%
depending on the acquisition, would be equity-settled. Following the decision in H1 FY23 to settle all of the amounts
above 100% in cash, amounts of £6.2 million recorded in equity at 31 July 2022 were reclassified from equity to
current and non-current liabilities at 31 January 2023. In H2 FY23, it was determined that the most likely method of
settlement for future earn outs on the acquisitions shown would be cash, thus in H2 FY23, an additional £4.4 million,
which was recorded in equity at 31 July 2022, was reclassified to current and non-current liabilities, resulting in a
total reclassification for the year of £10.6 million. At 31 July 2023, there are no amounts recorded in equity in respect
of future payments for past acquisitions.
Subsequent to the year end, an amount in respect of the second instalment of the year two earnout for Cascade
Data Labs of GBP 2.7 million was settled in cash.
Although the balance sheet classification at 31 July 2023 reflects what is currently assessed to be the most likely
form of settlement, with the exception of the Cascade Data Labs payment made in September 2023, no final
decision has been made as to the split between equity and cash for settlement of the further remaining earn out
amounts payable for Cascade Data Labs, Melon Group, Loop and Kin and Carta Data, and the Company retains the
option to settle between 60% and 75% of such further amounts payable in shares of Kin and Carta plc, at its sole
discretion. Should the final decision result alternatively in equity settlement, there would be a reclassification from
liabilities to equity.
242 |
kinandcarta.com
Building a world that works better for everyone
| 243
Financial StatementsNotes to the consolidated financial statements continued 20. Other financial assets
Trade and other receivables
Trade receivables
Accrued income (contract assets)
VAT receivable
Other receivables
Prepayments and other assets
2023
£’000
16,023
11,676
156
210
3,367
31,432
2022
£’000
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. Trade
receivables and contract assets included in the balance sheet are shown net of expected credit losses and an
allowance for expected credit notes in respect of service issues, which are recorded against revenue.
Set out below is information about the credit exposure on the Group’s contract assets and trade receivables,
detailing the provision for expected credit loss and credit notes:
As at 31 July 2023
Contract
assets
Total
£’000
Current
£’000
<60 days
£’000
Trade receivables
Days past due
60-89
days
£’000
90-120
days
£’000
Contract assets
and trade
receivables
>120 days
£’000
Total
£’000
Total
£’000
Expected credit loss
rate
Estimated total gross
carrying amount
Provision for expected
credit loss
Provision for credit
notes
Carrying amount per
the balance sheet
As at 31 July 2022
Expected credit loss
rate
Estimated total gross
carrying amount
Provision for expected
credit loss
Provision for credit
notes
Carrying amount per
the balance sheet
244 |
2.0%
4.3%
4.6%
3.0%
2.6%
70.4%
5.9%
4.3%
11,915
13,358
3,506
233
152
422
17,671
29,586
(239)
(568)
(161)
–
(451)
(119)
(7)
(8)
(4)
(5)
(297)
(1,037)
(1,276)
(28)
(611)
(611)
11,676
12,339
3,226
218
143
97
16,023
27,699
Contract
assets
Total
£’000
Current
£’000
<60 days
£’000
Trade receivables
Days past due
60-89
days
£’000
90-120
days
£’000
>120 days
£’000
Total
£’000
2.6%
7.8%
5.6%
3.0%
3.9%
14.1%
6.9%
Contract assets
and trade
receivables
Total
£’000
5.5%
15,602
17,998
9,373
1,610
395
718
30,094
45,696
(407)
(1,397)
(526)
(49)
(15)
(101)
(2,088)
(2,495)
–
(842)
–
–
–
(66)
(908)
(908)
15,195
15,759
8,847
1,561
380
551
27,098
42,293
20. Other financial assets (continued)
The movement in the allowance for expected credit losses of trade receivables and contract assets, and provisions
for expected credit notes against revenue in respect of service and other client issues, is as follows:
Balance at 1 August
Additional provisions
Arising through acquisitions
Disposal of businesses
Unused amounts reversed
Utilised during the year
Currency movements
Balance at 31 July
2023
£’000
2022
£’000
Expected
credit losses
Provision for
credit notes
Expected
credit losses
Provision for
credit notes
(2,495)
(348)
(908)
(1,533)
–
–
1,527
45
(5)
(1,276)
–
–
–
1,802
28
(611)
(2,164)
(371)
(209)
27
249
–
(27)
(2,495)
(11)
(841)
(7)
–
–
11
(60)
(908)
The reversal of unused amounts during the year arises primarily as a result of the decrease in the gross trade
receivables balance and an improvement in the ageing profile of receivables.
Cash and cash equivalents
Cash and cash equivalents
2023
£’000
9,847
2022
£’000
12,609
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.
21. Derivative financial instruments
Derivative financial assets
Forward foreign currency contracts
Derivative financial liabilities
Forward foreign currency contracts
2023
£’000
31
2023
£’000
–
2022
£’000
2
2022
£’000
454
All forward foreign currency contracts are designated and effective as hedging instruments. Further disclosures can
be found under note 29.
kinandcarta.com
Building a world that works better for everyone
| 245
Financial StatementsNotes to the consolidated financial statements continued 22. Trade and other payables
25. Provisions
Trade payables
Accruals for goods and services
VAT payable
Employee related taxes
Other employee-related liabilities
Other payables
2023
£’000
3,249
6,181
2,026
1,410
10,449
219
23,534
2022
£’000
4,693
7,713
2,033
1,411
16,632
486
32,968
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
23. Loans and borrowings
Non-current liabilities
Bank loans– revolving credit facility
2023
£’000
29,815
29,815
2022
£’000
13,148
13,148
Bank loans – revolving credit facility
The Group’s revolving multi-currency credit facility of £85.0 million is committed to 26 September 2026. Up to
£10.5 million can be drawn as an overdraft facility. As at 31 July 2023, interest on loan drawdowns is charged at a
currency-specific interbank reference rate (SOFR/SONIA) plus a margin, which is linked to the leverage ratio of the
Group, calculated on 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 are charged at an average rate of 2.00% (2022: 2.00%)
over the UK base rate.
At 31 July 2023, the Group’s outstanding loans within this facility were £29.8 million (2022: £13.1 million), leaving an
unutilised commitment of £55.2 million (31 July 2022: £71.9 million).
The Directors consider that the carrying amount of the loans approximates to their fair value.
Changes in loans and borrowings in the year were as follows:
2022
£’000
Drawdown
£’000
Acquisition
£’000
Repayment
£’000
Foreign
exchange
gains
£’000
2023
£’000
13,148
26,672
421
(8,809)
(1,617)
29,815
Bank loans – revolving credit
facility
24. Deferred income
Deferred income (contract liabilities)
For further information on deferred income, refer to note 3.
Provision for
repairs
£’000
Provision for
reorganisation
£’000
225
1,021
41
–
–
–
–
1,287
1,012
275
1,287
4,458
6,037
–
(5,188)
(4,228)
51
(158)
972
972
–
972
Provision
for client
disputes and
litigation
£’000
–
4,903
–
(4,903)
–
–
–
–
–
–
–
Total
£’000
4,683
11,961
41
(10,091)
(4,228)
51
(158)
2,259
1,984
275
2,259
Balance at 1 August 2022
Charged to the Consolidated Income Statement
Acquisition of businesses
Utilised during the year
Unused amounts reversed
Notional interest charge on provisions
Currency movements
Balance at 31 July 2023
Current
Non-current
Total
Provision for repairs
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 FY24 and FY26. Also included are provisions for Kin and Carta’s obligations as a lessor to
reimburse certain tenant maintenance costs under the lease in respect of the investment property, which are
classified as current.
Provision for reorganisation
The provision for reorganisation comprises staff redundancy, onerous property and other costs. The provision will
be utilised when the restructuring completes or where the obligations associated with onerous properties are fully
discharged.
Provision for client disputes and litigation
The provision for client disputes and litigation during the year related to settlements payable to two clients, as
detailed in note 7. These were provided for at H1 FY23 and paid during H2 FY23.
26. Deferred tax
Deferred tax assets and liabilities are offset against each other when they relate to income taxes levied by the same
tax jurisdiction and when the Group intends, and has the legally enforceable right, to settle its current tax assets
and liabilities on a net basis. Deferred tax assets and liabilities are classified in the Consolidated Balance Sheet as
follows:
2023
£’000
3,479
2022
£’000
5,159
Deferred tax assets
Deferred tax liabilities
1 The 31 July 2022 balance sheet has been restated in respect of a change in accounting policy for investment property to move from a cost model to a fair value model, which
has been applied retrospectively. Following the change, the basis for the valuation of deferred tax changed to assume a sales scenario. Refer to note 1 for further details.
2023
£’000
(4,678)
2,196
(2,482)
Restated¹
2022
£’000
(7,625)
10,500
2,875
246 |
kinandcarta.com
Building a world that works better for everyone
| 247
Financial StatementsNotes to the consolidated financial statements continued 26. Deferred tax (continued)
Deferred tax assets and liabilities are measured at the tax rates that are expected to prevail at the point at which
the related temporary differences reverse, based on the manner in which the related assets are expected to be
recovered or liabilities settled. At 31 July 2023, deferred tax balances in the UK are recognised at the UK corporation
tax rate of 25% and balances in the US are recognised at the rate of 28.17%, which includes the federal rate of 21%
and the US state level income tax rates, which vary from 0% to 9.5%.
The Group operates the St Ives Defined Benefit Pension Scheme (the “Scheme”) with assets held in separate
trustee administered funds. The Scheme has a net accounting surplus of £13.0 million (2022: £38.7 million) on an
IAS 19 basis. The Company expects to recover this asset through a reduction in future cash contributions payable
to the Scheme, reducing the UK corporation tax deductions associated with such contributions. Accordingly, the
deferred tax liability has been valued at the UK statutory corporation tax rate of 25%.
Deferred tax assets are recognised based on forecasts of future taxable profits that are expected to be available to
offset the reversal of the associated temporary differences, within the Group’s planning horizon of three years.
Unrecognised deferred tax assets
Deferred tax assets have not been realised in respect of the following items because it is not considered probable
that future taxable profits, within the Group’s planning horizon of three years, will be available to offset the reversal
of the associated temporary differences. All of these items have an unlimited life.
US goodwill
Other deductible temporary differences
Capital losses
2023
£’000
2022
£’000
Gross
amount
Estimated
tax benefit
31,062
3,107
18,711
52,880
8,750
875
4,678
14,303
Gross
amount
36,017
–
15,357
51,374
Estimated
tax benefit
10,268
–
3,839
14,107
The deductions in respect of the amortisation of US goodwill for tax are available over a 15-year period. The deferred
tax asset recognised at the balance sheet date is based on the Group’s planning horizon of three years and the
unrecognised amounts above correspond to the potential deductions beyond that time horizon, and they extend
out to 2038. The other deductible temporary differences are in respect of the unrelieved portion of historical
interest costs in the US. These can be carried forward indefinitely and set off against future profits subject to
limitations in individual years, but are unlikely to be utilised within the Group’s three-year planning time horizon.
26. Deferred tax (continued)
The individual movements in deferred tax liabilities/(assets) are as follows:
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
Goodwill
£’000
Acquired
intangible
assets
£’000
Total
£’000
Balance at 1 August
2021 (as reported)¹
Prior year adjustment
(note 1)
Balance at 1 August
2021 (restated)¹
(421)
3,363
(879)
–
(1,300)
3,363
Disposal of businesses
(82)
–
Charge/(credit) to the
Consolidated Income
Statement (restated)¹
Items taken directly to
Other Comprehensive
Income
Items taken directly to
equity
Acquisition-related
233
135
–
–
–
6,210
–
–
–
77
–
77
–
–
–
–
–
–
–
–
–
–
(599)
(1,764)
(3,496)
3,246
406
–
–
–
–
(879)
(599)
(1,764)
(3,496)
3,246
–
–
–
–
(473)
(82)
(103)
(1,525)
(242)
444
(2,015)
(3,073)
–
–
–
–
–
–
–
–
–
(250)
–
–
–
–
–
–
(2,053)
3,074
(744)
347
6,210
(250)
1,021
(478)
Currency movements
(81)
Balance at 31 July
2022 (restated)¹
Charge/(credit) to the
Consolidated Income
Statement
Items taken directly to
Other Comprehensive
Income
Items taken directly to
equity
Acquisition-related
Currency movements
Balance at 31 July
2023
Balances by
jurisdiction:
United Kingdom
United States of
America
Bulgaria
Other
(1,230)
9,708
77
(103)
(2,124) (2,256)
(5,849)
4,652
2,875
1,315
607
24
(1,834)
765
476
601
(2,267)
(313)
–
–
–
146
231
(7,074)
–
–
–
–
–
–
–
(129)
–
–
–
–
–
(13)
170
–
1,045
–
112
–
–
–
350
– (7,203)
–
1,045
507
(158)
507
607
3,241
101
(2,079)
(1,189)
(623)
(4,898)
2,734 (2,482)
208
3,241
101
(1,817)
(1,031)
(240)
–
1,280
1,742
25
–
(2)
231
–
–
–
–
–
–
(262)
(147)
(383)
(4,898)
999 (4,666)
–
–
(1)
(10)
–
–
–
–
455
454
–
(12)
3,241
101
(2,079)
(1,189)
(623)
(4,898)
2,734 (2,482)
1 The 31 July 2022 balance sheet has been restated in respect of a change in accounting policy for investment property to move from a cost model to a fair value model,
which has been applied retrospectively from 1 August 2021. Following the change, the basis for the valuation of deferred tax changed to assume a sales scenario. Refer to
note 1 for further details.
248 |
kinandcarta.com
Building a world that works better for everyone
| 249
Financial StatementsNotes to the consolidated financial statements continued 27. Retirement benefits
Defined contribution schemes
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 £3.6 million (2022: £4.3 million) represents contributions payable
to these schemes by the Group at rates specified in the rules of the schemes. At 31 July 2023, contributions of
£0.6 million (2022: £1.0 million), due in respect of the 2023 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.
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.
A full actuarial valuation of the scheme is carried out every three years by an independent actuary for the Trustee.
The last technical valuation prepared by XPS Pensions Limited, at 5 April 2022, showed a technical surplus of
£5.8 million and determined the cash contributions payable by the Group to April 2025.
The bid value of the scheme’s assets, as at 31 July 2023, 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
Price inflation
Expected rate of salary increases
Rate of pension increases
2023
%
5.10
3.15
nil
3.05
2022
%
3.50
3.15
nil
3.05
The mortality rate assumptions are based on published statistics and adjusted for scheme specific experience
reflecting analysis performed at the time of the trustees’ technical actuarial valuation effective 5 April 2022.
Assumed life expectancies for retirement at the age of 65 are as follows:
Members retiring immediately
Members retiring in 20 years time
2023
Male
20.1
21.3
Female
23.0
24.4
2022
Male
20.7
22.0
Female
23.5
25.0
27. Retirement benefits (continued)
The amount recognised in the Consolidated Balance Sheet in respect of the Scheme is as follows:
Present value of defined benefit obligations
Fair value of scheme assets
Net retirement benefit surplus
2023
£’000
2022
£’000
(245,673)
(302,586)
258,637
12,964
341,334
38,748
The lower surplus is due to a decrease in the value of Scheme assets of £82.7 million, driven primarily by the
reduction in the value of the gilt portfolio, which comprises a large proportion of Scheme assets, following the large
increase in UK gilt yields in the period. This was partially offset by a decrease in the Scheme liabilities of
£56.9 million, driven by increases in the AA corporate bond yield, which is used to discount the Scheme liabilities.
On the basis of the assumptions used in the measurement of the technical liability used to determine statutory
funding levels, the Scheme remains fully hedged against interest rate and long-term inflation rate risk. The technical
liability is discounted using gilt yields rather than AA corporate bond yields.
Amounts recognised in the Consolidated Income Statement, in respect of the Scheme as adjusting items, are as
follows:
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)
2023
£’000
715
10,373
(11,749)
–
(661)
2022
£’000
787
6,510
(6,850)
3,884
4,331
Amounts recognised in the Consolidated Statement of Comprehensive Income, in respect of the Scheme, are as follows:
Net measurement gains – changes in financial assumptions
Net measurement losses – experience adjustments
Net measurement gains– changes in demographic assumptions
Return on assets, in excess of interest income recorded in the Consolidated Income
Statement
2023
£’000
60,217
(11,014)
5,542
2022
£’000
102,115
(11,802)
5,986
(83,040)
(75,964)
(28,295)
20,335
250 |
kinandcarta.com
Building a world that works better for everyone
| 251
Financial StatementsNotes to the consolidated financial statements continued 27. Retirement benefits (continued)
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 £94.6 million (2022: £146.0 million) 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.
Market (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.
A sensitivity analysis of the principal assumptions used to measure the defined benefit pension obligation, as at
31 July 2023, 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.
Discount rate
Price inflation
Assumed life expectancy at age 65
Change in assumption
Reduce by 0.25%
Increase by 0.25%
Increase by 1 year
Increase in present value of
defined benefit obligations
£’000
7,896
4,828
9,007
As 31 July 2023, approximately 35% (2022: 40%) of the plan assets were invested in return-seeking assets, providing
a higher level of return over the long term.
27. Retirement benefits (continued)
Changes in the present value of the Scheme obligations are as follows:
Opening defined benefit obligation
Interest cost
Net measurement gains- changes in financial assumptions
Net measurement gains– changes in demographic assumptions
Net measurement losses – experience adjustments
Benefits paid
Past service cost
Closing defined benefit obligation
2023
£’000
2022
£’000
302,586
400,514
10,373
(60,217)
(5,542)
11,014
6,510
(102,115)
(5,986)
11,802
(12,541)
(12,023)
–
3,884
245,673
302,586
The weighted average duration of the defined benefit obligation is approximately 13 years (2022: 16 years).
The Trust Deed provides the Company with an unconditional right to a refund of any surplus at the end of the
Scheme’s duration. Based on these rights, any net surplus in the UK scheme is recognised in full.
A deferred tax liability of £3.2 million (2022: £9.7 million) has been recognised in relation to the retirement benefit
surplus. The Company expects to recover this asset through a reduction in future cash contributions payable to the
Scheme, reducing the UK corporation tax deductions associated with such contributions. Accordingly, the deferred
tax liability has been valued at the UK statutory corporation tax rate of 25%.
Changes in the fair value of the Scheme assets are as follows:
Opening fair value of scheme assets
Interest income on scheme assets
Return on assets, excluding interest income, recorded in the Consolidated Statement of
Comprehensive Income
Employer contributions
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:
Equity instruments
Government bonds
Other debt instruments
Liability hedging derivatives
Cash
Other
252 |
2023
£’000
341,334
11,749
2022
£’000
419,781
6,850
(83,040)
(75,964)
1,850
3,477
(12,541)
(12,023)
(715)
(787)
258,637
341,334
Value at
31 July 2023
£’000
Value at
31 July 2022
£’000
38,100
164,774
40,330
46,514
190,351
53,701
(13,072)
(8,090)
7,907
20,598
16,944
41,914
258,637
341,334
kinandcarta.com
Building a world that works better for everyone
| 253
Financial StatementsNotes to the consolidated financial statements continued 28. Financial instruments
The financial instruments by category and maturity profile are as follows:
28. Financial instruments (continued)
As at 31 July 2022
Financial assets measured at fair value through profit
or loss
Derivative financial instruments
Financial assets measured at amortised cost
Trade and other receivables
Cash and cash equivalents
Financial liabilities at fair value through profit or loss
Derivative financial instruments
Contingent consideration payable- current
Contingent consideration payable- non-current
Financial liabilities measured at amortised cost
Trade and other payables
Deferred income (contract liabilities)
Loans and borrowings
Lease liabilities- current
Lease liabilities- non-current
Deferred consideration payable- current
Deferred consideration payable- non- current
Note
2023
£’000
2022
£’000
Maturity profile
21
20
20
21
19
19
22
24
23
16
16
19
19
31
2 Less than 12 months
31,432
9,847
45,393 Less than 12 months
12,609 Less than 12 months
–
(454) Less than 12 months
(4,849)
(3,578)
(6,346) Less than 12 months
(1,904) More than 12 months
(25,534)
(32,968) Less than 12 months
(3,479)
(29,815)
(2,574)
(8,193)
(106)
(26)
(5,159) Less than 12 months
(13,148) More than 12 months
(2,806) Less than 12 months
(10,052) More than 12 months
(598) Less than 12 months
(251) More 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 and liabilities at 31 July 2023, based on contractual undiscounted receipts and
payments.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual
undiscounted payments:
At at 31 July 2023
Loans and borrowings
Lease liabilities
Contingent and deferred consideration payable
Deferred income (contract liabilities)
Trade and other payables
Within
one year
£’000
In two to
five years
£’000
After
five years
£’000
–
3,124
4,955
3,479
23,534
35,092
29,815
5,730
3,604
–
–
–
4,281
–
–
–
39,149
4,281
Total
£’000
29,815
13,135
8,559
3,479
23,534
78,522
Loans and borrowings
Derivative financial instruments
Lease liabilities
Contingent and deferred consideration payable
Deferred income (contract liabilities)
Trade and other payables
Within
one year
£’000
In two to
five years
£’000
After
five years
£’000
–
454
3,507
6,944
5,159
32,968
49,032
13,148
–
11,714
2,155
–
–
27,017
–
–
–
–
–
–
–
Total
£’000
13,148
454
15,221
9,099
5,159
32,968
76,049
29. Financial risk management
The Group is exposed to currency, credit, interest rate and liquidity risks, which arise in the normal course of
business. Derivative financial instruments are used to hedge exposure to fluctuations in foreign exchange rates.
The Group does not trade in financial instruments nor does it engage in speculative derivative transactions.
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. Treasury risk management is
performed at the Group’s head office.
At 31 July 2023, the Group’s borrowings consisted of loan drawdowns under the Group’s revolving multi-currency
credit facility, which 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.
Interest rate management
An analysis of financial assets and liabilities exposed to interest rate risk by currency is set out below:
Financial assets subject to interest rate risk are as follows:
US Dollar
British Pound Sterling
Euro
Argentine Peso
Other
The Group’s financial assets comprise cash and cash equivalents, all of which attract interest.
2023
£’000
4,883
3,026
662
372
904
2022
£’000
10,090
788
924
623
184
9,847
12,609
254 |
kinandcarta.com
Building a world that works better for everyone
| 255
Financial StatementsNotes to the consolidated financial statements continued 29. Financial risk management (continued)
Financial liabilities subject to interest rate risk are as follows:
Sterling bank loans
US Dollar bank loans
2023
£’000
6,500
23,315
29,815
2022
£’000
–
13,148
13,148
The Group’s bank liabilities comprise loan borrowings, which bear interest at floating rates based upon Sterling
SONIA and US Dollar SOFR, and overdraft borrowings, which bear interest at floating rates based upon the UK bank
base rate. The Group’s lease liabilities are not subject to interest rate risk.
Interest rate sensitivity analysis
The analysis shows the additional charge to profit before tax in the Consolidated Income Statement that would have
arisen if the amount of the loan liabilities outstanding at the respective balance sheet dates were outstanding for
the entire duration of the respective periods.
Assumed Sterling SONIA change of 1%
Assumed US Dollar SOFR change of 1%
2023
£’000
65
233
2022
£’000
–
131
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 currency risk management
The Group faces foreign currency risk on its exposures on 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 denominated 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.
Foreign currency sensitivity analysis
29. Financial risk management (continued)
The following table shows the estimated effect a 10% adjustment of the British Pound Sterling against the US Dollar
and the Euro would have on Group profit before tax and equity. This sensitivity relates to the impact of retranslation
of entities with a presentation currency of the US Dollar or Euro (including entities that have currencies pegged to
the US Dollar/Euro). A positive number below shows a gain/increase in equity and a negative shows a loss/reduction
in equity.
31 July 2023
USD (10% movement)
Euro (10% movement)
31 July 2022
USD (10% movement)
Euro (10% movement)
Profit or loss
Equity
Strengthening
Weakening Strengthening
Weakening
272
418
(165)
121
(272)
(418)
165
(121)
(1,365)
469
(1,560)
180
1,365
(469)
1,560
(180)
Forward foreign exchange contracts
The Group enters into forward foreign exchange contracts to cover specific foreign currency payments and
receipts. Forward foreign exchange contracts have been used to hedge the exchange rate risk arising from these
commitments, some of which are designated as cash flow hedges. As at 31 July 2023, 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 £30,642. The receipts for intercompany
recharges have been settled since the balance sheet date.
The following table details the forward currency contracts outstanding at the period end:
Buy British Pounds, sell US Dollars (up to 12 months)
1.26
1,891
1,500
1,469
Average contracted
exchange rate
British Pounds: US
Dollars
US Dollars
$’000
Contract
value
£’000
Notional
value
£’000
The following key exchange rates against British Pound Sterling were applied in the financial statements:
Credit risk management
US Dollar
Euro
2023
2022
Average
rate
Year end
rate
Average
rate
Year end
rate
1.21
1.15
1.29
1.17
1.32
1.18
1.22
1.19
The Group’s principal financial assets are bank and cash balances, trade and other receivables and a limited number
of derivatives held to hedge certain Group exposures. These represent the Group’s maximum exposure to credit risk
in relation to financial assets.
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss
to the Group. The Group has procedures to manage counterparty risk. The Group evaluates each new customer and
assesses their creditworthiness before any contract is undertaken.
The typical credit period extended to customers is 30 days. The maximum exposure on trade receivables and
accrued income (contract assets), as at the reporting date, is their carrying value. Credit approvals and other
monitoring procedures are also in place to ensure that follow-up action is taken to recover overdue debts on an
ongoing basis. The Group’s credit risk is limited as the Group maintains credit insurance up to a maximum aggregate
claim in any one year of £7.5 million with an aggregate annual deductible of £0.3 million, of which 90% is insured
over the deductible, subject to certain conditions on individual customers. The ageing of trade receivables that
were past due but not impaired, is shown in note 20.
256 |
kinandcarta.com
Building a world that works better for everyone
| 257
Financial StatementsNotes to the consolidated financial statements continued 29. Financial risk management (continued)
Consideration of expected credit losses
At each reporting date, the Group reviews the estimated recoverability of trade receivables (including contract
assets) on an ageing basis and provides against expected unrecoverable amounts. Experience has shown the level
of historical losses to be relatively low. Credit loss provisioning reflects past experience, economic factors and
client-specific conditions. The Group’s estimated exposure to credit risk for trade receivables and contract assets
is disclosed in note 20 and the detailed accounting policy in note 2.
Liquidity risk management
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, committed
until September 2026. Up to £10.5 million of this facility can be drawn as an overdraft facility. The contractual
maturities of drawn down borrowings are between one and three months, as 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 a currency-specific reference interbank rate (SOFR for loans drawn in
US Dollars or SONIA for loans drawn in Pounds Sterling) plus a margin, which is linked to the level of leverage (the
ratio of net debt to adjusted EBITDA for bank purposes). The margin charged to by our lenders on bank borrowings
throughout 2023 was 1.7%. Interest on overdraft drawdowns is charged at a rate of 2.00% (2022: 2.00%) over the
UK base rate.
The Group is subject to bank covenants on its borrowings, 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 year end, the Group’s leverage ratio for bank covenant purposes was 1.04 times (2022: 0.01 times) against a
maximum limit of 2.5 times, and interest cover was 10.5 times (2022: 18.5 times) against a minimum of four times.
The Group has fully complied with the requirements of these covenants during the year and expects to continue
to do so.
30. Share capital
Issued and fully paid:
Balance at 1 August 2021
Issued during the period
Balance at 31 July 2022
Issued during the period
Balance at 31 July 2023
Ordinary
shares of 10p
each
£’000
Number of
shares
172,545,721
5,414,958
177,960,679
61,318
17,255
542
17,797
6
178,021,997
17,803
All authorised and issued share capital is represented by equity shareholdings. During the period, 61,318 shares
were issued to satisfy share options exercised under the SAYE scheme. These shares were issued at a premium
of £44,983.
31. Additional paid-in capital
Balance at 1 August 2021
Reclassification to retained earnings
Shares issued during the period
Balance at 31 July 2022
Shares issued during the period
Balance at 31 July 2023
Share
premium
£’000
76,085
–
303
76,388
45
76,433
Merger
reserve
£’000
9,190
(5,357)
7,843
11,676
–
11,676
Capital
redemption
reserve
£’000
1,238
–
–
1,238
–
1,238
Total
£’000
86,513
(5,357)
8,146
89,302
45
89,347
The additional paid-in capital includes share premium, merger reserve and capital redemption reserve.
The merger reserve arises from acquisitions made in prior periods. During the prior year, 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 prior period related to the share
premium on share issues for consideration as part of the acquisitions of Loop and Melon Group of £0.6 million and
£7.2 million, respectively.
The capital redemption reserve represents the purchase by the Company of Kin and Carta plc ordinary shares in
prior periods.
Additional details of the shares issued in respect of the SAYE scheme are detailed in note 30.
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:
• The 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 as at 31 July 2023 (31 July 2022: 90,637 shares). In addition, 4,660,263 Kin and Carta plc
ordinary shares (31 July 2022: 2,489,665 shares) were held by the EBT as at 31 July 2023. All shares held in the
EBT are expected to be used to settle awards vesting in the 24 months following the balance sheet date
• The share option reserve, which includes the cumulative charge related to the unvested options granted to
Group’s employees of Kin and Carta plc ordinary shares
• The 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
258 |
kinandcarta.com
Building a world that works better for everyone
| 259
Financial StatementsNotes to the consolidated financial statements continued Notes to the consolidated
financial statements
continued
33. Share-based payments
The Company operates a number of equity-settled share-based payment schemes for certain employees of the
Group.
Long-term Incentive Plan 2010 (“LTIP”)
Executive Directors and employees above a certain band level have been granted nil-cost share options under
the Company’s LTIP programme, as determined by the Remuneration Committee. The options cannot generally be
exercised within the three-year vesting period. For UK participants, awards are generally required to be exercised
within seven years of vesting. For US participants, exercising is automatic at the point of vesting. The options may be
settled by the issue of new shares or by the allocation of shares from the Company‘s Employee Benefit Trust (“EBT”).
The specific performance conditions are detailed further in 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
2023
‘000
2022
‘000
7,591
4,236
(3,046)
(1,824)
6,957
409
73%
7,475
2,745
(1,324)
(1,305)
7,591
210
68%
The fair value of the options granted in the current period under the LTIP scheme 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 at grant (pence)
LTIP
2.26
£nil
3 years
47.66%
2.00%
0.03%
2.25
33. Share-based payments (continued)
CSOP Incentive
Certain employees were granted share options at market value under the Company’s LTIP programme, as
determined by the Remuneration Committee, on 4 September 2020. These options vested on 4 September 2023.
For the UK participants, CSOP options were granted, which have UK personal income tax advantages pursuant to the
provisions of Schedule 4 to the Income Tax (Earnings and Pensions) Act 2003. Participants have seven years from
the date of vesting to exercise these market value options. The options may be settled by the issue of new shares or
by allotment from the EBT.
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 the next three years
2023
‘000
2,145
–
(567)
–
1,578
–
100%
The fair value of the options granted in the prior period under the CSOP scheme 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)
2022
‘000
3,124
–
(785)
(194)
2,145
–
87%
CSOP
0.67
0.67
3 years
52.48%
2.00%
0.03%
0.22
260 |
kinandcarta.com
Building a world that works better for everyone
| 261
Financial Statements Notes to the consolidated
financial statements
continued
33. Share-based payments (continued)
Save As You Earn Share Option Plan (“Sharesave Plan”)
The Company has granted share options to eligible employees under an HMRC-approved all-employee Sharesave
Plan. Employees who participate enter into a savings contract under which they agree to save between £5 and £350
per month (or such limit as may be permitted by the tax legislation governing SAYE schemes from time to time) for
three years. Options cannot be ordinarily exercised within the three years and must be exercised within 12 months
of the end of the three-year period. Options ordinarily are forfeited if the employee leaves the Group before the
options vest. There are no cash settlement alternatives.
A reconciliation of the movement in the share options is shown below:
Number of options
Weighted average
exercise price
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
2023
‘000
465
914
(404)
(61)
914
46
2022
‘000
251
426
(82)
(130)
465
46
2023
2.18
0.80
2.25
–
0.80
–
Estimated % of options vesting in the future years
100%
100%
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)
Employee Share Purchase Plan (“ESPP Plan”)
2022
0.83
2.33
0.83
0.83
2.18
–
SAYE
0.66
0.80
3 years
47.66%
2.00%
0.03%
0.17
The Company has granted share options to eligible employees under an Employee Share Purchase Plan. Details of
the plan are included in the Directors’ Remuneration Report.
A reconciliation of the movement in the related 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
Estimated % of options vesting in the future years
Number of options
Weighted average
exercise price
2023
‘000
138
122
(260)
–
–
–
0%
2022
‘000
161
148
(47)
(124)
138
–
93%
2023
2.72
2.00
2.38
–
–
–
2022
0.92
2.46
0.92
0.94
2.72
–
33. Share-based payments (continued)
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 current period under the ESPP scheme 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 at date of grant (pence)
ESPP
2.35
2.00
1 year
47.66%
2.00%
0.00%
0.63
The options outstanding at 31 July 2023 had an exercise price in the range of £nil to £0.80 (2022: £nil to £2.46) and
a weighted-average contractual life of 1.44 years (2022: 1.35 years).
Share-settled bonus payments
A limited number of US staff received a portion of their bonus linked to substantial out performance for the FY23
year in the form of fully vested shares in Kin and Carta plc. The number of shares used to settle was calculated
based on the average price of £0.86. The related charge included within trade and other payables at 31 July 2023 is
£0.3 million (2022: £nil).
Share-based contingent consideration required to be treated as remuneration
The Group recognised a charge for share-based payments of £3.9 million (2022: £7.7 million) relating to contingent
consideration for acquisitions, which is recorded as part of deemed remuneration within adjusting items (note 7)
under the Americas, Europe and Melon reporting segments.
Share-based payment expense
The Group recognised a total expense in the profit and loss of £3.7 million in the current year (2022: charge of
£3.4 million) relating to equity-settled share-based payments other than in the context of acquisitions. Of this
amount, £3.1 million (2022: £3.1 million) has been recognised as an expense in the share-based payment reserve,
the remaining expense relates to employer tax national insurance and social security contributions associated with
share-based payments and amounts in respect of the share-settled bonus payments. The exercise price of options
outstanding at 31 July 2023 ranges between £nil and £2.45.
262 |
kinandcarta.com
Building a world that works better for everyone
| 263
Financial Statements Notes to the consolidated
financial statements
continued
34. Hedging and translation reserves
Hedging reserve
The hedging 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.
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
Translation reserve
2023
£000
–
2022
£000
(39)
The translation reserve comprises foreign currency differences arising from the translation into British Pounds of the
financial statements of Group entities whose functional and reporting currency is other than British Pounds.
35. Investment in joint arrangement
Balance at 1 August
Disbursement from joint arrangement
Share of results of joint arrangement
Disposal
Currency movements
Balance at 31 July
2023
£000
–
–
–
–
–
–
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. In the prior year, the Group acquired the
remaining 50% of the interest in Loop. Following the purchase of the remaining interest, the results of Loop were
fully consolidated in the Group’s results.
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 year, 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 year.
Remuneration of key management personnel
The remuneration of the Executive and Non-Executive Directors, who are the key management personnel of the
Group, is set out below in aggregate for each of the categories specified in IAS 24 ‘Related Party Disclosures’.
Short-term employee benefits (emoluments)
Post-employment benefits (pension contributions)
Gains on exercise of share awards
Share-based payment charge
2023
£000
1,115
38
1,264
547
2,964
2022
£000
1,640
73
940
623
3,276
Highest paid Director
Remuneration of the highest paid Director was £0.5 million (2022: £1.6 million), including pension contributions
of £0.02 million (2022: £0.06 million). The highest paid Director exercised 125,000 share options in the year
(2022: 287,061).
Further information about the remuneration of individual Directors is provided in the Directors’ Remuneration Report.
Aggregate Executive Directors’ remuneration
Short-term employee benefits (emoluments)
Post-employment benefits (pension contributions)
Gains on exercise of share awards
Share-based payment charge
2023
£000
806
38
1,264
547
2,655
2022
£000
1,360
73
940
623
2,996
Two Directors (2022: two) received part payment into a Group Personal Pension Plan and part payment as cash in
lieu of pension. Two Directors exercised share options during the year (2022: two).
At 31 July 2023, 60,700 ordinary shares of Kin and Carta plc were held by close family members of Chris Kutsor, one
of the Executive Directors (2022: nil).
264 |
kinandcarta.com
Building a world that works better for everyone
| 265
Financial Statements Notes to the consolidated
financial statements
continued
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 2023.
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 as at 31 July 2023, and their results are fully consolidated into the
Group’s Financial Statements.
As of 31 July 2023, the subsidiary undertakings were as follows:
Subsidiaries
Cascade Data Labs, 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 Tehnologii DOOEL Skopje
Solstice Consulting LLC
Solstice Mobile Argentina Srl
SpireMedia, Inc.
Kin and Carta Services UK Limited
Kin and Carta Colombia Holdings S.A.S
Kin and Carta Group Limited
Kin and Carta Americas Holdings LLC
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 Services LLC
Solstice Consulting Argentina LLC
Solstice Consulting Latin America LLC
Kin and Carta Services Bulgaria EOOD
Kin and Carta Data Holdings Limited
Kin and Carta Data Limited
Kin and Carta Data Poland Sp. Z.o.o.
Non-trading subsidiaries
Kin and Carta Advisory LLC
Kin + Carta Limited
Pollen Health (US) LLC
St Ives Pension Scheme Trustees Limited
Note
g
i
k
l, m
a
d, m
c
a
b, m
h
j
d, m
e
f, n
a
k
a
b, m
a
b, m
Place of incorporation
United States of America
Kosovo
Colombia
Greece
England and Wales
United States of America
Scotland
England and Wales
United States of America
Bulgaria
North Macedonia
United States of America
Argentina
United States of America
England and Wales
Colombia
England and Wales
United States of America
England and Wales
United States of America
b, m
United States of America
b, m
United States of America
b, m, o United States of America
United States of America
b, m
United States of America
b, m
Bulgaria
h
Scotland
c
Scotland
c
Poland
p
Place of incorporation
Note
United States of America
b, m
England and Wales
a
United States of America
b, m
England and Wales
a
Nature of business
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Holding company
Holding company
Holding company
Treasury company
Provision of management
services
Provision of management
services
Holding company
Holding company
Holding company
Holding company
Shared service centre
Holding company
Digital transformation
Digital transformation
Nature of business
37. List of undertakings (continued)
a. Registered office: The Spitfire Building, 71 Collier Street, London N1 9BE
b. Registered office: 251 Little Falls Drive, Wilmington DE 19808, United States
c. Registered office: Second Floor, 132 Princes Street, Edinburgh EH2 4AH, Scotland. On 22 September 2022,
Kin and Carta Scotland Limited’s registered office address changed from Exchange Tower, 19 Canning Street,
Edinburgh EH3 8EH.
d. Registered office: 801 Adlai Stevenson Dr, Springfield IL 62703-4261, United States
e. Registered office: Avenida Cabildo 1507, Piso 10, Ciudad Autonoma de Buenos Aires, Argentina. On 3 April 2023,
Solstice Mobile Argentina Srl’s registered office address changed from Solstice Argentina, Aguirre 1169, Ciudad
Autonoma de Buenos Aires, Argentina.
f. Registered office: 1900 W. Littleton Boulevard, Littleton CO 80120, United States
g. Registered office: 1127 Broadway Street NE, Suite 310, Salem OR 97301, United States
h. Registered Office: Sofia 1113, Slatina district, 20 Kosta Lulchev Street, 3rd floor, Bulgaria
i. Registered Office: Bekim Fehmiu Str. Arting Building, 5th Floor, Pristina, Kosovo
j. Registered Office: 1737 Street no. 32, Municipality Centar, Skopje, Macedonia
k. Registered Office: Carrera 7 No. 71-52, Torre-B Piso 10, Bogotá, Colombia. On 27 June 2023, Kin and Carta
Colombia S.A.S’s and Kin and Carta Colombia Holdings S.A.S’s registered office address changed from Carrera 16
#97 Piso 8 Bogotá, 97-46 Edificio Torre, 97 Piso 8, Bogotá, Colombia Barrio Chicó, Colombia.
l. Registered Office: 62 Kifissias Avenue, Maroussi, 15125, Athens, Greece
m. Membership interest
n. Class A Common Stock
o. On 18 October 2022, Kin and Carta Marketing Services (Delaware) LLC changed its name to Kin and Carta
Services LLC.
p. Registered Office: Rzeznicza, No 28, Wroclaw, p.c. 50130, Poland
38. Contingent assets
At 31 July 2023, the Group identified one contingent asset. This related to an insurance claim to reimburse in full
the settlement costs paid in H2 FY23 in relation to a client dispute arising in the year, as detailed further in note 7.
At the year end, the claim was being reviewed by the insurers and as such the outcome and amount was uncertain.
In accordance with IAS 37, the amount has not been recognised in the Group Financial Statements at 31 July 2023.
Following the end of year, and before the approval of these financial statements, the Group’s insurers agreed to
reimburse in full the settlement cost. Insurance proceeds of £3.3 million are expected to be received before the end
of the half year FY24. There were no contingent assets identified as at 31 July 2022.
39. Post-balance sheet events
As noted above, after the year end, the Group’s insurers agreed to reimburse in full the settlement costs paid in H2
FY23 in respect of a client dispute arising in the year, as detailed further in note 7. The insurance proceeds of £3.3
million are expected to be received before the end of the half year FY24 and will be recorded as an adjusting item in
the Consolidated Income Statement in FY24 within the Americas segment.
On 18 October 2023, it was announced that the boards of directors of Kelvin UK Bidco Limited (‘Bidco’), a newly
formed company owned indirectly by funds advised by Apax Partners LLP (‘Apax’), and Kin + Carta had reached
agreement on the terms and conditions of a recommended cash offer made by Bidco to acquire the entire issued
share capital of Kin + Carta (the ‘Acquisition’). The Acquisition is conditional inter alia on approval by the Company’s
shareholders and certain regulatory approvals. Completion of the Acquisition is currently expected to take place in
the first quarter of 2024.
266 |
kinandcarta.com
Building a world that works better for everyone
| 267
Financial Statements Company balance sheet
Company number 01552113
Company statement of
changes in equity
Assets
Tangible assets
Investment property
Investments
Retirement benefit surplus
Non-current assets
Trade and other debtors
Cash and bank balances
Derivative financial instruments
Current assets
Liabilities
Trade and other creditors
Provisions
Derivative financial instruments
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Bank loans
Deferred taxation
Creditors: amounts falling due after more than one year
Net assets
Capital and reserves
Share capital
Share premium account
Other reserves
Profit and loss account
Total equity
Note
5
7
8
13
9
10
11
14
10
12
16
15
15
15
31 July
2023
£’000
52
4,790
181,857
12,964
Restated¹
31 July
2022
£’000
111
4,790
203,853
38,748
199,663
247,502
4,291
4,573
31
8,895
(7,107)
(1,000)
–
(8,107)
788
12,062
2,492
2
14,556
(7,524)
–
(454)
(7,978)
6,578
200,451
254,080
(6,500)
(1,089)
(7,589)
–
(8,553)
(8,553)
192,862
245,527
17,803
76,433
7,034
91,592
17,796
76,389
19,185
132,157
192,862
245,527
1 The Company Balance Sheet at 31 July 2022 has been restated in respect of investment property following a change in accounting policy to move from a cost model to a
fair value model, which has been applied retrospectively. Refer to note 1 for further details.
As permitted by section 408 of the Companies Act 2006, the Parent Company has elected not to present its own
profit and loss account for the year. The loss for the financial year for the Company was £20.4 million (2022 restated
profit: £35.3 million).
These Financial Statements were approved by the Board of Directors and authorised for issue on 1 November 2023.
They were signed on its behalf by:
Kelly Manthey
Chief Executive Officer
Chris Kutsor
Chief Financial Officer
Chief Operating Officer
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
£
’
e
v
r
e
s
e
r
r
e
g
r
e
M
0
0
0
£
’
76,085 9,190
–
–
76,085 9,190
–
–
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
£
’
1,238
–
1,238
–
–
–
–
189
352
–
–
–
Balance at 1 August 2021 (as reported) 17,255
Prior year adjustment (note 1)
–
17,255
Balance at 1 August 2021 (restated)
Profit for the year (restated)
–
Actuarial gain on defined benefits
pension scheme
Total comprehensive income
Dividends paid
Shares issued to settle consideration
for acquisitions
Shares issued to settle employee share
options
Purchase of own shares by Employee
Benefit Trust
Settlement of share-based payment
using own shares
Recognition of share-based payments
in respect of employee share schemes
Recognition of share-based
contingent consideration deemed as
remuneration for a subsidiary
Tax on share-based payments
Reclassification to retained earnings
Balance at 31 July 2022 (restated)
Loss for the year
Other comprehensive income
Actuarial loss on defined benefits
pension scheme net of tax
Total comprehensive expense
Dividends paid
Shares issued to settle employee share
options
Purchase of own shares by Employee
Benefit Trust
Reclassification of share-settled
amount from liabilities
Recognition of share-based payments
in respect of employee share schemes
Recognition of share-based
contingent consideration deemed as
remuneration
Reclassification of contingent
consideration deemed as
remuneration from equity to liabilities
Tax on share-based payments
Reclassification to retained earnings²
–
–
–
17,796
–
–
–
–
–
–
–
–
–
7
–
–
–
17,803
–
–
–
–
–
–
– 7,843
304
–
–
–
–
–
–
–
–
–
–
– (5,357)
76,389 11,676
–
–
–
–
–
–
–
44
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
e
v
r
e
s
e
r
P
O
S
E
0
0
0
£
’
(68)
–
(68)
–
–
–
–
–
(17)
–
–
–
–
–
– (5,593)
–
–
353
–
–
–
–
–
–
–
1,238 (5,325)
–
–
–
–
–
–
–
–
–
–
– 3,872
– (8,395)
–
–
–
–
–
–
362
–
–
–
–
–
n
o
i
t
p
o
e
r
a
h
S
e
v
r
e
s
e
r
0
0
0
£
’
s
e
v
r
e
s
e
r
r
e
h
t
O
0
0
0
£
’
s
s
o
l
d
n
a
t
i
f
o
r
P
¹
t
n
u
o
c
c
a
0
0
0
£
’
0
0
0
£
’
l
a
t
o
T
3,681
–
3,681
–
13,878
–
13,878
–
1,082
75,238 182,456
1,082
76,320 183,538
35,294 35,294
y
r
u
s
a
e
r
T
s
e
r
a
h
s
0
0
0
£
’
(163)
–
(163)
–
–
–
–
–
–
–
–
–
–
–
–
(163)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14,126
14,126
49,420 49,420
(38)
(38)
– 7,843
–
8,195
(1,242) (1,259)
1,098
332
– (5,593)
–
353
3,118
3,118
–
–
–
(5,593)
353
3,118
249
5,953 5,953
249
(5,357)
11,759 19,185
–
–
5,357
5,953
249
–
132,157 245,527
– (20,420) (20,420)
11
11
–
(21,221)
(21,221)
–
– (41,630) (41,630)
(3)
(3)
–
–
–
–
–
–
(1,660) 2,212
(2,211)
52
– (8,395)
–
362
3,128
3,128
–
–
–
(8,395)
362
3,128
–
3,042 3,042
–
3,042
–
–
–
(8,176) (8,176)
(1,045) (1,045)
(3,279) (3,279)
3,769 7,034
(8,176)
–
(1,045)
–
–
3,279
91,592 192,862
268 |
kinandcarta.com
Building a world that works better for everyone
| 269
1 The results for the year to 31 July 2022 have been restated in respect of the restatement of depreciation on investment property following a change in accounting policy to
move from a cost model to a fair value model, which has been applied retrospectively. Refer to note 1 for further details.
2 Following the full vesting in the period of shares, in respect of deferred consideration for the Spire acquisition that were allotted in a prior period, related amounts have
been transferred from the share option reserve to retained earnings.
Balance at 31 July 2023
76,433 11,676
1,238 (9,486)
(163)
Financial Statements
Notes to the Company
financial statements
1. Accounting policies and general information
Kin and Carta plc is a public company limited by shares incorporated and domiciled in the United Kingdom and
registered in England and Wales (company registration number 01552113) under the Companies Act 2006. The
address of the registered office is The Spitfire Building, 71 Collier Street, London N1 9BE.
These Company Financial Statements have been prepared on the going concern basis under the historical cost
convention, 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. The financial
statements are presented in Pounds Sterling as this is the currency of the primary economic environment in which
the Company operates, generally rounded to the nearest thousand, except when otherwise indicated.
Financial Reporting Standard 101 – reduced disclosure exemptions
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework (“FRS 101”). In preparing these financial statements, the Company applies the recognition, measurement
and disclosure requirements of UK-adopted international accounting standards (“Adopted IFRSs”) but makes
amendments where necessary in order to comply with the Companies Act 2006 and has set out below where
advantage of the FRS 101 disclosure exemptions has been taken.
The Company is taking advantage of the following applicable disclosure exemptions permitted by FRS 101 in its
financial statements:
• Cash flow statement and related notes
• Comparative period reconciliations for share capital
• Disclosures in respect of transactions with wholly owned subsidiaries
• The effects of new, but not yet effective, IFRSs
• Disclosures in respect of capital management
As the Consolidated Financial Statements include the equivalent disclosures, the Company has also taken the
exemptions under FRS 101 available in respect of IFRS 2 ‘Share-based Payments’ and certain disclosures required by
IFRS 13 ‘Fair Value Measurement’, and the disclosures required by IFRS 7 ‘Financial Instrument Disclosures’.
The principal accounting policies adopted are the same as those set out in note 2 to the Consolidated Financial
Statements , including the following policies applicable to the Company. The accounting policies set out below,
unless otherwise stated, have been applied consistently to all periods presented in these Financial Statements.
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.
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 that 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 £13.0 million (2022: £38.7 million). A sensitivity analysis can be found in note 27 to
the Consolidated Financial Statements.
1. Accounting policies and general information (continued)
Prior year restatement
IAS 40 permits investment properties to be held at either the cost or fair value model. During the year to 31 July 2023,
there was a change in accounting policy to move from a cost model to a fair value model. The change arose because
management judged that the fair value model was more appropriate as it better reflects the manner of recovery of
value of the asset. The property is well maintained by the current tenant which contributes to sustaining the fair value
of the property. This change in accounting policy has been applied retrospectively from 1 August 2021, being the
beginning of the earliest prior period presented as required by IAS 8.
The previously reported carrying amount at 1 August 2021, under the cost model, was £4.6 million. The fair value,
being the market value as determined by an independent property valuer during July 2023, was £4.8 million. The fair
value thus obtained was also applied as at 1 August 2021 and 31 July 2022 as management’s assessment is that the
fair value would have not been materially different at either date. The difference between the carrying amount as
per the cost model previously adopted and the fair value as at 1 August 2021 is £0.20 million, which is presented in
the profit and loss account within equity as an adjustment to opening equity at 1 August 2021. The difference to the
restatement in the Consolidated Group Accounts of £0.35 million is due to an intra-group profit on the sale of the
property arising in the Company accounts of £0.15 million, which is eliminated on consolidation.
At 1 August 2021, there was a deferred tax liability of £0.88m recognised in respect of the investment property.
Following the change in accounting policy, the treatment assumed basis for the valuation of deferred tax changed
to assume a sales scenario. In line with IAS 12, the change in accounting policy resulted in a deferred tax asset. A full
valuation allowance was taken against the asset. The deferred tax liability was at 1 August 2021 was restated through
the profit and loss account within equity.
These two items result in a total adjustment to equity at 1 August 2021 of £1.08 million. The difference to adjustment
in the Consolidated Group Accounts is due to an intra-group profit on the sale of the property arising in the
Company accounts.
In the prior year to 31 July 2022, £0.27 million depreciation was previously recorded in respect of the investment
property. This has been restated to nil following the accounting policy change. In addition, there was a tax credit
of £0.04 million recorded in the year in respect of deferred tax, which has been restated to nil, resulting in a net
increase in net profit after tax for the prior period of £0.22 million.
Restatement as at and for the prior year ended 31 July 2022
Balance Sheet (extract)
Investment property
Deferred taxation
Net assets
Profit and loss account
Total equity
Profit and loss
Administrative expenses
Income tax charge
Net profit for the year
31 July
2022
(statutory- as
previously
reported)
£’000
Investment
property
accounting
policy change
£’000
31 July
2022
(statutory-
restated)
£’000
4,318
(9,387)
244,221
130,851
244,221
(12,055)
90
35,070
472
834
1,306
1,306
1,306
269
(45)
224
4,790
(8,553)
245,527
132,157
245,527
(11,786)
45
35,294
270 |
kinandcarta.com
Building a world that works better for everyone
| 271
Financial Statements Notes to the Company
financial statements
continued
1. Accounting policies and general information (continued)
Restatement as at 1 August 2021
Balance Sheet (extract)
Investment property
Deferred taxation
Net assets
Profit and loss account
Total equity
1 August
2021
(statutory- as
previously
reported)
£’000
Investment
property
accounting
policy change
£’000
1 August
2021
(statutory-
restated)
£’000
4,587
(2,530)
182,456
75,232
182,456
203
879
1,082
1,082
1,082
4,790
(1,651)
183,538
76,314
183,538
2. (Loss)/profit of the Parent Company
The Company has taken advantage of section 408 of the Companies Act 2006 and, consequently, the Statement of
Comprehensive Income (including the profit and loss account) of the Parent Company is not presented as part of
these accounts. The loss for the financial year for the Company was £20.4 million (2022 restated profit: £35.3 million).
3. Auditors’ remuneration
The auditor’s remuneration for audit and other services is disclosed in note 5 to the Consolidated Financial
Statements.
4. Employee information
The average monthly number of employees (including Executive Directors) was:
Administration
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs
2023
Number
86
2022
Number
74
2023
£’000
8,149
489
177
8,815
2022
£’000
8,370
432
267
9,069
5. Tangible assets
Cost
At 1 August 2021
Additions
Reclassification from software
At 31 July 2022
Additions
At 31 July 2023
Accumulated depreciation and impairment
At 1 August 2021
Charge for the year
Reclassification from software
At 31 July 2022
Charge for the year
At 31 July 2023
Net book value
At 31 July 2022
At 31 July 2023
6. Intangible assets
Cost
At 1 August 2021
Reclassification to plant and machinery
At 31 July 2022 and 31 July 2023
Accumulated amortisation and impairment
At 1 August 2021
Reclassification to plant and machinery
At 31 July 2022 and 31 July 2023
Net book value
At 31 July 2022 and 31 July 2023
Plant and
machinery
£’000
Total
£’000
–
124
140
264
16
280
–
34
119
153
75
228
111
52
–
124
140
264
16
280
–
34
119
153
75
228
111
52
Software
£’000
Total
£’000
140
(140)
–
119
(119)
–
140
(140)
–
119
(119)
–
–
–
272 |
kinandcarta.com
Building a world that works better for everyone
| 273
Financial Statements Notes to the Company
financial statements
continued
7. Investment property
The investment property is a commercial building in the UK that is leased to a third party. The remaining lease
length is 45 years, with a break clause in April 2025 and every five years thereafter. The break clause in April 2025 is
not expected to be exercised. For further detail, refer to note 17 of the Consolidated Financial Statements.
At 1 August 2021
Cost
Accumulated depreciation
Net book value (as previously reported)
Adjustment to fair value taken to profit and loss reserve
Fair value at 1 August 2021 (restated)
Fair value at 31 July 2022 (restated)
At 31 July 2023
Investment
property
£’000
7,944
3,357
4,587
203
4,790
4,790
4,790
For further details on the restatement, refer to note 1 of the Company Financial Statements.
Rental income of £0.8 million (2022: £0.8 million) in relation to the investment properties has been recorded to the
profit and loss account in the current year.
8. Investments
All of the below are unlisted investments. Details of the Group’s subsidiaries as at 31 July 2023 are listed in note 37
of the Consolidated Financial Statements.
At 1 August 2021
Capital contributions
Impairments
Loan advances
Loan repayments
Currency movements
At 31 July 2022
Capital contributions
Impairments
Reclassifications
Loan advances
Loan repayments
Currency movements
At 31 July 2023
Shares in
subsidiaries
at cost
£’000
Loans to
subsidiaries
£’000
Total
£’000
175,871
60,703
(780)
12,126
103,831
(50,750)
(330)
12,126
(46,992)
(46,992)
2,925
20,810
(6,656)
2,925
203,853
–
–
(12,430)
(1,760)
7,585
(1,760)
7,585
(15,327)
(15,327)
(64)
(64)
72,040
111,453
(450)
–
–
–
183,043
6,656
(12,430)
–
–
–
–
177,269
4,588
181,857
9. Trade and other debtors
Trade debtors
Amounts owed by Group undertakings
Other debtors
Prepayments and accrued income
Corporation tax receivable
2023
£’000
7
2,106
14
1,804
360
4,291
2022
£’000
36
10,054
102
1,870
–
12,062
Amounts owed by Group undertakings are repayable on demand. They are non-interest bearing and unsecured.
Management has assessed that the estimated credit loss on such balances is insignificant and, on this basis, have
not provided for an expected credit loss on this balance.
10. Derivative financial instruments
Derivative financial assets
Forward foreign currency contracts
Derivative financial liabilities
Forward foreign currency contracts
11. Trade and other creditors
Amounts owing to Group undertakings
Trade creditors
Corporation tax payable
Tax and social security
Other creditors
Accruals and deferred income
2023
£’000
31
2023
£’000
–
2023
£’000
2,474
614
–
243
827
2,949
7,107
2022
£’000
2
2022
£’000
454
2022
£’000
1,248
720
92
227
2,740
2,497
7,524
Amounts owed by Group undertakings are repayable on demand. They are non-interest bearing and unsecured.
274 |
kinandcarta.com
Building a world that works better for everyone
| 275
Financial Statements Notes to the Company
financial statements
continued
12. Bank loans
Amounts falling due after more than one year
Bank loans
2023
£’000
2022
£’000
6,500
–
15. Called up share capital, share premium account and other reserves
Information on share capital, share premium and other reserves and movements during the year is included in notes
30, 31 and 32 of the Consolidated Financial Statements.
16. Deferred tax
Deferred tax assets and liabilities are classified in the Balance Sheet as follows:
The Company has access to the Group’s revolving multi-currency credit facility of £85 million, which is committed
until September 2026. Up to £10.5 million may be drawn as an overdraft facility. As at 31 July 2023, interest on loan
drawdowns is charged at a currency-specific reference interbank rate (SONIA for Pounds Sterling, SOFR for US
Dollars) plus a margin. The margin is linked to the leverage ratio of the Group calculated on 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 in GBP is charged at an average rate of 2.00% (2022: 2.00%) over the UK base rate.
As at 31 July 2023, the Company had a loan of £6.5 million drawn on the facility (2022: £nil). The Group’s
outstanding loans within this facility are detailed in note 23 of the Consolidated Financial Statements.
Deferred tax assets
Deferred tax liabilities
2023
£’000
(2,279)
3,368
1,089
Restated¹
2022
£’000
(1,310)
9,863
8,553
1 The 31 July 2022 balance sheet has been restated in respect of a change in accounting policy for investment property to move from a cost model to a fair value model, which
has been applied retrospectively. Following the change, the basis for the valuation of deferred tax changed to assume a sales scenario. Refer to note 1 for further details.
13. Retirement benefits
Retirement benefit surplus
2023
£’000
12,964
2022
£’000
38,748
The individual movements in deferred tax liabilities/(assets) are as follows:
Accelerated
tax
depreciation
£’000
Retirement
benefit
obligations
£’000
Revenue tax
losses
£’000
Short-term
timing
differences
£’000
Share
options
£’000
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 IAS 19 ‘Employee Benefits’. The IAS 19
disclosures are included in note 27 of the notes to the Consolidated Financial Statements.
14. Provisions
Balance at 1 August 2022
Charged to the Income Statement
Balance at 31 July 2023
Current
Non-current
Total
Provision for
repairs
£’000
–
1,000
1,000
1,000
–
1,000
Total
£’000
–
1,000
1,000
1,000
–
1,000
The provision relates to Kin and Carta’s obligations as a lessor to reimburse certain tenant maintenance costs under
the lease in respect of the investment property, which are classified as current.
Balance at 1 August 2021
(as reported)¹
Prior year adjustment (note 1)
Balance at 1 August 2021
(restated)¹
(Credit)/charge to the Income
Statement
Items taken directly to Other
Comprehensive Income
Items taken directly to equity
Balance at 31 July 2022
(restated)¹
(Credit)/charge to the Income
Statement
Items taken directly to Other
Comprehensive Income
Items taken directly to equity
Balance at 31 July 2023
1,036
(879)
3,275
–
157
3,275
–
–
–
(26)
247
(103)
6,210
–
–
–
Total
£’000
2,530
(879)
(87)
–
(1,694)
–
(87)
(1,694)
1,651
–
–
–
823
941
–
(249)
6,210
(249)
9,732
(103)
(87)
(1,120)
8,553
583
(1,763)
(207)
(44)
(1,435)
(7,074)
–
3,241
–
–
–
–
(1,866)
(294)
–
(7,074)
1,045
(119)
1,045
1,089
–
–
131
(4)
–
–
127
1 The 31 July 2022 balance sheet has been restated in respect of a change in accounting policy for investment property to move from a cost model to a fair value model,
which has been applied retrospectively. Following the change, the basis for the valuation of deferred tax changed to assume a sales scenario. Refer to note 1 for further
details.
Deferred tax assets and liabilities are measured at the tax rates, which are expected to prevail at the point at which
the related temporary differences reverse, based on the manner in which the related assets are expected to be
recovered or liabilities settled, which is the current UK statutory corporation rate of 25%.
276 |
kinandcarta.com
Building a world that works better for everyone
| 277
Financial Statements Notes to the Company
financial statements
continued
16. Deferred tax (continued)
Deferred tax assets are recognised based on forecasts of future taxable profits that are expected to be available
to offset the reversal of the associated temporary differences. The Company’s deferred tax assets at the balance
sheet date are expected to be utilised within the Group’s planning horizon of three years, either against the profit of
the company or available future profits of the UK tax group, through group relief.
The Group operates the St Ives Defined Benefit Pension Scheme (the “Scheme”) with assets held in separate
trustee-administered funds. The Scheme has a net accounting surplus of £13.0 million (2022: £38.7 million) on an
IAS 19 basis. The Company expects to recover this asset through a reduction in future cash contributions payable
to the Scheme, reducing the UK corporation tax deductions associated with such contributions. Accordingly, the
deferred tax liability has been valued at the UK statutory corporation tax rate of 25%.
Unrecognised deferred tax assets
Capital losses
2023
£’000
2022
£’000
Gross
amount
18,511
18,511
Estimated
tax benefit
4,628
4,628
Gross
amount
15,357
15,357
Estimated
tax benefit
3,839
3,839
17. Related party transactions
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.
18. Post balance sheet events
On 18 October 2023, it was announced that the boards of directors of Kelvin UK Bidco Limited (‘Bidco’), a newly
formed company owned indirectly by funds advised by Apax Partners LLP (‘Apax’), and Kin + Carta had reached
agreement on the terms and conditions of a recommended cash offer made by Bidco to acquire the entire issued
share capital of Kin + Carta (the ‘Acquisition’). The Acquisition is conditional inter alia on approval by the Company’s
shareholders and certain regulatory approvals. Completion of the Acquisition is currently expected to take place in
the first quarter of 2024.
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 2023 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 2023 by virtue of section 479A of that Act:
Company
Kin + Carta Limited
Kin and Carta Data Holdings Limited
Kin and Carta Data Limited
Kin and Carta Scotland Limited
Kin and Carta Services UK Limited
Kin and Carta Group Limited
Kin and Carta Investments Limited
Kin and Carta Partnerships Limited
St Ives Pension Scheme Trustees Limited
Company
registration number
11403627
SC468131
SC451730
SC172507
11442056
08417677
00190460
09569438
02286545
Alternative Performance Measures
(“APMs”)
The full year results include both statutory and adjusted results. The adjusted results reflect how management
assesses and monitors the ongoing financial performance of the Group and allows for a consistent and meaningful
comparison from period-to-period and with our peer group.
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 “adjusting items” to reflect the manner in which performance is tracked and assessed
internally by management.
Adjusting items are presented in the middle column of the Consolidated Income Statement. In the opinion of the
Directors, their separate presentation aids understanding of the financial performance of the Group. Adjusting items
include acquisition and disposal-related costs, amortisation of acquired intangibles, impairments, share-based
payment charges, administrative expenses related to St Ives Defined Benefit Pension Scheme, client disputes and
litigation and associated insurance income, and restructuring charges. For further details, refer to note 7 of the
Consolidated Financial Statements.
As adjusted results include the benefits of acquisitions and restructuring programmes but exclude significant costs
(such as significant acquisition costs, share-based payments, legal and major restructuring items), they should not
be regarded as a complete picture of the Group’s financial performance, which is presented in its statutory results.
The exclusion of adjusting items may result in adjusted earnings being materially higher or lower than statutory
earnings. In particular, when significant impairments and amortisation charges, share-based payments, restructuring
charges and legal costs are excluded, adjusted earnings will be higher than statutory earnings.
The key APMs frequently used by the Group for continuing operations are:
Net revenue: This measure is defined as revenue less project-related costs as shown on the Consolidated Income
Statement. Project-related costs comprise primarily of certain third-party expenses directly attributable to a project.
Revenue
Project-related costs
Net revenue
Year to
31 July
2023
£’000
195,870
(3,858)
Year to
31 July
2022
£’000
197,123
(6,846)
192,012
190,277
Like-for-like net revenue at constant currency: This measure is defined as the net revenue from continuing
operations when comparing the current period to the prior period at the constant currency rate of exchange,
excluding the effects of acquisition or disposal.
Europe
Americas
Group
Year to
31 July
2023
£’000
57,246
134,766
192,012
Impact of ¹
acquisitions
£’000
Impact of ²
exchange
movements
£’000
Like-for-like
adjusted net
revenue
£’000
(8,182)
(3,921)
(157)
(9,699)
48,907
121,146
(12,103)
(9,856)
170,053
Year to
31 July
2022
£’000
58,050
132,227
190,277
Like-for-like
adjusted
net revenue
decline %
(15.8%)
(8.4%)
(10.6%)
1 Representing (i) for Loop in Americas and Melon Group in Europe, the net revenue for the period from 1 August 2022 to the one year anniversary of the date of the
respective acquisitions, both of which took place in the prior year, and (ii) for Kin and Carta Data (completed in 2023) the FY2023 post-acquisition revenue.
2 The impact of retranslating 2023 net revenue at the 2022 average exchange rates.
278 |
kinandcarta.com
Building a world that works better for everyone
| 279
Other information Alternative Performance Measures
(“APMs”)
continued
Adjusted operating profit: This measure is defined as the statutory operating profit or loss after adjusting items.
Statutory operating loss
Add back total adjusting items
Adjusted operating profit
Year to
31 July
2023
£’000
Restated¹
Year to
31 July
2022
£’000
(19,279)
(14,086)
37,735
18,456
36,482
22,396
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model which has
been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
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
Add back total adjusting items after tax
Adjusted profit after tax
Year to
31 July
2023
£’000
Restated¹
Year to
31 July
2022
£’000
(18,765)
(13,974)
33,785
15,020
32,731
18,757
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
Like-for-like adjusted operating profit at constant currency: This measure is defined as the adjusted organic
operating profit from continuing operations when comparing the current period to the prior period at the constant
currency rate of exchange, excluding the effects of acquisition or disposal.
Adjusted basic earnings per share from continuing operations: This measure is defined as basic earnings per
share after adjusting items
Europe
Americas
Corporate costs
Group
Year to
31 July
2023
£’000
3,751
19,014
(4,309)
18,456
Impact of ²
exchange
movements
£’000
Like-for-like
adjusted
operating
profit
£’000
Restated³,⁴
Year to
31 July
2022
£’000
Like-for-like
adjusted
operating
profit decline
%
Impact of ¹
acquisitions
£’000
(2,037)
(1,152)
–
(94)
(1,329)
–
(3,189)
(1,423)
1,620
16,533
(4,309)
13,844
4,439
23,508
(5,551)
(63.5%)
(29.7%)
22.4%
22,396
(38.2%)
1 Representing (i) for Loop in Americas and Melon Group in Europe, the results for the period from 1 August 2022 to the one year anniversary of the date of the respective
acquisitions both of which took place in the prior year, and (ii) for Kin and Carta Data (completed in 2023) calculated using the FY23 post-acquisition results.
2 The impact of retranslating 2023 net revenue at the 2022 average exchange rates.
3 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
4 The prior year allocation of corporate costs to the segments have been updated to reflect a change in allocation basis in the current year.
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 before tax
Add back total adjusting items before tax
Adjusted profit before tax
Year to
31 July
2023
£’000
Restated¹
Year to
31 July
2022
£’000
(20,669)
(15,583)
36,499
15,830
36,142
20,559
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
Adjusted profit after tax
Weighted average number of shares (‘000)
Adjusted basic earnings per share (pence)
Year to
31 July
2023
£’000
15,020
173,189
8.67
Restated¹
Year to
31 July
2022
£’000
18,757
173,700
10.80
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
Adjusted operating margin: This measure is defined as the percentage of adjusted operating profit over net revenue.
Net revenue
Adjusted operating profit
Adjusted operating margin
Year to 31 July 2023
£’000
Restated1 Year to 31 July 2022
£’000
Group
192,012
18,456
9.6%
Europe
57,246
3,751
6.6%
Americas
Group
Europe
Americas
134,766
190,277
58,050
19,014
14.1%
22,396
11.8%
4,439
7.6%
132,227
23,508
17.8%
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
280 |
kinandcarta.com
Building a world that works better for everyone
| 281
Other information Alternative Performance Measures
(“APMs”)
continued
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,
as defined in the facility agreement, includes an adjustment to present on a “frozen GAAP” pre-IFRS 16 basis and
a pro-forma adjustment to incorporate the results of acquisitions in the preceding 12-month period that have not
already been consolidated in the Group results.
The adjusted EBITDA for 2022 below has been determined on the basis of continuing and discontinued 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- FY23 presentation basis
2022 share-based payments charge presented within adjusted results
Adjusted EBITDA for covenant purposes as reported to the bank
Year to
31 July
2023
£’000
18,456
13,617
(9,256)
22,817
(2,614)
20,203
–
20,203
Restated¹
Year to
31 July
2022
£’000
22,396
10,278
(6,390)
26,284
(1,518)
24,766
(3,234)
21,532
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which has
been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
Net debt/(cash): This measure is calculated as the total of loans and other borrowings excluding leases, less cash
and cash equivalents.
For the measurement of the bank covenants, cash, cash equivalents and borrowings denominated in currencies
other than Pounds 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.
Cash and cash equivalents
Bank loans
Net debt before covenant adjustments
Foreign exchange difference between spot rate and average rate
Net debt for covenant purposes
Year to
31 July
2023
£’000
9,847
(29,815)
(19,968)
(1,035)
(21,003)
Year to
31 July
2022
£’000
12,609
(13,148)
(539)
353
(186)
Net debt/(cash) to adjusted EBITDA for bank covenant purposes: This measure is calculated by dividing net
debt/(cash) 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
2023
£’000
20,203
(21,003)
1.04
Restated¹
Year to
31 July
2022
£’000
24,467
(186)
0.01
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose following an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
Backlog: 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 less revenue recognised to date.
Adjusted operating cash inflows before movements in working capital: This measure is calculated by adding
back non-cash items included within adjusted operating profit.
Adjusted operating profit
Depreciation of property, plant and equipment
Increase in provisions related to adjusted results
Share of profit from joint arrangement
Disbursement from joint arrangement
Adjusted operating cash inflow from before working capital
Year to
31 July
2023
£’000
18,456
4,361
1,062
–
–
23,879
Restated1
Year to
31 July
2022
£’000
22,396
3,886
32
(442)
147
26,019
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose following an accounting policy change to measure investment property using a fair value model which
has been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
282 |
kinandcarta.com
Building a world that works better for everyone
| 283
Other information Shareholder Information
Glossary
Corporate information
Further information about the Group can be found on our website kinandcarta.com
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
the payment of dividends directly into a bank or building society accounts
Their contact details are: Kin + Carta plc Shareholder Services, Link Group, 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 and
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.
AGM
AI
APM
Articles
AWS
B Corp
Board
CAGR
Annual General Meeting
Artificial intelligence
Alternative performance measure
The articles of association of Kin and Carta plc
Amazon Web Services
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
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
CDS
DEI
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
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)
Diversity, Equity and Inclusion
Deferred Bonus Shares
Dollar or $
Unless otherwise specified, all references to Dollars or $ are to the currency of the US
DX
Edit
eNPS
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
Enterprise client
Enterprise client profiles are c.$1Bn+ in revenue and often multinational businesses.
This includes government-backed Public Sector
EPS
ESG
EU
EVP
EX
Earnings per share
Environmental, social and corporate governance
European Union
Employee value proposition
Employee experience
Executive Directors
The Chief Executive Officer and the Chief Financial Officer and Chief Operating Officer
Forecast Data
Forecast Data Services Limited (now known as Kin and Carta Data Limited), Forecast
Poland sp. z o.o. (now known as Kin and Carta Data Poland Sp. Z.o.o.), and MacDonald
Family Limited (now known as Kin and Carta Data Holdings Limited), acquired by the
Group on 5 May 2023
284 |
kinandcarta.com
Building a world that works better for everyone
| 285
Other information Glossary continued
FRC
Financial Reporting Council
Operations Platform Kin + Carta’s shared service functions, including legal, finance, HR operations, Connective
FTSE All-Share
The aggregation of the FTSE 100, FTSE 250 and FTSE Small Cap indices
GHG
GMP
Greenhouse gas
Guaranteed minimum pensions
Growth Platform
Global sales, marketing and partnerships, which drive Kin + Carta’s growth, market position
and penetration among key target audiences and industry sectors
IAS
IDEA
IFRS
Incite
IT
Kin
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
Information technology
Collective term for Kin + Carta employees
Kin + Carta Americas
or Americas
Cascade Data Labs, Kin and Carta Colombia S.A.S., Loop Integration, Spire, Solstice, and
Solstice Mobile Argentina Srl
Kin + Carta Europe or
Europe
Kin and Carta UK Limited, Melon Group,
Forecast Data and Kin and Carta Greece Μονοπρόσωπ
Μονοπρόσωπηη I.K.E
Kin + Carta or Group
The Company and its subsidiary undertakings
KPI
LatAm
Key performance indicator
Latin America
Loop Integration
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
LTIP
M&A
M&A Platform
MACH
Melon Group
Long-term incentive plan
Mergers and acquisitions
Kin + Carta’s approach to identifying, acquiring and integrating key acquisition target
businesses or intellectual property
Microservices based, API-first, Cloud-native SaaS and Headless ecosystem technology
Kin and Carta Bulgaria EAD (incorporated in Bulgaria), Melon Tehnologii DOOEL Skopje
(incorporated in North Macedonia) and Kin and Carta Kosovo 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, which was acquired by the Group on 22 December
2021 via the purchase of Datorium, LLC
Ops Council
Operating Council, which advises the Chief Executive Officer and Chief Financial Officer
and Chief Operating Officer on matters that have been delegated to them by the Board
to run the business of Kin + Carta and to ensure strong executive alignment on business
priorities and actions.
Digital Services (IT) and business intelligence
People Platform
Kin + Carta’s industry-leading employee value proposition and experience with clear
career paths and progressive learning and development #foreveryone
Platforms
Regions
Relish
Responsibility
Platform
SaaS
Scheme
SEE
Services Platform
Solstice
Spire
Our six platforms (Growth Platform; M&A Platform; Operations Platform; People Platform;
Responsibility Platform; Services Platform) 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
Kin + Carta Americas and Kin + Carta Europe
Relish Agency Limited
Kin + Carta’s 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
Software as a service
St Ives Defined Benefit Pension Scheme
South East Europe
Kin + Carta’s focus on 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
Solstice Consulting LLC (d.b.a. Kin and Carta U.S.), a digital transformation consulting firm,
organised in Illinois
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
Triple bottom line
Giving consideration to people, profit and planet
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.
286 |
kinandcarta.com
Building a world that works better for everyone
Other information i
K
n
a
n
d
C
a
r
t
a
p
c
l
Building a world
that works better
for everyone
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
f
o
r
t
h
e
y
e
a
r
e
n
d
e
d
2
0
2
3
C
o
m
p
a
n
y
n
u
m
b
e
r
:
1
0
5
5
2
1
1
3
Kin and Carta plc
The Spitfire Building
71 Collier Street
London
N1 9BE
Telephone
+44 (0) 20 7928 8844
Email
Website
cosec@kinandcarta.com
www.kinandcarta.com
Find us online @kinandcarta
Company number: 01552113
Building
a world
that works
better for
everyone
Kin and Carta plc
Annual Report and Accounts
For the year ended 31 July 2023
Company number: 01552113
Welcome
to the 2023
Annual
Report
Kin + Carta is a London Stock
Exchange listed global digital
transformation consultancy
working responsibly with
enterprise clients to build a world
that works better for everyone.
Kin + Carta’s 1,800+ 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.
Contents
Overview
Highlights
Our business at a glance
Our purpose framework
Chairman’s statement
Our business proposition
Strategic Report
Chief Executive Officer’s statement
Market overview
Business model
Strategy
Strategy in action - Service lines
Strategy in action - Sectors
Strategy in action - Partners
Our global delivery model
Strategic progress
Key performance indicators
Chief Financial Officer’s review
A responsible business
(including Section 172 statement)
Risk management
Governance
Board of Directors
Governance at a glance
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 auditor's report to the
members of Kin and Carta plc
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated statement of changes in equity
Consolidated balance sheet
Consolidated statement of cash flows
Notes to the Group financial statements
Company balance sheet
Company statement of changes in equity
Notes to the company financial statements
Other information
Alternative performance measures ("APMs")
Shareholder information
Glossary
2
4
6
8
11
14
18
22
24
26
28
30
32
34
36
40
44
112
124
129
132
140
148
152
178
183
186
194
195
196
197
198
200
268
269
270
279
284
285
| 01
We work with enterprise
businesses to deliver
technology, data, and
experience transformation
with a focus on value
creation, inclusion,
and environmental
stewardship.
kinandcarta.com
Building a world that works better for everyone
Overview
Highlights
Financial review
Continuing operations1
Revenue
£195.9m -1%
Net revenue2
£192.0m +1%
Adjusted operating profit3, 4
£18.5m -17%
Adjusted profit before tax3, 4
£15.8m -23%
Adjusted basic earnings per share3, 4
8.7p -20%
Statutory operating (loss)5
(£19.3m)
Statutory (loss) before tax5
(£20.7m)
Statutory basic (loss) per share5
(10.8p)
Net debt (bank covenant basis)6
£21.0m (2022: £0.2m)
ESG highlights
• First double-materiality assessment
• TCFD reporting progress
•
IDEA launched in new markets, now active wherever
Kin + Carta has a presence
Recommended Cash Offer for Kin and Carta Plc
On 18 October 2023, it was announced that the boards of
directors of Kelvin UK Bidco Limited ("Bidco"), a newly formed
company owned indirectly by funds advised by Apax Partners
LLP ("Apax"), and Kin + Carta had reached agreement on the
terms and conditions of a recommended cash offer made by
Bidco to acquire the entire issued share capital of Kin + Carta
(the "Acquisition") . Under the terms of the Acquisition, Kin
+ Carta shareholders will be entitled to receive 110 pence in
cash for each Kin + Carta share, valuing Kin + Carta at £203
million on a fully diluted basis. This represents a premium of
41% to the closing price on 17 October 2023. The Acquisition
is conditional inter alia on approval by the Company's
shareholders and certain regulatory approvals. Completion of
the Acquisition is currently expected to take place in the first
quarter of 2024.
1 All consolidated income statement measures reflect the results from
continuing operations. Discontinued operations in 2022 include the results
of three businesses, Incite, Edit and Relish, which were divested in the
period. Refer to note 8 of the Consolidated Financial Statements for details
of discontinued operations.
2 Net revenue is defined as revenue less project-related costs as shown
on the consolidated income statement. Project-related costs comprise
primarily of certain third-party expenses directly attributable to a project.
3 Adjusted results exclude adjusting items to reflect how management
assesses and monitors the ongoing financial performance of the Group.
Refer to note 7 of the Consolidated Financial Statements for further
details.
4 Adjusted results for the year to 31 July 2022 have been restated to reflect
the reclassification of the share-based payments charge from adjusted
results to adjusting items and the restatement of depreciation on
investment property. The latter arose from an accounting policy change
to measure investment property using a fair value model, which has been
applied retrospectively. Refer to note 1 of the Consolidated Financial
Statements for further details.
5 Statutory results for the year to 31 July 2022 have been restated to reflect
the restatement of depreciation on investment property, which arose
following an accounting policy change to measure investment property
using a fair value model, which has been applied retrospectively.
6 Net debt as a measure for bank covenant purposes. The reconciliation and
definition is set out in the adjusted performance measures section.
7 Like-for-like growth in relation to net revenue is defined as the net
revenue from continuing operations at constant currency and excluding
acquisitions when comparing the current period to the prior period.
8 The reconciliation and definition is set out in the adjusted performance
measures section.
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 weighted value
of the qualified and targeted sales funnel.
Financial review
Operational review
• Net revenue² of £192.0 million from continuing operations
up 1% year-on-year (“YoY”) and down 11% on a like-for-
like7 basis (“LFL”) due to macroeconomic challenges
• Net revenue from key financial services,
public sector, and agriculture industry
sectors grew 21% YoY
•
•
•
•
•
•
•
•
•
Americas net revenue² grew 2% YoY (8% decline on a
LFL basis7) to £134.8 million, representing 70% of Group
net revenue
Europe net revenue² declined 1% YoY (16% decline on a
LFL7 basis) to £57.2 million, representing 30% of Group
net revenue
Sales backlog9 of £97 million, up 1% YoY, sales pipeline9
of £110 million (FY22: £174 million) down in total, but up
on a like-for-like basis which excludes the prior year’s
two unusually large but low probability opportunities in
the UK
Adjusted operating profit3 of £18.5 million (FY224: £22.4
million) reflecting previously announced market volatility
and headwinds
Statutory operating loss of £19.3 million (FY225: loss £14.1
million) driven by non-cash goodwill impairment in the UK
and acquisition-related charges of £34.1 million which are
recorded as adjusting items
Adjusted EBITDA3 £22.8 million (FY224: £26.3 million)
Statutory basic loss per share was 10.8p (FY225: 8.0p
loss). Adjusted basic earnings per share3 decreased by
20% from prior year to 8.7p4
Adjusted operating cash inflow before working capital,
interest and tax8 of £23.9 million (FY22: inflow of £26.0
million)
Statutory operating cash outflow before working capital,
interest and tax of £1.1 million (FY22: inflow of £19.2
million). Reduction driven by FY23 acquisition-related
deemed remuneration payments of £16.2 million (FY22:
nil) and FY23 customer litigation costs of £3.6 million
(FY22: £0.4 million)
• Net debt for bank covenant purposes6 of £21.0 million
(FY22: £0.2 million); net debt to adjusted EBITDA ratio 1.04
times (FY22: 0.01 times)
• The Group’s client concentration
increased year on year. This includes the
Company’s largest client which comprises
25% of total net revenue compared to 12%
in prior year
• The market slowed significantly in
Q2, presenting fewer new business
opportunities as companies scrutinised
their project spending. Widespread
macroeconomic volatility led to extended
sales cycles, cautious client spending, and
intense competition
• New client wins including America's
largest automotive manufacturer,
Japanese multinational technology
company, S&P 400 automotive group, US
National Veterinary Associates and £44.2
million of UK Public Sector contracts
• Acceleration of margin efficient nearshore
delivery in Latin America and South East
Europe to 40% of total delivery headcount
• c.£2 million annualised reduction in selling
and admin costs improves cost structure
• Data & AI proposition scaled as priority
launch partner for Google’s generative
AI platform, and as one of the first
businesses to access Microsoft’s
generative AI platform
• Kin + Carta awarded 2023 Google Cloud
Industry Solution Services Partner of
the Year Award for Retail Digital Growth,
and Sustainability Changemaker 2023
Microsoft US Partner of the Year Award
• Completion of Forecast Data Services
acquisition, deepening data & AI
capabilities
• Successful execution of Double
Materiality Assessment and further ESG
improvements
02 |
kinandcarta.com
Building a world that works better for everyone
| 03
Overview Our business at a glance
Kin + Carta is a digital
transformation consultancy
We provide high-value digital transformation services
to enterprise clients, using an efficient distributed
delivery model, in partnership with the world’s leading
technology companies.
Providing business
critical technology
and data services
For more info
see page 22
Identify, prioritise and
plan digital innovation and
investments
Maximise the potential
of data and artificial
intelligence
Strategy + Innovation
Data + AI
Build and modernise
mission critical cloud
applications
Design and build
intelligent experiences
powered by data
Support, grow and
optimise valuable digital
assets
Cloud + Platforms
Experience + Product
Managed Services
Net revenue by enterprise1
Net revenue by sector1
10%
Revenue from
enterprise clients*
Revenue from
non-enterprise clients**
10%
4%
3%
4%
7%
36%
90%
14%
22%
Financial services
Retail and distribution
Industrials and agriculture
Transportation
Public sector
Healthcare
Technology, digital and media
Other
* Enterprise client profiles are c.$1Bn+ in revenue and often multinational businesses.
This includes government-backed Public Sector.
** Non-enterprise client profiles are smaller in size than enterprise clients and are
high-potential catalysts to new technologies, new sectors, or new markets.
1 Continuing operations only. Discontinued operations in 2022 include the results of three businesses, Incite, Edit and Relish, which were divested in the period.
Refer to note 8 of the Consolidated Financial Statements for details of the discontinued operations.
With over 1,800 Kin across
three continents
Onshore
High-touch sales, consultancy
and domestic delivery
Nearshore
Scalable, margin-efficient,
high-quality delivery
Portland
Chicago
Denver
Colombia
Argentina
Americas
600
Onshore Kin
390
Nearshore Kin
58%+
Engineers
For more info
see page 32
Working in a diverse and
inclusive engineering culture
London
Manchester
Liverpool
Edinburgh
Bristol
New York
Netherlands
Greece
Bulgaria
North Macedonia
Kosovo
Poland
Europe
500
Onshore Kin
350
Nearshore Kin
61%+
Engineers
Why Kin + Carta?
• Digitally native
consultancy built to
change and adapt
• Market leading
data and advanced
artificial intelligence
capabilities
• Experts in modern
software design and
engineering
• Small enough to pivot
quickly to changing
market needs
• Large enough to take
on our client's biggest
challenges
• High-value domestic
consultancy with
margin efficient
nearshore delivery
• Partnered with the
world's leading
technology companies
• Social responsibility
as a supply and
demand differentiator
04 |
kinandcarta.com
Building a world that works better for everyone
| 05
Overview
Our purpose framework
Purpose: Building a world that works
better for everyone
We use business as a force for good, measuring our impact on
people, planet and profit, and ensuring inclusivity, sustainability
and accessibility are integrated in what we do and how we do it.
G
Governance
We have committed to continuous inquiry of what responsible
business can achieve as we serve all of our stakeholders.
We are legally accountable to this commitment having
changed our articles of association to become the first B Corp
certified company on the London Stock Exchange.
S
P e o p l e
Social
Empowered by people
Kin + Carta is committed to the continuous
development of our talent teams by instilling
the IDEA philosophy and principles that drive
inclusion, diversity, equity and accessibility in the
workplace.
Our values
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 to 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.
E Environmental
S Social
G Governance
E
t
e
n
a
l
P
Environmental
Respecting our planet
Understanding our contribution to
global warming and other planetary
crises is core to responsible
business conduct. Measuring
and managing our own emissions
is the foundation upon which
greater positive environmental
impact will be built.
P
r
o
f
i
t
Responsible return
Our clients want to work
with businesses that reflect
their values and operate
in a responsible way. Kin
+ Carta’s purpose and B
Corp status are demand and
supply differentiators that
help fuel the growth of
the business.
Our cultural
framework
Across Kin + Carta, we make a
significant investment in creating
a values-based environment that
supports and develops our people.
This empowering approach sets our
people up to consult with our clients for
the highest impact to customers and
communities, with a keen emphasis on
continuous improvement and learning at
the level of both IQ and EQ.
EVP
Purpose
& culture
Professional
growth
Personal
wellbeing
Recognition
& reward
Our employee value proposition (“EVP”)
is focused on enhancing culture and
employee experience.
For more info
see page 64
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.
For more info
see page 47
Governance
People
Community
Environment
Clients
06 |
kinandcarta.com
Building a world that works better for everyone
| 07
Overview Chairman’s statement
“ The leadership
team took
action to respond to
swiftly deteriorating
market conditions
by refining the
market focus of the
business and
prioritising client
success.
John Kerr
Chairman
Challenging year
The year proved to be challenging
for the global economy and for
many companies with the effects
of inflation, higher interest rates
and slowing economic growth
creating uncertainty and lowering
confidence. This had a material
effect on the technology services
market as clients re-evaluated
investment levels and pace of
delivery with far more caution and
price sensitivity, which reduced the
predictability and visibility of future
revenue.
Kin + Carta was no exception to
this trend, and the leadership team
took action to respond to swiftly
deteriorating market conditions
by refining the market focus of
the business and prioritising client
success. The team also adjusted
the business model towards lower
cost nearshore delivery centres and
adding critical skills in future-proof
services such as data and artificial
intelligence.
For a business known for its focus
on talent and culture, these steps
have required some very difficult
decisions to be taken to reduce
headcount in some areas. However,
these tough decisions have been
necessary, in order to secure the
future success of our clients and
our people.
It is encouraging that enterprise
businesses remain committed to
long-term digital transformation
roadmaps as they execute
technology-driven plans to remain
competitive. This maintained
demand enables Kin + Carta to
continue to grow pipeline. Although
there are signs that the market
environment is stabilising, we are
minded to be cautious as the
near-term environment remains
unpredictable, as widely reported
across the industry.
Focus on clients
Our continued focus on serving our
clients has served the Company
well. Large enterprise clients
account for an increasing share of
the Company’s revenue, with net
revenue from our top 20 clients
increasing by 20% year-on-year
as we partner to deliver their most
important technology initiatives.
In recent years, we have grown
our nearshore presence in Latin
America and in South East Europe.
This enables clients to access
high-value skills at a lower delivery
cost, while helping the Company to
achieve competitive rate structures
in an increasingly price sensitive
market, while maintaining high
levels of service quality.
Focus on people
As already indicated, it has
been a challenging year for our
employees, which included
headcount reductions. The volatile
market and changes we instituted
challenged many leaders to
embrace change and grow their
roles, while continuing to deliver
leading-edge work for our clients.
This has allowed many of our
best employees to gain valuable
experience, while developing
market-leading new skills. As a
Company, we have also remained
true to our B Corp principles – it
remains a priority for us to attract
and retain the best talent from all
available sources.
I would like to extend my personal
thanks and the thanks of the Board
to all of our employees for their
ongoing commitment and loyalty
this past year; their contribution
has been exceptional in a
challenging environment.
environment is stabilising, we are minded
“ Although there are signs that the market
to be cautious as the near-term environment
remains unpredictable.
• Partnerships – we have
continued to invest in
go-to-market relationships with
technology and cloud service
providers such as Microsoft and
Google.
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 processes and
systems to ensure oversight of
the business meets the standards
expected by our shareholders.
The Board and its three sub-
committees – Audit, Remuneration
and Nomination – operate
effectively.
During the year, Nigel Pocklington
was appointed Senior Independent
Director.
The entire leadership team
has demonstrated agility and
adaptability in a fast-evolving
market and in particular, I would
like to recognise the efforts of
our Chief Executive Officer, Kelly
Manthey, in her first year in the role.
Kelly was confronted with the most
challenging market environment the
Company has faced in quite some
time, and she responded in a way
that underscored both her qualities
and her ability to deliver at the
highest level.
Focus on performance
In previous communications to
you, I have emphasised three key
priorities, which remain unchanged:
• Focus – the Company has
completed the transition to a
pure-play digital transformation
business following the
divestment of non-core
activities. The principle has
been underlined by the
continued focus on our most
important clients.
• Geographic expansion – the
Company has invested in
acquiring lower cost nearshore
capabilities in South East
Europe and in building key
capabilities in Latin America.
As a result, the percentage
of the Company’s headcount
based in nearshore locations
increased to 40% during the
year. We expect that this trend
will continue.
08 |
kinandcarta.com
Building a world that works better for everyone
| 09
Overview Chairman’s statement
continued
Our business proposition
Recommended Cash Offer for
Kin and Carta Plc
On 18 October 2023, it was
announced that the boards of
directors of Kelvin UK Bidco Limited
("Bidco"), a newly formed company
owned indirectly by funds advised
by Apax Partners LLP ("Apax"), and
Kin + Carta had reached agreement
on the terms and conditions of a
recommended cash offer made by
Bidco to acquire the entire issued
share capital of Kin + Carta (the
"Acquisition") . Under the terms
of the Acquisition, Kin + Carta
shareholders will be entitled to
receive 110 pence in cash for each
Kin + Carta share, valuing Kin +
Carta at £203 million on a fully
diluted basis. This represents a
premium of 41% to the closing price
on 17 October 2023. The Acquisition
is conditional inter alia on approval
by the Company's shareholders
and certain regulatory approvals.
Completion of the Acquisition is
currently expected to take place in
the first quarter of 2024.
We believe the offer to acquire
Kin + Carta by Apax represents
an excellent opportunity for
the Company to accelerate
ambitious growth plans and
scale the business, building on
the acquisition and integration
of leading data and technology
companies, the development of
valuable technology partnerships,
and the creation of a strong
portfolio of enterprise clients.
I would like to thank the Board for its
hard work and support to the new
leadership team over the past year.
John Kerr
Chairman
1 November 2023
Our long-term drivers for scaling a successful,
high performance DX consultancy
Marketplace
Approach
Growth History
Pure play digital
transformation with a focus
on data transformation
and modern app
development. Going to
market at the intersection
of industry sectors, digital
transformation services,
and the world’s leading
technology partners.
The first certified B Corp
company on the London
Stock Exchange, Kin +
Carta believe in business
as a force for good, actively
measuring impact on
people, planet and profit,
as a diverse and inclusive
business.
Kin + Carta has grown
organically at 15% CAGR*
from FY17 through to the
end of FY23.
* Compound annual net revenue growth
rate from the start of FY17 to the end
of FY23, excluding the impact of exiting
non-digital-transformation business in
Europe between FY17 and FY19.
Clients
Capability
Delivery
Kin + Carta serves a blue
chip enterprise client base
of global private sector
businesses and national
public sector government
programmes. 90% of net
revenue is from resilient
enterprise clients.
Strategic acquisition and
Data & AI proposition
development have put Kin
+ Carta at the forefront
of the high-demand data
transformation market
with advanced and proven
artificial intelligence
capabilities in partnership
with Microsoft and Google.
Margin efficient distributed
global delivery with high-
quality nearshore delivery
centres in Latin America
(Argentina and Colombia),
and South East Europe
(Bulgaria, North Macedonia,
Kosovo, and Poland).
Culture
A differentiated and
responsible approach to
attracting, developing, and
retaining the best talent
in the market. Recognised
as ‘Best large firm to work
for’ 2023 by Consulting
Magazine for a third
consecutive year.
For more info on Data & AI see page 26
For more info on Global Delivery Model see page 32
For more info on our culture see page 66
For more info on Market overview see page 18
10 |
kinandcarta.com
Building a world that works better for everyone
| 11
Overview Strategic
Report
Strategic Report
Contents
Chief Executive Officer’s statement
Market overview
Business model
Strategy
Strategy in action - Service lines
Strategy in action - Sectors
Strategy in action - Partners
Our global delivery model
Strategic progress
Key performance indicators
Chief Financial Officer’s review
A responsible business
Risk management
14
18
22
24
26
28
30
32
34
36
40
44
112
Read more about our
responsible business
on page 44
Read more about our data
case study
on page 27
12 |
kinandcarta.com
Building a world that works better for everyone
| 13
Chief Executive Officer’s
statement
“ As the digital
transformation
market experienced
widespread
volatility, Kin + Carta
used the disruption
to accelerate
operational change.
Kelly Manthey
Chief Executive Officer
FY23 was undoubtedly a
challenging year. As the digital
transformation market experienced
widespread volatility, Kin + Carta
used the disruption to accelerate
operational change.
The market slowed significantly in
the first half as clients responded
to fears of a global recession and a
prospective banking crisis.
Sales-cycles lengthened, project
ramp-up times extended and
revenue slowed with the weakest
areas comprising sub-enterprise
scale-up clients or those
companies more exposed to a drop
in consumer spending. There were
substantially fewer new business
opportunities in the market as
many companies paused spending.
Fewer opportunities led to more
intense price competition as our
larger peers leveraged their scale
and offshore operations. The
net impact required a material
reduction to our previous growth
expectations.
Despite the volatile markets, we
began the second half with a
stronger order backlog and an
expectation that organic growth
and profitability would improve in
H2. Net revenue grew sequentially
in Q3 and Q4 in line with reduced
expectations, whilst the
bottom-line beat expectations
with a combination of assertive
cost controls and a strong focus
on clients. Net revenue for the year
came in at £192.0m and although
this was only marginally ahead
of the FY22 result, it represents
a resilient performance in what
was an unexpectedly challenging
marketplace. Statutory revenue for
the year was £195.9m.
Focus on enterprise
client foundation
Our focus on clients was paramount.
The client base strengthened,
reflected in the makeup of our Top
20 clients and 90% of total revenue
derived from enterprise grade
businesses (organisations with
excess of $1 billion net revenue). In
a highly competitive new business
environment we took steps to better
reflect our client’s ecosystems with
a connected go-to-market strategy
across sectors, services, and
technology partners. Consistency
of high-performance consulting
and delivery was enhanced by the
development and application of
the ‘Kin + Carta Way’, a proprietary
global delivery methodology built
for our client’s success that we will
continue to expand in FY24.
While demand from existing
enterprise clients was more
resilient than the churn
experienced from our smaller
clients, winning new business
remained challenging compared
to prior years and we experienced
continued volatility within the
enterprise client base. Many of our
top enterprise clients maintained or
increased investment in their digital
transformation roadmaps, and we
saw a 20% increase in net revenue
from our Top 20 global clients
this year compared to our Top 20
clients in the prior year. Our largest
client grew from 12% of net revenue
last year to 25% of net revenue
in FY23 which has been both a
testament to their confidence in us
and a risk to manage going forward.
By continuing to focus on delivering
for our clients, we also hope to
manage the potential instability
caused by executive turnover at
some enterprise clients.
Adding new enterprise wins
Despite the tougher new business
market, significant wins were
achieved. These included America's
largest automotive manufacturer, a
Japanese multinational technology
company, S&P 400 automotive
group, US National Veterinary
Associates in the Americas, and
£44.2 million of public sector wins in
Europe including the UK Department
for Education, Department for
Work and Pensions, Department
for Levelling-Up, Housing and
Communities, and the BBC.
“ Data & AI has been our fastest growing
service line and we continue to see
increased demand for the transformational data
services that increase revenue, drive efficiencies
and enable AI ambitions.
Accelerating cost reductions
Reorganisation around key industry
sectors with sales, subject matter
experts and delivery closer to
clients, and an acceleration and
expansion of nearshore delivery
and operations capabilities
helped to preserve our margins
and improve our cost base. Latin
America headcount scaled by 44%
to 390 employees bolstered by the
opening of new offices in Colombia
and Buenos Aires. The integration
of the prior year’s acquisition
of the Melon Group in Bulgaria,
Kosovo and North Macedonia has
progressed well, and we’ve opened
a new shared services centre
in Bulgaria to further improve
operational costs.
Leading with what’s next:
Data and AI
Last year I told you that the
importance of data transformation
services would continue to rise.
In FY23, Data & AI has been our
fastest growing service line and
we continue to see increased
demand for the transformational
data services that increase revenue,
drive efficiencies and enable AI
ambitions. Kin + Carta’s data & AI
capabilities have deepened with
the acquisition of Forecast Data
Services in Europe, bringing high
performance data scientists and
engineers, an enterprise client
base, specialist nearshore teams in
Poland, and valuable relationships
with the universities that fuel supply
of talent.
In spite of the volatile conditions,
we continued to innovate. As a
priority launch partner for Google
generative AI, and with early access
to Microsoft’s generative AI platform,
our engineers guided enterprise
clients through the use cases that
make generative AI a viable and
powerful tool for their businesses.
Our role is to assess, enhance and
deploy technologies that drive
value for our clients, and we will
continue to be at the forefront
of the generative AI wave by
favouring building, experimentation
and optimisation over thought
leadership and hype cycle.
AI is not a standalone technology. It
is dependent on a complementary
data ecosystem, and this is where
generative AI enthusiasm will
translate to material revenue in
the short to medium term.
Kin + Carta’s data & AI proposition
is a direct enabler of generative
AI ambitions, starting with core
data foundations and governance,
then the application of enterprise
analytics and insights, building
custom data products that provide
differentiation for our clients,
and the deployment of machine
learning and artificial intelligence to
enterprise use cases. It is because
of Kin + Carta’s end-to-end
capabilities across this domain,
developed with the world’s leading
technology partners Microsoft and
Google, that we are being trusted to
lead the development of generative
AI strategy and execution for global
enterprise clients.
14 |
kinandcarta.com
Building a world that works better for everyone
| 15
Strategic Report Chief Executive
Officer’s statement
continued
The Company’s employee
experience, founded on a
high-performance and
conscientious engineers’ culture,
was widely recognised across our
regions and offices including:
• Consulting Magazine’s ‘Best
firms to work for’.
• Women’s Choice Awards ‘Best
companies to work for’.
• Great Places to Work Awards
‘Best workplaces for tech,
wellbeing and as a large
organisation’.
• Top Places to Work, for
‘leadership, purpose and values,
professional development,
employee wellbeing,
compensation and benefits’.
The speed and effectiveness of our
response to market disruption is
a measure of the professionalism
and agility that our leadership
team have embodied this year. I am
deeply proud of their innovation,
empathy and resolve during an
extremely complex period.
Kelly Manthey
Chief Executive Officer
1 November 2023
Strengthened technology
partner relationships
Big Tech is quickly evolving to
put themselves in the strongest
position to capitalise on AI and
the strength of Kin + Carta’s
relationships with technology
partners continues to be a key
value driver. This year Kin + Carta
was named Cloud Partner of the
Year in Retail by Google, while
Microsoft awarded Kin + Carta
Partner of the Year Sustainability
Changemaker for the second
consecutive year. Further progress
in the MACH partner ecosystem
(micro-services, API-led, cloud
native and headless), and data
domain specialists like Databricks
ensure that our clients benefit from
leadership in the most progressive
platforms.
A winning and
responsible culture
Kin + Carta’s commitment to
B Corp principles and operating
as a higher standard, more
responsible consulting business
continues to shape progress.
MSCI and Sustainalytics ESG
ratings have improved in FY23,
climate disclosure TCFD (Task
force for Climate-related Financial
Disclosure) reporting has been
delivered, and the Company has
successfully completed its first
double materiality assessment.
Kin + Carta’s vibrant IDEA
(Inclusion Diversity Equity
and Accessibility) programme
focused on ‘responsibility in the
everyday’ driving progress in
IDEA engagement, standards and
integration across the business.
16 |
kinandcarta.com
Building a world that works better for everyone
| 17
Strategic Report Market overview
Market context
Macro headwinds
Global economic volatility slowed growth across the
market as sales cycles lengthened and projects took
longer to ramp-up. Cautionary client spend resulted
in smaller, more incremental deals as businesses
moved to protect cash. Enterprise organisations seized
the opportunity to fast-track reorganisation and
restructuring, further tempering progress. As global
interest rates rose, tech scale-ups lost funding, and
lowering consumer confidence affected budgets in
industry sectors closest to the disruption. Conversely,
well-funded and resilient sectors like financial services
and the public sector continued to deliver their digital
transformation roadmaps.
Our response
Improvements to the cost structure were executed in
all regions. Selling and administrative costs were driven
by the acceleration of nearshore delivery and migration
of operations headcount nearshore, bolstered by a
restructure of domestic US/UK headcount to further
drive nearshore adoption. Pricing power was negotiated
with clients with a focus on high demand capabilities
increasing pricing leverage. The business accelerated
its organisation around resilient industry sectors, and
strengthened the portfolio mix with a higher percentage
of enterprise client profiles. Investment was increased
in the high-demand Data & AI capability, including the
acquisition of Forecast Data.
Market drivers
Regional context
Europe
Despite a challenging UK economy abruptly impacting
business in the first half, notably in the tech scale-up
sector, significant wins were achieved in the resilient UK
Public Sector, including notable Data & AI projects. Data
capabilities were also bolstered with the acquisition of
Forecast Data.
Americas
While cautionary client spend symptoms remained
consistent in the Americas, the US economy proved
more resilient. Key clients continued to increase
their digital transformation investments with
Kin + Carta, notably in financial services, agriculture,
and distribution, with high capability demand for Data &
AI services.
Link to FY24 strategic priorities
Optimise our
foundation
Focus
on core
Focus on what
clients need next
Trend
Description
Impact
How we are responding
Link to strategy
Digital first-
consumers
Acceleration of digitally-led
experiences as enterprise businesses
rethink bricks and mortar investments
As digitally native brands set the pace, customer expectations
are rapidly evolving. Cross-platform speed, efficiency, connected
experience, and secure predictive data applications have
become the baseline.
Kin + Carta builds intelligent experiences, powered by data and enabled by cloud computing. We
create the technical foundations for our client’s success and continuously run, grow and optimise those
products and services to meet changing consumer and enterprise needs.
Increased
efficiency
Products and services that drive
revenue and operational efficiency
Global economic pressure, volatile economies, high interest
rates and tempered consumer confidence are increasing
the importance for modern digital products and services to
contribute to top and bottom lines.
Kin + Carta provide cost-saving efficiencies and distributed global delivery with speed to value and
clear return on investment to clients. Our innovation is shaping the future of our clients businesses and
defining how they differentiate and grow in a competitive market and pressured economic climate.
Distributed
delivery
Increased demand for
margin-efficient delivery
Tightened budgets have heightened expectations that digital
transformation consultancies can provide high-quality nearshore
and offshore delivery resources at competitive rates.
Kin + Carta deploy a distributed global delivery model that blends high-performance domestic
leadership close to our clients with high-quality, margin efficient technical delivery from nearshore
delivery centres in Latin America and South East Europe.
Data
foundations
Increased demand for high-quality
data services
Enterprise businesses need to secure, organise, democratise and
deploy their commercial and operational data, but face outdated
and siloed systems that limit progress and return.
Artificial
intelligence
Increased demand for artificial
intelligence
High profile advances have placed artificial intelligence,
generative artificial intelligence, and machine learning on
executive agendas.
Kin + Carta offers enterprise clients full-service data capabilities from critical data foundations
through to differentiating intelligent experiences. Partnering with Microsoft, Google and Databricks, we
build repeatable, high-value data solutions and enable our clients to establish high-performance data
organisations within their businesses.
Kin + Carta have a proven track record of delivering advanced artificial intelligence applications that
answer valuable enterprise use cases. Working in partnership with Microsoft and Google, Kin + Carta
have early access to the world’s leading generative artificial intelligence platforms that are disrupting
what we are able to build for our clients, and how we are able to build it.
18 |
kinandcarta.com
Building a world that works better for everyone
| 19
Strategic Report
Market overview
continued
Sector overviews
Financial services
Largest sector in the digital
transformation market with
enhanced buying power in the
year ahead.
Financial services proved resilient
across the market through FY23
and a source of growth for Kin +
Carta in Europe and the Americas.
Looking to FY24, high interest
rates are generating significant
net interest income, bolstering
financial services sector budgets
for transformational digital services
as financial brands continue
to accelerate their technology
roadmaps.
Public sector
Long-term multi-year contracts
prove resilient against backdrop
of economic volatility.
Government-backed UK Public
Sector was one of Kin + Carta’s
fastest growing sectors in FY23,
with the expectation that this
momentum will continue in FY24.
Multi-year, large scale contracts
focused on the digitisation
and efficiency of sustainable
public services continue to be
commissioned and delivered in-line
with long-term government policy.
Agriculture
Data-driven technology is the
future of the rapidly evolving
agriculture sector.
Market conditions in Kin +
Carta’s third largest vertical are
a catalyst to new companies and
new technology in the sector
as deglobalisation drives higher
domestic production. Market
leaders are commissioning and
deploying practical applications of
artificial intelligence and machine
learning at scale to improve crop
efficiency, manage productivity and
reduce risk.
Retail
Partner innovation is driving
revenue and efficiency in a
complex trading environment for
the sector.
After the post-pandemic boom,
the retail sector has been impacted
by tightened consumer spending
and investment in transformation
roadmaps has eased. Kin + Carta
serve retail clients with leading
partner innovation like
revenue-driving cloud retail search,
and were awarded Google Cloud
Industry Solution Services Partner
of the Year Award 2023 for Retail
Digital Growth.
20 |
kinandcarta.com
Building a world that works better for everyone
| 21
Strategic Report Business model
Summary
Our resources
What we do
How we do it
Kin + Carta provide high-value
digital transformation services
to enterprise clients by
deploying specialist teams in
an efficient distributed delivery
model, in partnership with the
world’s leading technology
companies.
Kin + Carta’s ability to deliver
across the full project
life cycle from strategy
to execution, deploying
seamlessly across multiple
service lines is a key
differentiator.
Strategy + Innovation
Identify, prioritise and
plan digital innovation and
investments.
Data + AI
Maximise the potential of data
and artificial intelligence.
Cloud + Platforms
Build and modernise mission
critical cloud applications.
Experience + Product
Design and build intelligent
experiences powered by data.
Managed Services
Support, grow and optimise
valuable digital assets.
Our people
Kin + Carta has a strong and
diverse engineering culture
and employee proposition that
attracts, develops and retains
the best technology talent in
the market.
Our expertise
A pure-play digital
transformation consultancy
focused on high-value
capabilities and outcomes with
over 1,800 high performance
specialists across three
continents.
Our partnerships
Kin + Carta partners with
Microsoft, Google, Amazon and
the world’s leading technology
companies to drive innovation,
funding, early access to new
technologies, and commercial
opportunities.
Our sustainable mindset
We believe in using business as
a force for good. Kin + Carta is
the first certified B Corp on the
London Stock Exchange.
Our ESG enablers
•
Inaugural double-materiality
assessment
• The B Corp framework
•
IDEA policy and global
programme
Kin + Carta go-to-market at the intersection of industry sectors,
transformational services and technology partnerships, driven
by the Kin + Carta Way, a proprietary delivery methodology
that increases growth and provides a competitive advantage for
clients. Work is delivered through high-quality, margin efficient
distributed global delivery hubs across US, Latin America, UK,
and South East Europe.
Kin + Carta Way
Delivery Methodology:
For more info
see page 33
Sector
Service
Partner
Distributed
Global Delivery:
For more info
see page 32
The value
we create
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 approach
to measuring and managing
our impact on people,
planet and profit as a
globally certified B Corp
Company.
22 |
kinandcarta.com
Building a world that works better for everyone
| 23
Strategic Report Strategy
Our long-term strategy
Scaling a high-performance global DX
consultancy through:
• Delivering high-value data transformation and modern
application development outcomes for enterprise
clients in resilient industry sectors
• Going to market at the intersection of services,
sectors, and partnerships
• With margin-efficient distributed global delivery
• As a responsible B Corp Company
Our growth levers
Services
As digital transformation
rapidly evolves, we
continually evaluate new
opportunities to add
complementary service
offerings or capabilities
that enhance client
outcomes. In FY23,
Kin + Carta continued
to deepen Data & AI
capabilities with the
acquisition of Forecast
Data and the expansion
of Generative Artificial
Intelligence practices.
Sectors
Industry vertical growth
is approached 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. In
FY24, focus will increase
on financial services,
public sector and
agriculture.
Partners
Kin + Carta’s
partnerships with
Microsoft, Google,
Amazon 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.
FY24 will see an increased
maturity in our Microsoft
relationship as we
execute our strategy to
serve enterprise clients in
resilient sectors.
Territories
Geographic growth that
brings access to a new
market, clients, capability
or technology. In FY23,
Kin + Carta continued
to expand organically in
Latin America (Argentina
and Colombia), and
further integrated the
FY22 acquisition of the
Melon Group in South
East Europe (Bulgaria,
North Macedonia and
Kosovo), bolstered by the
acquisition of Forecast
Data, including their
Polish delivery hub.
Data & AI
Financial Services
Google
Experience & Product
Public Sector
Microsoft
Cloud & Platforms
Retail & Distribution
Amazon
United States
Latin America
United Kingdom
Strategy & Innovation
Agriculture
Databricks
South East Europe
Managed Services
Manufacturing
CommerceTools
24 |
kinandcarta.com
Building a world that works better for everyone
| 25
Strategic Report Strategy in action
– Service lines
Overview
In FY23, Data & AI has been our fastest growing service line and we
continue to see increased demand for the transformational data
services that drive revenue, optimise margins and enable artificial
intelligence ambitions. Kin + Carta’s Data & AI capabilities have
been deepened with the acquisition of Forecast Data in Europe,
bringing high-performance data scientists and engineers, an
enterprise client base, specialist nearshore teams in Poland, and
valuable relationships with the universities that fuel supply.
As a priority launch partner for Google generative AI, and with early
access to Microsoft’s generative AI platform, our engineers guide
enterprise clients through the use cases that make generative AI a
viable and powerful tool for their businesses. Our role is to assess,
improve and deploy technologies that drive value for our clients,
and we will continue to be at the forefront of the generative AI
wave by favouring building, experimentation and optimisation over
thought leadership and hype cycle.
Deep dive – Data & AI
Data foundations are the enabler of
artificial intelligence ambitions
Artificial intelligence is not a standalone technology. It is dependent
on a complementary data ecosystem, and in the short to medium
term, this is where generative AI enthusiasm will translate to
material revenue. Kin + Carta’s Data & AI proposition is a direct
enabler of generative AI ambitions, starting with core data
foundations and governance, then the application of enterprise
analytics and insights, building custom data products that provide
differentiation for our clients, and the deployment of machine
learning and artificial intelligence to enterprise use cases. It is
because of Kin + Carta’s end-to-end capabilities across this
domain, developed with the world’s leading technology partners,
that we are being trusted to lead the development of generative AI
strategy and execution for global enterprise clients.
Our Data & AI solutions:
Data foundations & governance:
Critical infrastructure, data
processing and quality that
increase efficiency and enables
innovation
Analytics and insights:
Reporting and dashboards that put
business intelligence in the hands
of decision makers
Data COE and enablement:
High performance, centralised
data teams that increase velocity,
accelerate data maturity, develop
standards and practices, and
de-risk the pace of progress
Data products:
Bespoke data tools that create
competitive advantage
Artificial intelligence &
machine learning:
Algorithms that automate
decisioning, personalise customer
experiences, and optimise
operations
Strategic Report
Case study
Automotive data transformation
Challenge
This automotive giant designs,
builds and distributes a wide range
of vehicles. Headquartered in the
U.S., it operates on a global scale.
Even though the company had
C-level commitment to adopt
Azure and cloud infrastructure,
organisational and technical issues
slowed its migration progress.
As cloud platforms matured
and became access points for
emerging tech such as Large
Language Models ("LLMs"), and
with thousands of data scientists,
analysts, engineers and other
employees needing centralised
storage for petabytes of data and
scalable compute, accelerating
modernisation efforts became a
high priority.
Outcome
Users have confidence in the
integrity of organisational data and
are empowered to make informed
decisions that support business
goals. The power of Azure provides
a secure data foundation and a
launch pad for various impactful
data products:
• Powerful data syndication
capabilities
• Automated monitoring of data
quality
• Well-documented and
discoverable data assets
• Reduced development and
delivery time, with less time
spent procuring required data
• Traceable data lineage provides
ability to identify issues and
mitigate compliance risk
• Stringent data security
processes and requirements
limit the exposure of sensitive
data
• Kin + Carta continues to
support the automotive
company as it explores the
potential for new use cases and
further innovation on its Azure
data platform
Approach
Building on a previous project to
evaluate how to maximise business
value with a strategic focus on data,
Kin + Carta was engaged to provide
the blueprint and best practices
to drive the Azure migration. By
leveraging technologies such as
Unity Catalog for Azure Databricks,
MLflow and Azure DevOps and the
company’s existing Azure Data Lake,
our solution included:
• Establishing and running a Kin +
Carta Data Centre of Excellence
integrated into the client’s
data organisation, enabling the
deployment, governance and
value-optimisation of enterprise
data
• Reusable patterns, processes
and tooling to implement
common workflows for pipeline
orchestration
• Targeted inventory of core data
assets to enable projects and
teams that were cloud-ready at
project inception but hindered
by platform immaturity
• Socialisation plan to educate
data practitioners on platform
features and best practices to
prepare teams for onboarding
• Onboarding hundreds of
data practitioners (analysts,
scientists and engineers) for
daily Azure and Databricks
usage
26 |
kinandcarta.com
Building a world that works better for everyone
| 27
Strategy in action
– Sectors
Overview
Kin + Carta focus on resilient industry sectors with the use cases and
funding to invest in large-scale digital transformation programmes.
Our biggest sector is Financial services, the largest sector in the
global digital transformation market, with enhanced buying power
going into FY24. We serve Retail with leading partner innovation
like Cloud Retail Search with Google. Agriculture is a technology
led sector investing in de-risking crop-production through artificial
intelligence and machine learning innovation. UK Government
Public Sector is Kin + Carta’s fastest growing sector with significant
framework qualifications and multi-year contract wins.
Deep dive – Public Sector
Collaborating with you to transform our public sector
Kin + Carta is a trusted digital supplier to the public sector,
dedicated to growing your capability and empowering your teams.
We understand that delivering exemplary digital transformation
isn’t just about technology, it’s about transforming the way we
deliver public services to meet the needs of citizens and our
institutions alike.
In the real world, you don’t need big promises about transformation,
or the endless “exploratories” that accompany them. You need
progress. You need new products and experiences to be designed,
built, deployed, and improved in less time and with greater insight.
You need better ways to collect, analyse and leverage your data to
inform the future.
By combining deep industry expertise, data-intelligence, world-class
engineering and seamless delivery, we’re setting out to prove why
it’s time for a new approach to making progress.
How we add value:
GDS compliance:
We test for quality at every stage
to meet and beat GDS standards
so our clients can be confident that
their project will pass assessment
every time
Reliability:
Our clients trust us to deliver at
pace and within the Technology
and Code of Practice, protecting
their budgets and timescales
Creativity and innovation:
Compliant shouldn’t mean dull.
We always consider where we
can embed simplicity through
innovation with the touches that
enhance user experience
Diverse, cross-functional teams:
Sharing extensive public sector
experience, our cross-functional
blended teams offer a complete
service with increased learning
opportunities for our client's teams
Data-driven decision making:
Data is at the heart of our decision
making, and we are leading the
charge in the use of machine
learning and AI to deliver insights
Inclusivity:
Using data doesn’t remove bias and
that is why we intentionally build
products with inclusivity as part of
the foundation
Strategic Report
Case study
Public Sector strategy
Challenge
The UK has a legally binding target
to achieve net zero carbon by
2050, and interim targets to reduce
public sector carbon emissions
by 78% by 2035. Government
departments report publicly on
their progress against these targets
via the Greening Government
Commitments ("GGCs"), as well as
their own published Annual Report
and Accounts.
Kin + Carta partnered with net
zero carbon experts from fellow
B Corp, Gemserv, to give a large
government department (the
"department") the insight it needed
to make informed decisions on
how it can achieve net zero carbon
for all three emissions scopes, and
how soon this can realistically be
achieved.
Approach
Between January and
September 2023, we worked
with representatives from across
the department to review its
developing Sustainability Strategy,
specifically with regards to net zero
carbon, enabling the department
to begin measuring, reporting
and reducing the full range of its
Scope 3 carbon emissions. We
analysed current emissions data,
recommended improvements and
created a reporting and reduction
plan to support the department’s
strategy. Finally, we helped the
department tackle the lack of
clarity and understanding about
how to contribute to net zero
reductions, by providing material
and guidance for their sustainability
champions, and detailed awareness
engagement exercises with their
senior leadership team.
Outcome
The renewed clarity and
enthusiasm that we have helped
to foster will underpin changes in
approach within the department
itself. As the department is one
of the largest in government,
they can have a major impact
in carbon reduction and helping
the government meet its carbon
targets. Through our partnership,
the department will go even
further by incorporating our
recommendations into their action
plans around major hotspot areas.
28 |
kinandcarta.com
Building a world that works better for everyone
| 29
Strategy in action
– Partners
Overview
Kin + Carta’s relationships with the world’s leading cloud and
Platform vendors continues to be a catalyst for growth at Kin +
Carta. As partnerships move into it’s fourth year of consistent
growth, new revenue in existing accounts and new account
acquisitions driven by our partnerships is a continuous focus.
We retained Managed Partner status across all three cloud
platforms, becoming a multi-winning partner of the year with
awards coming from both Google and Microsoft for our channel
practices built around them and became a launch partner for
many new services across Data & AI, and app development. We
continue to focus on the products that are seeing the highest
demand from our clients and wrapping our consulting services
around them, aligning to our partners’ core verticals and to working
collaboratively to drive value mutually for our clients.
Leveraging AI and augmenting our client’s data
is the game changer
Kin + Carta’s existing footprint in the AI and Search space has put
us in a strong position to support our clients with the biggest move
forward in new technology since the launch of the Apple App Store.
Our Global Strategic partners, Microsoft and Google, are at the
forefront of this change and our clients are looking for us to be
connected to help them access the benefits of this emerging
technology. As a result of this, we have added additional cloud
ecosystem partners to support our strategy with the addition of
Databricks, MongoDB, Starbust and Nvidia, all which are addressing
the need to move to, and modernise, data in the cloud.
Aligning platforms to our core services
Platform modernisation continues to be a need for our clients
particularly in the Content and Commerce space. We have a
new range of options available to our clients depending on their
requirements and we have continued our partnerships with SAP,
Optimizely, Contentstack, Contentful, Commercetools and VTex to
make sure we have the strongest understanding and alignment to
the technology stacks of choice for the enterprise customer. We
have also continued our relationship with the MACH alliance and its
community of partners that is gaining accelerated traction in the
market. Our platforms are all underpinned by our Cloud Partners
Google, Microsoft and AWS.
Our partnerships can be
categorised into three areas:
Platform partners:
Microsoft, Google Cloud and
Amazon Web Services (“AWS”) –
these are the public clouds that our
clients want us to build and host
their services in
Product partners:
SAP, Optimizely, Commercetools,
Vtex, Contentstack Contentful
and Databricks – 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 and Appian
– these are the technical tools we
use to create our solutions for our
clients
Strategic Report
Case study
Scaling data with Google Cloud
Outcome
Not only does this solution save
GFS money, but can be scaled up
and down when required. Data is
accessed via a standardised API
layer built and deployed within
GKE. This takes advantage of
the automated scaling and
high-availability across regions and
multiple zones.
• 20% increase in segment of
users ordering 90% or more
online
• 99% improvement to customer
feature requests
• 25% to 96% adoption increase
in Canada
Challenge
Gordon Food Service ("GFS") is the
largest family-operated broadline
food distribution company in North
America. A commitment to great
products and quality service has
been the recipe for success with
a client base of around 100,000
customers including schools,
hospitals and restaurants.
GFS’s challenge was that its data
was coming from a variety of
consumer applications directly
connected to multiple data sources
drawn from both the cloud and the
business premises. The end result?
Varying views and dependencies
for database administration,
causing rigidity. GFS had a real
operational need for this data,
including the ability to:
• Manage pricing and promotions
• Track historical product price
changes
• Analyse purchase behaviour
But the difficulty in accessing the
numbers that mattered meant that
opportunities were being missed.
Approach
Our solution was to bring
everything together in one place.
We created data pipelines to
supply an Integrated Consumption
Data Store ("ICDS") that supported
GFS’s operational and analytical
needs. In essence, everything
collected flowed into one place
where it could be viewed, used
and analysed to add real value for
decision makers. Understanding the
technology available and working
closely with those who create it
means the optimum solution can
be delivered. To build the ICDS, we
utilised our long-term partnership
with Google Cloud. After careful
analysis and consultation, we
agreed that Google Cloud’s
Dataflow would be ideal as a
serverless execution engine for
Apache Beam SDK to do batch
data processing. Data is extracted
from BigQuery and stored in Cloud
SQL. This allows GFS to achieve
data syndication, speed and
accessibility for various operational
needs.
30 |
kinandcarta.com
Building a world that works better for everyone
| 31
Our global delivery model
Distributed delivery
Expectations have changed. Enterprise clients expect
to be able to make the most of their budgets by
accessing technical resource beyond the domestic
workforce. Kin + Carta continue to invest in high-
quality technical delivery both onshore and nearshore,
with margin efficient delivery hubs in Latin America
(Argentina and Colombia) and South East Europe
(Bulgaria, North Macedonia, Kosovo and Poland).
Core benefits
Market scope
Demand for high-quality,
efficiently priced nearshore
delivery is increasing.
Margin efficient
Blended teams
Lower cost resources from
vibrant nearshore territories
with strong technical
talent supply creates high
gross margin efficiency for
delivery and shared services
resource.
Kin + Carta blend high-touch
onshore leadership closest
to clients with high-quality
nearshore delivery to ensure
optimum performance and
avoid cultural misalignment.
High-quality nearshore delivery
South East Europe
The FY22 acquisition of Melon Group is now fully
integrated into the Europe region, delivering UK
projects and winning standalone work. South
East Europe delivery has since been bolstered
by the FY23 acquisition of Forecast Data with the
addition of delivery capacity in Poland.
340
Total staff
Latin America
Argentina and Colombia continue to scale
organically in Latin America, both opening new
offices in FY23 and serving Americas delivery and
shared service needs.
390
Total staff
Cultural context
The strength of the innovative engineering cultures in each and every Kin + Carta delivery
hub is key to our success. Cultural initiatives include local culture packs, client visits to
nearshore locations, quarterly business reviews, and two-way learning across locations.
For more info
see page 66
l
i
u
B
l
s
k
c
o
b
g
n
d
i
The Kin + Carta Way
Distributed global delivery is enabled by a unifying
proprietary delivery methodology called the
Kin + Carta Way.
Core benefits
Quality
All delivery teams are
trained in the learning and
development modules of the
Kin + Carta Way to ensure
the highest quality and most
advanced delivery practices
for our clients. This ambition
is encapsulated in our gold
standard Seven-Star client
experience.
Efficiency
Consistency
Aligned delivery teams in
all locations, fluent in the
practical processes and
standards of the Kin + Carta
Way accelerate speed to
value for our clients.
Central and distributed
project governance
processes and reporting
ensure that all clients receive
the same high standards,
while challenges can be
identified early, and learnings
shared quickly.
Consistently delivering a Seven-Star client experience that drives growth and competitive
advantage for Kin + Carta and our clients.
y
r
e
v
i
l
e
D
s
e
s
a
h
p
Sales
Discovery
Delivery
– start
Delivery
– middle
Delivery
– last mile
Delivery
– launch
Run, grow,
optimise
Sell
well
Sell well to
set us up for
success
Consult
well
Become
trusted
experts
through
consulting
Define
well
Set us up
for delivery
success
Govern
well
Clear and
transparent
view of how
we measure
and track
success
Engage
well
Multi-
layered, well
orchestrated
engagement
strategy
Build
well
The right
tools,
processes
and people
to deliver on
the project
vision
32 |
kinandcarta.com
Building a world that works better for everyone
| 33
Strategic Report
Strategic progress
Our strategic priorities
FY23 Strategic priorities
Our progress
FY24 Strategic priorities
Client success
Delivery and implementation of
the Kin + Carta Way, a globally
consistent proprietary delivery
methodology
The Seven-Star client experience and the Kin + Carta Way, a consistent set
of delivery and engagement frameworks, were defined and implemented with
improvements in client satisfaction and delivery team health as a result.
The Kin + Carta Way has been rolled out as a part of new hire induction
and Kin + Carta Way principles are being embedded in all client projects.
The goals of the Kin + Carta Way are to increase client conversion, increase
client satisfaction, increase revenue growth, increase client advocacy,
increase client retention, and increase opportunities for Kin. Success has
been measured via newly-implemented Client Satisfaction and Delivery
Health frameworks, both of which have had continuous positive trends since
implementation in both regions.
Global delivery
Increasing the percentage of
margin efficient distributed
(nearshore) delivery
With the successful integration of the Melon Group in South East Europe
("SEE") and the organic growth of Latin America ("LatAm") high-quality
delivery resource, the percentage of revenue delivered nearshore in both
regions has increased, and it’s been proven that we are able to deliver
effectively with LatAm and SEE on some of our largest clients.
Americas nearshore revenue went from 10% at the start of FY23 to 24% at the
end of the fiscal year. Europe grew nearshore revenue to 7% by deploying
SEE resources.
Data
Increasing the high strategic
relevance Data & AI pipeline and
percentage of net revenue
The data pipeline is strong. Data literacy training has been rolled-out across
the organisation, and the successful acquisition of Forecast Data has
bolstered Data & AI capabilities, capacity and enterprise clients.
Americas Data & AI net revenue held steady, and Europe increased to 16%
of total net revenue. The pipeline of new data sales opportunities grew
significantly in FY23 and we expect this trend to continue in FY24.
Foundation
Strategic initiatives aligned to driving Client Success
with expanded deployment of Kin + Carta Way training
to further ensure consistency and quality in delivery;
Kin Success through the enhancement of employee
experience, performance management, and learning and
development; and continued deepening of enterprise
grade data security, Information Governance, and cyber
risk.
Link to risks
Link to double-
materiality themes
2 6 7
10 11 12 13
9 10
Core
Next
Focused Execution of key growth drivers in resilient
industry sectors, with key capabilities and core
technology partners. Increased Global Delivery to
drive efficiency and resilience.
2 3 4
9 10 12 13
16 17
Targeted Innovation aligned to key industry sectors,
capabilities and technology partners. Continued efforts
to embed Responsibility in the everyday, with an
emphasis on pathways to B Corp recertification and net
zero.
2 4 7
9 10 11 13
8
Link to risks:
1 Economy and volatility
5 Client concentration
8 Being a responsible business
2 Growth
3 Scalability
4 Operational resilience
6 Laws and regulations
7 Our people
9 Data protection
10 Information, cyber security and systems
Link to double-materiality themes
1 Labour rights
2 Biodiversity
6 Public policy
7 Tax
11 Data security
16 Economic contribution
12 Employee retention and recruitment
17 Community impact
3 Water and effluents
8 Responsible marketing and labelling
13 Upskilling
4 Responsible procurement
9 Energy and emissions
5 Materials and waste
10 Business conduct
14 Diversity and equal opportunity
15 Consumer health and safety
34 |
kinandcarta.com
Building a world that works better for everyone
| 35
Strategic Report Key performance indicators
Link to FY24
strategic priorities
Optimise our
foundation
Focus
on core
Focus on what
clients need next
Measuring our performance
Financial highlights
Link to risks:
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
1. Like-for-like net revenue (decline)/growth at
2. Adjusted operating profit margin
3. Net revenue predictability
4. Number of £1 million clients
constant currency
FY23
(11%)
FY22
FY21
13%
37%
FY23
FY221
FY21
9.6%
9.5%
11.8%
FY23
FY22
FY21
77%
76%
71%
FY23
FY22
FY21
32
30
40
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.
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.
Performance this year
On a like-for-like basis, net revenue declined by 11%
from FY22, reflecting macroeconomic challenges.
Link to Directors' remuneration
Executive compensation has a net revenue growth
target.
Performance this year
Group adjusted operating margin was 9.6% for the
period (2022: 11.8%) with higher gross margins offset
by higher selling and IT costs.
Link to Directors' remuneration
Executive compensation has a profit before tax target
as well as improving operating margin initiatives in
strategic objectives component.
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.
Performance this year
Having focused on growing long-term established
relationships with our top clients, some £140.2 million
(77%) of our net revenue comes from existing clients
who had a tenure of three years or more (2022: £144.0
million/76%).
Link to Directors' remuneration
Executive compensation has a net revenue growth
target.
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.
Performance this year
In 2023, there were 32 clients from whom Kin + Carta
generated more than £1 million revenue individually
(2022: 40). Although this represents a slight decline
in the year, the diversity remains strong and provides
a robust foundation for growth. For FY23, there
was an increase in the proportion of enterprise
clients generating more than £1 million revenue, with
enterprise clients representing 30 of the 32 (2022: 31
of the 40).
Link to Directors' remuneration
Executive compensation has a net revenue growth
target.
Link to risks
1 2 3
Link to risks
1 3 4
Link to risks
2 3 5
Link to risks
3 6
Link to FY24 strategic priorities
Link to FY24 strategic priorities
Link to FY24 strategic priorities
Link to FY24 strategic priorities
1 The results for the year to 31 July 2022 have been restated to reflect the
reclassification of share-based payments from adjusted results to adjusting
items and the restatement of depreciation on investment property. The latter
arose from an accounting policy change to measure investment property using
a fair value model which has been applied retrospectively. Refer to note 1 of the
Consolidated Financial Statements for further details.
36 |
kinandcarta.com
Building a world that works better for everyone
| 37
Strategic Report
Key performance indicators
continued
Non-Financial highlights
Link to FY24
strategic priorities
Optimise our
foundation
Focus
on core
Focus on what
clients need next
Link to risks:
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
5. Mean gender pay gap
6. US ethnicity
7. Positive impact work
FY23
FY22
FY21
9%
18%
14%
FY23
FY22
FY21
35%
28%
24%
Definition
An equity measure that shows the difference in
average earnings between men and women.
Performance this year
This year has seen a significant improvement in our
gender pay gap, decreasing from 18% to 9% globally,
exceeding our target by 7ppts. This reflects the
cumulative effects of multiple initiatives across the
regions.
Definition
A measure to demonstrate our commitment to
diversity, where we aim to have teams that are
representative of the communities in which they work.
Performance this year
Work across FY23 achieved progress of 7ppts on last
year with 35% diversity of ethnicity in the US.
FY23
FY22
FY21
10%
9%
6%
Definition
Revenue that has a demonstrable beneficial
environmental or social impact.
Performance this year
In a year of market contraction, to have met and
exceeded our target speaks to the potential for
greater focus in partnering with our clients on work
that makes the world work better for everyone.
Link to risks
2 9
Link to risks
2 9
Link to risks
9
Link to FY24 strategic priorities
Link to FY24 strategic priorities
Link to FY24 strategic priorities
38 |
kinandcarta.com
Building a world that works better for everyone
| 39
For an overview of our
Alternative Performance
Measures see pages
279 to 283
Strategic Report
Chief Financial Officer’s
review
“ FY23 was a
challenging
year for Kin + Carta
and we look to the
future with cautious
optimism.
Chris Kutsor
Chief Financial Officer and
Chief Operating Officer
by 43% to £2.6 million (2022: £1.8
million), driven by increased net
debt levels and higher interest
rates.
Prior period restatements
and reclassifications
During the period there was a
change of accounting policy
to account for the investment
property, which is now accounted
for using the fair value model
instead of the cost model
previously used. This change has
been applied retrospectively from
1 August 2021 and resulted in a
£0.3 million increase to adjusted
operating profit in FY22.
A credit of £1.3 million has been
adjusted in opening retained
earnings at 1 August 2021 relating to
the restatement of an income tax
charge on loan forgiveness arising
in the FY21 year.
The Group’s share-based
payment charge is excluded
from adjusted results in a similar
way to the Company’s publicly
listed peer group companies
in digital transformation, aiding
comparability. The FY22 results
have been restated to reclassify the
share-based payment charge to
adjusting items in the Consolidated
Income Statement. There is no
impact on the statutory loss for
either period.
Further details are set out in note
1 of the Consolidated Financial
Statements.
Key adjusting items are as follows:
• Amortisation, deemed
remuneration and other
acquisition-related charges
related to acquisitions: £9.3
million related to the non-
cash amortisation of acquired
intangibles, £9.8 million of
contingent consideration
required to be treated as
remuneration, a credit of £0.3
million in respect of deferred
consideration adjustments, and
£0.7 million of acquisition and
integration-related costs.
• A non-cash impairment goodwill
charge of £14.6 million relating
to the ‘UK excluding Kin and
Carta Data’ cash generating unit.
• A charge, net of associated
insurance proceeds, of £3.6
million related to two client
disputes and associated legal
costs. This includes the full
and final settlement costs and
related external advisor costs
associated with the resolution
of two client disputes which
were significant in value and
which are expected to be non-
recurring in nature. We expect
to record a credit of £3.3m
in FY24 in respect of further
reimbursement of costs by
our insurer. The net revenue
and cost impacts of the client
delivery are included in adjusted
results.
• A net credit of £7.8 million
relating to the renegotiation of
the Chicago office lease that
will result in a smaller, lower
cost space in the same building
from January 2024 under a new
lease. The prior year charge
of £6.3 million comprised an
impairment of the right-of-
use asset and a provision for
onerous costs related to a
portion of the Chicago lease,
both of which reflected the
costs of the portion of the lease
which no longer had economic
value.
Further details are provided within
note 7 of the Consolidated Financial
Statements.
Regional performance
The Americas segment delivered
£19.0 million of adjusted operating
profit (2022: £23.5 million) on net
revenue of £134.8 million (2022:
£132.2 million). Americas’ organic
net revenue at constant currency
declined by 8.4%, reflecting
macroeconomic weakness that
caused client spending caution
and elongated sales cycles noted
across the industry. Gross margin
percentage was unchanged year-
on-year. Adjusted operating margin
declined from 17.8% to 14.1% due to
the effect of investment in selling
and marketing functions and in
information technology. Statutory
revenue was £158.0 million (2022:
£154.0 million).
The Europe segment delivered
£3.8 million of adjusted operating
profit (2022: £4.4 million) on net
revenue of £57.2 million (2022: £58.1
million). Like-for-like net revenue
declined by 15.8%, primarily as a
result of macroeconomic weakness
in the UK, which accounts for 84%
of Europe’s net revenue. Public
sector net revenue grew 220% to
£11.9 million on several multi-year
contract wins. While there was
a modest increase in the gross
margin percentage year on year,
the operating margin declined
from 7.6% to 6.6% due to planned
investment in selling staff and
information technology. Statutory
revenue was £62.1 million (2022:
£61.8 million).
Net finance costs
Adjusted net finance costs, which
exclude the Defined Benefit
Scheme pension costs, increased
This report comments on the
key financial aspects of the
Group’s 2023 results. The report
includes adjusted results which
exclude adjusting items to reflect
how management assesses and
monitors the ongoing financial
performance of the Group. The
definition and reconciliation of
adjusted measures is set out in the
adjusted performance measures
section.
Group performance
Group net revenue from continuing
operations of £192.0 million (2022:
£190.3 million), including favourable
effects from currency movements
and acquisitions, was broadly in
line with the prior period. Statutory
revenue decreased from £197.1
million to £195.9 million. On a like-
for-like basis, net revenue declined
by 10.6%. On a like-for-like basis,
net revenue declined by 10.6%. The
Americas region makes up 70% of
net revenue and Europe 30%. Net
revenue by client sector includes
Transportation (10%), Industrials
and Agriculture (14%), Retail &
Distribution (22%) and Financial
Services (36%). The Company’s
largest client makes up 25% of net
revenue, and is part of the Financial
Services sector.
Group adjusted operating margin
was 9.6% for the period (2022:
11.8%) with higher gross margins
offset by higher selling and IT costs.
The Group’s delivery staff in Latin
America and Southeast Europe
near-shore locations grew from 9%
of delivery staff last period to over
40% this period, and is expected to
continue to grow and improve the
Group’s profitability profile. Whilst
this nearshore delivery enhances
client retention and improves the
Company’s gross margins, it is
delivered at a lower price point than
onshore (domestic) delivery, and
therefore impeded organic growth
in each region. The lower operating
margin in the period also includes
the impact of unusual client
disputes from two non-enterprise
clients with related net revenue at
much lower than average margin.
Adjusting items
The statutory total loss before tax
from continuing operations in the
period was £20.7 million (2022: loss
of £15.6 million), which is stated
after net adjusting cost items of
£36.5 million (2022: net costs of
£36.1 million).
40 |
kinandcarta.com
Building a world that works better for everyone
| 41
Strategic Report Chief Financial Officer’s
review continued
Acquisitions
On 5 May 2023, the Group acquired
100% of the issued share capital
of Kin and Carta Data Limited
(formerly known as Forecast Data
Services Limited), a data and
artificial intelligence business
based in Edinburgh, Scotland
and its Polish subsidiary based in
Wroclaw, Poland. The initial cash
consideration, net of cash acquired,
was £2.2 million, with the potential
for further payments of up to £10.1
million over the next two years
contingent upon achieving EBITDA
growth targets. Based on current
forecasts we estimate further
payments totalling £4.3 million will
be made. Further details are set
out in note 12 of the Consolidated
Financial Statements.
Balance sheet and cash flow
Net assets of £73.4 million
decreased by £53.0 million versus
31 July 2022, driven by the actuarial
loss, net of tax, on the Pension
Scheme surplus of £21.2 million;
the net loss after tax of £18.8
million which included a non-cash
impairment of £14.6 million on
goodwill; non-income movements
in equity related to net share
repurchases and settlements of
£8.0 million; transfers from equity
to liabilities in respect of contingent
deferred payments for acquisitions
made in prior periods of £10.6
million following the Company’s
decision to settle in cash rather
than equity; and foreign exchange
losses and other movements of
£1.0 million; partially offset by
£6.5 million of credits to equity in
respect of share-based payments,
net of tax.
Operating cash outflow before
working capital, interest and tax
was £1.1 million (2022: inflow of
£19.2 million), which includes £16.2
million of deferred payments
related to acquisitions completed
in prior periods (2022: £nil). The
related income statement charge
is treated as an adjusting item.
The cash outflow also includes
other outflows linked to adjusting
items before working capital of
£8.7 million (2022: £7.8 million),
principally related to the settlement
of customer disputes of £3.6
million, and legacy pension-related
outflows of £2.7 million. The net
operating cash inflow before
adjusting items, working capital,
tax and interest was £23.9 million
(2022: £26.0 million). After the year
end, the Group’s insurers confirmed
that a further £3.3 million of costs
related to the settlement of the
final client dispute would be
reimbursed. This is expected to be
received in the first half of FY24
and the associated credit will be
recorded as an adjusting item in the
Consolidated Income Statement.
The working capital inflow of £1.6
million (2022: outflow of £7.1 million)
includes an inflow of £12.2 million
from movements in receivables, net
of deferred income, which reflects
a strong focus on billing and
collection in the period, offset by an
outflow of movement in payables
of £10.6 million linked principally
to a reduction in the liability for
employee bonuses.
The investing cash outflow of
£5.2 million (2022: inflow of £21.0
million) includes £2.2 million related
to the acquisition of Forecast
Data Services Ltd as well as
capital expenditure of £2.4 million
(2022: £1.3 million), and deferred
consideration payments relating
prior period acquisitions of £0.7
million (2022: £nil). FY22 included
a cash inflow of £34.3 million of
proceeds from the divestment of
subsidiaries.
Financing cash flows included
market purchases of the
Company’s shares by the Employee
Benefit Trust of £8.4 million (2022:
£5.6 million) to satisfy expected
future vesting under employee
share-based payment schemes.
Lease payments were broadly
in line with the prior period at
£4.0 million (2022: £3.8 million).
Following the renegotiation of the
Chicago lease in the period, Group
lease payments are forecast to
reduce to c.£3.3 million in FY24,
excluding further acquisitions.
Credit facility and net debt
The Group ended the period with
a net bank debt position of £20.0
million measured at 31 July 2023
closing currency exchange rates.
For bank covenant purposes,
net debt is measured at average
currency exchange rates through
the period rather than closing,
resulting in an adjusted debt figure
of £21.0 million (2022: £0.2 million).
Bank leverage remains modest with
net debt at 1.04 times adjusted
EBITDA for bank covenant purposes
at 31 July 2023 (2022: 0.01 times).
Interest cover for bank purposes
was 10.5 times (2022: 18.5 times)
compared to a minimum covenant
of 4 times.
Our liquidity position remains
solid, with modest claims on future
operating cash flows beyond
growth-related investments in
working capital, operational capital
expenditures at similar levels
to prior years and the schedule
of contingent and deferred
consideration payments related
to acquisitions in prior periods.
There remains substantial undrawn
capacity on the Company’s credit
facility of £85.0 million committed
until September 2026.
As at 31 July 2023, the Company
had loans of £29.8 million drawn on
the facility (2022: £13.1 million). The
undrawn portion of this facility at
31 July 2023 was £55.2 million
(2022: £71.9 million).
Pension
The IAS 19 pension accounting
surplus decreased during the
period to £13.0 million from £38.7
million at 31 July 2022.
The lower surplus is due to a
decrease in the value of Scheme
assets of £82.7 million, driven
primarily by the reduction in the
value of the gilt portfolio which
comprises a large proportion of
Scheme assets, following the large
increase in UK gilt yields in the
period. This was partially offset by
a decrease in the Scheme liabilities
of £56.9 million, driven by increases
in the AA corporate bond yield
which is used to discount the
Scheme liabilities.
The Scheme remains fully hedged
against interest rate and inflation
rate risk measured on the basis of
the technical liability, which has a
different discount rate profile to
the accounting liability. At 31 July
2023, approximately 35% of the
Scheme’s assets were allocated to
growth assets (reduced from 40%
at 31 July 2022), of which less than
half were allocated to equities. The
non-growth assets are invested
in liability matching and cash flow
matching assets.
Excluding trustee expenses,
sponsor cash contributions to
the Scheme will reduce to £0.6
million in FY24 and £0.4 million in
FY25. In addition, the Company is
committed to make a contribution
of £0.4 million per annum towards
trustee expenses until FY27. The
levy payable by the company to the
Pension Protection Fund will reduce
significantly from £0.6 million in
FY23 to £0.04 million in FY24 as a
result of the Scheme’s improved
funding status.
Chris Kutsor
Chief Financial Officer and Chief
Operating Officer
1 November 2023
42 |
kinandcarta.com
Building a world that works better for everyone
| 43
Strategic Report A responsible
business
Overview of our approach
In a time of volatility, focus and collaboration is key. This
year was about operationalising our responsible business
commitments to directly and positively impact our
performance and our stakeholders.
The strategic exercises that we have invested in equip
us to better account for what are usually treated as
externalities, and instead appreciate and leverage the
interdependencies between people, profit and planet.
As collective ESG maturity continues at pace,
Kin + Carta is strongly placed to contribute as a force
for good.
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
Read more about our
responsible business
on page 46
Read more about B Corp
on page 47
44 |
kinandcarta.com
Building a world that works better for everyone
| 45
Strategic Report Strengthening our
responsible business
Operationalising our triple bottom line structure
G
Governance
Environmental
E
The foundation of our
triple bottom line, listed
Company structure
Social
S
P e o p l e
t
e
n
a
l
P
P
r
o
f
i
t
Environmental
Social
Governance
Our Planet
Our environmental framework
How we are measuring, and
reducing carbon emissions
Energy and carbon reporting
Task Force on Climate-
related Financial
Disclosures ("TCFD")
76
76
76
78
64
64
66
People
Onboarding process
Employee experience
Our culture
IDEA (Inclusion, Diversity,
68
Equality and Awareness)
Health and safety management 72
73
Human Rights
74
Clients
Governance
Articles of association
Committees and working
groups
Policies
56
56
58
Bringing our purpose to life
Over the past 12 months, our ESG focus has been powered by data as
we strengthen and mature the inputs and insights behind our triple
bottom line approach.
Completing our first double-materiality assessment has highlighted
the strength of our governance structure. Our established diversity
and inclusion programmes are a differentiating factor in attracting
and retaining talent, and we have innovated for improved carbon
accounting.
This combination of achievements strengthens the foundation of
our purpose, equipping us to invest in sustainability as a lever for
profitability in due course and scale our pre-competitive collaborations
to building a world that works better for everyone.
B Corp
We have been proud to increase our contribution to the UK and
global B Corp movement; our sponsorship of the Better Business
Act in April 2023 reflected our support of stronger regulation and
legislation.
We are proud to have directly consulted with B Lab on their digital
transformation roadmap, deploying our expertise and skills in
service of B Corp’s theory of change.
People
Planet
Profit
People
Community
Environment
Clients
Governance
Triple bottom line initiative
This year saw us complete our first double-materiality assessment
evaluating the importance of ESG topics relevant to financial
and impact materiality. Financial materiality looks at ESG topics
material to Kin + Carta’s ability to create sustained revenue, while
impact materiality maps the ESG topics material to “Building a
world that works better for everyone”.
Our progress over
the last 12 months
With renewed investment
in our responsible business
platform, we have contributed
to greater Company-wide
understanding of our ESG
strategy and stakeholder-led
approach. Indeed, investing
in sustainability is a lever to
profitability as client and
society-wide expectations
of businesses increases. We
are committed to creating
the conditions for every Kin in
every country to feel proud of
their skills-based, consulting
contribution.
integrate ESG
“ Continuing to
thinking into our
business strategy
creates value for all
our stakeholders,
from clients to
shareholders.
Jennifer Crowley
Global Director of
Responsible Business
46 |
kinandcarta.com
Building a world that works better for everyone
| 47
Strategic Report A responsible business
Our progress, achievements and notable activities
AUGUST 2021
New climate strategy and
action plan
SEPT-DEC 2021
B Corp certification
JUNE 2022
Awarded Microsoft
Sustainability Changermaker
Partner of the year
FEBRUARY 2022
Long-term goal to help
clients save carbon
established
JULY 2022
DECEMBER 2022
Scope 3 added to emissions
measured
Fully accounted for
global Scope 1, 2 and 3
emissions through offsetting
investment in carbon
removal technology
MAY 2023
JANUARY 2023
ESG ratings improvement
(MSCI and Sustainalytics)
Launched IDEA across SEE
region
JULY 2023
AUGUST 2023
Completion of first double-
materiality assessment
Pilot of an IDEA chat-bot to
educate and support Kin in
their education and allyship
Rigorous reporting for the
Taskforce on Climate-related
Financial Disclosure
AUGUST 2023
AUGUST 2023
Addition of four new
categories to Scope 3
emissions, resetting of base
year to FY22 as part of SBTi
commitment to net zero
Pause in tracking against the
client carbon goal but with
methodology developed
48 |
kinandcarta.com
Building a world that works better for everyone
| 49
Strategic Report A responsible business
continued
Double-materiality assessment recommendations
Context
Guided by our commitment to the
triple bottom line, we carried out a
comprehensive double-materiality
assessment to help orient our
ESG commitments and strategic
priorities.
Adopting a double-materiality
perspective enables us to identify
ESG priorities double-dividend:
they are important to the health
of our business, as well as to
our people, communities and
environmental footprint.
This section outlines the results
and presents our initial strategic
priorities.
Methodology:
Double-materiality unlocks
value creation and future-
proofs ESG disclosures
Assessing impact and financial
materiality can guide the
identification of opportunities that
create business value, while having
a positive impact on people and
planet.
Additionally, ESG reporting
standards are moving towards
including both inbound and
outbound ESG implications. For
instance, TCFD gold standard and
B Corp recertification leverage
double-materiality assessments.
Key findings
• Our people are at the core of
our value proposition for clients
and investors alike.
• Client decarbonisation yields
multiple onward benefits including
a positive contribution to our
investors’ net zero targets and
timelines, as well as
Kin + Carta’s own.
• All stakeholders, but notably
investors and clients, place
increasing value on data security
and privacy, where risks have both
financial and community wellbeing
safeguarding implications.
•
Internal employee insights (financial and impact lens)
• Expert opinion (financial and impact lens)
• Shareholder and client insights (financial lens)
• Client materiality assessments, annual reports and
• External research, including peer benchmarking
(financial and impact lens)
ongoing interviews
Key
1 Labour rights
2 Biodiversity
3 Water and effluents
4 Responsible procurement
5 Materials and waste
6 Public policy
7 Tax
11 Data security see page 51
12 Employee retention and recruitment see pages 64 to 67
13 Upskilling see pages 64 to 67
14 Diversity and equal opportunity see pages 68 to 71
15 Consumer health and safety
16 Economic contribution
17 Community impact
8 Responsible marketing and labelling
9 Energy and emissions see page 76 onwards
10 Business conduct see page 50 and pages 56 to 63
Environment
Social
Governance
Derived from the set of GRI indicators, selected to represent the main categories across E, S and G. This approach is aligned with incoming CSRD regulation.
High
y
t
i
l
a
i
r
e
t
a
m
l
i
a
c
n
a
n
F
i
9
See page
76 onwards
See page 51
11
12
See pages page
64 to 67
13
See pages page
64 to 67
ESG topics most
material to Kin + Carta
10
See page 50 and
pages 56 to 63
1
2
3
4
5
6
7
8
14
See pages
68 to 71
15
16
17
Low
Impact materiality
Higher
Culture
We will continuously strive
to deliver on maintaining
an engaging and inspiring
environment for our Kin.
To keep hearts and minds
engaged we will focus on:
•
Improving communication.
More frequent and varied (in
structure) communications
will contribute to a unified
sense of connection, while
also allowing for regional
nuances.
• Tapping into the double-
dividend of upskilling. We
are revisiting our values and
behaviours and investing
in consulting training and
upskilling.
• Bridging the gap. We
intentionally strive to
close any gaps in our Kin’s
perception of who we say we
are, what we do, and how we
do it.
Data security
We are committed to providing
clients and investors the certainty
that their privacy and data is safe
with us.
• On our internal data security:
we strive for our systems
to meet strict safeguarding
needs against data leaks and
cyber attacks, lowering our
risk profile to investors and
clients.
• On our client’s data security:
given our vertical focus (public
sector, financial services,
enterprise clients) we ensure
that we are playing our part in
safeguarding public wellbeing
by keeping data safe.
• On our data governance:
honouring our investors’
emphasis on data governance,
we ensure our processes are
fit-for-purpose to effectively
manage both internal and
client data security and
privacy risks.
Governance
We take pride in our existing
responsible business governance
functions, while also striving to
match the evolving expectations
on governance.
Lenders and investors are
increasingly recognising the
importance of enhanced
governance practices for
future-proofing businesses and
maintaining enterprise value.
We will respond to this by:
• Supporting the monitoring
and reporting of our ESG
objectives and targets with
data and evidence.
• Striving to meet a gold
standard in internal
communication by clearly
demonstrating how feedback
is being implemented.
• Maintaining clear
communication of
decision-making processes
to bolster transparency for
employees and investors.
50 |
kinandcarta.com
Building a world that works better for everyone
| 51
Strategic Report
A responsible business
continued
Responsible business KPIs
As a business, we plan in three-year cycles and having first set non-financial KPIs in 2021 we are now evolving these
key business metrics. Informed by the themes and insights of our first double-materiality assessment as well as this
next stage of growth for our Company we will refine our focus from eight to six non-financial KPIs.
In doing so we will cease to report on net new jobs, promotions and charitable donations. We will instead add
diversity of leadership and Scope 1 and 2 reductions as important people and planet KPIs respectively.
These ambitious KPIs contribute to the value and values of Kin + Carta.
+21
FY23 Outcome
+35
FY23 Target
+32
FY22 Outcome
+23-27
FY24 Target
Link to stakeholders
S
Employee net promoter score (“eNPS”)1
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.
This metric is, based on responses to the following statement in our
twice-yearly engagement survey, "I would recommend Kin + Carta as a
place to work to my friends and family". The score is calculated based
on responses to the statement, on a scale of 1-10 - responses of 9 and
10 are considered "promoters", 7 or 8 as "passives" and 6 or below as
"detractors". The score is reported with a number ranging from +100 to
-100 (calculation is % of promoters minus % of detractors).
Performance commentary
Our Kin have felt the effect of external volatility and internal
responsiveness to that.
The most difficult of business decisions, redundancies understandably
affected Kin morale.
We are confident in our path to a stronger global eNPS in FY24 and beyond.
Percentages of employees promoted per annum1
Definition
A metric for career progression, which is an important part of our
responsibility as an employer.
Performance commentary
In a year of constrained client demand, we have been intentional about
how best to invest in, and reward, the skills of our Kin.
Through FY24/25 we will define a new global career growth matrix and
adjust our performance review process.
26%
FY23 Outcome
20%
FY23 Target
N/A
FY24 Target
29%
FY22 Outcome
Mean gender pay gap1
Definition
An equality measure that shows the difference in average earnings
between women and men.
Performance commentary
This year has seen a significant improvement in our gender pay gap,
decreasing from 18% to 9% globally, exceeding our target by 7ppts. This
achievement reflects the maturity of our EX (employee experience)
capability across our regions from talent attraction to continuous
engagement and talent retention. There were also notable nuances in
the country by country workforce demographics that have made this
year particularly favourable.
We foresee an interim reversal in this progress as we incorporate new
regional teams.
Our FY24 target is ambitious in the context of our regional growth plans
and we model for the short and medium term.
We are proud to publish our UK Gender Pay Gap Report for the first time
this year, before doubling down on regional and country-specific trends.
Percentage of employees identifying as Asian,
Black, Latinx or other non-white1 (USA only)
Definition
A measure of our commitment to diversity, where we aim to have teams
that are representative of the communities in which they work.
Performance commentary
This year’s marked improvement is in part because of stronger data that
empowered better decision making.
Such is our ambition in this area that this specific KPI will be replaced
with a new KPI striving for greater diversity of leadership across Kin +
Carta.
9%
FY23 Outcome
16%
FY23 Target
13%
FY24 Target
18%
FY22 Outcome
Link to stakeholders
S
35%
FY23 Outcome
31%
FY23 Target
28%
FY22 Outcome
Diversity of leadership in FY24 with the
target of establishing global and regional
benchmarks.
Link to stakeholders
S
In the interim we will pause reporting on promotions as a standalone
non-financial KPI.
Link to stakeholders
S
Link to stakeholders:
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
Community
Environment
Clients
Suppliers
E Environmental
S Social
G Governance
52 |
kinandcarta.com
Building a world that works better for everyone
| 53
Strategic Report
A responsible business
continued
Net number of jobs added per annum
as a percentage of total1
Definition
Providing new careers in emerging areas of technology is the most
meaningful way we contribute to the prosperity of our communities.
This measure excludes job growth through acquisitions.
Performance commentary
Prudent management of the business this year saw a regrettable but
necessary reduction, not growth, of headcount. As future headcount
growth may well come from future acquisition activity, we will cease to
report on this metric.
4%
FY23 Outcome
19%
FY23 Target
N/A
FY24 Target
17%
FY22 Outcome
Carbon intensity1
Definition
Tonnes of CO2e per £m revenue – allows us to measure our carbon
footprint as we grow.
Performance commentary
The increase in carbon intensity from our previous financial year is
largely due to calculating emissions from a larger range of (Scope 3)
business activities and improved data collation.
Link to stakeholders G
5.68
FY23 Outcome
5
FY23 Target
5
FY24 Target
5.2
FY22 Outcome
Link to stakeholders
E S G
Equivalent percentage of net profit raised for charity1
Definition
An indication of our philanthropic contribution, comprising cash
donations, funds raised in Company initiatives and time volunteered at
charge-out rates.
Performance commentary
The difficult decision to prioritise business stability through the year
means that we were unable to meet the target this year.
As we reset our global philanthropy strategy we will cease measuring
against this specific metric and better account for the contribution of
Kin time and skills in addition to donations.
<1%
FY23 Outcome
2.0%
FY23 Target
N/A
FY24 Target
1.5%
FY22 Outcome
Total revenue from positive impact projects1, 2
Definition
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.
Performance commentary
Despite a challenging landscape, intentional focus on particular positive
impact revenue areas has resulted in exceeding our FY23 target by 1ppt
with a 10% positive impact revenue outcome. We commit to a bolder
target in FY24 as measurement, and Kin commitment to using business
as a force for good, accelerate.
Link to stakeholders
E
£19m/ 10%
FY23 Outcome
£19.25m
/9%
FY23 Target
£16.5m
/9%
FY22 Outcome
£35m/17%
FY24 Target
Link to stakeholders E
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 Updated KPI to include percentage of net revenue earned from positive impact projects in addition to total cash amount.
Link to stakeholders:
People
Community
Environment
Clients
Suppliers
E Environmental
S Social
G Governance
54 |
kinandcarta.com
Building a world that works better for everyone
| 55
Strategic Report
A responsible business
continued
G
Governance
Overview
The Board is collectively
responsible for leading Kin + Carta,
promoting its long-term
success, and generating value
for its stakeholders, including
shareholders and the 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 133 to 134, to establish
clear expectations and common
understandings of the roles,
responsibilities 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 107 to 111.
Articles of association
Kin + Carta’s articles of association
illustrate our commitment to
cultivating a 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. Also, during the
year, Kin + Carta sponsored
the Better Business Act, which
demonstrates our commitment
and the importance we place on
stakeholder engagement.
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, our internal
Climate Task Force led the TCFD
reporting, contributed to our
double-materiality assessment and
added a further four Scope 3 sub-
categories to our overall emissions
reporting for FY23.
The structure of this group is
currently under review as the
business prioritises net zero
feasibility more widely.
Responsible business governance highlights
Through conducting our double-materiality assessment and
engaging with ESG specialists within our key investor groups,
we have gained a fresh insight on their perspective and views
on ESG investment, and their expectations of Kin + Carta.
We continually monitor and educate ourselves on proposed
and new legislation that concerns Kin + Carta and ensure we
are prepared to be compliant with such upcoming changes.
Environmental and social risk
review task force
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.
The panel includes the global
and regional CEOs, the Global
Director of Responsible Business,
the Global Director of Commercial
Legal and Global Chief Strategy
Officer. During the year, informed
by briefing papers with input from
internal subject matter experts,
the review panel recommended
the progression of the majority
of opportunities. 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. During FY23,
we have made eight referrals to
the review board’s triage process.
The associated Environmental and
Social Risk Policy for Client and
Partner Engagements is described
on page 61.
56 |
kinandcarta.com
Building a world that works better for everyone
| 57
Strategic Report A responsible business
continued
G
Governance
Non-financial and
sustainability information
statement
Non-financial and sustainability
reporting required under the
Companies Act 2006 is included in
the Strategic Report as referenced
below:
Our business model is set out on
pages 22 to 23.
Our policies, due diligence
processes and outcomes in
relation to:
•
Anti-bribery and corruption -
see pages 58 to 59
• Environmental, social and
community matters -
see pages 59 to 61
• Our people -
see page 62
• Human rights -
see page 63
The principal risks and risk
management in relation to the
matters above are set out on pages
112 to 121.
Our non-financial KPIs are set out
on pages 52 to 55.
Our climate-related financial
disclosures are set out on pages 76
to 106.
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.
Anti-bribery and corruption
Associated
stakeholders
Policy
Anti-Bribery and
Corruption
Description
Sets out standards in areas
such as the prohibition of
bribery, facilitation payments,
political donations, and
minimum standards in relation
to charitable donations, gifts and
entertainment and conflicts of
interests. It sets out obligations
under the UK Bribery Act 2010
and the US Foreign Corrupt
Practices Act 1977.
Policy embedding, due
diligence and outcomes
Issued Group-wide with recipients
required to confirm they acknowledge
and understand the policy and is
accessible on our intranet.
Senior management team are
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.
2023 annual review found all
businesses within Kin + Carta to be
deemed low risk.
Link to stakeholders:
People
Community
Environment
Clients
Anti-bribery and corruption
Policy
Speak Up
(whistleblowing)
Description
Outlines the procedures and
channels for our people and
third parties to confidentially
raise any concerns about
suspected misconduct in
confidence without fear of
retaliation.
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 in alignment with
our Anti-Bribery and Corruption
Policy.
Associated
stakeholders
Associated
stakeholders
Policy embedding, due
diligence and outcomes
Issued Group-wide with recipients
required to confirm they acknowledge
and understand the policy and that is
accessible on our intranet.
During the year, there were no formal
whistleblowing investigations or
notifications, however, this policy was
consulted when conducting internal
investigations in accordance with
applicable policies.
Policy embedding, due
diligence and outcomes
Due diligence undertaken on charity
partnerships that involve donations,
fundraising or volunteering over
specified thresholds.
While we did not undertake formal
partnerships for the full 12 months
of FY23 we did fund and execute
a number of regional events that
contributed to community needs
e.g. continuing our long-standing
partnership in the US with Volunteers
of America by supporting their efforts
for veterans and foster children, and
partnering with Fundación Casa
Grande in Argentina to support a
key project to provide housing to
vulnerable women.
Further, we reviewed the funding and
planning approach to philanthropy,
agreeing upon new principles
that will be detailed in first half of
FY24 via a revised policy and Kin
communications.
58 |
kinandcarta.com
Building a world that works better for everyone
| 59
Strategic Report A responsible business
continued
G
Governance
Environmental, social and community matters
Associated
stakeholders
Environmental, social and community matters
Associated
stakeholders
Policy
Ethical and
Sustainable
Procurement
Associated
stakeholders
Policy
Environmental
and Social Risk
Policy for Client
and Partner
Engagements
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.
Policy embedding, due
diligence and outcomes
In the second half of FY23, work
was undertaken to improve the
responsible procurement practices
as a new supplier management team
was set up. This involved evolving
the supplier question to ask more
direct questions about carbon
measurement and management,
adapting the format to make it
easier to interact with, and refining
the communications to help the
supplier understand our context
and motivations as a responsible
business.
Description
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.
Policy embedding, due
diligence and outcomes
Policy and process revised and
improved during 2023 following
employee feedback and deepening
the connection with our carbon
commitments across our full value
chain. 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.
Associated
stakeholders
Policy
Supplier Code of
Conduct
Policy
Health Safety
+ Environment
Framework
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 2023
completed the assessment and,
in the majority of cases, met our
criteria. Where any non-compliance
with mandatory requirements has
been flagged, escalation steps were
followed and direct dialogue with the
supplier determined if alternative,
equal standards could suffice.
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 72.
Description
Sets high mandatory standards
and behaviours required from
our suppliers related to their
treatment of employees, health,
safety and environmental
responsibility and sustainable
procurement, 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 a
net zero plan wherever possible).
Description
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.
Link to stakeholders:
People
Community
Environment
Clients
Suppliers
60 |
kinandcarta.com
Building a world that works better for everyone
| 61
Strategic Report A responsible business
continued
G
Governance
Our people
Policy
Code of Ethics
Our people
Policy
Inclusion, Diversity,
Equity and
Awareness (“IDEA”)
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.
Description
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.
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
68 for information on our 2023 IDEA
progress.
Link to stakeholders:
People
Community
Environment
Clients
Suppliers
Associated
stakeholders
Human rights
Policy
Modern Slavery
Associated
stakeholders
Associated
stakeholders
Policy embedding, due
diligence and outcomes
Suppliers confirm via Supplier Code
of Conduct assessment that they
comply with all applicable human
rights and equality laws, and laws
prohibiting slavery, human trafficking
and any form of child labour, 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 that management is to act
accordingly. No incidents of Modern
Slavery were reported or identified
during the year.
Description
Sets our zero-tolerance approach
to any form of modern slavery
and child labour in recognition
that slavery, forced labour,
human trafficking and child labour
are 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 child labour in our
operations, supply chain, and
customer and client relationships.
Our 2023 Modern Slavery
Statement is available to view on
our website kinandcarta.com/
en/modern-slavery-act/ and
published on the Modern slavery
statement registry (https://
modern-slavery-statement-
registry.service.gov.uk/statement-
summary/E7nEbrAK/2023).
62 |
kinandcarta.com
Building a world that works better for everyone
| 63
Strategic Report A responsible business
continued
S
People
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.
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 onboarding
experiences welcome and
celebrate new Kin globally,
highlighting opportunities to learn,
connect and build confidence.
This year we reintroduced in-
person onboarding in our offices
to strengthen the opportunity for
connection and learning.
Results across 2023 demonstrate
that our new starters are both
engaged and content with the
experience, showing over 80%
satisfaction.
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.
This year we have continued to strengthen our Shared Service
offering, transferring transactional work to Shared Service teams and
creating space for projects that create moments that matter for our
people.
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.
EVP
Purpose
& culture
For more information
see page 65
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:
• Global pay equity programme.
• An extended pool of employees
eligible for LTIP awards.
Personal wellbeing:
Recognising the healing power
of connections and enabling
wellbeing initiatives.
• A wellbeing support programme
for our people in Europe,
providing access to wellbeing
and mental health support,
including on-demand therapy
and coaching.
• Employee assistance
programme.
• Emergency response protocols
launched in the Americas to
provide better support for
our people in the event of an
external emergency situation.
• Mindfulness sessions.
• Hosting a range of talks and
Purpose and culture:
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.
• Creation of a career growth
matrix to provide clarity of
expectations and better
support development.
• 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 and inclusive
leadership training.
• 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.
• Participation rates in our
engagement survey continued
to grow, which helped retain us
as a “Great place to work”.
• Enhancements to our
onboarding experience were
made-automating aspects of
the process and introducing
face-to-face sessions.
The above range of investments
and activities is over and above
continuous communication
and dialogue with Kin about the
performance of the business,
in the context of financial and
economic performance. These
happen as frequently as monthly
at regional meetings led by the
regional finance directors and
CEOs and quarterly at all-company
meetings, led by CSO, CFO and
CEO. At key points in the year or at
critical events, detailed emails are
shared recapping what is shared in
scheduled 'town hall' meetings.
Professional
growth
Personal
wellbeing
Recognition
& reward
Case study
Supporting disability inclusion
1,849
Number of employees
as at 31 July 20231
14.93%
Staff turnover for the year
ended 31 July 20231
1 For these purposes, employee refers to an
individual engaged under a contract of service
and, therefore, does not include our contingent
workforce.
1,822
Full time
27
Part time
With the launch of the Universal
Access Affinity Group, we formed
a global community whose aim
is to break down access and
inclusion barriers for disabled
and neurodivergent people at
Kin + Carta. It became clear that
there was still work to be done
and an important element of
enabling disabled people to be
successful within the business
is understanding the gaps that
ensure inclusion in the recruitment
process.
Therefore, we commissioned an
external specialised company
(Celebrating Disability) to
undertake an audit and gap analysis
for the recruitment and onboarding
process. As a result, providing us
with a report, recommendations
and tangible outcomes that will
enable us to develop a robust
recruitment and onboarding
process that welcomes and
engages disabled candidates and
employees.
Since the gap analysis was
completed, a global taskforce has
been launched between all our
Talent Acquisition teams, Universal
Access Affinity Group, and our
Global IDEA team to prioritise and
deliver on the recommendations
from Celebrating Disability and our
employees.
64 |
kinandcarta.com
Building a world that works better for everyone
| 65
Strategic Report A responsible business
continued
S
People
Our 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.
Examples of how we are embedding this for our people include:
Purpose and culture
Professional growth
• We support communities of purpose
and practice, and we strive to facilitate a
borderless organisation.
• Leadership development in various forms
including Coaching.
• Creation of a career growth matrix to
provide clarity of expectations and better
support development.
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 52 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.
Personal wellbeing
Recognition and reward
• A wellbeing support programme for our
people in Europe, providing access to
wellbeing and mental health support,
including on-demand therapy and coaching.
•
Iterating on our performance framework to
provide meaningful growth conversations,
evaluation of values and clear expectations,
celebrating progression and rewarding
people fairly and equitably.
• Global pay equity programme.
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.
“ In the ever-evolving
landscape of DEI, the journey
from good to great requires
proactive vigilance. While
governments and companies
may lag behind, society surges
forward. By continuously
tracking global and country-
specific DEI trends, we stay
ahead of the curve, ensuring our
programs not only keep pace
but anticipate societal shifts.
Sheeren Barros
Global Head of Diversity and Inclusion
66 |
kinandcarta.com
Building a world that works better for everyone
| 67
Strategic Report A responsible business
continued
S
People
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.
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 at:
kinandcarta.com/en/idea/
Our IDEA vision
Strategic action
objective
Progress in 2023
Our teams are
as diverse as the
population in the
regions in which we
operate.
Both gender and ethnic diversity will always be a priority in hiring. Alongside these, this year we
chose to review our hiring and onboarding processes and practises from the lens of someone with a
disability. We partnered with Celebrating Disability, a company that specialises in disability inclusion,
to complete a full gap analysis of our hiring practises. Once the review was complete, we invited
our Talent Acquisition teams to complete comprehensive training and have launched a taskforce to
deliver the actions.
People are paid
equitably
for equal work.
We continue to run a full pay equity analysis every six months alongside 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). This year we prioritised understanding our gender pay
gap in all regions, increasing the frequency of reporting and the quality of the data.
Employees feel as if
they can bring their
authentic selves to
work.
The IDEA theme for the year was "By removing borders and forming bonds we will create meaningful
connections". To meet this theme, we ensured all our events and activities were available to all
regions, launched an internal global Hub with information on how to get involved alongside quarterly
all-hands. This year, we have run over 50 events leading to 85% (global average) of our Kin stating
that they can be themselves at work.
IDEA is a
sustainable and
ingrained part
of how we do
business.
We are IDEA leaders
in the technology
community.
As our true skill at Kin + Carta is creating new technology, we wanted to use that skill to enhance
our IDEA programme. The responsibility and engineering teams partnered to create a bot which
integrated fully with our Slack channels. This bot contains a comprehensive DEI glossary, an
anonymous ask me anything, and an anonymous feedback form, all managed by the IDEA team.
This year we worked closely in our Latin America region to promote diversity and inclusion initiatives
with strategic partners. In Argentina specifically, we were able to join a professional networking net
that promotes inclusive work spaces for sexual diversity and generates ties to attract LGBTQIA+
talent to the different organisations that comprise it. We are actively looking to join the same
network in Colombia. In addition to this, we were able to lock different educational spaces with
a separate partner in the Latin America region, who undertook three different workshops: one
centre in inclusive communication, another space specifically during Pride Month for awareness
of the violence the LGBT community faces, and a final workshop on sexual diversity and identities,
where we got the certification for our Buenos Aires office as being a safe environment for the LGBT
community.
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.
The affinity groups, listed below, are always evolving and are empowered to make substantial changes to Kin + Carta
as a whole by influencing Company policy, compensation and delivery.
People of the Global
Majority (previously
called BAME)
Purpose: to provide
support to Kin + Carta
employees from Black,
Asian, mixed and other
minority ethnic groups.
Black + Kin
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.
Pride+ (previously
called LGBTQIA+)
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 Heath
Purpose: to actively
support our Kin with
their mental health and
wellbeing.
Parents’ Group
Philanthropy
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.
Children of the 60s,
70s and 80s
Purpose: bring awareness
to, and be a resource
for, Kin in their ’40s, ’50s,
and beyond and their
supporters.
68 |
kinandcarta.com
Building a world that works better for everyone
| 69
Strategic Report A responsible business
continued
S
People
The gender diversity of our Board, management
and employees as at 31 July 2023
All employees
802
1,047
Female
Male
Senior managers
13
23
Female
Male
Board
3
4
Female
Male
For these purposes:
• Employee refers to an individual engaged
under a contract of service and, therefore,
does not include our contingent workforce.
• Senior managers for these purposes
is as defined in section 414C(8) of the
Companies Act 2006 and includes
the directors of the Group’s subsidiary
undertakings.
For information on ethnic diversity, see the KPI
“Percentage of employees identifying as Asian,
Black, Latinx or other non-white” on page 53.
For information on other key demographic
information related to our people, see pages
149 to 150.
IDEA initiatives
We are committed to creating
an inclusive environment for all
employees, as part of this continual
commitment we launched the IDEA
Bot as a pilot across Europe. The
reason for the pilot is to address
feedback from our Kin who, from
time to time, struggle to keep up
to date with the latest terminology
and to reduce the fear of saying the
"wrong thing" by empowering our
Kin to discuss new topics and feel
more comfortable to ask questions
and shape our IDEA approach.
The IDEA Bot was built in
partnership with our in-house
developers and is embedded
in our internal communication
tool. It contains a comprehensive
DEI glossary and an Anonymous
Question function, which is then
answered and published by the
IDEA team. To ensure the bot adds
as much value as possible, we are
running a comprehensive pilot
in one region before rolling it out
globally.
Mental health team
and programme
We are continuing to grow the
mental health first aid team, now
to over 45 qualified individuals
across Europe. All of our Mental
Health First Aiders (“MHFA”) have
been trained by Mental Health
First Aid England. The smaller task
force has now merged with our
IDEA programme to become one
of our nine Affinity Groups. The
European Mental Health Affinity
Groups priority is 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.
• Maintaining our internal mental
health website where Kin can
access various resources to
support mental health.
• Free anonymous therapy and
coaching 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.
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.
70 |
kinandcarta.com
Building a world that works better for everyone
| 71
Strategic Report A responsible business
continued
S
People
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.
• 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.
Our Accident Severity Rate (“ASR”)
was 47 (2022: 74). 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 via Employee
Assistance Programs, Mental
Health First Aiders and wellbeing
workshops.
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.
S
Human rights
Human rights
At Kin + Carta, we are committed
to equawlity, 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:
For more information on our
Code of Ethics
see page 62
For more information on our
Inclusion, Diversity, Equity and
Awareness Policy
see page 62
For more information on our
Modern Slavery Policy
see page 63
For more information on our
Speak Up Policy
see page 59
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
Kin + Carta is proud to remain
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.
For more information on practices
related to our people and inclusion,
diversity, equity and awareness
(“IDEA”) see page 68
72 |
kinandcarta.com
Building a world that works better for everyone
| 73
Strategic Report A responsible business
continued
S
Clients
Clients
Positive impact client work
The responsible business agenda
is now a core focus for our clients
and integral for progress as leaders
in their respective sectors. Kin +
Carta’s continued commitment to
exploring how to make a positive
contribution to our clients’ own
societal and environmental targets
is both a point of differentiation
and a point of pride.
Deadlines on decarbonisation
commitments now loom large
for all companies. The need for
data, insights and digital twin
strategies to operationalise these
commitments is growing rapidly.
Across all of our verticals and
regions, 2023 saw an uplift in
discussions and debate about the
role of digital in decarbonisation
and the forcing function that
regulation is playing for our clients
and their industries.
Challenging economic conditions
did see a temporary reduction
in committed spend and so
we ourselves have paused
formal measurement of client
decarbonisation tonnage achieved
after an encouraging start with
robust methodology developed, a
number of client engagements and
industry recognition.
Our proprietary approach to
evaluating positive impact
takes into account a number
of environmental, societal, and
reputational and remit variables.
We are proud of exceeding our
non-financial KPI of 9% of total
revenue coming from positive
impact work and delivering
impact driven work with clients
globally during 2023 that
equates to 10% of our total revenue.
We strive to increasingly introduce
these elements of responsible
business into client conversations
at the earliest stage, with a view
to maximising the outcomes
and impact that we can achieve
together. New initiatives like the
Kin + Carta Way, consulting
training, automated tracking and
other initiatives will further enhance
how we work in this area and the
direct client benefit it provides.
Robust governance for client
reassurance
In addition to our project
initiatives, a core element of
implementing responsible business
practices with our clients is
maintaining well established
processes, supported by our
policies:
See pages 58 to 62 for information
on our Anti-Bribery and Corruption
Policy, Code of Ethics, and
Environmental and Social Risk
Policy for Client and Partner
Engagements.
74 |
kinandcarta.com
Building a world that works better for everyone
| 75
Strategic Report A responsible business
continued
E
Planet
Our planet
Our environmental framework
During the year no environmental
incidents were reported.
A summary of our environmental
management policies and
frameworks can be found at:
For more information on our Ethical
and Sustainable Procurement Policy
see page 61
For more information on our
Environmental and Social Risk Policy
for Client and Partner Engagements
see page 61
For more information on our health,
safety and environment framework
see page 60
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 106.
How we are measuring, and
reducing carbon emissions
We measure 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:
• Replacing core networking
equipment in Denver, Portland,
Buenos Aires and Edinburgh
with a sustainable cloud
managed network.
• Removing legacy IT
infrastructure from our London
office and migrating it to the
cloud.
• Optimising cloud resource to
avoid operating under-utilised
infrastructure.
Our ongoing work to reduce
consumption includes:
•
•
Improving corporate travel
management.
Internal training and upskilling
on how we can lower energy
consumption.
• Continuing IT infrastructure
efficiencies.
Energy and carbon reporting
Kin + Carta’s carbon emissions
for 2022/23 have been calculated
primarily using DEFRA (UK) and
EPA (America) 2023 greenhouse
gas emission factors. 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 using the pro-rata
method or based on floor area
and average consumption for
similar buildings. Travel data was
obtained through expense claims
and travel management companies.
Both distance and spend-based
methodologies were used to
calculate travel emissions.
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. No mandatory
emissions have been excluded from
the emissions data.
Carbon emissions and energy consumption 2023
Scope 1 emissions (tCO2e)
Scope 2 emissions (tCO2e)
Total Scope 1 and 2 emissions (tCO2e)
Energy consumption electric, natural gas and grey fleet (kWh)
UK and
offshore
Global
(excluding UK
and offshore)
-
37.06
37.06
14.27
112.23
126.50
192,298
464,968
% UK
-
24.82
22.66
29.26
Purchased
goods and
services
Capital
goods
Waste
generated
(including
water)
Business
travel
Employee commuting
and working from home
(equipment only)
Leased
assets
Total
Global Scope 3
emissions (tCO2e)
145.63
114.08
16.73
536
131.39
7.92
951.91
Global energy consumption split and carbon intensity
kWh energy consumed
Natural
gas
Transport
(grey
fleet)
Electricity
Total
Scope 1 Scope 2 Scope 3
tCO2
Total (of
Scopes
1 & 2)
Intensity
ratio (of
Scopes
1 & 2)
2023
488,010
78,196
91,060 657,266
2022
638,813 350,004
16,320 1,005,137
2021
632,949
41,340
5,754 680,043
14
68
9
149
124
148
956
829
N/A*
164
191
157
0.83
0.97
0.87
* Not reported in previous years.
The intensity ratio has been calculated as: tCO2e produced per million pounds of turnover.
Total (of
Scopes
1, 2 & 3)
1115
1021
Intensity
ratio (of
Scopes
1, 2 & 3)
5.68
5
N/A*
N/A*
76 |
kinandcarta.com
Building a world that works better for everyone
| 77
Strategic Report A responsible business
continued
E
TCFD
Leaning into regulation for greater business impact:
Kin + Carta’s Task Force on Climate-related Financial Disclosures ("TCFD") Annual Report 2023
Summary of TCFD
Disclosures
Kin + Carta, our industry, and the
economy are at something of a
tipping point as digital transformation
powers data and artificial intelligence
("AI") which, in turn, powers
decarbonisation. We are committed
and ambitious in playing our part in
the climate transition.
With this commitment in mind, we
are driving efforts to enhance our
climate-related disclosures and hold
ourselves to account in taking action to
contribute and build our resilience for
the transition to a low carbon economy.
While climate-related reporting is
at a relatively nascent stage across
our industry, we will continue to drive
efforts to strengthen responsible
business practices, further enhance our
climate and wider sustainability-related
disclosures and drive value for our
stakeholders including investors, clients,
supply chain, employees and the planet.
We set out in this section our climate-
related financial disclosures which
we consider to be consistent with
the TCFD recommendations and
recommended disclosures. The table
below is a summary view of the TCFD
disclosures.
TCFD pillars
Governance
Pages 81 to
84
TCFD disclosure
recommendations
a. Describe the Board’s
oversight of
climate-related risks
and opportunities.
Pages 81 to 82
Strategy
Pages 86 to
95
b. Describe
management’s role
in assessing and
managing climate-
related risks and
opportunities. Page 82
a. Describe the
climate-related risks
and opportunities
the organisation has
identified over the
short, medium, and
long term. Pages 90
to 93
b. Describe the impact
of climate-related
risks and opportunities
on the organisation’s
businesses, strategy,
and financial planning.
Pages 94 to 95
How we respond to these recommendations
• While the Board has delegated overall responsibility for the delivery of the
Group’s strategy (i.e. including its climate strategy) to the Group Chief
Executive, our Governance framework ensures that the Board maintains
oversight of the climate-related issues impacting our business.
•
The Board meets seven times annually, with climate-related matters
typically discussed in three of those meetings.
• Within the Exec, the Chief Financial Officer and Chief Operating Officer
(a split role filled by one individual) prioritises sustainability initiatives,
including regulatory and statutory compliance related to Environmental,
Social, and Governance ("ESG") standards.
• We expect all of our Kin in management positions to take responsibility
for monitoring climate-related risks and opportunities and escalating
them when necessary, with additional specific responsibilities being
allocated to the Global Director of Responsible Business and across the
Responsible Business Platform.
• We recognise that not all climate-related risks and opportunities are
foreseeable, but we are working to better identify, assess, prepare for
and adapt to these risks by carrying out qualitative scenario analysis and
building on our Climate Strategy and Action Plan.
• We have defined the short term as by 2025, medium term as by 2030
and long term as by 2050. These time frames are attached to different
climate-related risks and opportunities depending on the timeframe
within which the risk could materially impact the business.
• Our Climate Strategy and Action Plan ("CSAP") consolidates the
governance, strategy, risk management and metrics framework that we
adopt to address climate-related issues.
• We have disclosed how conducting scenario analysis has highlighted and
equipped us to prioritise climate-related issues, which may impact our
business materially. We have outlined seven strategic actions, which we
are validating and may employ to address the impact climate-related
issues have on our business and strategy.
• We recognise that to improve our adherence to the TCFD disclosures,
we will need to further assess and disclose how climate-related risks and
opportunities impact 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.
Pages 86 to 93
•
To inform our strategic planning, we have conducted qualitative
scenario analysis, which incorporates the IPCC’s Shared
Socio-economic Pathway ("SSP") narratives 1 and 5 (which account for
societal, economic and technological change) to assess different future
climate-related scenarios. These are the same pathways we used last
year, which helps us to remain consistent in our reporting.
• We recognise that, to improve our strategy, we may benefit from the use
of more than two scenarios to prepare our business for more potential
circumstances.
Foreword from our CFO
A year of intentional integration, leaning into the pace of
regulatory advancement.
I am proud of our investment in climate disclosure over the last
12 months, in particular, the detail and rigor of this Report, which
enables us to make even greater progress in the year to come.
Highlights include:
• Submission to the Science Based Targets initiative
• Scope 3 measurement added a further four subcategories
• Successful completion of inaugural double-materiality
assessment
• Evolution of supplier code-of-conduct to engage on net zero
target
A need to focus has informed the short-term pausing of our
ambitious client carbon-saving commitment, in part as a reflection
of client priorities in a time of economic challenge. We do, however,
remain excited by, and confident in, our ability to facilitate the
growing connection between digital and decarbonisation. As a
certified B Corp we adhere to their theory of change and to our
collective responsibility as business leaders.
Adhering to, and exceeding, regulatory expectations contributes
to our mission to build a world that works better for everyone.
Chris Kutsor,
Chief Financial Officer,
Chief Operating Officer
Kin + Carta Board Member
78 |
kinandcarta.com
Building a world that works better for everyone
| 79
Strategic Report A responsible business
continued
E
TCFD
TCFD pillars
Risk
Management
Pages 96 to
103
TCFD disclosure
recommendations
a. Describe the
organisation’s
processes for
identifying and
assessing climate-
related risks. Page 96
How we respond to these recommendations
• Our approach to climate risk assessment accounts for both transition
and physical risks, including the six TCFD subtypes that could affect
Kin + Carta: policy and legal, technology, market and reputation-related
transition risks, and acute and chronic physical risks.
• We identified emerging risks across each of these categories, which are
validating and may add to our Responsible Business Risk Register in future.
•
Each risk that we identify is assessed with a rating (a product of the
assessed likelihood and probability of occurrence), current and future
mitigations, and a tolerance level.
Metrics and
Targets Pages
104 to 106
b. Describe the
organisation’s
processes for managing
climate-related risks.
Pages 100 to 101
• Our risk ratings (which ascend from 1 (very low) to 25 (very high)) are
categorised into five levels, which are associated with an acceptance
level.
•
Executive Directors conduct the assessments and assign risks with
ratings of between 9 and 15 to a risk owner. Risks with ratings of 16 and
above are taken up to the Board for further consideration.
c. Describe how
processes for
identifying, assessing,
and managing climate-
related risks are
integrated into the
organisation’s overall
risk management: Page
102
• Our risk rating approach equips Senior Leaders to determine the
significance of climate-related risks relative to each other and to other
principal risks.
• We aim to integrate climate considerations more effectively into our risk
management framework and throughout our business operations.
a. Disclose the
• We have detailed the metrics we use to measure our climate and wider
metrics used by the
organisation to assess
climate-related risks
and opportunities in
line with its strategy
and risk management
process. Pages 104 to
106
b. Disclose Scope 1, Scope
2, and, if appropriate,
Scope 3 greenhouse
gas ("GHG") emissions,
and the related risks.
Pages 104 to 105
c. Describe the
targets used by the
organisation to manage
climate-related risks
and opportunities and
performance against
targets. Page 105
environmental impact and acknowledged which aspects of our business
operations are responsible for the largest shares of these levels.
• We have identified which metrics are relevant for measuring each GHG
emissions Scope and disclosed environmental impact metrics outside
of GHG emissions for water use, waste management and electricity
efficiency. Our GHG emissions results are as follows:
•
•
•
Scope 1: 14 tCO2e
Scope 2: 149 tCO2e
Scope 3: 951 tCO2e
• We have outlined remedying actions that will be taken to mitigate the risk
that these emissions sources represent.
• We outline how the metrics we disclose are necessary for understanding
our progress towards our targets; primarily, becoming net zero by 2027.
• We intend to use the SBTi methodology alongside the GHG protocol to
develop and disclose interim targets en route to net zero. And in parallel,
we intend to develop forward-looking metrics that consider our strategic
planning time horizons.
Governance
At Kin + Carta, our strong governance foundations
provide the rigour and process to further embed ESG
and the climate crisis in our strategy and operating
model. In the boardroom, across management and
all teams, climate considerations increasingly feed
into discussions ranging from strategy and risk to
acquisitions and performance objectives.
Kin + Carta’s Board, including the Executive and Non
Executive Directors, hold overall accountability for
climate-related risks and opportunities ("CROs"),
overseeing key policies concerning environmental
and climate matters such as our Climate Strategy
and Action Plan ("CSAP") and risk registers. The Kin +
Carta parent board (i.e., the "Board") has delegated
responsibility for the delivery of our strategy to the
Group Chief Executive, who can delegate further,
while retaining primary responsibility for strategic
delivery. In discharging responsibilities, the Board
takes appropriate account of the interests of our
stakeholders including clients and wider society. Our
Governance framework (Figure A) enables the Board to
have oversight of the CROs impacting our business and
address and account for climate and nature-related
matters and map the points of connection with wider
sustainability-related issues with our global director
of responsible business reporting to our global chief
strategy officer, and thus a point of connection and
continuity between the different parties.
Our Board and Management Committees provide
holistic oversight of climate-related issues, ensuring
we are all accountable for taking action to meet our
goals. The Board consults on, and approves, ambitious
medium-term goals for each aspect of the triple
bottom line: people, profit, and planet. These goals are
typically set to be achieved within five years before
being further broken down into annual initiatives with
a specific responsible business initiative set for this
coming year that includes a discovery and roadmap for
net zero 2027. Progress against this will be updated to
leadership monthly and to the Board each time they
meet.
The Board meets at least seven times annually.
Currently, climate-related matters are discussed
in three of those meetings. In September 2022, for
example, the Board approved targets to offset all
emissions from our global business by the end of FY23
and reach net zero greenhouse gas ("GHG") emissions
by the end of 2027. The Board recognised that
additional work is needed to determine the strategies
for achieving the net zero target, an action which will be
explored next year. In January 2023, the Board received
an overview of the key ESG initiatives for FY22/23
developed in collaboration with the Climate Taskforce.
Figure A: Our governance structure for climate-related issues
Kin + Carta’s Board
Board Committees
Audit
Remuneration
Nomination
Exec
CEO
1
Climate Task Force*
CFO and COO
Management Forums
3
Ops Council
2
Environmental and Social
Risk ("ESR") Review Board
Key:
Board Committees
Management Committees
Reports up to
* Climate Taskforce reports to the Board but is not a formal committee of the Board.
80 |
kinandcarta.com
Building a world that works better for everyone
| 81
Strategic Report
A responsible business
continued
E
TCFD
These initiatives range from measuring, managing and
reducing our environmental footprint, to exploring
client-facing services related to sustainable consulting
and engineering. The intention is to increase the
frequency with which board meetings discuss and
directly contribute to the net zero feasibility study and
roadmap through FY24.
A robust system of governance sits at the core
of Kin + Carta’s climate strategy
The Board assigns specific responsibilities to Board
Committees and delegates further authority to the
Group Chief Executive. The Chief Executive Officer
actively promotes the People and Responsibility
Platforms, prioritising sustainability and addressing
climate risk. She drives responsible business
practices, safeguarding the wellbeing of employees
and stakeholders involved in our activities. The CEO
assumes responsibility for monitoring Key Performance
Indicators reflecting our people, profit, planet ethos.
The Chief Financial Officer and Chief Operating
Officer (a split role fulfilled by one individual) oversees
the global Operations Platform, which encompasses
Finance, Legal, Employee Experience, Connective
Digital Services (IT), and Risk Management. Within
this platform, they prioritise sustainability initiatives
including regulatory and statutory compliance related
to ESG standards. He also ensures the implementation
of robust business conduct policies that align with
sustainability principles.
Underpinning the Board, three forums have key
responsibilities for managing climate and responsible
business-related issues (Figure B). We are committed
to ensuring that our governance structure remains
adaptable, aligned with strategy and the evolving
demands of the market. We recognise the benefits
of assessing and adjusting our governance practices
regularly to respond to changing circumstances
effectively.
Management’s role in climate-related change
Day-to-day responsibility for monitoring exposure to
CRO and responding to environmental incidents in
"real-time" sits with each member of the Leadership
Team. Currently, our Kin can escalate climate-related
incidents, risks, or concerns to management via two
processes depending on the "type" of issue (Figure
C). Responsibility for providing rigorous oversight and
management of climate-related issues that is essential
for progressing our climate goals, however, sits with
roles within the Global Responsible Business Platform
(Figure D).
Figure B: Three committees have key responsibilities relating to climate and wider "responsible business" issues
Forum name
Forum purpose
Which
climate-related
issues is the forum
responsible for?
1
Climate
Task Force
Assess and review
business-wide climate-related
risks, opportunities, metrics
and targets.
2
Environmental and
Social Risk Review Board
Assess and approve potential
new client projects or
partnership opportunities.
3
Ops
Council
Advise the Executive Directors
on matters delegated to them
by the Board and ensure
strong alignment on business
priorities and actions.
• Measuring, managing and
• Assessing the potential
• Advising the CEO, CFO
monitoring Company Scope
1, 2 and 3 emissions.
• Overseeing adherence to the
"responsibility assignment
matrix" to enable consistent
reporting.
environmental/social risks
identified in an opportunity
(e.g., through a project brief)
during the qualification
stage.
• Agreeing on whether to
approve the opportunity.
Frequently, as is required
(including when referrals are
received) (since FY23)
and COO on responsible
business matters e.g.,
ensuring they support and
uphold the development
and monitoring of ESG
commitments and initiatives
proactively.
Weekly meetings. Responsibility
Platform matters are considered
quarterly (at least) (since FY21)
Frequency and
operational since
Monthly (since FY22)
Do they report to
the Board?
Yes – Reports to the Board
No – Reports to
the Ops Council
Yes – Reports to the Board
(via reports from the CEO, CFO
and COO)
Figure C: Processes for escalating two types of climate-related issues to management
Type of issue
Process for escalating to management
Climate-related event /
potential incident (e.g.
extreme weather event
impacting Kin + Carta)
Colleague submits an Incident
Report via online incident
management system.
Incident report is received by the critical
incident team (comprised of key compliance
leads including the Head of Risk Management)
and logged automatically.
The subject matter expert from the critical incident team assesses
the incident and potential responses. They approve/recommend
an approach to the appropriate colleague or board, in accordance
with the Group’s Delegation of Authorities.
Learnings from the incident are embedded
into the appropriate framework e.g., strategy
or risk management.
Potential environmental/
climate-related risk
identified in a client project
or partner engagement
opportunity
Risk identified during weekly
high-level review of all new
opportunities.
Risk flagged to Chief Growth Officer and
Regional Business representatives.
ESR review document drafted (by
Responsible Business Rep) and sent
to the designated review group.
The designated review group
conducts an initial vote. If the vote
is split, a meeting is convened, and
second vote is taken.
Reasons for decision are captured in a
single global log of ESR cases and outcomes
(which is made available to the Board) and
communicated to relevant stakeholders.
82 |
kinandcarta.com
Building a world that works better for everyone
| 83
Strategic Report
A responsible business
continued
E
TCFD
Figure D: Key management roles with climate and environment-related responsibilities, which sit on the Global
Responsible Business Platform
Management
title
Climate-related
responsibilities
• Monitor climate-related risks and opportunities
and raise climate-related risks.
•
•
Identify and introduce strategic initiatives and
opportunities to support clients and collaborate
with partners on climate-related projects.
Lead and oversee all "responsible business"
initiatives to enhance positive impact across the
triple bottom line and build towards B Corp
re-certification in 2024.
• As a member of the ESR Review Board, assess
client / partnership opportunity briefings to
identify and advise on environmental or social
risks they may present.
All
management
positions
Global
Director of
Responsible
Business
Health,
Safety and
Environment
Advisor
Climate-related forums attended
ESR Review
Board*
Climate Task
Force
Ops Council
Dependent on the individual role
Chairs the
Climate Task
Force
Responsible
for assessing
environmental
or social
risk of client
and partner
opportunities
Chairs the
quarterly
meetings
dedicated
to the
People and
Responsibility
Platforms
Attends
quarterly
meetings
dedicated
to the
People and
Responsibility
Platforms
•
Lead the annual measurement of Scope 1, 2 and 3
emissions.
Contributes
as required
• Collaborate with the rest of the global
responsibility platform, Finance, Risk and
the Climate Task Force on maturing carbon
accounting and embedding environmental risk x
location thinking into the business.
•
Jointly lead on the net zero feasibility project with
the Global Director of Responsible Business.
Accountable
for reporting
on emissions
*Environmental and Social Risk Review Board.
84 |
kinandcarta.com
Building a world that works better for everyone
| 85
Strategic Report A responsible business
continued
E
TCFD
Strategy
The economy is undergoing multiple inter-connected
shifts, which add complexity to our business
operating environment and mission to build a world
that works better for everyone. As a triple bottom line
B Corp, we recognise that integrating considerations
of the evolving climate transition into our strategy
can empower us to understand our clients’ evolving
needs, ensure regulatory compliance, and deliver on
our purpose.
This year, we have engaged in an in-depth explorative
climate scenario analysis to build our understanding
of Kin + Carta’s exposure to climate-related physical
and transition risks and opportunities. Evaluating the
insights from the climate scenario analysis has supported
us to identify and monitor our exposure to risks and
opportunities and frame our approach to build the
resilience of our operations and strategy.
Although climate-related risks and opportunities ("CROs")
will impact Kin + Carta in ways that we may not yet be
able to identify, inaction now may lead to higher costs
and missed opportunities in the future. We believe this
assessment can inform our investment and growth
decisions so that the strategies we develop mitigate the
impact of climate-driven changes on the economy.
Although the absolute direct environmental impact
of Kin + Carta and digital consulting sector is low
relative to high emitting organisations and sectors, our
Climate Strategy and Action Plan ("CSAP", first set in
2021), acknowledges that our climate strategy will be
evaluated in the context of the nuance of our
industry’s specific pathway and with scrutiny relative
to our peers. The CSAP consolidates the
climate-related actions that we employ currently
under the four TCFD pillars (governance, strategy, risk
management and metrics and targets) and will mark
the progress we make in enhancing these in future. It
outlines how we take an inside-out approach as we aim
to commit with ambition to addressing, first, our own
operational climate-related impact before affecting
change across our value chain.
Our B Corp status is evidence of our strategic
commitment to our triple bottom line values, high
environmental performance standards, and transparent
accountability. In 2024, we will undergo the B Corp
recertification process (required every three years). As
we look to recertify, we recognise the importance of
reflecting on the approaches we take to developing and
strengthening disclosures, managing and accounting for
CRO in our strategy.
The nature of Kin + Carta’s offering to clients is such
that no specific supply chain is at risk from different
climate-related scenarios. The business strategy is
to be dynamic, nimble and responsive to the evolving
needs of clients and their value chains as affected by
climate change. This includes empowering clients to
have better command of their business performance
data in times of volatility and to move their on-prem,
physical systems to the cloud to reduce risk. The
business strategy has scale, diversification of location
and hybrid working built in and each way will support
resilience in a 2°C or lower scenario.
Climate-related scenario analysis methodology
In FY23 we undertook an in-depth climate scenario
analysis to explore potential future climate-related
conditions (social, political and economic) and hazard
events, which could impact our business, i.e., transition
and physical CROs. Following our FY22 TCFD reporting
experience, we evolved our scenario analysis approach;
the methodology and key findings are outlined below.
"Physical" methodology: The physical scenario analysis
involved assessing the exposure of 16 Kin + Carta offices
to six hazard types (wildfire, drought, heat, tropical
cyclone, riverine and coastal flooding) in two scenarios
(a baseline and warming scenario RCP8.5) across four
time horizons (pre-industrial, 2030, 2050, and 2080). The
modelled output outlines the percentage (%) of land
area within a 50km2 grid cell (in which the Kin + Carta
offices are each located) which is exposed to each
extreme event type annually.
In conducting this exercise no long term risks were
identified, with all risks being more pertinent in the
short and medium term.
"Transition" methodology: Building on last year’s
reporting assets, we first developed a schematic profile
of our operations accounting for our top and bottom
line drivers (e.g., staffing costs), global physical asset
distribution, existing risk management and climate
mitigations. We overlaid this profile with two transition
development narratives to frame plausible future
conditions in diverging global responses to climate
change.
Having assessed four publicly available scenario
frameworks (NGFS, IEA, IPCC, IPR), we chose the IPCC’s
Shared Socio-economic narratives in line with last year’s
TCFD. The SSPs provide relevant variables at a granularity
suitable for exploring the potential future business
operating context (Figure E). We selected an optimistic
warming scenario of below 2°C (SSP1) and compared this
with a ‘business-as-usual’ (4°C) pathway (SSP5).
Figure E: Overview of the IPCC Shared
Socio-economic Pathways (SSP1 & 5) applied in our
climate scenario analysis
SSP1: Sustainability (taking the green road)
• < 2°C warming.
• Optimistic outlook of a gradual but consistent
shift towards a more sustainable path, which is
driven by minimal challenges to either mitigation
or adaptation efforts.
• Very low greenhouse gas ("GHG") emissions and
lower resource and energy intensity.
• This scenario assumes swift and comprehensive
changes in policies, regulations, technologies
and markets by 2030.
• Key changes include the implementation of
carbon pricing schemes to reduce emissions
across regions and sectors, enhanced
climate–related policy and governance to
promote climate action and greater
climate-related awareness across civil society.
SSP5: Fossil-fueled development (taking the
highway)
• ~ 4°C warming.
• Significant challenges to climate mitigation
and low challenges to adaptation driven by a
reliance on technological innovation to drive
sustainability.
• Very high greenhouse gas ("GHG") emissions
driven by intensive exploitation of fossil fuel
resources and energy usage.
• This scenario assumes limited incentives, policy
or regulatory support for emission reduction.
• Key impacts include changes in the physical
environment i.e., more frequent and extreme
acute weather events and chronic changes, e.g.,
in temperature and precipitation patterns.
86 |
kinandcarta.com
Building a world that works better for everyone
| 87
Strategic Report A responsible business
continued
E
TCFD
Prioritising climate risks and opportunities: After
overlaying the SSP assumptions and representative
CO2e concentration climatic conditions on our baseline
future operating assumption, we could explore an
exhaustive list of plausible CROs: the "long-list". To
determine the materiality of the CROs on the long-
list and build horizon scanning heat maps, we defined
assessment criteria across two dimensions: impact
and likelihood. The average of these two numbers gave
us a total risk score (Figure F). Using these results,
we plotted heatmaps (Figure G) summarising (and
equipping us to prioritise) our physical and transition
CROs.
Figure F: Assessment criteria
Key scenario analysis findings
Physical CROs: Of the 24 physical risks identified, the
key sources of our physical hazard exposure by 2030
are from wildfires in our Eastern Europe and South
America offices and riverine flooding in our North
America offices.
Over the course of the mid/end-century this exposure
to wildfire and riverine flooding will rise significantly
and be joined by two emerging risks: drought in Eastern
Europe and heat in North and South America.
1
2
3
1. Level of Impact
Minimal impact on total costs and
revenues and negligible impact to
stakeholders if not addressed.
2. Probability of Occurrence
Increased costs/decreased
revenue but manageable with
current financials. Shift in
operating profile.
Significant material impact
on valuation, costs and
revenues. Critical disclosure for
stakeholders.
Medium–long
(over 2030–2050)
Short–Medium term
(2025–2030)
Short term
(2025)
Total risk score: average of "level of impact" x "probability of occurrence"
X < 1.5
1.5 < x < 2.5
X ≥ 2.5
CRO
long list
Heat
maps
CRO
short list
Physical Risks
24
Transition Risks
Transition Opportunities
15
15
High
3
e
c
n
e
r
r
u
c
c
O
f
o
y
t
i
l
i
b
a
b
o
r
P
2
1
Carbon offsets
Capability gaps
Carbon taxes (suppliers
& transportation)
Expansion (geographic
& acquisition)
Targets and
standardisation
Energy costs
US Carbon Taxes
Cost of electricity
Climate-related
commitments
Interconnected
market share
Misaligned
perceptions
Combined into 6
short-listed risks
(In)access to
green subsidies
Compliance risk
(climate-related
reporting)
Low
1
Level of Impact
3
High
6
6
4
High
3
e
c
n
e
r
r
u
c
c
O
f
o
y
t
i
l
i
b
a
b
o
r
P
2
1
N. America
E. Europe
Heatwave events will
also increase in Eastern
Europe and North
America office regions.
E. Europe
Wildfire and riverine flood events
are expected to increase in
occurrence in the Eastern Europe
office regions and North America.
S. America
E. Europe
N. America
S. America
Some of our South America
offices have elevated
exposure to heat, riverine
flooding, and wildfires.
N. America
UK
N. America
UK
E. Europe
Low
E. Europe
S. America
UK
N. America
1
Level of Impact
3
High
7 Actions
Physical Risks Key:
Transition Risks Key:
Acute – Wildlife
Acute – Coastal Flood
Policy and Legal
Market
Acute – Tropical Cyclones
Chronic – Heat
Technology
Reputation
Acute – Riverine Flood
Chronic – Drought
Figure G: These horizon scanning heatmaps present the high-level results of Kin + Carta’s
physical (left heatmap) and transition (right heatmap) climate scenario analysis
Physical Risk: our exposure to six types of hazard
across 16 offices in four regions (UK, Eastern Europe,
North America and South America).
Transition Risks: the 15 long-listed transition risks
identified across four types (policy and legal,
reputation, market and technology).
High
3
e
c
n
e
r
r
u
c
c
O
f
o
y
t
i
l
i
b
a
b
o
r
P
2
1
N. America
E. Europe
Heatwave events will
also increase in Eastern
Europe and North
America office regions.
E. Europe
Wildfire and riverine flood events
are expected to increase in
occurrence in the Eastern Europe
office regions and North America.
S. America
E. Europe
N. America
S. America
Some of our South America
offices have elevated
exposure to heat, riverine
flooding, and wildfires.
N. America
UK
N. America
UK
E. Europe
High
3
e
c
n
e
r
r
u
c
c
O
f
o
y
t
i
l
i
b
a
b
o
r
P
2
1
Carbon offsets
Capability gaps
Carbon taxes (suppliers
& transportation)
Expansion (geographic
& acquisition)
Targets and
standardisation
Energy costs
US Carbon Taxes
Cost of electricity
Climate-related
commitments
Interconnected
market share
Misaligned
perceptions
Combined into 6
short-listed risks
(In)access to
green subsidies
Compliance risk
(climate-related
reporting)
Low
E. Europe
S. America
UK
N. America
1
Level of Impact
3
High
Low
1
Level of Impact
3
High
As highlighted by the smoke and air pollution from
Canadian wildfires, which affected many North
America-based Kin in June 2023, we see a growing
need to understand the second order impacts from
physical hazards on our business. This incident
corroborated our assessment that Kin + Carta’s strong
remote working capabilities may mitigate the direct,
large-scale and long-term impacts to our business
from our exposure to hazards.
In future, we expect the main mode of impact from
physical hazards to be in lost working days, such as
due to localised failures in public telecommunications
infrastructure. We recognise that defining new metrics
(e.g., "number of working days lost equivalent") may
equip us to better understand the impact that
climate-related incidents have on our business. Based
on this year’s scope (six hazards and 16 offices), we do
not think our exposure is significant enough to warrant
changes in our locations or growth strategy. However,
this analysis could change if, in future, we extend the
scope to include additional hazards or nature-related
risks (e.g., non-GHG air and water pollution in line with
the TNFD framework), dependent public infrastructure
and/or employee residences at the postcode level.
In light of these findings, next year we intend to
explore and validate the opportunity to enhance our
climate-related risk management capabilities.
Specifically, to explore how strengthened incident
reporting and continuity planning may mitigate impact
and support our Kin in times of disruption.
Transition CROs (see Figures H and I): Of the 30 CROs
identified, one of the most significant opportunities
is the growing demand for digital decarbonisation
strategies, which Kin + Carta is strongly positioned
to partner with clients on. We intend to mature our
capability to proactively evaluate and track this
opportunity against market and client signals and
appetite.
Compared to asset-heavy industries where carbon
policy and technology drive exposure to the
low-carbon economic transition, our analysis shows
that market and reputational drivers such as investor
perception and employee satisfaction are more
critical to our transition narrative. Therefore, our key
risk exposures are from a market demand shift and
consolidation pressure (single-vendor model) and
reputational, from the potential failure to implement
strong approaches for setting and monitoring climate
commitments.
88 |
kinandcarta.com
Building a world that works better for everyone
| 89
Strategic Report
A responsible business
continued
E
TCFD
Figure H: Short list of climate-related risks and opportunities identified through scenario analysis
Risk
type
Name
Description
Climate-related risks and opportunities
Enhancing
commitments
Build on our forward-looking market position as a "responsible business" (marked by our B
Corp status and net zero target) by prioritising (climate-related) metrics standardisation
and committing to the Science Based Targets initiative ("SBTi").
Submitting our commitment to the SBTi in August 2023 (and developing our targets within
a year) demonstrates commitment to a standardised, data-led approach to metrics setting.
Providing transparency on the methodology we use in target setting and evaluating our
climate transition maturity can enhance the integrity of our sustainability commitments,
enhancing our reputation for existing and prospective clients and aligning market and
employees’ perceptions of our business.
Digital
decarbonisation
As operational efficiencies in digital technologies can reduce GHG emissions by up to
20%1, market demand is likely to grow for services at the intersection of data/digital
infrastructure and climate e.g., digital decarbonisation design.
Kin + Carta’s foundational capabilities and service offerings at the design stages of
digital infrastructure mean that we are well situated to advise on digital infrastructure
decarbonisation adaptations/transition plans for clients across different sectors to achieve
lower-carbon operations in alignment with our own values.
Sustainable
operations
Drive authentic behaviours and practices, which demonstrate commitment to triple
bottom line values (people, profit, planet) and reduce risk of greenwashing accusations.
Successful and authentic triple bottom line operations drive tangible dividends including
cultural and mission alignment between the Board, employees and market, regulatory
compliance, and the attraction and retention of talented, driven employees.
Continuity
planning
Enhance and actively manage business continuity planning approaches and capabilities,
incorporating principles of continuous resilience.
Developing consistent approaches to continuity and transition planning can showcase how
identified failure and operation modes are mitigated from the climate-related physical and
transition risks which face Kin + Carta. Embedding these capabilities can showcase our
commitment to responsible business values to our investors, employees, clients and market.
s
t
e
k
r
a
M
i
y
c
n
e
c
i
f
f
e
e
c
r
u
o
s
e
R
e
c
n
e
i
l
i
s
e
R
Impact¹
Occurrence1
Risk score¹
Time frame²
Actions
Short term
(<2025)
• Action 1) Committing to the Science Based
Targets initiative
3
3
3
2
3
3
2
3
H
H
H
H
Medium term
(2030)
• Action 6) Market and demand assessment
approach
Medium term
(2030)
• Action 2) GHG accounting and carbon
offsetting due diligence
Medium term
(2030)
• Action 7) Enhancing climate-related risk
management
1 Level of impact form 1 - 3, Probability of Occurrence from 1 - 3 (i.e., Low/Moderate/High respectively).
The Risk score is the average of these two scores categorised as Low: x ≤ 1.5; Moderate: 1.5 < x < 2.5; and High: x ≥ 2.5.
2 The timeframe within which the risk could materially impact the business, based on the IPCCs SSP1 scenarios
(warming of <2 degrees Celsius) whereby the short term is <2025, medium term is 2030 and long term is 2050.
90 |
kinandcarta.com
Building a world that works better for everyone
| 91
Strategic Report
A responsible business
continued
E
TCFD
Figure I: Short list of climate-related transition risks and opportunities identified through scenario analysis
Risk
type
Name
Description
Climate-related risks and opportunities
n
o
i
t
a
t
u
p
e
R
/
t
e
k
r
a
M
l
y
g
o
o
n
h
c
e
T
l
a
g
e
L
d
n
a
y
c
i
l
o
P
Climate-related
target setting
Climate and carbon-related target setting are complex exercises, which can be subject to
market and regulatory scrutiny.
Failing to implement well-structured, standardised approaches for setting, communicating and
monitoring publicised sustainability commitments could expose Kin + Carta to reputational damage,
loss of investor and employee trust and, potentially, legal fines. If targets are communicated poorly
and misinterpreted, the Company’s transition pathway could be undermined.
Overlooking
innovation
opportunities
The economy is undergoing multiple inter-connected shifts, which add complexity to
business operating environments and may impact our revenue potential if we fail to adapt
and innovate in line with change.
If climate transition is considered in silo from our broader (digital technology) strategy, or if
there is a failure to leverage the maximum potential of existing employees’ capabilities, our
existing and future potential revenue streams could be restricted or lost. The consulting market
is showing trends of consolidation around (climate-related) capabilities and growing likelihood
of tightening consulting budgets for non-integrated solutions. Failing to adapt or innovate could
tighten our potential revenue streams.
Carbon offsets
Voluntary carbon offset markets currently lack the transparency required for proper
auditability.
Kin + Carta’s grid dependency means that advancing our progress to carbon neutrality and net
zero will rely on carbon offsets. The effectiveness of underlying emissions offsetting techniques in
which we invest (through The Climate Vault platform) relies on existing carbon offset markets. Limits
to transparency and the lack of regulation of this market could expose us to negative publicity,
reputational damage, or greenwashing accusations if rigorous due diligence is not performed.
Capability gaps
In the context of an accelerating technology development deployment operating
environment, maintaining and growing a talent base for the digital and climate transitions
may become more challenging and expose us to capability gaps.
Capability gaps may emerge if new climate or sustainability-related processes and services (which
existing employees are not trained for) are introduced while internal upskilling is deprioritised. A sole
focus on hiring to cover new offerings can impact employee satisfaction (lowering eNPs), generate
capability mismatching and challenges for retaining and attracting talent.
Growth-related
compliance
Growth, particularly into new jurisdictions or through acquisition, presents new compliance
and reputational risks.
Expansion into new geographies will increase the (GHG) reporting burden as local requirements
might differ and require additional resource to address compliance in new jurisdictions.
Equally, expansion through acquisition could generate reputational or internal cultural risk,
increased attrition or exposure to legal fines if robust climate due diligence is not introduced to
understand the entity’s operational carbon intensity, capabilities or values.
Value
chain-driven
carbon taxes
While the direct impact of carbon taxes on Kin + Carta (i.e., Scope 2 emissions) will be
limited, they will have a disproportional indirect effect via our value chain i.e., supply chain,
clients, employees and sector expectations.
In the short term, carbon taxes are likely to be implemented in the jurisdictions that we operate
in. Although the impact of carbon policy and prices is moderated by our absolute emissions,
establishing or maintaining relationships with carbon intensive actors may trigger carbon taxes
and inflict reputational harm if due diligence and monitoring is not maintained.
Impact¹
Occurrence1
Risk score¹
Time frame²
Actions
3
3
2
3
2
2
3
2
3
2
3
3
Short term
(<2030)
• Action 1) Committing to the Science Based
Targets initiative
Short term
(<2030)
• Action 4) Internal training and upskilling on
climate and the environment
• Action 5) Regulatory and growth (M&A)
horizon scanning and due diligence
Short term
(<2030)
• Action 2) GHG accounting and carbon
offsetting due diligence
Medium term
(2030)
• Action 4) Internal training and upskilling on
climate and the environment
• Action 5) Regulatory and growth (M&A)
horizon scanning and due diligence
Medium term
(2030)
• Action 5) Regulatory and growth (M&A)
horizon scanning due diligence
Medium term
(2030)
• Action 3) Developing an approach to
supplier engagement for climate transition
H
H
H
H
H
H
1 Level of impact form 1 - 3, Probability of Occurence from 1 - 3 (i.e., Low/Moderate/High respectively).
The Risk score is the average of these two scores categorised as Low: x ≤ 1.5; Moderate: 1.5 < x < 2.5; and High: x ≥ 2.5.
2 The timeframe within which the risk could materially impact the business, based on the IPCCs SSP1 scenarios
(warming of <2 degrees Celsius) whereby the short term is <2025, medium term is 2030 and long term is 2050
92 |
kinandcarta.com
Building a world that works better for everyone
| 93
Strategic Report
A responsible business
continued
E
TCFD
Risks and opportunities by geography and sector
Our approach incorporated assessing our CROs by
both geography and sector. The primary geographic
differentiation lies in the potential impact of physical
risks, a summary of which can be seen in Figure G. In
terms of sector-based impacts, we provide digital
transformation consultancy services to our clients.
However, we recognise that our customers, who
operate in a wide variety of sectors, will all face
differing impacts and opportunities from a low-carbon
economic transition. Each of our business areas were
closely involved in our scenario analysis and the long-
list, short-list and assessment of our CROs. Going
forward we will embed this perspective on our key
customer sectors into our strategy and planning for
where we see our business by 2030.
Actions for managing risks
and opportunities
We are committed to identifying effective actions
which progress our efforts in reducing our climate
impact. We aim, first, to build on our strategy to
improve our environmental performance before
collaborating across the supply chain to support
system-wide transition. Drawing on our scenario
analysis findings, we have identified seven actions for
change (which we are validating and may advance this
year), which have potential to address the interrelated
CRO we face (Figure J).
Action 1) Committing to the Science Based Targets
initiative: Acknowledging the reputational and market
risk that could be driven by a failure to implement
standardised climate-related targets, we submitted
a letter of commitment to the Science Based Targets
initiative in FY23. This pledge marks our strategic
decision to drive standardisation in our target setting
approach to ensure our publicly disclosed metrics are
verifiable, auditable and comparable. Within the year,
we will set rigorous targets (GHG emission reduction
commitment); a key foundational step which will
underpin other actions we mobilise to embed changes
across our operations and supply chain to reduce our
environmental footprint.
Action 2) GHG accounting and carbon offsetting
due diligence: In 2021 we offset all carbon emissions
from our operations in North America. In FY22 we offset
emissions for all business activity. In FY23, we built on
this achievement by offsetting all emissions from our
global business, extended to cover six sub-categories
Figure J: Our short-listed climate-related risks
and opportunities and their relationships with four
opportunities and seven actions
1
Actions
O p portunities
Enhancing
commitments
Risks
Climate-related
target setting
C
u
l
t
u
r
e
4
vernance
7
o
G
Continuity
planning
Short-listed
physical risks
(climate hazards)
6
5
Digital
decarbonisation
Overlooking
innovation
opportunities
Growth-related
compliance
Capability
gaps
Carbon
offsets
Value chain-driven
carbon taxes
Sustainable
operations
2
3
Business Strat e g y
Actions for mitigating and strategically managing our
short-listed climate-related risks and opportunities
1 Committing to the Science Based Targets initiative
2 GHG accounting and carbon offsetting due diligence
3 Developing an approach for supplier engagement for climate transition
4 Internal training and upskilling on climate and the environment
5 Regulatory and growth (M&A) horizon scanning and due diligence
6 Market and demand assessment approach
7 Enhancing climate-related risk management
Transition Risks
Policy and Legal
Market
Technology
Reputation
Physical (Acute/Chronic)
Transition Opportunities
Markets
Resilience
Products/Services
Resource efficiency
Energy source
regulatory, policy scanning and due diligence specific
to climate to inform our growth and M&A strategy. We
would expect detailed climate-related due diligence
to build resilience in our approach to transactions,
providing robust audit trails and enabling us to
anticipate policy and regulatory change.
Action 6) Market demand assessment approach:
A failure to account for the inter-connection of ongoing
market shifts has the potential to limit future value
generation, particularly if the market (especially in
higher risk sectors or locations) tightens on clients’
budgets for consulting services for non-integrated
solutions. While our scenario analysis findings
re-emphasised the market need for digital
decarbonisation solutions, our current and future
clients’ willingness to spend on "climate-digital
services" is not yet well understood. By building on our
governance and approaches to maintaining market
demand oversight, we may explore opportunities to
engage with clients and market participants to size
opportunities, track and understand their appetite to
inform our strategy.
Action 7) Enhancing climate-related risk
management: As detailed further in the Risk
Management section of this report, we recognise the
opportunity to enhance continuity-planning by building
on our strong existing risk management capabilities.
By integrating climate considerations holistically into
our approach to managing all risks interrelated with the
climate, we aim to mitigate their impacts, pre-empt
change and build our operational resilience.
Our evolving strategy for the transition
The exploratory nature of our scenario analysis has
supported us to understand the conditions Kin + Carta
might face in different global warming scenarios and
establish foundational assets to build on in future. We
recognise the importance of proactively monitoring
the evolving transition landscape e.g., developments
in climate pledges. The next strategic step is to fully
integrate these findings in our strategy, financial
planning and develop our normative scenario: a
Company-wide climate view to outline where we see
our business by 2030 and provide foundations for our
transition plan.
of Scope 3 (in line with our pledge to be carbon neutral
by 2023). Both sets of verifiable offsets were achieved in
partnership with "The Climate Vault" a US-based non-
profit, which purchases offsets and invests in developing
carbon removal startups.
Ultimately, we aim to leverage internal actions to
decarbonise our operations. However, carbon offsets
need to play a short to medium-term role as we
continue to depend on non-renewable grid electricity.
To mitigate the reputational risk posed by carbon
offset-reliance, we see two actions. First, understand
our footprint in greater detail through enhanced carbon
accounting. Second, explore how to enhance our due
diligence capabilities to monitor this risk proactively
and understand how to decarbonise with integrity.
Action 3) Developing an approach to supplier
engagement for climate transition: Without suitable
due diligence, carbon taxes triggered by our supply
chain could drive reputational risks and costs into our
business. Therefore, we intend to explore approaches to
fostering greater action for climate transition across our
supply chain.
A hybrid approach to supplier engagement,
incorporating an external system and direct
communication, for example, could be leveraged to
compare suppliers’ practices and targets for reducing
climate impact, while signposting the importance we
attribute to climate action in procurement. We are also
maturing our carbon attribution model to determine
which suppliers to engage first (e.g., based on spend or
emissions). Our recent transition to a new partnership
with a B Corp e-waste recycling supplier is a step in
progressing this action. This partnership with a
like-minded organisation demonstrates our
commitment to centralising sustainability
considerations in procurement and partnerships.
Action 4) Internal training and upskilling on
climate and the environment: We recognise the
short to medium-term risk of overlooking innovation
opportunities and capability gaps. To mitigate these
risks, we will continue to support business-wide
learning about climate-related risks and opportunities.
Our approach to engaging our Leadership team on
findings from our FY23 double-materiality assessment,
for example, was a significant point of progress in the
incorporation of ESG insight into business strategy.
Action 5) Regulatory and growth (M&A) horizon
scanning and due diligence: In the transition context,
maintaining rigorous due diligence will be essential for
reducing risk posed by compliance considerations as
we grow into new jurisdictions or through acquisition.
Building on our existing governance processes, this
action could involve enhancing our ability to conduct
94 |
kinandcarta.com
Building a world that works better for everyone
| 95
Strategic Report
A responsible business
continued
E
TCFD
Risk management
Over the past year, we have made significant
progress in understanding our exposure to
climate-related risks. We appreciate the increasing
interdependencies between emerging
climate-related physical and transition risks and our
existing risk register.
Our awareness of material CROs facing Kin + Carta (as
discussed in the "Strategy" section) informs our ongoing
efforts to enhance our risk management capabilities
by integrating climate into our risk management
framework. An integrated approach will strengthen
our resilience, help us sustain progress towards our
goals, business mission, and contribute to the broader
transition to a net zero economy.
Our risk management framework
Kin + Carta’s enterprise risk management framework
ensures that existing and emerging climate risks, which
may impact us in the short (<2025), medium (by 2030)
and long terms (2050), are identified, assessed and
managed consistently and at suitable levels across
the Company. These timeframes reflect our business
planning structure in the short to medium term with
our rolling five-year goals and also a LRP (long-range
plan). While the Board and Audit Committee oversee
the framework, set the Company’s risk appetite and
Figure K. Our risk management framework
ensure appropriate risk management measures are in
place, our "Three Lines of Defence" are responsible for
day-to-day risk-related actions and assurance. This
model, whereby the first line drives bottom-up risk
identification and management, the second provides
oversight and third provides assurance, is standard
across Kin + Carta (Figure K). The "lines" are each
involved in different stages of the risk management
lifecycle (i.e., identifying, assessing, escalating and
managing risks) as we recognise the importance of
assigning responsibilities to teams who have suitable
knowledge and capabilities (Figure M). To date, we
have applied the "three line" structure to climate risks
in our approach to reviewing our client project and
partnership opportunities (Figure L).
Risk terminology: the definitions below outline
the two key categories of risk we consider and
manage at Kin + Carta.
Existing: risks, which are pertinent to our
operations currently, whose impacts can be
assessed and are actively managed.
Emerging: new or unforeseen risks, which may
pose longer-term considerations for our business
and whose impacts or scale are challenging to
assess.
Line of
Defence
Third
Kin + Carta’s Board and Audit Committee
Internal Assurance and Risk
Management
Internal Assurance Team
Second
Platform Leader
Environmental and Social Risk
Review Board
First
Executive Directors and Senior
Leadership Team
Senior Leadership Team
The risk management
framework (general i.e.,
non-climate specific)
The risk management
framework applied to
the context of client and
partnership opportunities
This year saw much greater
collaboration between the
risk team and the climate
taskforce, notable with the
Head of Risk Management
contributing directly to the
risk section. Collaboration
will only increase as climate-
related risk becomes a
more pressing and constant
business concern.
Figure L. Deep dive: the "Three Lines of Defence" approach to managing
climate-related risks in our client and partnership opportunities.
Kin + Carta’s Board and
Audit Committee
The Board oversees the Risk Management Framework, which will increasingly
involve climate-risk oversight. The Audit Committee conducts a review annually
or when there are notable risk profile changes.
Third
Internal Assurance Team Responsible for providing objective oversight regarding the adequacy and
Second
Environmental and
Social Risk Review Board
effectiveness of internal controls, ensuring decision making in relation to client
and partnership-based climate-related risk is consistent.
The ESR Board convenes when a referral is received and is responsible for
evaluating the potential social and environmental risks in client and partnership
opportunities. Each case is cross referenced with the controversial industries
list, documented per the ESR case review template, assessed and a decision is
made on whether to accept the risk and introduce mitigations.*
First
Senior Leadership Team
Responsible for day-to-day risk monitoring and management including
identifying climate-related risks which could emerge from prospective client
projects or partnerships during a weekly opportunity review.
* Mitigation activities can include conducting due diligence, further discussion by the ESR board,
direct engagement with the client or partner and in some cases applying specific criteria for proceeding.
Risk ratings and acceptance criteria
"Risk rating" is a key tool for assessing and quantifying
the potential severity of risks; climate-related risks
are no exception. Our risk rating approach equips
Senior Leaders to determine the significance of
climate-related risks relative to each other and to
other principal risks. These scores enable consistent
prioritisation and decision making.
Each risk identified across Kin + Carta is allocated
a score out of five for: a) estimated impact; and b)
likelihood of occurrence (based on a market view)
(Figure N).
These scores are multiplied to produce a rating, which
falls into one of five "levels" of acceptance criteria. While
Executive Directors escalate risks with ratings of 9 to
15 to a risk owner, risks with ratings of 16 and above are
taken up to the Board for further consideration.
These criteria help us to prioritise CROs consistently
against other major risks.
Our scenario analysis has supplemented the risk
rating approach by providing a robust assessment of
quantitative and qualitative data to generate insight
into the potential materiality of each risk. In future,
scenario analysis will continue to strengthen our
approach to assessing the materiality and significance
of emerging CROs.
96 |
kinandcarta.com
Building a world that works better for everyone
| 97
Strategic Report A responsible business
continued
E
TCFD
Figure M. The key stages of the risk management lifecycle
Identification
Assessment
Escalation
Responsible: Senior Leadership Team and Executive
Directors
Responsible: Senior Leadership Team and Executive
Directors (SME input)
y
r
a
m
m
u
S
While existing risks are identified through day-to-day
operational supervision, emerging risks are flagged
through "bottom-up" mechanisms such as monthly
regional presentations (involving market and pipeline
assessments and forecasts) and recorded in
bi-annual risk registers.
Each risk recorded in the register is 1) related to the
strategy; 2) assessed based on impact and likelihood;
and 3) assigned a rating. These ratings are matched
to acceptance criteria, which inform the decision on
whether the risk is escalated and how it is prioritised.
Responsible: Executive Directors escalate to the Risk
Owner/Board
Based on the risk rating and associated acceptance criteria,
Executive Directors identify which risks should be escalated
to the a) risk owner; or b) Board (see figure D for more
details). At each Board meeting, the newly escalated risks
are reviewed, discussed and recorded.
Management
Responsible: Risk Owner
During evaluation, the Board assigns an owner to each risk.
This owner is then responsible for introducing the controls
and measures necessary for managing the risk to the
acceptance level agreed by the Board (i.e. to accept and
control or reduce the risk).
Monthly regional presentations to Executive Directors
Bi-annual Risk Register e.g., the Responsible Business Risk Register (completed by Functional Leads and CFO)
Environmental and Social Risk Policy and Review Board (for Client and Partner Engagement)
l
s
o
o
t
y
e
K
Scenario analysis
Risk rating and acceptance criteria (i.e. to inform assessment of relative significance of risks and escalation decisions)
Board-level evaluation of principal risks
l
e A new climate-related physical incident, which could
p
m
a
x
E
damage our infrastructure is identified as a risk and
recorded in the Responsible Business Register.
The risk is assessed and rated by the functional lead
based on the likelihood (based on a market view) and
impact on terms of people, reputation and profit.
As the resulting risk rating is >16, the risk is escalated to the
Board who decide whether to reduce or accept the risk.
They also nominate the risk owner.
The risk owner incorporates the new risk into continuity
planning and develops a step-by-step process informed by
EX to understand how they would respond.
98 |
kinandcarta.com
Building a world that works better for everyone
| 99
Strategic Report
A responsible business
continued
E
TCFD
Figure N. Our enterprise-wide risk rating approach
Figure O. TCFD Taxonomy of key climate-related risks
Rating
The consequences of the risk (in quantitative £ terms, number of people
impacted and reputational impact)
Risk type
Description
Tools we adopt to identify
related risks
Examples for Kin + Carta
Impact
Extreme
Major
Moderate
Minor
Insignificant
5
4
3
2
1
Catastrophic and causes unbearable damage/500 people impacted/adverse general public
comms.
Critical and causes damage (e.g., < £1m)/>250 people impacted/adverse industry rating and
effect on share price.
Moderate and causes reasonable damage (e.g., <£100k)/>100 people impacted/Industry press,
government/client litigations.
Marginal and causes minor damage (e.g., <£10k)/50 people impacted/decline in ratings from our
clients (health rating) or our people (eNPS)
Near negligible amount of damage/>10 people impacted/standard internal conversations
Likelihood
Rating
The likelihood of occurrence (for climate-related risks, this is based on a
forward-looking market view)
Certain
Likely
Possible
Unlikely
Rare
5
4
3
2
1
>80% Almost certain to occur
51-80 More likely to occur than not
21-50% Fairly likely to occur
6-20 Unlikely but possible
0-5 Extremely unlikely
Impact X Likelihood = Risk Rating
Risk Rating
1–3
Acceptance
Criteria
Accept
4–8
Accept
9–15
16–20
Reduce or Accept
(Risk Owner)
Reduce or Accept
(Board)
21–25
Reduce
Managing climate-related risks
In line with the TCFD framework, our approach to climate
risk considers transition and physical risks and their six
subtypes. We aim to implement suitable controls and
mitigations to address each "type", supported by key
tools for consistent risk identification (Figure O). While
risk registers are valuable bottom-up tools, which prompt
climate considerations, we also value feedback from
investors and stakeholders to understand their perceived
risks and address them appropriately.
In terms of the teams and roles who have specific risk
management duties, our key operational CROs are
managed by our Climate Task Force in conjunction with
the Office Experience team.
For example, our physical risks and transition
opportunities for our offices are managed by our
Health, Safety and Environment Advisor and supplier
due diligence is managed jointly by our Global Supplier
Management and Responsible Business teams; both
functions are supported by the Climate Task Force.
Transition Risks: related to the transition to a low-carbon economy and the diverse implications this process has
on market, policy, regulatory, legal, market and other socio-economic contexts.
Policy and
Legal
Technology
Market
Reputation
Risks presented by changes in
our exposure to climate-related
regulation, policy or litigation
which affect our internal, supplier
or clients’ operations or services.
Risks related to technological
advancements which support
the transition to a lower carbon
economy and the associated
costs and innovation required
to keep pace with these
developments.
Risks related to climate
change-related shifts in the
market which generate changes
in supply, demand, consumer
preferences, market signals and
costs.
Risks tied to how an organisation/
sector’s reputation is perceived
or changes in relation to its
response to climate change and
transition.
• Bi-annual risk registers (e.g.
•
Responsible Business Risk
Register)
• Monthly regional review
board
•
Environmental and Social Risk
Policy for Client and Partner
Engagements and Review
Board (the Board convenes
when a referral is received)
• Risk rating and acceptance
criteria
• Climate-related qualitative
Scenario Analysis and
planning
•
Incident reporting procedure
(for issues not previously
identified)
Increased compliance
burden across our multiple
locations
• Reduced ability to innovate in
line with clients’ demands
• Demand for upskilling and
recruiting
• Changes in demand for
clients’ service offerings
• Reduced capital available for
clients to pay for services
• Reduced eNPS score or
ability to recruit or retain
staff
• Decreased competitiveness
Physical Risks: related to the physical impacts that climate change has on our business operations or
infrastructure e.g., from extreme weather events.
Acute
Chronic
Risk from increased frequency
and severity of extreme weather
events such as flooding or
hurricanes.
Risk from longer-term changes in
weather patterns and increased
variability, including consistently
higher temperatures and related
sea level rise.
• Responsible Business and
• Damage to infrastructure
HS&E Risk Register
•
Environmental aspect and
impact assessment
• Climate-related Qualitative
Scenario Analysis
•
Incident reporting procedure
(for issues not previously
identified)
•
•
Loss of revenue e.g. through
power outages preventing
ability to work
Increased insurance costs/
claims
100 |
kinandcarta.com
Building a world that works better for everyone
| 101
Strategic Report A responsible business
continued
E
TCFD
Figure P. Enhancing our capabilities to monitor climate-related regulatory change
Risk type
Description
Over the coming years, we intend to build our internal
approach to monitoring climate-related policies and
regulations that impact our locations proactively. Doing
so will equip us to identify the appropriate controls
required for ensuring compliance. Below we outline two
regulations which we will continue to monitor:
The Taskforce on Nature-related Financial
Disclosures ("TNFD") framework was finalised in
September 2023 and likely to remain voluntary in the
short term.
The EU Corporate Sustainability Due Diligence
Directive’s ("CSDDD") new legislation (likely to be
mandatory from 2025) will apply to large companies
operating in the EU to undertake due diligence on
environmental and human rights considerations
in their value chains. We intend to monitor this
legislation to understand when we might be required
to comply.
CROs and their interdependencies
with our other principal risks
The transition to a low carbon economy, climate change
and their related risks are likely to impact most of Kin +
Carta’s principal risks in ways we may not yet be able
to understand fully.
In Figure Q, we outline some of the inter-relationships
between climate-related risks and our existing principal
risks including considerations of their potential impact
on our existing mitigation efforts.
Accounting for such interdependencies and
relationships is likely to be one facet of our future
efforts to advance our risk management approach
by integrating climate effectively into our existing
frameworks and practices across our business.
Figure Q. An overview of how climate-related change and risks may impact Kin + Carta’s existing principal risks
Risk type
Description
d
e
t
c
e
f
f
a
t
s
o
M
Principal risks
How might climate-related risks impact this existing principal risk?
Being a
responsible
Business
Economy and
Volatility
Growth
Kin + Carta’s performance against climate-related targets are key indicators of progress against and
commitment to our responsible business strategy and triple bottom line. If we do not successfully
deliver, or are perceived to fall short of delivering, on our internal and client climate commitments,
we may experience reputational damage, which could result in lost business opportunities and
decreased share price.
Increased frequency and severity of extreme weather events is likely to exacerbate the risk that
economic volatility could lead to higher inflation, which drives up our costs or reduces our earnings
if key clients, whom we rely on for recurring earnings as part of our economic risk mitigation
strategy, are unable to finance projects. Climate change may compromise the effectiveness of
our mitigation strategies e.g., in developing a robust diversification strategy as it may become
challenging to identify which industries are resilient to market instability.
Our approach to growth could be compromised if climate-related market uncertainty restricts
growth via the four levers (services, partners, sectors and territories) of our risk mitigation
approach. If we over-invest in new territories exposed to climate risk or under-invest in sectors
which may grow or are more resilient to the affects of climate change, we may reduce our ability to
generate both organic and inorganic growth.
Principal risks
How might climate-related risks impact this existing principal risk?
Client
Concentration
Scalability
Our People
Laws and
regulations
Financing
If key clients with whom we hold strategic partnerships 1) expect climate-related offerings which
we have not been able to develop in line with climate-related innovation; 2) experience financial
strain in their operations which limits their ability to finance projects; or 3) perceive us to be
greenwashing or taking insufficient climate action, they may stop financing projects with Kin +
Carta, impacting our revenue, profits and people.
Fluctuations in the market, a decreased share price and variations in our ability to access cash
funds may affect our ability to scale our investment in "green" services, tools, systems or operations
which may restrict our progress against climate-related strategic priorities.
Kin + Carta’s reputation in the eyes of the market, clients and employees may change depending
on how they perceive our contribution towards climate change and commitment to related goals.
If our reputation is damaged due to misconceptions or changes in perceptions, this could damage
our eNPS scores, reduce our ability to retain or attract talent and compromise the integrity of our
culture.
Local and transnational climate-related laws and regulations are likely to increase in number and
scope, presenting new challenges and considerations when expanding geographically (e.g. in Latin
America and Europe). These changes may compromise our growth strategy and increase the
risk that we fail to comply with relevant regulations, which could result in fines, or damage to our
reputation or financial viability.
Cost of borrowing may be impacted by climate risk e.g., in our locations which are more exposed to
climate change we may be required to pay notably higher spreads on bank loans. The access to, and
availability of, cash funds which enable us to trade may also be affected by climate-related changes:
a) to regulations which affect operating costs (e.g., via carbon prices); or b) to reputation or client
demand for our services which impacts revenue. Climate risk may impact the cost of borrowing, for
example, if our locations experience higher exposure to climate change, this may pay significantly
higher spreads on bank loans.
Information,
Cyber Security
and Systems
Power outages or physical damage affecting third-party data servers (and their back up systems)
due to extreme weather events can increase the vulnerability and exposure of our critical IT
platforms, which could compromise the ability of our Kin to deliver work and stay connected.
Data
Protection
Operational
Resilience
d
e
t
c
e
f
f
a
t
s
a
e
L
Increased incidence of power outages attributed to extreme weather-related events may expose
companies to greater risk of data breaches and incidents of data theft. If privacy laws develop
in line with climate-related change, compliance may become more challenging and result in
accidental infraction. If our exposure to data breaches grows, mitigating that risk through internal
training may also become more challenging.
A slowing rate of innovation or failure to develop service offerings in line with technological
advancements may result in reduced competitiveness and declined ability to meet our clients’
needs. Changes in the market, policy or regulations may generate challenging conditions limiting
our ability to grow our capabilities and offerings through acquisitions, which could lower clients’
appetites for our services.
Legacy Defined
Benefit Pension
Scheme
Rising temperatures and changes to weather patterns are likely to have an "upward impact" on
inflation, particularly in South America where three of our offices are located. Expected inflation
rates are key assumptions which influence our Legacy Defined Benefit scheme surplus/deficit.
Although the scheme is hedged against interest and inflation rates as a key mitigation, unexpected
inflationary rises could impact the scheme.
102 |
kinandcarta.com
Building a world that works better for everyone
| 103
Strategic Report
A responsible business
continued
E
TCFD
Metrics and targets
Metrics help us to track progress against our climate
change ambitions and hold ourselves to account in
managing and mitigating the CROs we face. We are
committed to advancing the standardisation of our
metrics, which will underpin all future actions we take to
play our part in the climate transition.
GHG emissions across Scopes 1, 2 and 3
We report on our GHG emissions across Scope 1,
2 and 3, in line with our commitment to provide an
extended analysis of our company footprint and to
drive down material emissions as part of our journey
to net zero (Figure R). Scope 1 and Scope 2 emissions,
which amount to 14.6% of our total carbon footprint
in 2023, are produced through our immediate internal
operations; either directly (using natural gas heating,
which we have in just one of our leased offices), or
indirectly (through the consumption of purchased
electricity). In the short term, we plan to minimise
these as a priority by reducing our use of fossil fuels
and increasing the share of renewable energy in our
operations.
We strive to reduce our electricity-based emissions by
procuring renewable energy tariffs where possible. In
relation to 2020 (base year), Scope 2 emissions have
been reduced from 490 tCO2e to 149 tCO2e this year.
This reduction of 69.6%, highlights our progress towards
using energy sources that are less carbon-intensive.
We have worked to reduce our GHG emissions, largely,
by reducing the emissions intensity of our energy
consumption.
Figure R. GHG Emissions data 2021–2023
GHG Data 2023
2023
2022
2021
GHG emissions by scope (tCO2e)
Scope 1
Scope 2
Scope 3
Building-related fuel and gas
Company-owned vehicles
Scope 1 Total
Electricity: Location-based
Scope 2 Total
Upstream goods and services
Business travel
Commuting (including working from home)
Water use
Waste management
Capital goods spend
Leased assets
Scope 3 Total
14
-
14
149
149
146
536
131
6
10
114
8
951
64
4
68
124
124
674
155
-
-
-
-
-
-
-
9
148
148
530
11
-
-
-
-
-
829
541
Electricity consumption
Electricity
consumed (kWh)
UK operations
Operations outside of the UK
Electricity consumption Total
192,298
464,968
264,238
374,576
-
-
657,266
638,813
632,949
Renewable energy
Renewable energy use (%)
47
-
-
Between 2020 and 2023, our GHG intensity ratio
has decreased from 3.38 tCO2e/£million to 0.83
tCO2e/£million; a reduction of 75.4% (calculated by
dividing the sum of our Scope 1 and 2 emissions
by revenue). This indicates that, despite Company
growth, we have been able to reduce our Scope 1 and 2
emissions and electricity consumption.
We have improved the emissions efficiency of our
immediate operations partly by upgrading networking
equipment and removing legacy infrastructure by using
sustainable cloud partners. We are also continuing to
improve corporate travel management and reviewing
office efficiency (e.g., adjusting HVAC settings), ensuring
our UK offices are on REGO tariffs.
Analysis of our Scope 3 emissions shows that the main
contributor to Kin + Carta’s carbon footprint at 536
tCO2e (56.4% of our Scope 3 emissions) is our indirect
business travel. Our travel emissions are calculated
based on distance travelled, per person, per mode
of transport. This total was calculated based on a
combination of data from travel agents and (where this
data was not available) estimated using a spend-based
methodology (and expenses data from internal systems).
We recognise that this can result in overestimations,
particularly for air travel data. This coming year, we
will be moving our financial data to a shared expenses
system, which will help mitigate overestimations. Despite
potential overestimations, we expect there to have
been an increase in travel emissions compared to last
year, which was still impacted by pandemic-related
restrictions to business travel.
Last year the largest source (81.3%) of our Scope 3
emissions was upstream goods and services. This
year it represents 15.4% of our Scope 3 emissions.
We calculate our upstream emissions by using ONS
industry-specific emissions intensities that are
measured in 1000 tCO2e/£million.
Internal carbon prices and revenue from products and
services designed for a lower-carbon economy have
not yet been incorporated into our business activity
and provided here.
Working from home and
commuting emissions:
In 2023, we underwent a process of collecting
relevant environmental data, in reference to the
activity of our people. This involved collecting
information on how our people work and how this
may impact the planet.
We collected data on working from home emissions
(relating to equipment and expected power used by
staff). The second was commuting emissions, which
gave us insight into how being in office can impact
the planet, compared to WFH.
• Commuting emissions: 69.29 tCO2e
• WFH Equipment emissions: 62.1 tCO2e
This year we expanded the classification of our Scope
3 emissions to encapsulate more aspects of our
operations, including emissions from: water use, waste
management and capital spend. By doing so, we hope
to report a more transparent and accurate view of our
climate impact.
In future, we intend to refer to 2021 as the new baseline
year for Scopes 1 and 2, while this year, 2023 will be
the Scope 3 base year as it is the year we have begun
reporting a holistic depiction of our Scope 3 emissions.
This year, our emissions intensity, including Scope 3, is
5.68 tCO2e/£million.
Methodology
We carry out an inventory of all relevant GHG emissions
within our operational control annually. This process
helps us understand where the risks and opportunities
relating to emissions reductions exist in our direct
and indirect operational activities. Our approach to
measuring and disclosing greenhouse gas emissions is
aligned with the environmental reporting guidelines of
the UK Government, using the DEFRA emissions factors
(and EPA factors, for our USA operations) in addition
to the revised edition of the GHG Protocol Corporate
Accounting and Reporting Standard. Meanwhile, our
Scope 1 and 2 emissions are reported in accordance
with SECR requirements and Scope 3 is reported in
line with the published reporting standard for Carbon
Reduction Plans and the Corporate Value Chain.
104 |
kinandcarta.com
Building a world that works better for everyone
| 105
Strategic Report
A responsible business
continued
E
TCFD
Wider environmental impacts
While the methodologies used for measuring
environmental impact data beyond emissions have
remained consistent, it is only this year that the
emissions from our water use and waste management
have been encapsulated in our Scope 3 data (as well as
capital spend).
Water
Year
2023
Water
Used (m3)
Water
Emissions
(tCO2e)
36.17
6.40
Electricity
Year
08/22 07/23
08/21 07/22
08/20 07/21
08/19 07/20
Electricity Use
(kWh)
Electricity
Emissions
(tCO2e)
657,266
638,813
632,949
1,915,113
149
124
148
490
Waste and a circular approach: We recognise the
importance of sustainable practices in waste disposal.
We are committed to addressing the quarter of our
waste that still goes to landfill through innovative new
supplier partnerships.
Environmental impact of our buildings: To date, our
leased offices have received the following certifications:
BREEAM (for "new constructions") and ISO 14001 in
Manchester, LEED platinum in Chicago, LEED gold in
Denver. Combined, these buildings are responsible for
35% of our building-related Scope 1 and 2 emissions.
Kin + Carta’s water use: We recognise that water
conservation can play a key role in reducing emissions.
We calculate our water usage emissions by using a
DEFRA GHG intensity figure (0.177 tCO2e/cubic metre)
and estimate our water use based on a South Staffs
Water publication which suggests that employees use
an average of 50 litres of water per day in the office.
Water
Year
2023
Recycled (t)
Landfill (t)
Waste2Energy (t)
Emissions (tCO2e)
54.98
19.85
0.33
10.33
SBTi and our "net zero by 2027" ambition
Late in FY23, our SBTi application was approved,
marking a new stage in our net zero journey as we align
with a recognised, consistent framework. In recent
years, there has been an industry-wide shift towards
the standardisation of metrics and targets, with the aim
of providing stakeholders with accessible reference
points to understand and compare businesses’
approaches to "responsible" climate-related practices.
We recognise the leading role that tech companies can
play in mitigating climate risk, which is why we have set
a medium-term goal of achieving net zero by 2027.
By August 2024, we will have established credible and
clear science-based targets (and a formal process
for developing and monitoring these numbers) and
made significant progress in defining a SBTi-approved
roadmap and monitoring framework to track our
progress towards our net zero goal.
Our Internal Assurance team will work to ensure that,
once targets are set, they are reviewed at a regular
frequency in line with SBTi.
Section 172 statement
Engaging with our stakeholders
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 statement is to
demonstrate the manner in which the
Directors have had regard to the range
of factors and stakeholders identified in
section 172 of the Companies Act in the
context of 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 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
As world-class consultants to organisations
around the world we are keen to ensure that
we are focused on what is important to all
of our stakeholders and the impact we have
on our economy and society, as a whole.
We lean into being curious, adaptive,
innovative and accountable to our
stakeholders, therefore, we have set
out an overview of how our Directors
consider stakeholders in their decision
making and the importance we place on
each of our key stakeholder groups: our
clients, our communities, our environment,
our people, our shareholders and our
suppliers. We detail the relationship with
each stakeholder group, what matters to
them, how we engaged and the impact
that such engagement has had on the
Board’s decisions. Consideration of these
stakeholders and other relevant matters are
embedded into all Board decision-making,
strategy development and risk assessment
throughout the year.
Further information can also be found
throughout the Strategic Report and in our
summary of the 2023 key focuses of the
Board set out in the Governance Report.
106 |
kinandcarta.com
Building a world that works better for everyone
| 107
Strategic Report
A responsible business
continued
Our clients
Our communities
Our environment
Why do they matter?
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.
What are their key priorities?
Our clients seek a holistic services 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).
How do we engage?
During the year the Board has met with key clients to hear
their views on the market, their needs, and how Kin + Carta is
performing.
Further, the Board has received presentations from the
Kin + Carta client account teams in both the American and
European regions.
What were the key impacts?
The Board approved the acquisition of Forecast Data, which
strengthens our data and Artificial Intelligence capabilities
globally and establishes a data hub for Europe that matches our
strong capabilities in America allowing us to be ready to serve
our clients’ business critical priorities.
The Board further approved Kin + Carta’s seven-star client
experience governance framework, which includes internal audit
on maintaining client health.
Also, following the acquisition of Melon Group in the prior year,
the Board has requested and received regular updates on the
integration into the Group as part of its nearshore strategy to
achieve a more comprehensive and cost effective experience to
our clients.
Why does it matter?
Continuing to treat the planet as an externality of
economic activity is untenable.
What are the key priorities?
The urgent transition to a low carbon economy
through innovation, carbon pricing and
purpose-led business models are among the key
planetary priorities for business.
How do we engage?
It starts with education and connection. This year the
Board has prioritised supporting the ESG roadmap
of a newly appointed global director of responsible
business. This has included contributing to Kin +
Carta’s inaugural double materiality assessment
(direct interviews and analysis of findings) and the
most in-depth reporting to date for the Taskforce on
climate-related financial disclosure.
A final point of engagement between the Board
and the environment as a key stakeholder was their
approval of a new non-financial KPI on the absolute
reduction of Scope 1 & 2 emissions in FY24 metric.
What were the key impacts?
These strategic exercises have resulted in the
inclusion of a net zero feasibility study in the FY24
strategic priorities.
Why do they matter?
The local communities surrounding our offices and
homes need to thrive in order for our professional
lives and places of work to continue to grow and
perform well. The interdependencies between public,
private and government as three key actors are now
better understood, particularly in a post-pandemic
world.
What are their key priorities?
Our community priorities include inclusive
recruitment, products and services, ethical
procurement and charitable initiatives.
How do we engage?
During a time of resetting the strategic philanthropic
priorities of the business, local community events
were prioritised across our regions and office hubs.
The primary themes of these activities spanned
across our regions and included World Blood
Donation Day (June 2023), holiday gifts to children,
veterans and people in need.
Kin from our Skopje, Prishtina and Buenos Aires
offices organised blood donation events locally.
On multiple occasions, US-based Kin partnered
with Volunteers of America to support veterans and
children-in-need be that with holiday hampers and
gifts or back-to-school packs.
In Buenos Aires where, led by our Americas CEO and
LatAm COO, Kin + Carta employees contributed to
the refurbishment of temporary accommodation for
vulnerable women (fundacioncasagrande.com.ar/).
Both Martin Luther King Day (15 January 2023) and
“Bring your kid to work day” (27 April 2023) saw
further philanthropic support achieved because
of organising and fundraising efforts by our
philanthropy affinity group.
What were the key impacts?
Community events are a win: win for those that
benefit from Kin time, skills or support, and for our
Kin who feel increased pride in their contribution to
work and the world beyond work.
108 |
kinandcarta.com
Building a world that works better for everyone
| 109
Strategic Report A responsible business
continued
Our people
Our shareholders
Our suppliers
Why do they matter?
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 we have in our teams.
What are their key priorities?
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 all employees.
• 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.
How do we engage?
Over the past year, we have considered the methods of workforce engagement proposed under the 2018 UK
Corporate Governance Code simultaneously with our existing methods of engagement. Given the nature and extent
of our workforce and the wide ranging locations in which we operate, we have evolved our approach to workforce
engagement. We now conduct extensive half-yearly employee engagement surveys with a range of fixed choice and
free choice questions. At Board meetings, presentations have been given on the results of the half-yearly employee
surveys and eNPS results presented by members of the Employee Experience team. This has included a deep dive
into the key themes affecting our people, what people are asking for and how we, as their employer, can do better for
them. We consider this to be an effective method of workforce engagement as it enables the Board to understand the
perspective of our workforce around the globe through engagement channels at all levels.
The Board has also received a presentation from the Global Head of Diversity and Inclusion.
What were the key impacts?
During the year, the Board has:
• Approved our updated Speak Up Policy and Board Diversity Policy.
• Approved the Modern Slavery Statement and in order to uphold Kin + Carta’s responsibility in respect to
human rights, we approved a Group-wide standalone Modern Slavery Policy, with associated training for our
employees, supporting our zero-tolerance policy towards any form of modern slavery or child labour.
• Approved the Global Health, Safety and Environment Policy Statement, which received sign off by the CEO
and was published.
• Approved the awarding of share plans open to all levels of employees in the UK and US.
• Delegated to the Remuneration Committee to approve LTIP targets for approximately 400 employees that
align with the Company’s strategic objectives and targets set for the Executive Directors.
• Supported pay equity initiatives underpinned by formal bandings in place and a new performance appraisal
system.
• Approved non-financial KPIs, including eNPS and gender pay gap.
Why do they matter?
Our shareholders are investors in, and owners of, our
business, providing the capital we need to invest in
and grow Kin + Carta.
What are their key priorities?
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 impacts on people and the planet, in
addition to profit. They value transparency in any
communication with them.
How do we engage?
The Chairman has engaged with the top shareholders
throughout the year to consider their views. Further,
the Chair of the Remuneration Committee has
conducted shareholder consultations on proposed
changes to the Company’s Remuneration Policy
ahead of the 2023 Annual General Meeting (with a
further consultation to be held with shareholders
who voted against specific remuneration
resolutions).
The Board has given investor presentations open to
shareholders held on the announcement of the half-
year and year-end results.
Taking part in the double-materiality assessment
(the Chairman and Executive Directors) and
approving the outcome of shareholder engagement.
What were the key impacts?
To mitigate against macroeconomic factors, the
Board has:
• continued the integration of our nearshore
businesses to achieve a more cost effective
offering to the market; and
•
introduced cost saving initiatives and efficiencies.
Why do they matter?
Our suppliers provide goods and services, and
expertise to Kin + Carta that supports our
infrastructure, internal capabilities, agility and, in turn,
our growth.
What are their key priorities?
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).
How do we engage?
We are committed to building strong working
relationships with our suppliers, ensuring that
together we are aligned on critical aspects,
including quality, ethics, delivery, innovation, risk,
environmental, social and governance compliance.
We actively engaged 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.
What were the key impacts?
The Board has approved our updated Anti-bribery
and Corruption Policy and our new Modern Slavery
Policy and Modern Slavery Statement, to support
principles contained in our new Supplier Code of
Conduct that applies in all the territories in which
we operate in order to maintain consistency and set
uniform standards across all locations.
110 |
kinandcarta.com
Building a world that works better for everyone
| 111
Strategic Report Risk management
Our approach
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.
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.
Identify risks
Risks pertinent to the business
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.
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 underakes reviews
and discussions on emerging
and existing principal 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.
Where appropriate, the Board takes
a view on a risk tolerance level
appropriate for individual principal
risks.
Our risk management framework
Accountability
Board and Audit Committee
The Board has responsibility of oversight for risk management and it sets
the risk appetite it considers appropriate and acceptable to achieve our
strategic priorities.
Actions: first line
Actions: second line
Assurance
Day-to-day management control
and internal controls
Functions that oversee and
specialise in risk management
Independent assurance
Our businesses:
Our platforms:
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.
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 placed by
the management, and advises on
potential mitigating activities and
design of controls.
e
c
n
a
r
u
s
s
a
l
a
n
r
e
t
x
E
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.
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 181 and 182.
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 pages 58 and 59).
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.
Legacy
Defined
Benefits
Pension
Scheme
Pandemic
shocks
Economy
and volatility
Financing
Growth
Information,
cyber security
and
systems
Data
protection
Scalability
Integration
Key:
Internal risk
External risk
Being a
responsible
business
Operational
resilence
Our people
Laws and
regulataions
Client
concentration
Internal and external risk
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:
• Ongoing volatility from
macroeconomic and
geopolitical events.
• Potential usage of cyber
activities to support
geo-political agendas.
•
Increased regulatory action
on personal data international
transfers.
• Climate-related risks resulting in
intense weather conditions and
natural disasters.
• Potential changes in Kin + Carta
sales and demand model to
meet client expectations and
technological advances.
The Board is also mindful of the
potential impact of the pace of
change in the DX market, emerging
technologies, and concentration of
revenue within our top 20 clients,
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.
112 |
kinandcarta.com
Building a world that works better for everyone
| 113
Strategic Report
Risk management
continued
Principal risks
The table on pages 114 to 121 details Kin + Carta’s principal risks, its risk tolerance level accepted by the Board, key
mitigating activities in place to address them and its 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.
Trend:
Increase Decrease
No change
1. Economy and volatility
2. Growth
3. Scalability
4. Operational resilience
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.
Macroeconomic headwinds including Inflation-
induced interest rate hikes in the US and UK markets,
enterprise clients remain cautious to commit to large
programmes of work in this environment, which has
slowed new business growth.
Mitigating activities:
Diversification into sectors that are capable of
delivering growth.
Offering a highly relevant suite of digital
transformation service lines across areas of
Strategy + Innovation, Cloud + Platforms, Products +
experiences, AI + Data 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.
Offering of nearshore capability to limit the impact
on Kin + Carta’s margin and an ongoing review of
Kin + Carta’s cost base.
Increase our global footprint, which will give us
the flexibility to take advantage of favourable local
economic climate.
Trend
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 monitor competition sufficiently to
meet competitive threats and take advantage of
opportunities.
Failure to offer value propositions to our clients in line
with the industry trends. This includes the choice for
onshore/nearshore offering.
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
24 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.
Expanding into new geographic markets through the
acquisition of businesses with similar ethos to Kin +
Carta and continuing to integrate the newly acquired
businesses to realise new opportunities and synergies.
Focus on a robust blend of onshore/nearshore offering
to provide competitive offering to our clients.
Trend
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 Service and Expansion
Platforms, acquisition of high-growth digital
transformation businesses and greater focus on
securing longer-term contracts and revenue from
partner-aligned managed services.
Trend
Description:
Services may not meet clients expectations with new
technological advances 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 with the business.
Failure to deliver services securely with evolving
technological advances.
Failure to achieve optimum utilisation.
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. The Regional Service
Line and Practice Leaders in the Americas and Europe
regions are senior experts in their areas and they
continue to enhance Kin + Carta’s delivery framework
with new tools and technology.
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.
Continue to monitor unutilised staff percentage to
ensure it is proportional to revenue pipeline.
Trend
114 |
kinandcarta.com
Building a world that works better for everyone
| 115
Strategic Report Risk management
continued
5. Client concentration
6. Laws and regulations
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 top ten clients
in a short time period, this could have a significant
impact on its revenue, profits and people.
The top 20 clients represented 73% of Kin + Carta’s
net revenue.
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 clients’ spend and client
longevity.
Trend
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/recertifying B Corp
certification requires Kin + Carta to adhere to
additional regulations.
Failure to comply with or promptly respond to the
applicable laws and regulations and contractual
obligations could lead to fines, penalties, restriction
in trading activities and would cause reputational and
financial damage to Kin + Carta.
Failure to comply with local labour laws would impact
our reputation in the local labour market.
Mitigating activities:
Kin + Carta maintains in-house Data Protection,
Finance, Corporate Governance, Information Security
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 responsible
business section (see pages 58 to 63), provide
guidance to our People on our “Positive Impact
Approach” to behave ethically, strive to comply with
applicable local and international laws and regulations.
We continue to develop frameworks when entering
into new sector and services as well as when moving
into a new geographic area working with external
consultants when required.
Trend
Trend:
Increase Decrease
No change
7. 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:
8. Being a responsible business
Description:
Risk of misalignment of expectations in respect of
our culture, values, our stakeholders could result
in lost business opportunities, adverse effect on
our share price and failure to attract and retain the
necessary talent. This could also compromise the
ability to successfully recertify as a B Corp business.
Mitigating activities:
Alignment throughout the business to demonstrate
that Kin + Carta’s purpose is to build a world that
works better for everyone.
Strong emphasis on culture and responsibility, which
is part of our strategic priorities where initiatives
are focused on supporting a diverse, inclusive and
responsible business, with an exceptional employee
experience.
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 grass roots
participation across the business.
Continued focus on enhancing employee experience
in all relevant areas of our EVP framework (as
detailed on page 64).
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 programs.
Integrating our Kin from newly acquired businesses
onto common platforms and cohort communities to
help them feel supported and part of Kin + Carta.
Trend
Where possible, we seek to contribute to the client's
ESG strategy within the scope of their project. In
such cases we work together with our client to
identify and deliver positive impact projects, which
takes into account a number of environmental,
societal and reputational and remit variables.
Monitoring of the Responsible Business KPIs that
are set out in the "A responsible business" section
(pages 52 to 55).
Trend
116 |
kinandcarta.com
Building a world that works better for everyone
| 117
Strategic Report Risk management
continued
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
Platforms with continuous efforts to ensure the data
we process remains secure and confidential. The
framework is reviewed on an on-going basis to ensure
Kin + Carta has robust processes to adhere to local
regulations.
Growth of 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 proper processes
are followed.
Trend
9. Data protection
Description:
Regulatory changes
The continued change in privacy laws across the
globe with standards being uplifted directly through
new legislation e.g., Argentina, Colorado, Delaware
etc. or updates to existing legislation e.g. the Data
Protection and Digital Information 2 bill in the UK
provide a slow but constantly moving environment for
the business to undertake its activities. The threat of
non-compliance or breaches are raised as Kin + Carta
has long-term engagements and as its geographical
scope widens.
Increasing complex digital business environments
The increasing number of tools and systems that can
provide specific processes during the lifecycle of data
within a digital business environment can present
increased challenges to the research, monitoring and
auditing of an increasing number of processors or
service providers.
Emerging technologies
The rapid adoption of Generative AI ("GenAI") has
presented challenges across the market, with its
inclusion in many tools and services along with best
practices being built alongside the adoption of and
use of this technology the risk levels of this fast
moving and increasing widely adopted technology
presents a risk to many organisations including Kin +
Carta.
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 changing in working practices and behaviour
has significantly increased the risk profile of our
business.
Trend:
Increase Decrease
No change
10. Information, cyber security and systems
Description:
The inability to identify the diverse asset portfolio
utilised by Kin + Carta and thus contextually control
access to critical data and platforms based upon
stakeholder persona and requirements, device
ownership and device security health is the most
significant threat to our business.
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
118 |
kinandcarta.com
Building a world that works better for everyone
| 119
Strategic Report Risk management
continued
11. Financing
12. 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 £5.8 million
as at 5 April 2022. A return to a deficit could lead
to a resumption of the need for deficit repair in cash
contributions by the Company to the Scheme.
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 (£63.7 million excluding the pension accounting
surplus at 31 July 2023) versus the Scheme’s solvency
deficit, a measure of the deficit in an insolvency
scenario (approximately £53 million at 5 October
2023).
Description:
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. As
at 31 July 2023 the unused portion of this facility was
£65 million. 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 aligns with our strategic priorities set by the Board.
The 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.
• Conduct 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 review Kin + Carta’s financial KPIs with
its bankers.
• Conduct half-yearly "going concern" reviews and
longer-term viability assessments.
Trend
120 |
Pandemic risk related to COVID-19 has reduced
significantly for Kin + Carta following the global
vaccination programs and development of applicable
treatments.
Successful integration of our acquisitions has led to
high-demand data services (Cascade Data Labs),
growth in commerce (Loop), and double-digit growth
from high-quality nearshore delivery (Melon Group).
This has lower Kin + Carta risk of failure to integrate
acquisitions into current Kin + Carta’s operations.
The Strategic Report comprising pages 12 to 121 was
approved by the Board and signed on its behalf by
Kelly Manthey
Chief Executive Officer
1 November 2023
Trend:
Increase Decrease
No change
Mitigating activities:
The Scheme was in a technical surplus at 5 April 2022
and 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 scheme asset volatility.
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.
The solvency deficit has further reduced, standing at
approximately £53 million at 5 October 2023 (£117
million at 5 April 2022). This is also an estimate of
the cost of scheme "buy out", a full transfer of the
Company’s obligations to an insurer.
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
kinandcarta.com
Building a world that works better for everyone
| 121
Strategic Report Governance
Governance Report
Contents
Board of Directors
Governance at a glance
Corporate governance report
Audit Committee report
Nomination Committee report
Directors Remuneration report
Directors’ report
Statement of Directors’ responsibilities in
respect of the financial statements
124
129
132
140
148
152
178
183
122 |
122 |
kinandcarta.com
kinandcarta.com
Building a world that works better for everyone
Building a world that works better for everyone
| 123
| 123
Governance Report Board of Directors
Career
John was appointed Non-Executive
Chairman Designate on 22 July 2019 and
subsequently Chairman on 5 December
2019. He previously acted as Chief
Executive Officer of Deloitte Consulting,
leading the creation of Deloitte Digital,
the first dedicated digital consulting
business. John grew the business
organically and by strategic acquisition.
He 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. John 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 Chair of LC Financial Holdings
Limited, CMSPI Limited, and SLR
Consulting Limited. He also serves as a
Trustee of Plan International (UK).
John Kerr
Chairman
Appointed to the Board
22 July 2019
Committee membership
N
Committee membership
Chair of the committee
N Member of the Nomination Committee
A Member of the Audit Committee
R Member of the Remuneration Committee
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
Kelly 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.
Career
Chris was appointed Chief Financial
Officer on 17 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 a Bachelor of Science in Finance
and Investments from the University
of Illinois and an MBA in Strategy and
Finance from The University of Chicago
Booth School of Business.
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 sits on the Board of Directors for
Skills for Chicagoland’s Future.
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.
Kelly Manthey
Chief Executive Officer
Appointed to the Board
1 August 2022
Committee membership
N
Chris Kutsor
Chief Financial Officer and
Chief Operating Officer
Appointed to the Board
17 June 2019
Committee membership
N
124 |
kinandcarta.com
Building a world that works better for everyone
| 125
Governance Report Board of Directors
continued
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
advisor 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.
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.
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 (‘‘Bain’’) 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. 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
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
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.
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’s Healthcare
and DEI practices, and the head of its
global DEI sub-committee and is a
member of the Bain board.
David Bell
Independent Non-Executive
Director
Appointed to the Board
4 August 2018
Committee membership
A N
Maria Gordian
Independent Non-Executive
Director
Appointed to the Board
1 November 2021
Committee membership
N R
Other roles
Michele has no other appointments to
disclose.
Career
Michele most recently served as Chief
Financial Officer of Hogg Robinson
Group plc until 2018. 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.
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.
Career
Nigel was appointed Independent
Non-Executive Director on 1 June 2016
and subsequently Senior Independent
Director on 1 December 2022. He is
the Chief Executive Officer of Good
Energy Group plc (‘‘Good Energy’’),
a green energy services and supply
company with significant interests in
the transition of heating and transport
to electrical power. On 1 August 2023,
Nigel became an Independent
Non-Executive Director of Mobico
Group plc, a global transportation
provider. 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 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, makes him well
suited to chairing the Remuneration
Committee.
Other roles
Nigel is Chief Executive Officer of
Good Energy and an independent
Non-Executive Director at Mobico
Group plc.
Michele Maher
Independent Non-Executive
Director
Appointed to the Board
15 May 2019
Committee membership
A N R
Nigel Pocklington
Senior Independent Director
Appointed to the Board
1 June 2016
Committee membership
A N R
126 |
kinandcarta.com
Building a world that works better for everyone
| 127
Governance Report Board of Directors
continued
Governance at a glance
During the year, John Kerr
(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 129.
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 Annual General
Meeting (“AGM”) and seek
re-election.
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 134. 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 on pages 107 to 111 of
our Strategic Report.
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,
Chief Financial Officer and
Chief Operating Officer, Senior
Independent Director and Non-
Executive Directors are set out on
pages 133 to 134.
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
2018 UK Corporate Governance
Code (the “Code”).
Major Board decisions
• Approved the acquisition of Forecast Data
• Approved the appointment of Nigel Pocklington as Senior Independent Director
• Approved an extension to the Group’s multi-currency credit facility agreement by a further year to
22 September 2026
• Approved recommended cash offer made by Kelvin UK Bidco Limited, a newly formed company owned
indirectly by funds advised by Apax Partners LLP, for the entire issued share capital of Kin + Carta
Governance improvements
• Approved updated Speak Up and Anti-Bribery and Corruption policies
• Appointed Jennifer Crowley as Global Director of Responsible Business, a newly created role, to increase
the reflection and consideration on responsible business attributes of Kin + Carta (including a particular
focus on ESG strategy)
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 held a number of ad hoc meetings, principally in connection
with acquisition-related activity.
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:
Meeting attendance
Board
Audit
Committee
Nomination
Committee
Remuneration
Committee
David Bell
Maria Gordian
John Kerr
Chris Kutsor
Michele Maher
Kelly Manthey
Nigel Pocklington
7 7
7 7
7 7
7 7
7 7
7 7
7 7
3 1
4
–
–
–
4 4
–
4 4
2 2
2 2
2 2
2 2
2 2
2 2
2 2
–
3 2
4
–
–
4 4
–
4 4
1 David Bell was unable to attend the meeting for personal reasons.
2 Maria Gordian was unable to attend the meeting for personal reasons.
Meetings attended
Meetings convened
This table only details attendance at meetings in the scheduled annual meeting calendar; other ad hoc Board
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.
128 |
kinandcarta.com
Building a world that works better for everyone
| 129
Governance Report
Governance at a glance
continued
Board composition as at 31 July 2023
Board gender diversity
Board ethnicity
3
1
4
Female
Male
6
Ethnic minority
White
Chair and Non-Executive
Director tenure
Independence
Key skills and experience
1
3
0–3 years
3–6 years
6+ years
1
1
4
2
3
3
5
Chair – independent on appointment
Digital innovation and technology
Executive Director
Finance, accounting and investor relations
Non-Executive Director – independent
People skills
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 2023. A copy of
the 2018 UK Corporate Governance
Code is publicly available on the
website of the Financial Reporting
Council (“FRC”), www.frc.org.uk.
During the year, we have complied
with the provisions of the Code in
all respects, save for:
• Provision 12 relating to the
appointment of a Senior
Independent Director. Following
the resignation of Helen
Stevenson, Senior Independent
Director, on 14 December
2021, the provision related to
the appointment of a Senior
Independent Director as part
of the Company’s succession
planning process and on the
Nomination Committee’s
recommendation had not
been satisfied. However, Nigel
Pocklington was appointed
Senior Independent Director
on 1 December 2022 and the
Company is therefore compliant
with this provision as of the date
of this report.
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)
128
6-7
112-121
44-111
58-63
Page(s)
130
133
138-139
Page(s)
150-151
130
138-139
149-150
Page(s)
145-147
143
112-121
Page(s)
157-164
152-177
165-177
164
130 |
kinandcarta.com
Building a world that works better for everyone
| 131
Governance Report
Corporate governance report
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 124 to 127. With
effect from 1 August 2023, Nigel
Pocklington was appointed as
an independent Non-Executive
Director of Mobico Group plc. The
Board did not consider that this
role would affect Nigel’s ability
to commit sufficient time to the
Company. Other than Nigel’s
recent appointment, 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 136 to 137.
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 Board and
committee responsibilities section
of our website:
investors.kinandcarta.com.
The Board
Key responsibilities include:
• establishing the purpose and values of Kin + Carta
• debating and agreeing the Group’s strategy,
long-term business objectives and risk appetite
• approving acquisitions, divestments and major
capital projects
• approving the Group’s annual budget, dividend
proposals and financial statements
• promoting the highest standards of corporate
governance and responsible business
• ensuring the Group has the necessary resources,
processes, controls and culture in place to deliver
Group strategy and promote long-term growth
Audit Committee
Nomination Committee
Remuneration Committee
Key responsibilities include:
Key responsibilities include:
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
• 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
•
identifying and nominating
of candidates to fill Board
and committee positions
and recommending the
re-election of Directors
132 |
kinandcarta.com
Building a world that works better for everyone
| 133
Governance Report 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 an 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.
Corporate governance report
continued
Key responsibilities
Chairman
•
•
•
•
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
Chief Executive
Officer
• 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 views 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, and the annual report and accounts
• 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
Chief Financial
Officer
and
Chief Operating
Officer
• 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
executive responsibility, in conjunction with the Chief Executive Officer, for the half-year and
preliminary results statements, and the annual report and accounts
• overseeing the scaling of operations in pursuit of further financial and operational effectiveness
Senior
Independent
Director
•
•
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 Chairman’s role in conjunction with the Nomination
Committee
• meeting with major shareholders for a balanced understanding of their issues and concerns, and
supporting the Chairman in ensuring these are shared with the Board
Non-Executive
Directors
• 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
134 |
kinandcarta.com
Building a world that works better for everyone
| 135
Governance Report
Corporate governance report
continued
2023/24 key focuses of the Board: how governance
contributes to strategy
People and responsible business
Governance, risk and controls
Strategy and business
Finance
Link to strategic
priorities
Key activities
and discussions
in 2022/23
• Received updates on responsible business
matters, including progress against KPIs.
• Received summaries on employee
engagement and experience, including culture
and IDEA initiatives.
• Considered talent matters and incentive
proposals for the wider workforce.
• Considered attrition rates and associated
matters across Kin + Carta.
• Considered salary inflation and mitigations.
Key outcomes
• Appointed Jennifer Crowley as Global Director
of Responsible Business, a newly created role,
to increase the reflection and consideration on
responsible business attributes of Kin + Carta
(including a particular focus on ESG strategy).
• Attended to regulatory disclosures, which
included the review and approval, according to
the Audit Committee’s recommendations, of
the Annual Report and Accounts 2021/22, 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.
• Oversaw the ongoing simplification of the legal
structure of the Group.
• Approved the appointment of Nigel
Pocklington as Senior Independent Director
and Chris Kutsor’s additional appointment as
Chief Operating Officer.
• Completed the process of placing dormant
legal entities in members’ voluntary
liquidation.
• Approved the settlement of two disputes with
former customers.
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.
Key priorities
for 2023/24
•
•
•
•
•
To complete and present a net zero feasibility
study and recommendations.
To prepare for B Corp recertification and strive
for quarterly score improvements.
•
•
To drive the achievement of the reset
non-financial KPIs.
To identify priority tactics to increase
leadership diversity.
To drive two eNPS cycles, with the first cycle
commencing in November 2023.
•
To collaborate with Client Success for training.
Link to FY24 strategic priorities
Optimise our
Foundation
Focus
on Core
Focus on what
Clients need next
• 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 initiatives,
including acquisitions.
• 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.
• Completed phase 1 of the new global forecasting
system, Planful.
• Completed the acquisition of Forecast Data, a data
service provider, further strengthening Kin + Carta’s
global data and artificial intelligence services.
•
•
•
To consider acquisition opportunities aligned to Kin +
Carta’s proposition and operating model.
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 FY24 strategic
priorities described on pages 34 and 35.
• 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
acquisition of Forecast Data.
• Considered macroeconomic inflationary pressure and
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.
• Considered the extension of the Group’s multi-currency
credit facility agreement for a further year.
• Approved the budget allocation, capital allocation
framework and key investment areas for 2023/24.
• Renewed the Group’s multi-currency credit facility
agreement.
• Conducted an operational expenditure and expenses
review.
• Concluded the triennial valuation of the St Ives Defined
Benefit Pension Scheme, showing a technical surplus of
£5.6m.
•
•
•
To continue to monitor the Company’s performance
versus budget, financial position, liquidity headroom,
banking covenants and realistic downside scenarios.
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.
136 |
kinandcarta.com
Building a world that works better for everyone
| 137
Governance Report
Corporate governance report
continued
In 2023, internally facilitated
effectiveness evaluations of the
Board and its committees were
undertaken via questionnaire,
led by John Kerr (Chairman)
and supported by Daniel Fattal
(former Company Secretary). Nigel
Pocklington (Senior Independent
Director) led a review of the
performance of the Chairman
and considered feedback from
the Executive and Non-Executive
Directors. A summary of the 2023
effectiveness review findings and
actions identified is disclosed
on the next page. These actions
will be carried out within the
2023/24 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.
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.
Kelly Manthey was appointed Chief
Executive Officer on 1 August 2022.
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 Kelly’s inductions, she
received a presentation from the
Company’s corporate lawyers on
listed company obligations and
directors’ duties. 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.
Each year, the Board considers
the most appropriate mechanism
for conducting its annual Board
effectiveness review.
Board
Matters arising from
the 2023 effectiveness
evaluation
Skills and experience
Actions identified
While considering future board appointments, the Board
should take into account candidates relevant experience
in future technologies and capital markets
Conduct and structure of
board meetings
Consider which Board meetings non-Board members
should attend
Introduce Board-only sessions for meetings that include
non-Board members
Board meeting
attendance
Keep Board members informed of the number of Board
meetings to be held in person throughout the year
Engagement with Board
members
Encourage dialogue between Executive and
Non-Executive Directors outside of meetings
Strategy articulation
Understanding clients
Enhance strategy papers to focus more on delivery
capability and measurable outcomes of strategic
priorities
Consider inviting clients to future Board meetings to
discuss their needs, sector trends, and our performance
as a whole
Audit Committee
No actions were identified for the Audit Committee
Nomination Committee
No actions were identified for the Nomination Committee
Remuneration Committee Process and timeline
Introduce a new HR lead to the Chair of the Committee to
assist the management and timelines of the committee
papers
138 |
kinandcarta.com
Building a world that works better for everyone
| 139
Governance Report Audit Committee report
Michele Maher
Chair of the Audit Committee
2024 areas
of focus:
In addition to the recurring matters
on the committee’s rolling agenda,
the Committee expects to review:
•
•
the implementation of “Concur”,
new expenses reporting
system and its effectiveness
in reinforcing compliance with
expense policy and driving cost
savings; and
the integration of recent
acquisitions (Melon, Loop, CDL,
Forecast Data) and impact on
planned growth and increased
scale.
Current members:
• Michele Maher (Chair)
• David Bell
• Nigel Pocklington
Meetings held:
4
For details of Audit Committee
members’ attendance at
meetings during the year, see
page 129.
2023 key
achievements:
• Reviewed management
processes around revenue
recognition to confirm robust
controls are in place including
compliance with the IFRS 15
standard as well as ensuring
there are adequate early
warning mechanisms to detect
significant changes to major
client contracts.
• Considered the control
environment in the context of
the increasing use of nearshore
resources in financial processes.
• Reviewed the recommendations
by the Assurance team following
the deferred consideration
reviews of Melon, Loop and CDL.
• Considered new disclosure
requirements and narrative
reporting guidance.
• Considered effectiveness of
the external audit process
and how the external auditor’s
objectivity and independence is
safeguarded.
Chair’s
introduction
On behalf of the Audit Committee, I
am pleased to present its report for
the year ended 31 July 2023.
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 and
KPMG, Kin + Carta’s former and
current external auditor, 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 145
to 147.
Michele Maher
Chair of the Audit Committee
1 November 2023
140 |
kinandcarta.com
Building a world that works better for everyone
| 141
Governance Report 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 carried out
a robust assessment of the Group’s
emerging and principal risks,
including:
• Regular engagement with,
and feedback from, senior
management on proposed
content.
• Feedback from external parties
(corporate reporting specialists,
remuneration advisors, and
external auditor) 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
auditor.
This work enabled the Committee
to provide positive assurance to
the Board to assist them in making
the statement required by the
Code.
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 144 and 145.
Audit Committee report
continued
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. Michele chairs 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 four meetings
in the year, at which it:
• Considered the external
auditor’s 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.
• 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.
• Received a report on
classification of share-based
payment charges as adjusting
items.
• Received a report on application
of accounting standard IFRS
15 on complex client contracts
together with evaluation and
recommendations on additional
controls to place better rigor
around the application of the
standard.
• Received updates on assurance
activities performed for
acquisition earn-outs including
first deferred consideration
for Melon and Loop and final
deferred consideration for CDL.
• Reviewed the Group’s trading
updates and half-year results
prior to release.
• Considered key mandatory
reporting requirements
for the year ended 31 July
2023, 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.
• 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 and approved revised
key controls policies, including
Anti-Bribery and Corruption,
Speak Up (whistleblowing),
and Non-Audit Services
and reported to the Board
on the operation of these
arrangements.
142 |
kinandcarta.com
Building a world that works better for everyone
| 143
Governance Report Audit Committee report
continued
Significant issues
considered
Recognition of
revenue and profit on
complex contracts
The assessment of
the carrying value
of goodwill
(£61.8 million) and
intangible assets
(£13.2 million)
The classification
of adjusting items
(£37.7 million
before tax)
How the Committee addressed these issues
Judgement is applied in recognising revenue where:
Revenue is recognised over time as distinct services delivered in respect of the input
costs incurred. Revenue is recognised as a percentage of completion as performance
obligations are delivered. This method particularly requires a judgement in respect of
estimating the cost to complete on the respective contract and the remaining risk and
associated contingency. Contingency includes revenue and cost contingency which
is considered for uncertainty remaining to deliver the remainder of the contract and
associated warranties.
The Committee considered the outcome of the assessment related to client contracts
with potential disputes and litigations in the period and agreed on the implementation of
the recommendations made by the internal Assurance team.
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 value-in-use calculations identified a shortfall of £14.6 million in relation to the UK
excluding Kin and Carta Data CGU goodwill, which has been recorded as an adjusting
item in the Consolidated Income Statement. Following discussion and challenge, the
Committee agreed with the recommendations made by management.
The Committee was satisfied with the assumptions applied to support the remaining
carrying value of goodwill of £61.8 million and intangible assets of £13.2 million. The
conclusion of the review and the key assumptions are disclosed in note 18 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 279 to 283.
The valuation of
the St Ives Defined
Benefit Pension
Scheme (£13.0 million
surplus)
The valuation of the St Ives Defined Benefit 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 to the Consolidated Financial Statements. The assumptions presented
to the Audit Committee by management are underpinned by actuarial advice. The Audit
Committee considered the suitability of the actuary.
Significant issues
considered
Going concern basis
for the financial
statements and
viability statement
How the Committee addressed these issues
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 179 and 180 and the viability statement can be
found on pages 181 and 182.
Accounting treatment
of acquisitions
Following the acquisition of Forecast Data in the year, the Committee considered the
allocation of the purchase price payable among the fair value of acquired net assets,
which includes acquired intangible assets and goodwill (which are detailed in note 12
of the Consolidated Financial Statements). In addition, the Committee considered the
treatment of contingent consideration as deemed remuneration. The Committee was
satisfied with the treatment applied.
Changes in
accounting policy
The Committee considered the change in accounting policy to hold investment property
at fair value (previously held at cost). Details of the restatement can be found in note 1 to
the Consolidated Financial Statements.
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 Senior
Internal Auditor 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.
• A review of policies related
to reimbursable expenses,
and credit card expenses,
Delegation of Authority and
signing authorities for the
Regions.
• A review of the financial model
and associated calculations
of Executive and Operations
Incentive Bonus Plans.
Additional reviews included:
• Development of Country Risk
• A review of the second
contingent consideration for
Cascade Data Labs.
• A review of the first contigent
consideration for Melon, Octain
and Loop.
• A review of completion
accounts and purchase price
allocation for Forecast Data.
•
Reviews on Revenue recognition
related to complex client
contracts and quarterly balance
sheet reviews.
• A review of spend across the
Group, covering expenses,
credit cards and supplier spend.
Profiles to support new business
development activities.
• Assessment of client contracts
with potential disputes and
litigations. Evaluation of
internal controls and provide
improvement recommendations.
• Conducted refresh training on
high risk activities, such as, IFRS
15 (Revenue Recognition).
•
Enhancement of an Internal
Incident Management
Framework.
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.
144 |
kinandcarta.com
Building a world that works better for everyone
| 145
Governance Report Audit Committee report
continued
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.
The areas covered included:
•
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.
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 2023 was supported by
the Company Secretary and
Internal Audit function. In addition,
during the year, the Committee
received regular reports from
Assurance on the effectiveness
of the Group’s internal controls
and risk management system, and
reports from the external auditor
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, advise
and to escalate, with regard
to noteworthy risk issues and
developments.
• Regular management meetings
within each Region as
appropriate.
• The Group’s Internal Audit
function, whose work plan
is closely linked to the risk
management framework.
• 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 auditor. 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 it considered
the Group had effective risk
management and internal control
processes in place.
Effectiveness of the
external auditor
In the prior year, the Audit
Committee conducted a tender
process for the external audit
engagement for Kin + Carta’s
financial year ended 31 July 2023.
This resulted in the appointment of
KPMG following the approval of the
shareholders at the 2022 AGM.
The Committee is tracking the
effectiveness of the new external
auditor’s process for the year
ended 31 July 2023 based on
the commitments made during
the tender. The results of this
assessment were discussed
with the external auditor at the
conclusion of the audit for the year
ended 31 July 2023.
The correspondence included
requests for further information
on certain aspects of the Group’s
Annual Report and Accounts
for the year ended 31 July 2022,
related primarily to deferred
tax, net investments in foreign
operations, expected credit
losses, business combinations and
leases. The Group responded fully
to all the matters raised and the
correspondence is now closed. The
Group agreed to make additional
disclosures, where appropriate,
in the 2023 Annual Report and
Accounts in respect of the areas
highlighted by the FRC, in order to
enhance users’ understanding of
those areas. No further actions are
required.
The Chair of the Committee has
been involved in reviewing the
Group’s responses to the points
raised by the FRC and is satisfied
that all the matters have been
addressed via the direct responses
to the FRC and the additional or
amended disclosures in this year’s
Annual Report and Accounts. The
FRC has published its case review
which can be found at frc.org.uk/
accountants/corporatereporting-
review/crr-reviews.
is satisfied that there are no
relationships between the
Company and KPMG, its employees
or its affiliates that may reasonably
be thought to impair the auditor’s
objectivity and independence.
The Committee met with KPMG
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 auditor 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, KPMG was appointed
as the Company’s external auditor
in 2022, with effect from the
financial year ended 31 July 2023.
The external auditor’s appointment
is reviewed regularly in accordance
with applicable law and regulation
and the FRC Ethical Standard for
Auditors. John Poole served as the
Lead Audit Partner for the financial
year ended 31 July 2023.
Interactions with the Financial
Reporting Council
During the year, the Group received
a letter from the FRC as part of its
regular review and assessment of
the quality of corporate reporting
in the UK. The review conducted by
the FRC was based solely on the
Group’s published Annual Report
and Accounts and does not provide
any assurance that the Annual
Report and Accounts are correct in
all material aspects.
Provision of non-audit
services
The Committee’s policy on the
engagement of the external
auditor 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
auditor 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 2023,
non-audit fees of £54,600 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.
Safeguarding the external
auditor’s independence
The Committee considered the
robustness of KPMG’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 KPMG’s objectivity and
independence. The Committee
146 |
kinandcarta.com
Building a world that works better for everyone
| 147
Governance Report Nomination Committee report
Current members:
• John Kerr (Chair)
• David Bell
• Chris Kutsor
• Maria Gordian
• Michele Maher
• Kelly Manthey
• Nigel Pocklington
Meetings held:
2
For details of Nomination
Committee members’ attendance
at meetings during the year, see
page 129.
John Kerr
Chair of the Nomination
Committee
2023 key
achievements:
Chair’s
introduction
• Recommended to the Board the
appointment of Chris Kutsor
as Chief Operating Officer with
effect from 1 August 2022 in
addition to his role as Chief
Financial Officer.
• Recommended to the
Board the appointment of
Nigel Pocklington as Senior
Independent Director with
effect from 1 December 2022.
• Having conducted a Board
and committees performance
evaluation during the year,
the Nomination Committee
identified no significant gaps
in the Board and committees’
effectiveness that needed
attention (see page 139).
2024 areas of
focus:
• Further consideration of
succession planning.
• Monitor the balance of diversity,
experience, knowledge and skills
of the Board.
On behalf of the Nomination
Committee, I am pleased to present
its report for the year ended
31 July 2023.
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.
Succession planning
During the year, the Committee
reviewed the diversity, experience,
knowledge and skill-set of the
Board and discharged their
principal duties by:
• ensuring that an appropriate
review of the Board, its
Committees and Directors’
effectiveness was undertaken;
• considering whether the
Non-Executive Directors were
sufficiently independent for
corporate governance purposes;
and
• approving the responsibilities
of the Chairman, the Chief
Executive Officer, Chief Financial
Officer and Chief Operating
Officer, and Senior Independent
Director.
John Kerr
Chair of the Nomination Committee
1 November 2023
Diversity targets
As at 31 July 2023, Kin + Carta met the UK Listing Rules diversity targets to
have at least 40% female Board representation, at least one senior Board
position occupied by a woman and at least one director from an ethnic
minority background, as shown in the table below (the “Diversity Targets”).
There have been no changes to the Board between 31 July 2023 and the date of
this report that have affected the Company’s ability to meet one or more of the
Diversity Targets. Each individual self-reported their gender identity and ethnic
background through a fixed choice questionnaire with possible responses
aligned to the specific categories in Listing Rule 9 Annex 2.
Gender identity
Number
of Board
members
Percentage
of the
Board
Number
of senior
positions on
the Board
(CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage
of executive
management
Men
Women
Not specified/
prefer not to say
4
3
–
57%
43%
–
3
1
–
5
2
-
71%
29%
-
Ethnic background
Number
of Board
members
Percentage
of the
Board
Number
of senior
positions on
the Board
(CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage
of executive
management
White British
or other White
(including
minority-white
groups)
Mixed/Multiple
Ethnic Groups
Asian/Asian
British
Black/African/
Caribbean/Black
British
Other ethnic
group, including
Arab
Not specified/
prefer not to say
6
–
–
1
–
–
86%
–
–
14%
–
–
4
–
–
–
–
–
5
2
–
–
–
-
71%
29%
–
–
–
-
148 |
kinandcarta.com
Building a world that works better for everyone
| 149
Governance Report 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.
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 2023
Inclusion, diversity, equity
and awareness
The Board Diversity Policy is
available to view in the reports and
policies section of our website:
investors.kinandcarta.com. The
policy takes into account DTR
7.2.8A as part of the identification
and selection of new directors and
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.
The proportion of women on the Board is 43%.
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 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, 1 November 2023.
Performance evaluation
In 2023, 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 pages
138 and 139 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
Board appointment process
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 were identified.
During the year, the Nomination
Committee recommended that
the Board approve Chris Kutsor’s
additional appointment to the role
of Chief Operating Officer effective
from 1 August 2022 and further
approved Nigel Pocklington’s
appointment to the role of Senior
Independent Director effective
from 1 December 2022.
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.
Senior managers
13
23
150 |
Female
Male
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 further develop 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
68 to 71. These initiatives are
intended to build a culture where
everyone is empowered to bring
their 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 is set out within this
Nomination Committee Report on
pages 149 to 150.
Senior managers for these purposes is as defined
in section 414C(8) of the Companies Act 2006 and
includes the directors of the Group’s subsidiary
undertakings and their direct reports.
kinandcarta.com
Building a world that works better for everyone
| 151
Governance Report Directors’ Remuneration report
Current members:
• Nigel Pocklington (Chair)
• Michele Maher
• Maria Gordian
Meetings held:
4
For details of Remuneration
Committee members’ attendance
at meetings during the year, see
page 129.
2023 key
achievements:
• Following the 2022 AGM, the
Committee reached out to
some of the Company’s largest
shareholders to continue a
dialogue and listen to their
views as significant investors of
Kin + Carta.
• Considered the remuneration
arrangements for 2022/23 and
approved the targets for the
2023/24 bonus and December
2022 LTIP awards.
Nigel Pocklington
Chair of the Remuneration
Committee
2024 areas of
focus:
• Continue to operate the
Directors’ Remuneration Policy
and welcome ongoing dialogue
with shareholders and key proxy
advisers.
• Determine the impact
on remuneration of the
recommended offer by Kelvin
UK Bidco Limited for the entire
issued share capital of the
Company, as set out in the Co-
Operation Agreement on
18 October 2023.
At a glance
Summary for Executive
Directors’ performance and
remuneration for 2023
• 2023 annual bonus pay-
out of 0%, reflecting the
Executive Directors’ proposal
to forego any bonus due to
the Company’s revision of its
trading performance during the
year.
• 2020-2023 LTIP award vesting
36% of maximum reflecting the
achievement of the ESG target
and modest growth in adjusted
net revenue and adjusted profit
before tax (“PBT”) over the
three-year performance period.
Implementation for 2024
• Given current economic
conditions, Kelly Manthey and
Chris Kutsor have not received
salary increases with effect
from 1 August 2023. The average
salary increase across the Group
for 2023/24 is 5.43% (excluding
recent Europe acquisitions); for
US resident employees only, the
average is 5.08%.
• Maximum annual bonus of up
to 150% salary, based 40% on
adjusted net revenue growth,
40% on adjusted PBT, and 20%
on strategic/personal objectives,
including ESG related measures.
Further details are disclosed on
page 70.
• Given the current expected
timing of the recommended
offer from Kelvin UK Bidco
Limited, the Committee does
not intend to grant any further
LTIP awards to employees. If any
grants are made this will be in
accordance with the Directors’
Remuneration Policy, and targets
will be disclosed at the time of
grant.
• With effect from 1 August 2023,
the annual base fee levels for
the Non-Executive Directors
increased to £50,000, with an
additional fee for the Audit and
Remuneration Committee chairs
increasing to £9,000 p.a.
Letter from the
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 2023.
This report is split into three parts:
this ‘annual statement’, a summary
of the ‘Remuneration Policy report’,
which was approved 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 2023 and
how the Remuneration Policy will be
implemented in the year ending 31
July 2024.
The 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.
Following the year end, the
Committee has determined the
impact of the recommended offer
from Kelvin UK Bidco Limited, a
newly formed company owned
indirectly by funds advised by
Apax Partners LLP, on Directors’
remuneration and our employee
share plans. The Committee agreed
outcomes in accordance with the
Directors’ Remuneration Policy
and the rules of our share plans
as outlined in the Co-Operation
Agreement.
Business context
Kin + Carta has had to respond to
deteriorating market conditions
during the year due to inflation
and increased uncertainty and
increasing risk related to our clients’
ambitious digital investment plans.
For the year ended 31 July 2023,
we saw a like-for-like net revenue
decline of 11% and adjusted PBT has
decreased from £20.6 million to
£15.8 million.
Despite challenges in the market,
we have continued integration
of Melon Group following the
acquisition last year and further
enhanced our high quality data
and artificial intelligence services
through the acquisition of Forecast
Data.
Wider workforce actions
The macro-economic headwinds
have continued to impact our
business, as well as the livelihoods
of our employees. To further
support employees, Kin + Carta
carried out a pay review for
2023/24 and increased salaries by
5.43% across the Group (excluding
recent Europe acquisitions). Kin +
Carta also has a benefits platform
which provides a range of benefits
and initiatives to support mental
and financial wellbeing. The Board,
including the Committee, will
continue to monitor the impact of
these headwinds on the livelihoods
of our employees.
152 |
kinandcarta.com
Building a world that works better for everyone
| 153
Governance Report Directors’ Remuneration report
continued
Performance and
reward for 2023
The Committee considered
performance achieved against
the annual bonus targets set for
2022/23:
• The targets for the 35%
weighting based on adjusted
net revenue and 35% weighting
based on adjusted PBT were not
met as performance was below
the threshold targets for both
measures.
• The 20% of bonus opportunity
based on strategic objectives,
relating to growth, services,
people, responsibility,
operations and expansion, was
met in full. Therefore, 20% out of
20% was achieved.
• The 10% of bonus opportunity
based on environmental, social
and governance (“ESG”) matters
was met at 37.5%. Therefore,
3.75% out of 10% was achieved.
This assessment would have
resulted in an overall annual bonus
outcome based on performance
against the formulaic targets of
23.75% of maximum. However,
given that the financial targets
were missed, the Executive
Directors voluntarily elected not to
receive an annual bonus which the
Committee accepted. Therefore
no annual bonus payment was
made for 2022/23. Full details of
performance against targets have
been disclosed on page 170.
The Committee considered
performance achieved against the
LTIP awards granted in November
2020 for Chris Kutsor, which are
due to vest in November 2023:
• 50% of the award is based
on a relative TSR target, the
threshold target was not met
therefore, this element of the
LTIP did not vest.
• The financial measures based
on growth in adjusted net
revenue from 2019/20 to
2022/23 (15% of the award) and
growth in adjusted PBT from
2019/20 to 2022/23 (15% of
the award) were partially met,
and will vest at 12% and 4% of
maximum respectively.
• 20% of the award was subject
to ESG targets which were met
in full.
Therefore, the LTIP award will vest at
36% of maximum. Kelly Manthey’s
2020 LTIP award was granted prior
to her appointment as an Executive
Director and will vest at 30% of
maximum. Further details are
provided on pages 171.
The Committee considered that
the outcomes under the bonus and
LTIP elements of the Remuneration
Policy were appropriate given the
performance achieved, and no
discretion was exercised.
Variable pay for 2023/24
For 2023/24, the annual bonus
measures have been reviewed
and updated to align with the
Company’s immediate priorities.
The weighting on financial
measures has been increased from
70% to 80%, with the remaining
20% based on strategic objectives
(inclusive of Corporate Social
Responsibility). The financial
measures will be split evenly
between total adjusted net revenue
growth and adjusted PBT growth.
As set out in the Co-Operation
Agreement, given the current
expected timing of the
recommended offer from Kelvin UK
Bidco Limited, the Committee does
not intend to grant any further LTIP
awards.
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 annual
Directors’ Remuneration Report at
the forthcoming Directors’ AGM.
Nigel Pocklington
Chair of the Remuneration
Committee
1 November 2023
154 |
kinandcarta.com
Building a world that works better for everyone
| 155
Governance Report Directors’ Remuneration report
continued
Policy report
Directors’ Remuneration Policy
This section of the report sets out
a summary of the Remuneration
Policy (the “Policy”) for Executive
and Non-Executive Directors, which
was approved at the 2022 AGM on
1 December 2022. A copy of the full
Policy is available in the 2021/22
Annual Report and Accounts, pages
148 to 157 inclusive.
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 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
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 summarised Policy table on
pages 158 to 163 sets out the
key aspects of the Company’s
Remuneration Policy for Executive
Directors.
How the 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
Clarity – remuneration arrangements should be
transparent and promote effective engagement with
shareholders and the workforce.
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.
Simplicity – remuneration structures should avoid
complexity and their rationale and operation should be
easy to understand.
The Company operates a UK market standard
remuneration structure that is familiar to all
stakeholders.
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.
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 of the 2021/22
Annual Report and Accounts.
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.
156 |
kinandcarta.com
Building a world that works better for everyone
| 157
Governance Report 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.
Basic salary
Purpose and link to strategy
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.
Maximum potential value
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;
In setting salaries, the Committee typically takes into
account the following:
• an individual’s development or performance in role;
• a change in the size and complexity of the Group;
the size and complexity of the organisation;
• significant market movement; and
•
•
•
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.
• 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.
Benefits
Purpose and link to strategy
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).
Pension
Purpose and link to strategy
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 potential value
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.
Maximum potential value
Maximum pension contribution will normally be no more
than that offered to the majority of employees (currently
5% of salary).
Performance metrics
Not applicable.
158 |
kinandcarta.com
Building a world that works better for everyone
| 159
Governance Report Directors’ Remuneration report
continued
Annual bonus
Purpose and link to strategy
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.
Maximum potential value
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 minimum bonus payment
of 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.
Long-term incentives
Purpose and link to strategy
Incentivises Executives to achieve superior financial
growth and return to shareholders over the longer term.
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.
All-employee share schemes
Purpose and link to strategy
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.
Maximum potential value
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.
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 and 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.
Maximum potential value
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.
160 |
kinandcarta.com
Building a world that works better for everyone
| 161
Governance Report Directors’ Remuneration report
continued
Maximum potential value
Not applicable.
Performance metrics
Not applicable.
Maximum potential value
Not applicable.
Performance metrics
Not applicable.
Share ownership guidelines
Purpose and link to strategy
To provide alignment between Executives and
shareholders.
Operation
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
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.
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
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.
In summary, the contractual provisions are as follows:
Executive Directors external appointments
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.
Non-Executive Directors Remuneration Policy
Chairman and Non-Executive Directors
The following sets out the fee policy for the Chairman and Non-Executive Directors:
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.
Purpose and link to strategy
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.
162 |
kinandcarta.com
Building a world that works better for everyone
| 163
Governance Report Directors’ Remuneration report
continued
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
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 full Policy as set out in the 2021/22 Annual
Report and Accounts, pages 148 to 157 inclusive.
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 and receive feedback on 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.
Annual report on remuneration
The following section provides
details of how Kin + Carta’s Policy
was implemented during 2022/23.
Details of how we intend to
implement the Remuneration Policy
for 2023/24 is detailed on pages
167 to 168. The Policy operated as
intended by the Committee.
Membership of the Committee
Michele Maher, Nigel Pocklington,
and Maria Gordian, all Independent
Non-Executive Directors, served
on the Committee during the
year. The Committee is chaired by
Nigel Pocklington. The number of
meetings held and attendances
on page 129. A description of the
principal matters considered by
the Committee in carrying out
its duties during the year are
described below.
During the year under review, the
Committee, where appropriate,
sought advice and assistance from
Daniel Fattal (former Company
Secretary), and members of
the Board, including John Kerr
(Chairman), David Bell
(Non-Executive Director), Kelly
Manthey (Chief Executive Officer),
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
2023 were £51,350 (2022: £91,500),
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 2021/22;
• approved the Directors’
Remuneration Report for
2021/22;
• approved the grant of awards
in December 2022 under
the Company’s 2020 LTIP to
certain senior managers and
the performance conditions
attached to their vesting;
• approved the structure of the
Executive Directors’ bonus
scheme for 2022/23; and
• consulted with major
shareholders following 2022
AGM.
164 |
kinandcarta.com
Building a world that works better for everyone
| 165
Governance Report Directors’ Remuneration report
continued
Summary of shareholder voting
The following table shows the results of the binding vote on the Remuneration Policy, the advisory vote on the
2021/22 Directors’ Remuneration Report and the vote to amend the Kin and Carta Long Term Incentive Plan 2020 at
the 2022 AGM:
Resolution
Votes for1
% for1
Votes
against
%
against
Total
votes cast
Votes
withheld
Remuneration Policy – 2022 AGM 104,500,984
73.10% 38,462,829
26.90%
142,963,813
445,028
Remuneration Report – 2022 AGM 134,363,376
93.69%
9,044,495
6.31%
143,407,871
970
Amend the LTIP – 2022 AGM
107,490,385
75.19% 35,473,310
24.81%
142,963,695
445,146
1
Includes”discretionary” votes.
Following the 2022 AGM, the Committee reached out to the Company’s largest shareholders who did not support
the resolutions, to continue a dialogue and listen to their views as significant investors of Kin + Carta. This has
resulted in various correspondence and a number of conversations with these shareholders. Although there was a
range of views, the primary issue raised by most of those consulted with was that while they are sympathetic to our
rationale that it was necessary to increase executive remuneration opportunities to better compete for talent in the
US technology market, the Directors’ Remuneration Policy included increases to both the maximum annual bonus
and LTIP opportunities and some shareholders would have preferred an increase to one element of the package
only or a more staggered approach. While the Committee understands the points raised by those shareholders
voting against the resolutions, the Committee continues to believe the Directors’ Remuneration Policy meets the
objectives of balancing the Company’s need to recruit and retain talent in the US technology market while reflecting
the Company’s status as a FTSE listed company.
The Committee continues to be grateful for the feedback received and the two-way engagement with shareholders,
which was extensive prior to the 2022 AGM. Given overall majority support was obtained for the remuneration
resolutions, it is not currently proposed to make any further changes to the approach to Directors’ remuneration
that was set out in the 2022 Annual Report.
Implementation of Remuneration Policy for 2023/24
The following section provides details of how we intend to implement the Remuneration Policy for 2023/24.
Basic salary
The Committee reviewed the Executive Directors’ salaries for 2023/24 and in light of the challenging financial
circumstances of the business no increases were awarded. Salaries for 2023/24 are as follows:
Kelly Manthey
Chris Kutsor
From
1 August 2023
From
1 August 2022
% increase
US$525,000
US$525,000
US$405,000
US$405,000
0%
0%
The average salary increase across the Group for 2023/24 is 5.43% (excluding recent acquisitions); for US resident
employees only, the average is 5.08%.
Pension and benefits
No changes in pension contribution rates or benefits provision to the Executive Directors are to be applied during
the year.
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.
Annual bonus
As discussed in the annual statement on page 153, 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 and strategic objectives (inclusive of Corporate Social Responsibility), weighted 80% and
20% 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
2023/24 adjusted net revenue
2023/24 adjusted PBT
Strategic objectives (inclusive of Corporate Social Responsibility)
Weighting
40%
40%
20%
In the event of any material acquisition or divestment, the Committee may 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.
166 |
kinandcarta.com
Building a world that works better for everyone
| 167
Governance Report Directors’ Remuneration report
continued
Long-term incentive awards in 2023/24
Given the current expected timing of the recommended offer from Kelvin UK Bidco Limited, the Committee does
not intend to grant any further LTIP awards to employees. If any grants are made this will be in accordance with the
Directors’ Remuneration Policy and targets will be disclosed at the time of grant.
Non-Executive Director Remuneration Policy for 2023/24
With effect from 1 August 2023, the annual base fee levels for the Non-Executive Directors will increase to £50,000,
with an additional fee for the Audit and Remuneration Committee chairs increasing to £9,000 p.a. and a fee for
acting as the Senior Independent Director remaining unchanged at £5,000 p.a.. The fee for acting as Chairman will
remain unchanged. John Kerr (Chairman) will continue to forego £10,000 p.a. of his fee, which the Company donates,
together with a matching sum from the Company, to registered charities.
Remuneration payable to Directors for the year ended 31 July 2023
Directors’ single figure table (audited)
Set out below, in a single figure, is the total remuneration of all Directors for the financial year ended 31 July 2023
and financial year ended 31 July 2022. The Policy operated as intended during the year.
Basic
salary/fee1
£’000
Taxable
benefits2
£’000
Bonus3
£’000
Share
plans
vesting4
£’000
Pension
benefits5
£’000
Total
£’000
Total
fixed
£’000
Total
variable
£’000
Director
Executive Directors
Kelly Manthey6, 10
2022/23
433.9
Chris Kutsor6
2021/22
2022/23
2021/22
Non-Executive Directors
David Bell
Maria Gordian8
John Kerr7
Michele Maher
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
2022/23
2021/22
Nigel Pocklington9
2022/23
2021/22
–
334.7
269.0
42.5
42.5
42.5
31.9
120.0
120.0
50.0
50.0
53.3
50.0
16.9
–
20.7
16.0
–
–
–
258.2
26.0
–
58.8
1,571.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Cash paid or payable in respect of the relevant period.
2 Taxable benefits constitute additional payments in lieu of the provision of a company car.
3 This is the amount of cash bonus paid in respect of the financial year.
21.7
–
16.7
13.4
–
–
–
–
–
–
–
–
–
–
498.5
472.5
–
430.9
2,128.5
42.5
42.5
42.5
31.9
120.0
120.0
50.0
50.0
53.3
50.0
–
372.1
298.4
42.5
42.5
42.5
31.9
120.0
120.0
50.0
50.0
53.3
50.0
26.0
–
58.8
1,830.1
–
–
–
–
–
–
–
–
–
–
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 2021/22 Directors’
remuneration report, 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. For
Chris Kutsor, whose 2019 LTIP award vested during the year, the 2019 LTIP figures in the table above have been restated to reflect the actual number of 2019 LTIP awards,
which vested on 17 December 2022 using the share price on the day of vesting (being 232.5p). The restated value of £973.6k provides a difference of 33.3p per vested
share in comparison to the estimate contained in the 2021/22 Directors’ remuneration report on page 164, which was £834.2k. The proportion of the restated value in the
single figure table for these awards which is attributable to share price growth is 16.7%. For Chris Kutsor, the 2021/22 figure 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
but have not been exercised as at 31 July 2023. These were made in connection with his appointment to the Board in 2019 as detailed on page 171. For these two awards,
the value shown is based on the share price on vesting of 249.5p.
The 2020 LTIP award is expected to vest at 30% for Kelly Manthey and 36% for Chris Kutsor of maximum, detailed further on page 171. The potential value of the 2020 LTIP
award was calculated using the average share price for the three months ending 31 July 2023, being 67.2p. The awards were granted on 27 November 2020, when the five-
day average share price prior to the date of grant was 100.8p. Therefore no element of the value shown in the table above represents share price appreciation.
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
Kelly Manthey and Chris Kutsor.
6 The remuneration of Kelly Manthey 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 1.21 (2022: 1.32).
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.
8 Maria Gordian was appointed to the Board as Non-Executive Director on 1 November 2021. Her 2021/2022 remuneration in the single figure table above is from this date.
9 Nigel Pocklington was appointed as Senior Independent Director on 1 December 2022.
10 Kelly Manthey was appointed as Chief Executive Officer with effect from 1 August 2022.
168 |
kinandcarta.com
Building a world that works better for everyone
| 169
Governance Report Directors’ Remuneration report
continued
Incentive outcomes for the year ended 31 July 2023 (audited)
Annual bonus
2020 LTIP vesting in November 2023 (audited)
For the 2020 LTIP award granted on 27 November 2020, the awards are subject to the achievement of performance
measures. Vesting of the 2020 LTIP awards is detailed in the table below:
Executive Directors’ bonuses for the year ended 31 July 2023 provided for a payment of up to 150% of salary, with
the performance measures weighted as follows:
Measure
Weighting
Targets
Measure
2022/23 adjusted net revenue
2022/23 adjusted PBT
Strategic objectives
ESG
Weighting
35%
35%
20%
10%
TSR relative to the
FTSE All-Share
50%
ESG
20%
The following provides the performance measures targets, together with the outturns for 2022/23.
Financial measures (70% of maximum)
Performance
period
1 August 2020
to 31 July 2023
(three-month
averaging)
Outcome
Below the
median
quartile1
Vesting
%
0%
1 August 2020
to 31 July 2023
100%
20%
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
Achieve and maintain B Corp certification
across geographies over the full
performance period. B Corp assessment
and certification is a recognised
independent framework for measuring
performance in areas such as governance,
communities, the environment and the
impact on society of our work with clients.
Threshold
target
(25% of
maximum)
Mid-target
(50% of
maximum)
Maximum
target
(100% of
maximum)
Actual
performance*
Bonus earned
as a % of
base salary
£23.5 million £24.2 million £26.2 million
£15.7 million
Measure
Adjusted PBT
0%
0%
0%
Adjusted net revenue
£228 million £236 million £252 million £190.8 million
Total
* Actual performance excludes Forecast Data, which was acquired during the year. This approach reflects our remuneration principles and is consistent with practice in prior
years.
The adjusted net revenue and adjusted PBT measures were not met and therefore no bonus was paid in respect of
these measures.
Strategic objectives (20% of maximum)
Each Executive Director may earn up to 20% of salary for the achievement of stretching strategic objectives, which
for 2022/23 related to the following initiatives: Client Success; Global Delivery; and Data. Both Executive Directors
were assessed as having achieved their objectives in full, with the Committee noting in particular the following:
• For the Client Success objective, we successfully launched the Seven Star Client Experience and the
Kin + Carta Way, a set of delivery and engagement frameworks, and have seen improvements in client
satisfaction and delivery team health as a result.
• For the Global Delivery objective, the percentage of revenue coming from nearshore in both regions has
increased. Americas nearshore revenue increased to 24% in 2022/23 and Europe nearshore revenue increased
to 7% in 2022/23 through the deployment of resources in South East Europe.
• For the Data objective, we successfully rolled out data literacy training across the Group and the acquisition of
Forecast Data bolstered our data proposition. In the Americas, Data made up 16% of adjusted net revenue and in
Europe it made up 16% of adjusted net revenue in FY23.
ESG (10% of maximum)
In addition to the adjusted net revenue growth, adjusted PBT, 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 37.5% achieved; the outcome of each target is disclosed on pages 52 to 55. Therefore, 3.75% out of 10%
was achieved.
Based on these achievements, the Committee determined that performance against the targets set would have
resulted in an annual bonus award of 35.6% of salary (23.75% of the maximum) in respect of 2022/23. However, as
the threshold target for both financial measures was not met, the Executive Directors voluntarily decided to waive
any annual bonus award for the year, so no bonus award was made for 2022/23.
Growth in
adjusted net
revenue (“CAGR”)
Growth in
adjusted PBT
Total vesting
15%
0% vesting below 7% p.a.
15% vesting for 7% p.a.
100% vesting for 13% p.a. or more
Straight-line vesting between these points
15%
0% vesting below 10% p.a.
15% vesting for 25% p.a.
100% vesting for 25% p.a. or more
Straight-line vesting between these points
Net revenue
in 2022/23 as
compared to
2019/20
Adjusted PBT
in 2022/23 as
compared to
2019/20
81.4%2
12%
27.3%3
4%
36%
1 The Company achieved a TSR ranking of 306th out of 539 companies, below the median of the group.
2 Net revenue in 2022/23 of £192 million versus net revenue in 2019/20 of £135 million, both values have been adjusted to take into account performance of divested and
acquired entities.
3 Adjusted PBT in 2022/23 of £15.8 million versus adjusted PBT in 2019/20 of £11.3 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 169, is detailed in the table below.
Date of
grant
Total number
of shares
% shares
vesting
Number
of awards
vesting
Total value
on vesting1
Kelly Manthey2
Chris Kutsor
27 November
2020
27 November
2020
128,968
30
38,690
£26,000
241,897
36
87,567
£58,845
Transfer of
award/earliest
vesting date
27 November
2023
27 November
2023
1 The potential value of the 2020 LTIP award was calculated using the average share price for the three months ending 31 July 2023, being 67.2p.
2 The LTIP figure in the single figure has been prorated to reflect the LTIP value from the date of appointment (1 August 2022). Kelly Manthey’s award was granted prior to
her appointment as an Executive Director, with 80% of the award subject to meeting performance conditions (70% relative TSR and 10% ESG measures– using the same
targets as for the November 2020 awards made to Executive Directors, as shown above).
The Committee believed the vesting outcome of the 2020 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.
170 |
kinandcarta.com
Building a world that works better for everyone
| 171
Governance Report Directors’ Remuneration report
continued
Scheme interests awarded during the 2023 financial year (audited)
Long-Term Incentive Plan (“LTIP”)
On 19 December 2022, Kelly Manthey and Chris Kutsor were granted awards under the Company’s LTIP, as follows:
Kelly Manthey
Chris Kutsor
Date of
grant
19 Dec 2022
19 Dec 2022
Shares over
which awards
granted
Face value of
share awards
granted (£) 1
407,431
314,304
£961,537
£741,757
% of salary
awarded
222%
222%
1 Face value is based on a share price of 236p (the five-day average prior to the date of grant). For both Kelly Manthey and Chris Kutsor, the award level was calculated using
a similar five-day average £:$ exchange rate of 1: 1.2285.
Awards granted vest on relative TSR, ESG metrics, growth in adjusted net revenue and growth in adjusted PBT,
assessed over the three years to 31 July 2025. Any vesting will be subject to the Committee’s overall discretion.
Vested shares will be subject to a two-year holding period.
A summary of the performance conditions is shown in the table below:
Deferred Bonus Shares (“DBS”)
As reported last year, the 2021/22 annual bonus was achieved at 96% 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 2021/22 on 1 November 2022,
details of the grant are disclosed in the Directors’ outstanding share incentive awards table on pages 176 and 177.
Percentage change in remuneration of Directors and employees
The table below 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, 2021 to 2022 and 2022 to
2023.
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 Kelly Manthey and Chris Kutsor is reported on a constant
currency in the table below to eliminate the impact of exchange rate fluctuations.
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
Performance
measurement period
1 August 2022 to
31 July 2025
(three-month averaging)
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
1 August 2022 to
31 July 2025
Growth in
adjusted
net revenue
(“CAGR”)
Growth in
adjusted PBT
(“CAGR”)
15%
15%
0% vesting below 12% p.a.
25% vesting for 12% p.a.
100% vesting for 18% 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
Net revenue in 2024/25
as compared to 2021/22
Adjusted PBT in 2024/25
as compared to 2021/22
In the 2022/23 Directors’ Remuneration Report, the growth in adjusted net revenue target for 100% vesting
disclosed for the 2023 LTIP grant was misstated due to a typesetting error. The correct target of 18% p.a. is stated in
the table above.
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.
Salary/fees
Taxable benefits2
Annual bonus3
2023
2022
2021
20201
2023
2022
2021
2020
2023
2022
2021
Average
employee
Kelly
Manthey5
10.0%
7.0%
9.1%
4.0%
15.6%
3.7%
(6.4)%
–
N/A
–
–
–
N/A
–
–
–
Chris
Kutsor
14.0%
9.0%
–
–
18.5%
10.0%
(9.9)%
5.9%
(62.0)%
N/A
(100)%
(9.6)%
231.4%
2020
(91.0)%
–
–
–
4.6%
N/A
N/A
David
Bell
John
Kerr
Michele
Maher
Nigel
Pocklington⁴
Maria
Gordian5
–
–
–
–
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
–
–
–
–
(0.4)%
0.4%
2.5%
18.0%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
7.0%
N/A
–
–
7.0%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
–
–
–
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1 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. 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.
3 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.
4 Nigel Pocklington was appointed as Senior Independent Director on 1 December 2022. The increase in 2022 to 2023 reflects his additional responsibilities.
5 Kelly Manthey was appointed to the Board on 1 August 2022 and Maria Gordia was appointed to the Board on 1 November 2022. Therefore no year-on-year comparison is
possible.
172 |
kinandcarta.com
Building a world that works better for everyone
| 173
Governance Report Directors’ Remuneration report
continued
Review of past performance
The chart below illustrates the Company’s Total Shareholder Return for the ten years ended 31 July 2023, 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.
250
200
150
100
50
0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Kin + Carta
FTSE SmallCap
FTSE All-Share
The table below details the Chief Executive Officer’s single figure of remuneration over the same ten-year period:
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
2023
Kelly
Manthey
1,648.4
1,133.5
477.8
478.2
878.6
582.9
469.4
1,790.4
1,675.0
498.5
100.0
69.7
Nil
Nil
100.0
25.0
Nil
100.0
96.0
Nil
98.5
100.0
Nil
Nil
Nil
N/A
Nil
70.0
86.0
30.0
Total remuneration
£’000
Annual bonus as
a percentage of
maximum
LTIP vesting as
a percentage of
maximum
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
166,616
167,202
Dividends paid in the year (including share buy backs)
–
–
(1%)
–
2023
£’000
2022
£’000
Percentage change
performance
Chief Executive Officer pay ratio
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 2023 and includes basic salary,
pension, and the value received from incentive plans. On average, the Group employed 448 UK employees during
the financial year ended 31 July 2023 (2022: 503).
Financial year
2023
2022
2021
2020
Calculation
methodology
Lower quartile
(P25)
Median
(P50)
Upper quartile
(P75)
Option A
Option A
Option A
Option A
9.5:1
36.4:1
39.2:1
12.1:1
6.9:1
25.4:1
28.0:1
8.6:1
5.2:1
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 2023 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 2023 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 2023 compared to 2022 and 2021 primarily due to variations in variable
pay received by the Chief Executive Officer.
A summary of the salaries and total single figures of remuneration for the relevant individuals is included in the table
below for 2023:
Pay level
Salary
Single figure of remuneration
Chief Executive
£433,884
£498,513
Lower quartile
(P25)
£46,797
£52,444
Median
(P50)
£65,781
£72,646
Upper quartile
(P75)
£87,212
£96,167
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)
No payments for loss of office to former Directors were made in the year.
Payments to past Directors (audited)
There have been no payments to past Directors other than those disclosed in previous years.
174 |
kinandcarta.com
Building a world that works better for everyone
| 175
Governance Report
Directors’ Remuneration report
continued
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
2023 were as follows:
Unvested LTIP
awards (subject
to performance
conditions)
Unvested
deferred
bonus share
awards
Unvested
ESPP
awards
Beneficial
holding
31 July
2023
Beneficial
holding
31 July
2022
Expressed as
a percentage
of annual basic
salary1
Unexercised
share options
Executive
Kelly Manthey
Chris Kutsor
Non-Executive
David Bell
John Kerr
Michele Maher
Nigel Pocklington
Maria Gordian
85,000
358,803
609,235
735,714
–
–
294,754
110,341
2,449
812,734
294,754
388,972
45.9%
186.4%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
84,486
112,359
28,089
21,235
–
84,486
112,359
28,089
21,235
–
–
–
–
–
–
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 31 July 2023 (67.6p), being the last business day of the financial year; and the Director’s annual rate of basic salary. The basic salary of Kelly Manthey 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 1.21.
From 31 July 2023 to 1 November 2023, there were no changes to the above stated holdings.
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
award1
Date of
award
Exercise
price for
options
Balance
at
31 July
2022
Awarded
during
year
Exercised
during
year2, 3
Lapsed
during
year3
Balance
at
31 July
2023
Vesting
date Expiry date
Status
Kelly Manthey
LTIP4
17 Dec 19
– 125,000
– (125,000)
–
– 17 Dec 22
17 Dec 29
MV2
4 Sep 20
£0.67
85,000
LTIP3
LTIP4
LTIP4
27 Nov 20
7 Dec 21
19 Dec 22
– 128,968
72,836
–
–
–
–
–
–
–
–
–
– 85,000 4 Sep 23
3 Sep 30
– 128,968 27 No 23
27 Nov 30
–
72,836 7 Dec 24
7 Dec 31
Vested and
exercised
Vested and
unexercised
Unvested
Unvested
–
407,431
– 407,431 19 Dec 25 19 Dec 32
Unvested
411,804
407,431 (125,000)
– 694,235
Vested and
unexercised
Vested and
exercised
Type
of
award1
Date of
award
Exercise
price for
options
Chris Kutsor
Balance
at
31 July
2022
Awarded
during
year
Exercised
during
year2, 3
Lapsed
during
year3
Balance
at
31 July
2023
Vesting
date Expiry date
Status
OPT5
17 June 19
£1.105 358,803
–
–
– 358,803 14 Mar 22 17 June 29
– 486,946
– (418,773)
(68,173)
- 17 Dec 22 17 Dec 29
LTIP4
LTIP3
LTIP4
DBS6
17 Dec 19
27 Nov 20
7 Dec 21
1 Nov 21
–
–
–
241,897
179,513
44,652
ESPP6
15 Nov 21
$3.315
1,809
DBS6
1 Nov 22
-
ESPP7 2 Dec 22
$2.45
LTIP4
19 Dec 22
-
-
-
-
65,689
2,449
314,304
–
–
–
–
–
–
–
-
-
-
-
– 241,897 27 Nov 23 27 Nov 30
Unvested
–
–
179,513
7 Dec 24
44,652
1 Nov 23
7 Dec 31
1 Nov 31
Unvested
Unvested
(1,809)
-
2 Dec 22
2 Dec 22
Lapsed
-
-
65,689
1 Nov 24
1 Nov 31
Unvested
2,449 2 Dec 23
2 Dec 23
Unvested
- 314,304 19 Dec 25 19 Dec 32
Unvested
1,313,620 382,422 (418,773)
(69,982) 1,207,307
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, MV = Market Value Option Award.
2 A market value option award, pursuant to the LTIP 2010, was granted to Kelly Manthey prior to her appointment as Chief Executive Officer on 1 August 2022. The Award
vested on 4 September 2023 at 85%.
3 Details of the Nov 20 LTIP, which was tested for performance at the year end and expected to vest at 30% of maximum for Kelly Manthey and 36% of the maximum for
Chris Kutsor in Nov 23, is included on pages 171.
4 2018 LTIP, 2019 LTIP, 2020 LTIP, 2021 LTIP and 2022 LTIP award performance conditions are detailed on the Company’s Investor site: https://investors.kinandcarta.com/
governance/remuneration/default.aspx. Details of the December 2019 LTIP was included in the 2021/22 Annual Report and Accounts.
5 Details of OPT performance conditions are disclosed on page 89 of the 2018/19 Annual Report and Accounts.
6 Awards are subject to continued employment over two-years.
7 Details of the right to acquire shares pursuant to the ESPP are included on page 177.
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 31 July 2023, being the last business day of the
financial year, was 67.6p and the range during the financial year 2023 was 58.0p to 253.5p.
Share options – Sharesave Scheme and Employee Stock
Purchase Plan (audited)
There are no outstanding Sharesave options in respect of Directors.
Chris Kutsor has the right to acquire 2,449 shares in the Company on 2 December 2023 at a purchase price of
US$2.45 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 2023, excluding lapsed options and options exercised and satisfied from utilising existing issued
shares, options of 14,856,737 shares (8.35% 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
1 November 2023
176 |
kinandcarta.com
Building a world that works better for everyone
| 177
Governance Report
Directors’ report
The Directors present their
Directors’ Report and the audited
Consolidated Financial Statements
for the year ended 31 July 2023.
The Corporate Governance Report
set out on pages 128 to 139 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 33. 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.
Annual General Meeting
The 42nd AGM of the Company
will be held on 7 December 2023.
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.
In accordance with section 489
of the Companies Act 2006, a
resolution for the re-appointment
of KPMG as auditor of the
Company is to be proposed at
the forthcoming Annual General
Meeting.
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 was
due to expire in September 2025
on terms broadly in line with the
previous agreement. The credit
facility is now available until
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 128 to
139 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 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 2023
and to the date of this Report.
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 124 to 127,
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 176 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 44 to 111 of this Annual
Report.
Employees, customers
and suppliers
Information relating to the
Directors’ regard for employee
interests and to business
relationships with customers,
suppliers and others is set out
in our “A responsible business”
section on pages 44 to 111 of this
Annual Report
FCA Listing Rules – compliance with Listing Rule 9.8.4R
The following disclosures required by LR 9.8.4R are contained in the Annual
Report as set out below and are incorporated into the Directors’ Report:
Listing rule requirement
Location in Annual Report
Details of any long-term incentive
schemes as required by LR 9.4.3R.
Directors’ Remuneration Report
on pages 152 to 177
Details of any arrangements under
which a director of the company
has waived or agreed to waive any
emoluments from the company or any
subsidiary undertaking.
Directors’ Remuneration Report
on pages 152 to 177
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 12
to 121 of this Annual Report. 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 40 to 43 of this Annual
Report. 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 2023 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 181 to
182 of this Annual Report 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.
On 18 October 2023, the Board of
Kin and Carta plc recommended
an offer for the Group to be
acquired by Apax. The Board
have considered the statements
in Apax’s announcement made
pursuant to rule 2.7 of the Takeover
Code in respect of the proposed
acquisition, and discussions
with Apax senior management
178 |
kinandcarta.com
Building a world that works better for everyone
| 179
Governance Report Directors’ report
continued
regarding Apax’s intention to
ensure continuity of the Group’s
existing business. Although the
Group’s current bank credit
facility includes a provision
which allows the lender banks to
withdraw the facility under certain
circumstances after a change of
control. The Directors believe that
Apax would ensure that appropriate
bank facilities would continue to
be made available to the group
after completion of the deal.
Considering this, the Directors have
concluded that the completion of
this acquisition would not impact
the appropriateness of the going
concern basis of preparation for
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 145-147
of this Annual Report.
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.
Coast Capital Management, LP
FIL limited
Jupiter Fund Management plc
Kabouter Management, LLC
Lombard Odier Asset Management (Europe) Limited
M&G plc
NN Group N.V.
As at 31 July 2023
Percentage of
issued share
capital carrying
voting rights*
Number of
voting rights
below 5%
below 5%
9,042,907
8,415,289
9,231,752
9,805,255
12,633,518
8,537,419
6,814,194
8,560,377
8,666,293
8,051,366
5.08%
4.73%
5.19%
5.51%
7.10%
4.79%
3.83%
4.81%
4.87%
4.53%
Sanne Fiduciary Services Limited in its capacity as trustee of the Kin and Carta Plc
Employee Benefit Trust
Wasatch Advisors, Inc.
* Percentage based on ordinary shares in issue, excluding treasury shares, as at 31 July 2023.
5,054,118
below 3%
5,326,496
below 3%
Between 1 August 2023 and 1 November 2023, the Company received the following notifications of interests
pursuant to the DTR 5:
• a notification from BlackRock, Inc. on 18 August 2023, which notified an increase in their voting rights to
9,502,499 (representing 5.33% of Kin + Carta’s issued share capital carrying voting rights); and
• a notification from Kabouter Management, LLC on 7 September 2023, which notified a decrease in their voting
rights to 5,156,200 (representing 2.90% of Kin + Carta’s issued share capital carrying voting rights).
Political donations
The Company made no political
donations nor incurred any political
expenditure during the year (2022:
£nil) and the Board has no intention
to seek shareholders’ approval
to permit the Board to make
political donations or incur political
expenditure.
Share capital
As at 31 July 2023, the Company
had 178,021,997 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 2023 was
177,931,360.
Powers of Directors to issue
or buy back the Company’s
shares
At the 2022 AGM, shareholders
approved authorities:
•
•
for the Directors to allot shares
up to an aggregate nominal
amount of £5,930,009 generally,
with a further authority to allot
additional shares up to an
aggregate nominal amount of
£5,930,009 where the allotment
is in connection with a rights
issue only; and
for the Company to make
market purchases of its own
shares up to a maximum of
17,790,027 shares. The Company
did not purchase any of its
own shares, nor has it reissued
shares held in treasury during
the year (2022: 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 12 to 121 of this Annual
Report. 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 this 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 £20.7
million (2022: statutory loss of
£15.6 million). The Directors have
decided not to recommend the
payment of a final dividend for
2023; 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 multi-currency
revolving credit facility of £85
million with an expiry date of
September 2026. 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 31 July
2026.
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 1 August
2024. 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 modest
revenue growth in the financial
year ending in 2024 compared to
the financial year ended in 2023,
with a commensurate increase
in operating profit. The related
scenarios reflect the estimated
financial impact of a of adverse
events associated with the
principal risks outlined in the Risk
management section on pages
112 to 121, 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
180 |
kinandcarta.com
Building a world that works better for everyone
| 181
Governance Report Directors’ report
continued
Statement of Directors’
responsibilities in respect of the
financial statements
of up to 25% 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 employees and,
in such a scenario, the Group
would undertake cost avoidance
measures by removing roles and
delaying new hires while employee
commissions linked to sales growth,
and employee bonuses linked to
operating profit would both also be
payable at a substantially reduced
level. In addition, the Group would
avoid other costs by reducing
expenditure on IT and capital items.
In addition to the stress scenario
outlined previously, other scenarios
were also modelled, including the
loss of the Group’s most significant
customer; and 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 price reductions
given to maintain customer volumes.
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, have a
reasonable expectation that the
Company will be able to continue
in operation and meets its liabilities
as they fall due over the three-year
assessment period.
Approved by Board and signed on
its behalf by
Lucy Maxwell
Company Secretary
1 November 2023
182 |
•
•
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 and
Directors’ 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.
This responsibility statement was
approved by the Board of Directors
on 30 November 2023 and is
signed on its behalf by
Kelly Manthey
Chief Executive Officer
1 November 2023
Chris Kutsor
Chief Financial Officer and Chief
Operating Officer
1 November 2023
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).
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 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 a 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 124 to 127
confirm that, to the best of their
knowledge:
•
•
the Board confirms that
the Annual Report and the
financial statements, taken as
a whole, are fair, balanced and
understandable and provide
the information necessary
for shareholders to assess
the Group’s position and
performance, business model
and strategy;
the Group financial statements,
which have been prepared in
accordance with UK-adopted
international accounting
standards, give a true and fair
view of the assets, liabilities,
financial position and profit of
the Group;
kinandcarta.com
Building a world that works better for everyone
| 183
Governance Report Financials
Financial Statements
Contents
Independent auditors’ report to the
members of Kin and Carta plc
Consolidated income statement
Consolidated statement of 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
186
194
195
196
197
198
200
268
269
270
184 |
184 |
kinandcarta.com
kinandcarta.com
Building a world that works better for everyone
Building a world that works better for everyone
| 185
| 185
Financial Statements Independent auditors’ report to the
members of Kin and Carta plc
Report on the audit of the financial statements
Opinion
We have audited the financial statements of Kin and
Carta Plc. (the “Company”) and its consolidated
undertakings (the “Group”) for the year ended 31 July
2023 set out on pages 194 to 278, which comprise
the Consolidated Income Statement, Consolidated
Statement of Consolidated Income, Consolidated
Statement of Financial Position, Consolidated
Statement of Changes in Equity, Consolidated
Statement of Cash Flows, Company Balance Sheet,
Company Statement of Changes of Equity and related
notes, including the summary of significant accounting
policies set out in note 2.
The financial reporting framework that has been applied
in the preparation of the Group Financial Statements is
UK Law, UK-adopted international accounting standards
and, as regards the Company financial statements, UK
Law and FRS 101 Reduced Disclosure Framework.
In our opinion:
•
•
•
•
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 2023 and of the Group’s loss 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 FRS 101
Reduced Disclosure Framework issued by the UK’s
Financial Reporting Council; and
the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs
(UK)”) and applicable law. Our responsibilities
under those standards are further described in the
Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the
audit evidence we have obtained is a sufficient and
appropriate basis for our opinion. Our audit opinion is
consistent with our report to the Audit Committee.
We were appointed as auditor by the shareholders
on 1 December 2022. We have fulfilled our ethical
responsibilities under, and we remain independent of
the Group in accordance with UK ethical requirements,
including the Financial Reporting Council (“FRC”)’s
Ethical Standard as applied to listed public interest
entities. No non-audit services prohibited by that
standard were provided.
Conclusions relating to going concern
The Directors have prepared the financial statements
on the going concern basis as they do not intend to
liquidate the Group or the Company or to cease their
operations, and as they have concluded that the Group
and the Company’s financial position means that this
is realistic. They have also concluded that there are no
material uncertainties that could have cast significant
doubt over their ability to continue as a going concern
for at least a year from the date of approval of the
financial statements (the “going concern period”).
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. Our evaluation of the
Directors’ assessment of the entity’s ability to continue
to adopt the going concern basis of accounting
included:
• Obtaining an understanding of the inherent risks to
the Group’s and Company’s business model and
analysed how those risks might affect the Group
and Company’s financial resources or ability to
continue operations over the going concern period.
• Obtaining an understanding of the Directors’
use of the going concern basis of preparation.
This included inspecting their going concern
assessment and associated underlying forecasts
and assumptions, and performing inquiries of
management and those charged with governance.
• Testing the mathematical accuracy of the going
concern model including the data used in stress
testing.
• Assessing base case and downside scenarios
relevant to covenant metrics. In particular,
whether downside scenarios applied mutually
consistent and severe assumptions in aggregate,
using our assessment of the possible range of
each key assumption and our knowledge of inter-
dependencies.
• We also compared the budget to actual results to
assess the Directors’ ability to budget accurately.
• We inspected the facility letter from the lender of
•
the level of committed financing, and the associated
covenant requirements. This included obtaining
evidence to support the going concern assessment
in the context of the change in control clause noted.
• We considered whether the going concern
disclosure in note 1 to the Group Financial
Statements gives an appropriate and sufficient
description of the Directors’ assessment of going
concern.
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 or the Company’s ability
to continue as a going concern for a period of at least
12 months from the date when the financial statements
are authorised for issue.
In relation to the Group and the Company’s 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.
However, as we cannot predict all future events or
conditions and as subsequent events may result in
outcomes that are inconsistent with judgements that
were reasonable at the time they were made, the
absence of reference to a material uncertainty in this
auditor’s report is not a guarantee that the Group or the
Company will continue in operation.
Detecting irregularities including fraud
We identified the areas of laws and regulations that
could reasonably be expected to have a material
effect on the financial statements and risks of material
misstatement due to fraud, using our understanding
of the entity’s industry, regulatory environment and
other external factors and inquiry with the directors. In
addition, our risk assessment procedures included:
•
Inquiring with the Directors and other management
as to the Group’s policies and procedures regarding
compliance with laws and regulations, identifying,
evaluating and accounting for litigation and
claims, as well as whether they have knowledge of
non-compliance or instances of litigation or claims.
Inquiring of Directors, internal audit and
management as to the Group’s high-level policies
and procedures to prevent and detect fraud,
including the Group’s channel for “whistleblowing”,
as well as whether they have knowledge of any
actual, suspected or alleged fraud.
•
Inquiring of Directors, internal audit regarding their
assessment of the risk that the financial statements
may be materially misstated due to irregularities,
including fraud.
• Reading Board, Audit Committee, Remuneration
Committee and Nomination Committee meeting
minutes.
• Performing planning analytical procedures to
identify any usual or unexpected relationships.
We discussed identified laws and regulations, fraud risk
factors and the need to remain alert among the audit
team.
Firstly, the Group is subject to laws and regulations
that directly affect the financial statements including
companies and financial reporting legislation, taxation
legislation and distributable profits legislation. We
assessed the extent of compliance with these laws and
regulations as part of our procedures on the related
financial statement items, including assessing the
financial statement disclosures and agreeing them to
supporting documentation when necessary.
Secondly, the Group is subject to many other
laws and regulations where the consequences of
non-compliance could have a material effect on
amounts or disclosures in the financial statements, for
instance through the imposition of fines or litigation.
We identified the following areas as those most likely
to have such an effect: health and safety, anti-bribery,
employment law, environmental law, regulatory capital
and liquidity and certain aspects of company legislation
recognising the nature of the Group’s activities.
Auditing standards limit the required audit procedures
to identify non-compliance with these non-direct laws
and regulations to inquiry of the Directors and other
management and inspection of regulatory and legal
correspondence, if any. These limited procedures did
not identify actual or suspected non-compliance.
We assessed events or conditions that could indicate
an incentive or pressure to commit fraud or provide an
opportunity to commit fraud. As required by auditing
standards, we performed procedures to address the
risk of management override of controls and the risk of
fraudulent revenue recognition.
186 |
kinandcarta.com
Building a world that works better for everyone
| 187
Financial Statements Independent auditors’ report to the
members of Kin and Carta plc
continued
In response to the fraud risks, we also performed
procedures including:
and cannot be expected to detect non-compliance
with all laws and regulations.
•
Identifying journal entries to test for all full scope
components based on risk criteria and material post
close adjustments, comparing the identified entries
to supporting documentation.
• Assessing significant accounting estimates for bias.
• Assessing the disclosures in the financial
statements.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some
material misstatements in the financial statements,
even though we have properly planned and performed
our audit in accordance with auditing standards. For
example, the further removed non-compliance with
laws and regulations (irregularities) is from the events
and transactions reflected in the financial statements,
the less likely the inherently limited procedures
required by auditing standards would identify it.
In addition, as with any audit, there remains a higher
risk of non-detection of irregularities, as these may
involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls.
We are not responsible for preventing non-compliance
Key audit matters: our assessment of risks of
material misstatement
Key audit matters are those matters that, in our
professional judgement, were of most significance
in the audit of the financial statements and include
the most significant assessed risks of material
misstatement (whether or not due to fraud) identified
by us, 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 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.
In arriving at our audit opinion above, the key audit
matters, in decreasing order of audit significance, were
as follows:
Group key audit matters
Revenue recognition £195.9 million (2022: £197.1 million)
Refer to page 205 (accounting policy) and page 218 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
The Group recognises revenue either on a
time and materials basis or in accordance
with the stage of completion of the
contract.
Revenue may be overstated in a period
due to an incentive to achieve revenue
forecasts to meet investor expectations
and in order to achieve targets as part
of performance-based compensation
arrangements.
There is limited judgement involved in the
time and materials contracts and those
contracts which are completed at the year
end. However, there is more judgement
in connection with stage of completion
revenue contacts open at the year end.
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,
which results in a significant risk of
error along with fraud for those specific
contracts.
We considered the size and composition
of the account balance as well as the
subjectivity included in a number of
revenue contracts.
We also considered the extent of audit
effort required and considered this to be
an area that has significant impact on our
overall audit of the Group
Our procedures included, amongst others:
Control operation
• We obtained and documented our understanding of the process
for recording the recognition of revenue and tested the design
and implementation of the relevant controls.
Test of detail
• We have evaluated the Group’s revenue accounting policies in
accordance with the requirements of IFRS.
• We selected a sample of revenue transactions recognised during
the year and agreed this to supporting documentation, including
invoice and evidence of payment.
• For revenue transactions that are in progress at year end, we
selected a sample, agreed this to supporting documentation
and assessed that revenue was recognised in accordance with
the terms of the contract and the Group’s accounting policy on
revenue recognition. Supporting documentation included: the
contract, approved time records confirmed by the appropriate
person, invoices and evidence of customer payment and were
required this was supplemented by enquiry of project managers.
• For a sample of revenue contracts calculated on a stage of
completion basis, we assessed and recalculated the degree of
completion of contracts at year-end, based on total contract
value, approved time records confirmed by the appropriate
person and estimated time to complete made by the project
managers. We held updated discussions on estimated time to
complete fixed price contracts that were subject to our sample
testing, prior to the signing of the Annual Report.
• We inspected a listing of credit notes issued after the year end
and noted no credit notes greater than performance materiality
had been issued.
• We assessed the level of deferred revenue and accrued revenue
recognised at the year end and tested a sample of deferred
revenue and accrued revenue balances to ensure they were
recognised in accordance with the Group’s revenue recognition
accounting policies.
Disclosures
• We considered the adequacy of the Group’s disclosures
presented in the financial statements over revenue recognition,
including key sources of estimation uncertainty and judgements
being applied.
Our results
• The results of our testing were satisfactory and we found the
amount of revenue recognised to be appropriate.
188 |
kinandcarta.com
Building a world that works better for everyone
| 189
Financial Statements Independent auditors’ report to the
members of Kin and Carta plc
continued
Carrying value of goodwill and other intangible assets £75.0 million (2022: £97.4 million)
Company key audit matter
Refer to page 217 (accounting policy) and pages 237 to 240 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
• Goodwill and intangible assets are
material and the assessment of
the carrying value of goodwill and
intangibles involves complex and
subjective judgements about the future
results of the business.
• As the business is subject to the risk of
loss of key customers and/or decline
in demand and pressures on pricing an
impairment assessment is undertaken
by calculating the value-in-use (“VIU”)
for each cash generating unit (“CGU”)
to support the carrying value of the
goodwill and other intangible assets.
• The current economic environment
may result in increased uncertainty
in forecasting the Group’s future cash
flows. Taken together with potential
changes in selecting an appropriate
discount rate, as a result of Company
and market factors– including higher
base interest rates and risk premiums
generally– there is a potential for a
greater level of subjectivity in the
discounted cash flow model used to
support the carrying value at 31 July
2023.
Our procedures included, amongst others:
Control operation
• Obtained and documented our understanding of the impairment
process and test the design and implementation of the relevant
control therein.
Test of detail
• Evaluated the methodology applied in determining the CGUs
and the estimate of the recoverable amount of goodwill to
determine if they are in line with the requirements of IFRS.
• Made inquiries of management regarding the indicators they
assess as possible indicators of impairment for CGUs.
•
Inspected management’s assessment and considered whether
further indicators should have been assessed based on our
knowledge of the business, its operating environment, industry
knowledge, current market conditions and other information
obtained during the audit.
• Compared the sum of the discounted cash flows to the Group’s
market capitalisation to identify if any indicator of impairment
existed.
• Evaluated the valuation techniques, assumptions and data used
by management to make their accounting estimates (and range
thereof) used for value in use. This involved using our valuation
specialists in the assessment of the discount rates used in
each CGU and sourced independent data, where possible. We
have also challenged management’s assumption of growth rate,
revenue backlogs and margin.
Disclosures
• Evaluated the completeness, accuracy and relevance of
disclosures required by IAS 36, including disclosures about
sensitivities and major sources of estimation uncertainty.
Our results
• Based on evidence obtained, we found that the assumptions
applied in management’s cash flow forecast models used in the
determination of value in use were appropriate. We read the
disclosures made and found them to be appropriate.
Carrying value of investment in subsidiaries £177.3 million (2022: £183.0 million)
Refer to page 270 (accounting policy) and page 274 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
The investment in subsidiary undertakings
is carried in the Balance Sheet of the
Company at cost less impairment.
There is a risk in respect of the carrying
value of these investments if future
cash flows and performance of these
subsidiaries is not sufficient to support the
Company’s investments.
Our procedures included, amongst others:
Control operation
• We obtained and documented our understanding of the process
around investment in subsidiaries and tested the design and
implementation of the relevant controls therein.
Test of detail
• We considered management’s assessment of impairment
indicators across the Group.
• We compared the carrying value of investments in the
Company’s Balance Sheet to the net assets of the subsidiary
financial statements.
• We compared the carrying value of subsidiaries to the market
capitalisation of the Company at 31 July 2023 to identify if any
indicator of impairment existed.
• We evaluated the methodology applied in determining the
recoverable amount calculated by a value-in-use model and
ensure this is in line with the requirements of IFRS.
• We considered the audit work performed in respect of cash flow
forecasts and profitability as part of the valuation of goodwill
and intangible assets.
Disclosures
• We evaluated the completeness, accuracy and relevance of
disclosures required by IAS 36, including disclosures about
sensitivities and major sources of estimation uncertainty.
Our results
• Based on evidence obtained, we concluded that the carrying
value of investments in subsidiaries were appropriate at the
balance sheet date.
Our application of materiality and an
overview of the scope of our audit
Materiality for the Group Financial Statements as a
whole was set at £1.56 million. This has been calculated
based on 0.8% of the Group revenue of £195.9 million.
In applying our judgement in determining the most
appropriate benchmark, the factors, which had the
most significant impact were our understanding that
revenue is a key measure for shareholders in assessing
the financial performance and the stability of this
measure year on year.
The materiality for the prior year Group Financial
Statements as a whole was set at £853k. This was
calculated based on 5% of adjusted profit before tax
from continuing activities.
Materiality for the Company financial statements as
a whole was set at £910k, determined with reference
to a benchmark of Company total assets of which it
represents 0.65% capped at 60% of Group materiality.
The materiality of the Company financial statements
for the prior year was £810k based on 0.5% of the
net assets of the Company capped at 95% of Group
materiality.
In applying our judgement in determining the
percentage to be applied to the benchmark for Group
and Company, the following qualitative factors, had the
most significant impact, decreasing our assessment of
materiality and included:
190 |
kinandcarta.com
Building a world that works better for everyone
| 191
Financial Statements Independent auditors’ report to the
members of Kin and Carta plc
continued
— the Group has a high public profile; and
— the Group has external debt.
We applied Group materiality to assist us determine the
overall audit strategy.
As this was the first year as auditor for the Group,
our ability to assess the factors which impact on our
determination of performance materiality was reduced.
In response to this uncertainty in the aggregation risk,
we considered it appropriate to reduce performance
materiality to 65% of Group and Company materiality.
In the prior year, performance materiality for the Group
and Company was set at 75%.
We applied performance materiality to assist us
determine what risks were significant risks for the
Group and Company.
We agreed to report to the Audit Committee any
corrected or uncorrected identified misstatements
exceeding £78k (2022: £76k) for the Group or £45.5k
(2022: £40.5k) to the Company, in addition to other
identified misstatements that warranted reporting on
qualitative grounds.
Of the Group’s reporting components, we performed
a full scope audit over 4 of the financially significant
components of the Group due to their financial
significance. These components and consolidation
adjustments contributed to 87% of revenue and 88% of
total assets.
The remaining 13% of total Group revenue and 12%
of total Group assets is represented by a number of
components, none of which individually represented
more than 4% of total Group revenue or 9% of total
Group assets.
For the residual components we performed analysis
at an aggregated group level to re-examine our
assessment that there were no significant risks of
material misstatement within these.
Our audit was all performed by a single engagement
team in KPMG Ireland.
We have nothing to report on the other
information in the Annual Report
The Directors are responsible for the other information
presented in the Annual Report together with the
Financial Statements. The other information comprises
the information included in the Strategic Report
including the Responsible Business Report and the
Governance Report including the Directors’ Report. The
financial statements and our Auditor’s Report thereon
do not comprise part of the other information. Our
opinion on the financial statements does not cover the
other information and, accordingly, we do not express
an audit opinion or, except as explicitly stated below,
any form of assurance conclusion thereon.
Our responsibility is to read the other information and,
in doing so, consider whether, based on our financial
statements audit work, the information therein is
materially misstated or inconsistent with the financial
statements or our audit knowledge. Based solely on that
work we have not identified material misstatements in
the other information.
Opinions on other matters prescribed
by the Companies Act 2006
Strategic Report and Directors’ Report
Based solely on our work on the other information
undertaken during the course of the audit:
• we have not identified material misstatements in the
Directors’ Report or the strategic report;
•
•
in our opinion, the information given in the strategic
report and the Directors’ Report is consistent with
the financial statements;
in our opinion, the Strategic Report and the
Directors’ Report have been prepared in accordance
with the Companies Act 2006.
Directors’ Remuneration Report
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
We have reviewed the Directors’ statement 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 by
the Listing Rules.
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:
• Directors’ statement with regards the
appropriateness of adopting the going concern
basis of accounting and any material uncertainties
identified set out on page 179;
• Directors’ explanation as to their assessment of
the Group’s prospects, the period this assessment
covers and why the period is appropriate set out on
pages 183;
• Director’s statement on whether it has a reasonable
expectation that the Group will be able to continue
in operation and meets its liabilities set out on
pages 183;
Group or the Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s 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, other irregularities or error, and to issue an
opinion in an auditor’s report. 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, other irregularities
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.
A fuller description of our responsibilities is
provided on the FRC’s website at www.frc.org.uk/
auditorsresponsibilities.
The purpose of our audit work and to
whom we owe our responsibilities
Our report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s
members those matters we are required to state to
them in an auditor’s report and for no other purpose. To
the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the
Company and the Company’s members, as a body, for
our audit work, for this report, or for the opinions we
have formed.
John Poole (Senior Statutory Auditor)
for and on behalf of KPMG, Statutory Auditor
The Soloist Building
1 Lanyon Place
Belfast
BT1 3LP
2 November 2023
• Directors’ statement on fair, balanced and
understandable and the information necessary for
shareholders to assess the Group’s position and
performance, business model and strategy set out
on page 183;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks and
the disclosures in the Annual Report that describe
the principal risks and the procedures in place to
identify emerging risks and explain how they are
being managed or mitigated set out on page 183.;
• Section of the Annual Report that describes the
review of effectiveness of risk management and
internal control systems set out on pages 146 and
147; and
• Section describing the work of the Audit Committee
set out on page 142.
We have nothing to report on the other matters on
which we are required to report by exception
Under the Companies Act 2006, we are required to
report to you if, in our opinion:
• 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
•
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; or
• certain disclosures of Directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
We have nothing to report in these respects.
Respective responsibilities and
restrictions on use
Responsibilities of Directors for the financial
statements
As explained more fully in the Directors’ Responsibilities
Statement set out on page 183, the Directors are
responsible for: the preparation of the financial
statements including being satisfied that they give
a true and fair view; 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; assessing
the Group and 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 they either intend to liquidate the
192 |
kinandcarta.com
Building a world that works better for everyone
| 193
Financial Statements Consolidated statement of
comprehensive income
For the year ended 31 July 2023
Net (loss)/profit for the period
Items that will not be reclassified subsequently to profit or loss:
Year to
31 July 2023
£’000
Year to
31 July 2022
£’000
Note
(18,765)
10,007
Remeasurement of defined benefit scheme surplus
27
(28,295)
Tax credit/(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 (losses)/gains
Tax credit/(charge) on items taken through other comprehensive income
Other comprehensive (loss)/income for the period
7,074
(21,221)
54
(43)
(1,477)
129
(1,337)
(22,558)
20,335
(6,209)
14,126
13
(54)
4,366
(1,105)
3,220
17,346
Total comprehensive (loss)/income for the period attributable to equity
holders of the Parent Company
(41,323)
27,353
196
Consolidated income statement
For the year ended 31 July 2023
Year to 31 July 2023
Restated¹
Year to 31 July 2022
Revenue
Project-related costs
Net revenue
Cost of service
Gross profit
Selling costs
Administrative expenses
Adjusted
results
Note
£’000
3
195,870
(3,858)
192,012
(104,871)
87,141
(20,382)
(48,303)
Adjusting
items
(note 7)
£’000
–
–
–
–
–
Statutory
results
Adjusted
results
£’000
195,870
£’000
197,123
(3,858)
(6,846)
192,012
190,277
(104,871)
(105,398)
87,141
(20,382)
(4,113)
(52,416)
–
(3,749)
(3,578)
–
(3,749)
(3,578)
(14,598)
(14,598)
(9,256)
(9,256)
(9,588)
(9,588)
(655)
(655)
7,802
7,802
–
–
84,879
(16,412)
(46,513)
442
–
–
–
–
–
–
–
–
Adjusting
items
(note 7)
£’000
–
–
–
–
–
–
Statutory
results
£’000
197,123
(6,846)
190,277
(105,398)
84,879
(16,412)
(7,565)
(54,078)
–
442
(3,234)
(3,234)
–
–
–
–
(6,390)
(6,390)
(13,229)
(13,229)
(1,421)
(1,421)
(6,264)
(6,264)
1,621
1,621
–
–
–
–
–
–
–
–
–
18,456
(37,735)
(19,279)
22,396
(36,482)
(14,086)
–
(2,626)
1,376
(140)
1,376
(2,766)
–
(1,837)
340
–
340
(1,837)
15,830
(36,499)
(20,669)
20,559
(36,142)
(15,583)
(810)
2,714
1,904
(1,802)
3,411
1,609
15,020
(33,785)
(18,765)
–
–
–
18,757
1,406
(32,731)
22,575
(13,974)
23,981
15,020
(33,785)
(18,765)
20,163
(10,156)
10,007
8.67
–
8.67
8.50
–
(10.83)
–
10.80
0.81
(10.83)
11.61
(10.83)
–
10.46
0.78
14
8.50
(10.83)
11.24
(8.04)
13.80
5.76
(7.79)
13.37
5.58
Share of results of joint arrangement
35
Share-based payment charges
Customer disputes and litigation
Impairment of goodwill
Amortisation of acquired intangibles
Contingent consideration treated as
remuneration and adjustments to
consideration
Acquisition and integration costs
Property impairment and related empty
credits/(charges)
Other operating income
Operating profit/(loss)
Net pension finance income
Other finance costs
Profit/(loss) before tax
Income tax (charge)/credit
Net profit/(loss) from continuing
operations
Net profit from discontinued operations
Net profit/(loss) for the period
attributable to equity holders of the
Parent Company
Basic earnings/(loss) per share
(pence)
Continuing operations
Discontinued operations
Continuing and discontinued
operations
Diluted earnings/(loss) per share
(pence)
Continuing operations
Discontinued operations
Continuing and discontinued
operations
9
10
11
8
14
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 for further details.
194 |
kinandcarta.com
Building a world that works better for everyone
| 195
Financial Statements Consolidated statement of
changes in equity
For the year ended 31 July 2023
Consolidated balance sheet
Company number 01552113
As at 31 July 2023
n
i
-
d
a
p
i
l
a
n
o
i
t
i
d
d
A
l
a
t
i
p
a
c
e
r
a
h
S
0
0
0
£
’
1
l
a
t
i
p
a
c
0
0
0
£
’
17,255
–
86,513
–
17,255 86,513
–
–
–
–
352
190
7,843
303
–
–
–
–
–
–
–
–
–
–
–
–
–
(5,357)
17,797 89,302
–
–
e
v
r
e
s
e
r
P
O
S
E
0
0
0
£
’
(68)
–
(68)
–
–
–
–
–
(17)
(5,593)
353
–
–
–
–
–
(5,325)
–
–
–
–
3,872
(8,395)
362
–
–
–
–
–
–
–
–
45
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6
–
–
–
–
–
–
–
–
Balance at 1 August 2021
(as previously reported)
Prior year adjustment (note 1)
Balance at 1 August 2021 (restated)
Profit for the year (restated)
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 by Employee Benefit
Trust
Reclassification of share-settled amount from
liabilities
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
Balance at 31 July 2022 (restated)
Loss for the year
Other comprehensive loss
Total comprehensive loss
Dividends paid
Shares issued to settle employee share options
Purchase of own shares by Employee Benefit
Trust
Reclassification of share-settled amount from
liabilities
Recognition of share-based payments in
respect of employee share schemes
Recognition of share-based contingent
consideration deemed as remuneration
Reclassification of contingent consideration
deemed as remuneration from equity to
liabilities
Tax on share-based payments
Hyperinflation revaluation
Reclassification to retained earnings³
s
e
r
a
h
s
y
r
u
s
a
e
r
T
0
0
0
£
’
(163)
–
(163)
–
–
–
–
–
–
–
–
–
–
–
–
–
e
v
r
e
s
e
r
n
o
i
t
p
o
e
r
a
h
S
0
0
0
£
’
e
v
r
e
s
e
r
n
o
i
t
a
s
n
a
r
t
l
d
n
a
g
n
g
d
e
H
i
0
0
0
£
’
3,756
–
3,756
–
–
–
–
1,583
–
1,583
–
3,220
3,220
–
s
e
v
r
e
s
e
r
r
e
h
t
O
0
0
0
£
’
91,621
–
91,621
–
3,220
3,220
–
²
)
t
i
c
i
f
e
d
d
e
t
a
u
m
u
c
c
a
(
l
0
0
0
£
’
y
t
i
u
q
e
l
a
t
o
T
0
0
0
£
’
i
/
s
g
n
n
r
a
e
d
e
n
a
t
e
R
i
2,532
(26,118) 82,758
2,532
(23,586) 85,290
10,007 10,007
14,126
17,346
24,133 27,353
(38)
(38)
–
(1,242)
–
–
7,843
(956)
–
1,098
8,195
332
–
– (5,593)
– (5,593)
–
3,118
7,593
(318)
–
–
(163)
–
–
12,907
–
–
–
–
–
–
–
–
–
–
–
(1,660)
–
–
3,128
3,878
– (10,623)
(545)
–
–
–
(3,279)
–
–
–
353
3,118
–
–
353
3,118
–
–
176
7,593
(318)
176
– (5,357)
4,979 101,700
–
(1,337)
(1,337)
–
2,257
(1,337)
–
–
–
(1,337)
7,593
–
(318)
–
176
–
–
5,357
6,964 126,461
(18,765) (18,765)
(21,221) (22,558)
(39,986) (41,323)
(3)
52
(3)
(2,211)
– (8,395)
– (8,395)
–
–
–
362
3,128
3,878
–
–
–
362
3,128
3,878
– (10,623)
–
(545)
424
424
–
(3,279)
4,066 87,570
– (10,623)
(545)
–
424
–
–
3,279
(31,957) 73,416
Balance at 31 July 2023
17,803 89,347
(9,486)
(163) 3,806
1 Additional paid-in capital includes share premium, merger reserve and capital redemption reserve as detailed in note 31.
Assets
Non-current assets
Property, plant and equipment
Investment property
Goodwill
Other intangible assets
Retirement benefit surplus
Other non-current assets
Deferred tax assets
Current assets
Trade and other receivables
Derivative financial instruments
Current tax assets
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Lease liabilities
Trade and other payables
Derivative financial instruments
Current tax liabilities
Deferred income
Contingent and deferred consideration payable
Provisions
Non-current liabilities
Lease liabilities
Loans and borrowings
Contingent and deferred consideration payable
Provisions
Deferred tax liabilities
Total liabilities
Net assets
Capital and reserves
Share capital
Other reserves
(Accumulated deficit)/retained earnings
Total equity
Note
15
17
18
18
27
26
20
21
20
16
22
21
24
19
25
16
23
19
25
26
30
32
31 July
2023
£’000
13,693
4,790
61,759
13,244
12,964
137
4,678
111,265
31,432
31
2,074
9,847
43,384
154,649
2,574
23,534
–
624
3,479
4,955
1,984
37,150
8,193
29,815
3,604
275
2,196
44,083
81,233
73,416
17,803
87,570
(31,957)
73,416
Restated¹
31 July
2022
£’000
10,559
4,790
76,935
20,435
38,748
101
7,625
159,193
45,393
2
–
12,609
58,004
217,197
2,806
32,968
454
1,867
5,159
6,944
477
50,675
10,052
13,148
2,155
4,206
10,500
40,061
90,736
126,461
17,797
101,700
6,964
126,461
1 The Consolidated Balance Sheet at 31 July 2022 has been restated in respect of the correction of the tax treatment of income from US loan forgiveness income in FY21 and
the restatement of depreciation and associated tax of the investment property following a change in accounting policy to move from a cost model to a fair value model,
which has been applied retrospectively. Refer to note 1 for further details.
These Consolidated Financial Statements were approved by the Board of Directors and authorised for issue on
1 November 2023. They were signed on its behalf by:
2 The results for the year to 31 July 2022 have been restated to reflect the correction of the tax treatment of income from US loan forgiveness income in FY21 and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 for further details.
3 Following the full vesting in the period of shares in respect of deferred consideration for the Spire acquisition that were allotted in a prior period, related amounts have
been transferred from the share option reserve to retained earnings.
Kelly Manthey
Chief Executive Officer
Chris Kutsor
Chief Financial Officer
Chief Operating Officer
196 |
kinandcarta.com
Building a world that works better for everyone
| 197
Financial Statements
Consolidated statement of
cash flows
For the year ended 31 July 2023
Statutory loss before tax
Net finance costs
Loss from continuing operations
Profit from discontinued operations
Statutory operating (loss)/profit
Depreciation of property, plant and equipment
Amortisation of intangible assets
Other items before working capital movements:
Share-based payment charge
(Decrease)/increase in retirement benefit obligations
Charge for contingent consideration required to be treated as
remuneration
Contingent consideration paid for acquisitions made in prior periods
Cash outflow from derivatives in respect of contingent consideration paid
for acquisitions made in prior periods
(Decrease)/increase in provisions
Impairment losses on goodwill
Non-cash reductions in lease liabilities
Impairment of right-of-use asset
Loss on disposal of property, plant and equipment
Share of profit from joint arrangement
Disbursement from joint arrangement
Gain on disposal of subsidiaries
Fair value gain from deemed sale on step acquisition
Operating cash (outflows)/inflows before movements in working capital
Decrease/(increase) in receivables
(Decrease)/increase in payables
(Decrease)/increase in deferred income
Cash generated from operations
Interest paid
Income taxes paid
Net cash flows from operating activities
Investing activities
Purchase of property, plant and equipment
Acquisition of subsidiaries, net of cash acquired
Deferred consideration paid for acquisitions made in prior periods
Proceeds on disposal of subsidiaries
Net cash flows from investing activities
Note
8
15
18
7
19
7
16
7
8
7
19
Year to
31 July
2023
£000
(20,669)
1,390
(19,279)
–
(19,279)
4,361
9,256
3,749
(1,135)
9,588
(14,537)
(1,651)
(2,429)
14,598
(5,421)
1,847
–
–
–
–
–
(1,053)
13,911
(10,649)
(1,687)
522
(1,660)
(1,462)
(2,600)
(2,374)
(2,197)
(673)
–
(5,244)
Restated1
Year to
31 July
2022
£000
(15,583)
1,497
(14,086)
25,684
11,598
4,123
6,484
3,118
1,194
13,228
–
–
3,551
–
(4,401)
6,207
72
(442)
147
(24,059)
(1,621)
19,199
(8,054)
939
43
12,127
(1,014)
(1,341)
9,772
(1,336)
(11,932)
–
34,269
21,001
Financing activities
Principal element of lease payments
Interest element of lease payments
Purchase of own shares by the Employee Benefit Trust
Dividends paid
Proceeds from issue of shares
Drawdown of borrowings
Repayment of borrowings
Net cash flows from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of currency movements
Note
13
Cash and cash equivalents at end of the year
20
Year to
31 July
2023
£000
(3,344)
(636)
(8,395)
(3)
52
26,672
(8,809)
5,537
(2,307)
12,609
(455)
9,847
Restated1
Year to
31 July
2022
£000
(3,080)
(732)
(5,593)
(38)
332
23,988
(78,178)
(63,301)
(32,528)
44,971
166
12,609
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 for further details.
Included in the figures above are the following cash flows from discontinued operations:
Net cash flows from investing activities
Net cash used in financing activities
Net increase in cash and cash equivalents
Year to
31 July
2023
£000
–
–
–
–
Year to
31 July
2022
£000
(1,862)
34,255
(542)
31,851
198 |
kinandcarta.com
Building a world that works better for everyone
| 199
Financial Statements Notes to the consolidated
financial statements
1. General information and basis of preparation
The Consolidated Financial Statements (“the financial statements”) of Kin and Carta plc and its subsidiaries
(collectively, the “Group”) for the year ended 31 July 2023 were authorised for issue in accordance with the
resolution of the Directors on 1 November 2023. The Group Financial Statements consolidate those of the Company
and its subsidiaries (together referred to as the ‘Group’). The Parent Company financial statements present
information about the Company as a separate entity and not about its Group.
Kin and Carta plc (the “Company”) is a public company limited by shares incorporated in the United Kingdom under
the Companies Act 2006 and is registered in England and Wales (Company registration number 1552113) and is
listed on the London Stock Exchange. The address of the registered office is The Spitfire Building, 71 Collier Street,
London N1 9BE. The Group is principally engaged in the provision of digital transformation consultancy services.
In accordance with the Companies Act 2006, the Consolidated Financial Statements have been prepared and
approved by the Directors in accordance with UK-adopted international accounting standards (“UK-Adopted IFRS”).
The company prepares its Parent Company financial statements in accordance with Financial Reporting Standard
101 Reduced Disclosure Framework (“FRS 101”). The financial statements are presented in Pounds Sterling as this is
the currency of the primary economic environment in which the Group operates, generally rounded to the nearest
thousand, except when otherwise indicated.
The Consolidated Financial Statements have been prepared on a historical cost basis, except for the following items,
which are measured at fair value or grant date fair value:
• Share-based payment arrangements
•
Investment property
• Business combinations
• Derivative financial instruments
• Contingent consideration payable
The accounting policies set out in note 2 have, unless otherwise stated, been applied consistently to all periods
presented in these Consolidated Financial Statements and have been applied consistently by the Group.
Prior year restatements and reclassifications
(1) Correction of the taxation of income from loan forgiveness
In FY21, the forgiveness of £4.5 million of loans received under the Payment Protection Programme (“PPP”) provided
by the US Government were recorded in adjusted other income. This was treated as taxable income in the financial
statements for the year ended 31 July 2021, consistent with general US tax rules for loan forgiveness, and a current
corporate income tax charge of £1.3 million was provided for at 31 July 2021 and 31 July 2022. However, specific
tax legislation for the exclusion of such income was enacted into law within the FY21 year, which resulted in the tax
charge being overstated by £1.3 million in that year. As a result, the retained earnings for the comparative balance
sheet in these financial statements have been restated as detailed in the tables below.
(2) Change of accounting policy to hold investment property at the fair value model (previously cost model)
IAS 40 permits investment properties to be held at either the cost or fair value model. During the year to 31 July
2023, there was a change in accounting policy to move from a cost model to a fair value model. The change arose
because management judged that the fair value model was more appropriate as it better reflects the manner of
recovery of value of the asset. This change in accounting policy has been applied retrospectively from 1 August
2021, being the beginning of the earliest prior period presented, as required by IAS 8.
1. General information and basis of preparation (continued)
The previously reported carrying amount at 1 August 2021 under the cost model was £4.4 million. The fair value
at 31 July 2023, being the market value as determined by an independent property valuer during July 2023, was
£4.8 million. The fair value thus obtained was also applied as at 1 August 2021 and 31 July 2022 as management’s
assessment was that the fair value would have not been materially different to the value at 31 July 2023 at either
earlier date. The difference between the carrying amount as per the cost model previously adopted and the fair
value as at 1 August 2021 is £0.35 million, which is presented in accumulated retained earnings within equity as an
adjustment to opening equity at 1 August 2021, net of the related deferred tax adjustment.
At 1 August 2021, there was a deferred tax liability of £0.88 million in respect of the investment property. Following
the change in accounting policy, the basis for the valuation of deferred tax changed to assume a sale scenario for
determining the tax basis. In line with IAS 12, the revised accounting policy resulted in a deferred tax asset and a full
valuation allowance was taken against the asset, given the low probability of recovery. The deferred tax liability at
1 August 2021 was restated to nil through accumulated retained earnings within equity.
In the prior year to 31 July 2022, £0.27 million depreciation was previously recorded in respect of the investment
property. This has been restated to nil following the accounting policy change. In addition, there was a tax credit
of £0.05 million recorded in the year in respect of deferred tax, which has been restated to nil, resulting in a net
increase in net profit after tax for the prior period of £0.22 million.
(3) Reclassification of share-based payments from adjusting results to adjusting items
Share-based payments are transactions in which the Group issues shares to certain employees as consideration for
services received, accounted for under IFRS 2 ‘Share-based Payment’. From FY23, management decided to exclude
the Group’s share-based payment charge from the adjusted results. The inclusion of share-based payments,
together with associated employer taxes, where applicable, as an adjusting item is in line with publicly listed peer
group companies in digital transformation, and with the manner in which financial analysts tend to assess financial
performance of companies in the industry, therefore aiding the comparability of adjusted results. The FY22 have
been restated to reclassify the share-based payment charge from non-adjusting items to adjusting items in the
Consolidated Income Statement. There is no impact on statutory profit/(loss) for either period.
These three items are reflected in the tables below:
Restatements and reclassifications as at and for the prior year ended 31 July 2022
31 July
2022
(statutory-
as previously
reported)
£’000
Tax on loan
forgiveness
restatement
£’000
Share-based
payments
reclassification
£’000
Investment
property
accounting
policy
change
£’000
31 July
2022
(statutory-
restated)
£’000
Consolidated Balance Sheet (extract)
Investment property
Current tax liabilities
Deferred tax liabilities
Net assets
Retained earnings
Total equity
Consolidated Income Statement (extract)
Administrative expenses
Share-based payments
4,169
(3,168)
(11,334)
123,705
4,208
123,705
(57,581)
–
Loss before tax from continuing operations
(15,852)
Income tax (charge)/credit
1,654
Net (loss)/profit from continuing operations
(14,198)
–
1,301
–
1,301
1,301
1,301
–
–
–
–
–
–
–
–
–
–
–
3,234
(3,234)
–
–
–
621
–
834
1,455
1,455
1,455
269
–
269
(45)
224
4,790
(1,867)
(10,500)
126,461
6,964
126,461
(54,078)
(3,234)
(15,583)
1,609
(13,974)
| 201
200 |
kinandcarta.com
Building a world that works better for everyone
Financial Statements 1. General information and basis of preparation (continued)
Basic and diluted earnings per share for the year ending 31 July 2022 have been updated to reflect the share-based
payments reclassification and the restatement of depreciation following the accounting policy change to hold
investment property at the fair value model:
1. General information and basis of preparation (continued)
Standards issued but not yet effective
At the date of the approval of these financial statements, the following standards, which have not been applied in
these financial statements were in issue, but not yet effective:
Continuing and discontinued operations
Net profit for the period (£’000)
Earnings per share (pence)
Basic earnings per share
Diluted earnings per share
Restatements as at 1 August 2021
Consolidated Balance Sheet (extract)
Investment property
Current tax assets/(liabilities)
Deferred tax liabilities
Net assets
Accumulated deficit
Total equity
Adjusted earnings
Statutory earnings
Year to
31 July
2022
(as previously
reported)
Year to
31 July
2022
(restated)
Year to
31 July
2022
(as previously
reported)
Year to
31 July
2022
(restated)
16,291
20,163
9,783
10,007
9.38
9.08
11.61
11.24
5.63
5.46
5.76
5.58
1 August
2021
(statutory- as
previously
reported)
£’000
Tax on loan
forgiveness
restatement
£’000
Investment
property
accounting
policy change
£’000
1 August
2021
(statutory-
restated)
£’000
4,438
(514)
(3,930)
82,758
(26,118)
82,758
–
1,301
–
1,301
1,301
1,301
352
–
879
1,231
1,231
1,231
4,790
787
(3,051)
85,290
(23,586)
85,290
New and amended standards and interpretations
The following amendments became effective for annual accounting periods beginning on, or after, 1 January 2022,
hence are applicable to Kin and Carta plc for the financial year to 31 July 2023:
• Amendments to IAS 37: Onerous Contracts- Cost of Fulfilling a Contract
• Amendments to References to the Conceptual Framework in IFRS 3 ‘Business Combinations’
• Amendments to IAS 16: Property, Plant and Equipment- Proceeds before Intended Use
• Annual Improvements to IFRS Standards 2018-2020
These amendments have a limited impact on the Consolidated Financial Statements of the Group.
• Amended IFRS 17: Insurance contracts
• Amendments to IAS 8: Definition of Accounting Estimates
• Amendments to IAS 1: Disclosure of Accounting Policies, Classification of Liabilities as Current or Non-current
and Non-current Liabilities with Covenants
• Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
• Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture
• Amendment to IFRS 16: Lease Liability in a Sale and Leaseback
These new standards are not expected to have a material impact on the Consolidated Financial Statements. The
Group has not early adopted any standards, interpretations or amendments that have been issued but are not
yet effective.
Going concern
As at 31 July 2023, the Group had drawn £29.8 million, (31 July 2022: £13.1 million) on its credit facilities, leaving
an unutilised amount of £55.2 million (31 July 2022: £71.9 million). At 31 July 2023, the ratio of net debt/(cash) to
adjusted EBITDA for bank covenant purposes was 1.04 times (31 July 2022: 0.01 times), well within the covenant limit
of 2.5 times.
The Group has prepared a forecast of financial projections for the three-year period to 31 July 2026. The forecast
underpins the going concern assessment, which had been made for the period through to 1 November 2024, a
period of 12 months from the date of approval of the Consolidated Financial Statements.
The base case reflects the assumptions made by the Group with respect to organic growth, increased client
diversification and operating profit margin improvement. For the going concern assessment, management ran a series
of downside scenarios on the latest forecast profit and cash flow projections to assess bank covenant headroom
against funding facilities. This process involved a number of sensitised scenarios to assess the financial impact of the
Group’s principal business risks, which align with those disclosed within this Annual Report and Accounts.
These scenarios and analysis included assumptions around the Group’s products and markets, expenditure
commitments, expected cash flows and borrowing facilities, taking into account reasonable possible changes in
trading performance, and after making appropriate enquiries. In performing this assessment, consideration was
given to the current macroeconomic environment. The inflationary and rising interest rate environment has seen the
Group’s clients spending more cautiously in FY23, resulting in lower than forecast revenue growth. Revenue growth
is forecast to improve modestly in FY24 as the impact of new contract wins comes through and macroeconomic
pressures are forecast to reduce. Scenarios modelled included sales volume reductions, decreases in gross margin
and significant customer loss. None of the stress scenarios modelled show a breach of bank covenants in respect of
available funding facilities or any liquidity shortfall.
This process allowed the Board to conclude that the Group will continue to operate on a going concern basis for a
period of at least 12 months from when the Consolidated Financial Statements are authorised for issue. Accordingly,
the Consolidated Financial Statements are prepared on a going concern basis.
Recommended acquisition of Kin and Carta plc by Apax Partners LLP (“Apax”)
On 18 October 2023, the Board of Kin and Carta plc recommended an offer for the Group to be acquired by Apax.
The Board have considered the statements in Apax’s announcement made pursuant to rule 2.7 of the Takeover Code
in respect of the proposed acquisition, and discussions with Apax senior management regarding Apax’s intention
to ensure continuity of the Group’s existing business. Although the Group’s current bank credit facility includes a
provision which allows the lender banks to withdraw the facility under certain circumstances after a change of control.
The Board believes that Apax would ensure that appropriate bank facilities would continue to be made available to the
group after completion of the deal. Considering this, the Board has concluded that the completion of this acquisition
would not impact the appropriateness of the going concern basis of preparation for these Consolidated Financial
Statements.
202 |
kinandcarta.com
Building a world that works better for everyone
| 203
Financial StatementsNotes to the consolidated financial statements continued 1. General information and basis of preparation (continued)
The financial statements do not include any adjustments which would be required should it be inappropriate to
apply the going concern basis of accounting.
Climate change
In preparing the Consolidated Financial Statements, management has considered the impact of climate change.
There has been no material impact identified on the financial reporting judgements and estimates. While there is
currently no medium-term impact expected from climate change, management is aware of the risks arising from
climate change and will regularly assess these risks against judgement and estimates made in preparation of the
Group’s financial statements.
2. Accounting policies
Basis of consolidation
The Consolidated Financial Statements consolidate the accounts of the Parent and its subsidiary undertakings
to 31 July each year. Subsidiaries are entities controlled by the company. Control exists when the company is
exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. The financial statements of subsidiaries are included in the Consolidated
Financial Statements from the date on which control commences until the date on which control ceases. Where
subsidiary undertakings were acquired or sold during the year, the accounts include the results for the part of the
year for which they were subsidiary undertakings using the acquisition method of accounting. Intra-group balances,
and any unrealised income and expense arising from intra-group transactions, are eliminated in preparing the
Consolidated Financial Statements. Where necessary, adjustments are made to the results of subsidiaries to bring
their accounting policies in line with those of the Group.
Joint operations
Where the Group undertakes contracts jointly with other parties, these are accounted for as joint operations as
defined by IFRS 11 ‘Joint arrangements’. In accordance with IFRS 11, the Group accounts for its own share of assets,
liabilities, revenues and expenses measured according to the terms of the joint operations agreement. There were
no joint arrangements for the year to 31 July 2023. In the prior, year there was a joint arrangement to 14 February
2022 when the remaining 50% interest was acquired by the Group (refer to note 35).
Foreign currencies
The Group’s Consolidated Financial Statements are presented in Pounds Sterling, which is also the Parent
Company’s functional currency. For each subsidiary, the Group determines the functional currency, and items
included in the financial statements of each entity are measured using that functional currency with reference to
the primary economic environment in which it operates.
Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies of Group companies at
the spot exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at
the exchange rate at the reporting date. Non-monetary items that are measured based on historical cost in a
foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary items that
are measured at fair value in a foreign currency are translated using the exchange rate at the date when the fair
value was measured. When a gain or loss on a non-monetary item is recognised in other comprehensive income,
any exchange component of that gain or loss shall be recognised in other comprehensive income. When a gain or
loss on a non-monetary item is recognised in profit or loss, any exchange component of that gain or loss shall be
recognised in profit or loss. Foreign currency differences are generally recognised in profit or loss and presented
within administrative expenses.
2. Accounting policies (continued)
Group companies
On consolidation, the assets and liabilities of the Group’s foreign operations are translated into Pounds Sterling at
the exchange rates at the reporting date. Income and expense items are translated at the average rate of exchange
rates for 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. Foreign currency differences are recognised in
the statement of comprehensive income and accumulated in the translation reserve until the foreign operation is
disposed of, at which point the relevant proportion of the accumulated amount is recycled to profit or loss.
Any 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.
The following key exchange rates against British Pound Sterling were applied in these financial statements:
US Dollar
Euro
2023
2022
Average
rate
Year end
rate
Average
rate
Year end
rate
1.21
1.15
1.29
1.17
1.32
1.18
1.22
1.19
The Group is also subject to currency risk in relation to the translation of the net assets of its foreign operations into
Sterling for inclusion in the Consolidated Financial Statements. These net investments include intercompany loans
for which settlement is neither planned or likely to occur in the foreseeable future. In accordance with IAS 21, these
loans form part of the net investment in foreign operations and the exchange differences on the loans are booked
through other reserves.
Revenue recognition
The Group recognises revenue when it transfers control over a product or service to its customer. Revenue from
supply of services is measured at the fair value of consideration received or receivable, and comprises amounts
receivable for services, net of volume discounts, up-front payments, VAT and other sales-related taxes. Revenue is
recognised to depict the transfer of promised services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those services. The Group has adopted the five-
step approach to the timing of revenue recognition based on performance obligations in customer contracts.
This involves identifying the contract with customers, identifying the performance obligations, determining the
transaction price, allocating the price to the performance obligations within the contract and recognising revenue
when the performance obligations are satisfied.
Due to the contracting nature of the business, all of the Group’s revenue is recognised in respect of performance
obligations that are satisfied over time. The Group primarily uses the cost input method to measure the progress of
delivery. Discounts and other incentives are recognised over the period of the contracts to which they relate.
Time and materials contracts
Contracts for the provision services generally tend to be “time and materials” contracts whereby the customer is
contractually bound to pay for services in line with the time spent delivering a contractually agreed services scope.
Such services are recognised as a performance obligation satisfied over time in line with the chargeable time and
materials which are allocated to the contracted project.
204 |
kinandcarta.com
Building a world that works better for everyone
| 205
Financial StatementsNotes to the consolidated financial statements continued 2. Accounting policies (continued)
Fixed price contracts
A small number of contracts are performed on a fixed-price basis. The stage of completion determined as a
proportion of the total effort expected for the project that has elapsed at the end of the reporting period is an
appropriate measure of progress towards complete satisfaction of the performance conditions under IFRS 15.
Where costs are anticipated to be in excess of revenues, an onerous contract will be recognised. Where contract
variations or claims may arise, which fall under the variable consideration or contract modification requirements of
IFRS 15, the recognition of revenue in respect of these is assessed on a contract-by-contract basis when evidence
supports that the contract modification is enforceable or when, in the cases of variable consideration, it is highly
probable that a significant reversal in the amount of revenue recognised will not occur.
Typically, customers are not entitled to refunds. The above methods are deemed to be appropriate in identifying
the point of transfer of services for revenue recognition. Where appropriate, an expected loss on the contract is
recognised as an expense immediately in the Consolidated Income Statement.
Invoices are generally raised either in advance of the service provided or in arrears with a monthly cadence.
Payment terms for the customer are typically 30 days from the date of issue of the invoice and according to the
contract terms.
2. Accounting policies (continued)
Investment property
Investment properties are properties that are held to earn rental income and are held at the fair value model,
which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of
investment properties are included in profit or loss in the period in which they arise. Fair value is determined based
on a valuation performed by an accredited external independent valuer applying a valuation model recommended
by the International Valuation Standards Committee.
Previously investment property was carried at historical cost less accumulated depreciation and impairment. There
was an accounting policy change during the year to hold the investment property at fair value. See note 1 for further
details.
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. When
the recognition model was changed from the cost model to fair value the gain was recognised through the profit
and loss account.
Net revenue
Goodwill
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.
Adjusting items
Statutory results (“Statutory results”) presented in the Consolidated Income Statement include adjusting items.
Adjusted items are presented in the middle column of the Consolidated Income Statement. In the opinion of the
Directors, their separate presentation aids understanding of the financial performance of the Group. Adjusting items
include acquisition and disposal-related costs, amortisation of acquired intangibles, impairments, share-based
payment charges, administrative expenses related to St Ives Defined Benefit Pension Scheme, client disputes and
litigation and associated insurance income, and restructuring charges.
The results, excluding adjusting items, are presented in the Consolidated Income Statement under the heading
“adjusted results”, to reflect the manner in which performance is tracked and assessed internally by management.
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 to the Consolidated Financial Statements.
Accrued and deferred income
Accrued income is a contract asset and is recognised when a performance obligation has been satisfied, and
revenue has been recognised, 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.
Deferred income is a contract liability and is recognised when payments are received from customers prior to
satisfaction of performance obligations and the associated revenue is recognised. Contract liabilities typically
related to prepayments for third-party pass-through expenses and direct costs that are incurred shortly
after billing.
Goodwill arising on the acquisition of a subsidiary is initially measured at cost, being the excess of the aggregate of
the consideration transferred 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.
Goodwill is reviewed for impairment annually and whenever there is an indication that the goodwill may be impaired
in accordance with IAS 36, any impairment losses are recognised immediately in the Consolidated Income
Statement.
For the purpose of impairment testing, the goodwill arising on acquisition is allocated to the group of cash-
generating units (“CGUs”) that are expected to benefit from the synergies of the combination. A CGU represents
the lowest level at which goodwill is monitored by the Group’s Board of Directors for internal management purposes.
If the recoverable amount of the CGU 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 CGU,
the attributable amount of goodwill is included in the determination of the gain or loss on disposal.
Other intangible assets
Intangible assets, other than goodwill, include those arising on acquisition comprising customer relationships,
proprietary techniques and trademarks. These are initially recognised at cost and amortised on a straight-line
basis over their useful economic lives from the date they are available for use. Intangible assets are subsequently
stated at cost less accumulated amortisation and any accumulated impairment losses. Amortisation of intangibles
arising in the context of an acquisition is recorded on a separate line within operating profit. The estimated useful
economic lives are as follows:
Customer relationships
Proprietary techniques
Trademarks
3 years
3 to 10 years
0 to 1 year
206 |
kinandcarta.com
Building a world that works better for everyone
| 207
Financial StatementsNotes to the consolidated financial statements continued 2. Accounting policies (continued)
Property, plant and equipment
Property, plant and equipment is initially recognised at cost and depreciated on a straight-line basis over
their useful economic lives from the date they are available for use. They are subsequently stated at cost less
accumulated depreciation and any accumulated impairment losses, if any. Subsequent expenditure on property,
plant and equipment is capitalised when it enhances or improves the condition of the item of property, plant
and equipment beyond its original assessed standard of performance. Maintenance expenditure is expensed as
incurred.
Depreciation is provided to write off the cost less the estimated residual value of property, plant and equipment
using the straight-line method by reference to their estimated useful lives as follows:
Freehold buildings
Long leases
Plant and machinery
Fixture, fittings and equipment
2–4%
Period of lease
10–33%
10–33%
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. Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included
in the income statement when the asset is derecognised.
Hyperinflationary economies
The Argentinian economy was designated as hyperinflationary from 1 July 2018. As a result, application of IAS 29
‘Financial Reporting in Hyperinflationary Economies’ has been applied to the Argentinian subsidiary, which provides
nearshore delivery services primarily to US-based clients. Adjustments are made for the historical cost of non-
monetary assets for the change in purchasing power caused by inflation from the date of initial recognition to the
balance sheet date.
Impairment of assets other than goodwill
At each balance sheet date, the Group reviews the carrying amounts of its property, plant and equipment, right-of-
use assets and other 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 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 CGU 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 CGU) is estimated to be less than its carrying amount, the carrying
amount of the asset (CGU) is reduced to its recoverable amount. An impairment loss is recognised immediately as
an expense in the Consolidated Income Statement.
Where an impairment loss subsequently reverses, the carrying amount of the asset (CGU) 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 (CGU) in
prior periods.
2. Accounting policies (continued)
Tax
The tax expense in the Consolidated Income Statement comprises current income tax and deferred tax.
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to
the taxation authorities. 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. Current income tax relating to items recognised directly in equity is recognised
in equity and not in the Consolidated Income Statement.
The Group provides for future liabilities in respect of uncertain tax positions where additional tax may become
payable in future periods. Such provisions are based on management’s best judgement of the probability of the
outcome in reaching an agreement with the relevant tax authorities.
Deferred tax
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 reporting 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 utilised.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has
become probable that future taxable profits will allow the deferred tax 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.
208 |
kinandcarta.com
Building a world that works better for everyone
| 209
Financial StatementsNotes to the consolidated financial statements continued 2. Accounting policies (continued)
Provisions
2. Accounting policies (continued)
The Group’s primary categories of financial instruments are listed below:
Provisions have been made in respect of restructuring commitments and other property-related commitments.
Trade and other receivables
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event
and where it is probable that an outflow will be required to settle the obligation and the amount of the obligation
can be estimated reliably. When a provision is released, the provision is taken back to the Consolidated Income
Statement within the line item where it was initially booked. If the effect is material, expected future cash flows are
discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to unwinding the discount is recognised as a finance cost.
Details of provisions are set out in note 25.
Contingent liabilities
Contingent liabilities are possible obligations of the Group of which the timing and amount are subject to significant
uncertainty. Contingent liabilities are not recognised in the Consolidated Balance Sheet, unless they are assumed by
the Group as part of a business combination. They are however disclosed, unless they are considered to be remote.
If a contingent liability becomes probable, and the amount can be reliably measured, it is no longer treated as
contingent and recognised as a liability on the balance sheet.
Contingent assets
Contingent assets are possible assets of the Group of which the timing and amount are subject to significant
uncertainty. Contingent assets are not recognised in the Consolidated Balance Sheet. They are however disclosed
when they are considered to be probable. A contingent asset is recognsied in the financial statements when the
inflow of economic benefits is virtually certain.
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
Note
Measurement
Trade and other receivables
Cash and cash equivalents
Trade and other payables
Derivative financial instruments
Deferred consideration payable
Contingent consideration payable
Bank borrowings
20
20
22
21
19
19
23
Amortised cost
Amortised cost
Amortised cost
Fair value through profit and loss
Fair value through profit and loss
Fair value through profit and loss
Amortised cost
1 The fair value measurement hierarchy is only applicable for financial instruments measured at fair value.
Fair value
measurement
hierarchy¹
n/a
n/a
n/a
2
2
3
n/a
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:
• 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
• Level 3 inputs are unobservable inputs for the asset or liability
Trade receivables are initially recognised and carried at their original invoice amount. Trade receivables and
contract assets are stated at cost less expected credit losses (ECLs). At each reporting date, the Group evaluates
the estimated recoverability of trade receivables and contract assets and records allowances for ECLs based on
experience.
The Group applies the simplified approach to the measurement of ECLs, which requires expected lifetime losses to
be recognised from initial recognition of the receivable. Immediately after an individual trade receivable or contract
asset is assessed to be unlikely to be recovered, an impairment is recognised as the difference between the
carrying amount of the receivable and the present value of estimated future cash flows.
Where there are no specific concerns over recovery, other than the increasing age of a trade receivable or contract
asset balance past payment terms, the Group uses a provision matrix, where provision rates are based on days past
due. The provision matrix used reflects estimates based on past experience and current economic factors.
The information about the ECLs on the Group’s trade receivables and contract assets is disclosed in note 20.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash and short-term deposits with a maturity of three
months or less. All of the cash and cash equivalents balance is available for use by the Group.
For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and
short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of
the Group’s cash management.
Trade and other payables
Trade payables that are not interest bearing and are initially recognised at fair value and subsequently carried at
amortised cost.
Financial assets and financial liabilities are offset and the net amount is reported in the Consolidated Balance Sheet
if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a
net basis, i.e. to realise the assets and settle the liabilities simultaneously.
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.
210 |
kinandcarta.com
Building a world that works better for everyone
| 211
Financial StatementsNotes to the consolidated financial statements continued 2. Accounting policies (continued)
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.
Contingent consideration payable
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 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.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded as the proceeds receivable, net of direct issue costs.
Subsequent to initial recognition, borrowings are stated at amortised cost, where applicable. 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. Bank
borrowings are derecognised when the obligation under the liability is discharged, cancelled or expires.
The Directors consider that the carrying value of all financial assets and liabilities is approximately equal to their fair
value.
Finance income and expense
All interest income and expense is recognised in the income statement on an accruals basis, using the effective
interest method.
Retirement benefits
The Group operates a defined benefit pension scheme, and also makes payments into defined contribution
schemes. Payments to defined contribution schemes are accounted for on an accruals basis.
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.
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.
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 reflect how management assesses and monitors the ongoing financial
performance 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:
• gains and losses on curtailments and settlements and costs incurred in the running of the Scheme
• 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.
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 with a corresponding increase in equity.
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 service and 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.
Employee Share Ownership Plan (“ESOP”)
As the Group is deemed to have control of its ESOP trust, it is included in the 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.
212 |
kinandcarta.com
Building a world that works better for everyone
| 213
Financial StatementsNotes to the consolidated financial statements continued 2. Accounting policies (continued)
Leases
The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys
the right to control the use of an identified asset for a period of time in exchange for consideration.
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and
leases of low-value assets (less than £3,000). The Group recognises lease liabilities to make payments and right-
of-use assets representing the right to use the underlying assets.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (ie the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes
the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before
the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-
line basis over the lease term. The Group holds right-of-use assets in respect of land and buildings which are
depreciated between one and 14 years.
Right-of-use assets are tested for impairment in accordance with IAS 36 ‘Impairment of Assets’.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present value
of lease payments to be made over the lease term. The lease payments include fixed payments less any lease
incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be
paid under residual value guarantees. The lease payments also include the exercise price of a purchase option
reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term
reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a
rate are recognised as an expense in the period in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease
commencement date, if the interest rate implicit in the lease is not readily determinable. The incremental borrowing
rate applied to each lease is determined by taking into account the risk-free rate of the country where the asset
under lease is located, matched to the term of the lease and adjusted for factors such as the credit risk profile of
the lessee.
After the commencement date, the amount of lease liabilities is increased to reflect the addition of interest and
reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is
a modification, a change in the lease term, a change in lease payments (e.g. changes to future payments resulting
from a change in an index or rate used to determine such lease payments) or a change in the assessment of an
option to purchase the underlying asset.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases (i.e. those leases that have a
lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies
the lease of low-value assets recognition exemption to leases of office equipment that are considered of low asset
value (below £3,000). Lease payments on short term leases and leases of low-value assets are recognised as an
expense on a straight-line basis over the lease term.
2. Accounting policies (continued)
Business combinations
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 and
liabilities incurred or assumed by the Group, 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 are
automatically forfeited upon termination of employment, are classified as remuneration for post-combination
services and are 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 contingent consideration payable in the
Consolidated Balance Sheet. At each balance sheet date, the Group revises its estimate for the contingent amounts
payable that are 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 are
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 acquirer’s share-based payment
awards are measured in accordance with IFRS 2 ‘Share-based Payment’
• 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 at the acquisition date, and is subject to a maximum of
one year.
214 |
kinandcarta.com
Building a world that works better for everyone
| 215
Financial StatementsNotes to the consolidated financial statements continued 2. Accounting policies (continued)
Discontinued operations
Classification as a discontinued operation occurs at the earlier of the date of disposal or when the operation meets
the criteria to be classified as held for sale. A component of the Group is classified as a discontinued operation if its
carrying amount will be recovered principally through sale rather than through continuing use, and:
•
•
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
•
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 losses from the disposal of the operation,
is reported separately as discontinued operations in the Consolidated Income Statement.
When an operation is classified as a discontinued operation, the comparative income statement and statement of
comprehensive income is represented as if the operation had been discontinued from the start of the comparative
year.
Segmental reporting
Segment information is presented on a regional basis. Corporate costs, comprising certain costs that are not
allocated to the operating regions, are disclosed separately.
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 – this segment generates revenue from services offered to our global clients by our operating
businesses which are located in Europe
Corporate costs are those that 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 Makers (“CODM”s). The CODM has been determined to be the Chief Executive Officer and the
Chief Financial and Chief Operating Officer who are primarily responsible for the assessment of the performance of
the Group. The full segmental balance sheet is not disclosed as this information is not reported to the CODM.
Significant accounting judgements, estimates and assumptions
The preparation of the Group’s Consolidated Financial Statements in conformity with IFRS requires management to
make judgements, estimates and assumptions that affect the application of policies, reported amounts of assets
and liabilities, revenue and expenses and the accompanying disclosures. The estimates are based on historical
experience and various other factors that are believed to be reasonable under the circumstances, the results of
which form the basis of making the judgements about carrying values of assets and liabilities that are not readily
apparent from other sources. Uncertainty about these assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of assets or liabilities affected in future periods. Actual results
may also differ from these estimates.
The estimates are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that and prior periods, or in the period of the revision and
future periods if the revision affects both current and future periods.
2. Accounting policies (continued)
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date,
which have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year, are described below. The Group based its assumptions and estimates on parameters
available when the Consolidated Financial Statements were prepared. Existing circumstances and assumptions
about future developments, however, may change due to market changes or circumstances arising that are beyond
the control of the Group. Such changes are reflected in the assumptions when they occur.
Carrying value of goodwill
The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy
set out above. Impairment exists when the carrying value of an asset or cash-generating unit (“CGU”) exceeds
its recoverable amount, which is the higher of its fair value less costs of disposal and its value-in-use. The Group
estimates the recoverable amount based on value-in-use calculations, a process which involves estimation. The
value-in-use calculation is based on a discounted cash flow (“DCF”) model. The cash flows are derived from the
relevant budget and forecasts for the next three years, including a terminal value assumption. The recoverable
amount is sensitive to the discount rate used for the DCF model as well as the expected future cash inflows, growth
rates and maintainable earnings assumed within the calculation. The recoverability analysis for the year to 31 July
2023 resulted in an impairment in the carry amount of goodwill for the UK excluding Kin and Carta Data CGU. For
all other CGUs, the value-in-use supports the carrying amount of goodwill. The situation will be monitored closely
should future developments indicate that adjustments are appropriate. Refer to note 18 for further information.
Carrying value of acquired intangibles
The Group considers the recoverability of acquired intangibles. 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.
Contingent consideration payable
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 19.
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 Guaranteed Minimum
Pension and mortality. The net surplus in the Consolidated Balance Sheet for the retirement benefit scheme was
£13.0 million (2022: surplus of £38.7 million). A sensitivity analysis can be found in note 27.
Revenue recognition
As detailed in the revenue recognition policy, the Group recognises revenue on a time and material basis for
the majority of contracts. Other contracts are performed on a fixed-price basis. For these contracts, revenue
is recognised based on the stage of completion, which is measured by reference to costs incurred to date as a
percentage of total estimated costs. This estimate of the stage of completion requires judgement in respect of
uncertainties around delivery of the remainder of the contract, which include potential project delays and technical
delivery challenges that may result in the requirement for credit note or onerous cost provisions.
216 |
kinandcarta.com
Building a world that works better for everyone
| 217
Financial StatementsNotes to the consolidated financial statements continued 3. Revenue
All Group revenue, in the current and prior year, is derived by the rendering of services where revenue is recognised
on performance obligations satisfied over time. Revenue and net revenue by region is under note 4.
The following table provides information about trade receivables, accrued income and deferred income arising from
contracts with customers:
Trade receivables
Accrued income (contract assets)
Deferred income (contract liabilities)
2023
£’000
16,023
11,676
(3,479)
2022
£’000
27,098
15,195
(5,159)
Accrued income (contract assets) relate to the Group’s right to consideration when a performance obligation has
been satisfied and revenue is recognised, but has not been billed at year end. It is transferred to trade receivables
when an invoice is issued to the customer. During the year, £15.2 million (2022: £13.1 million) of accrued income
recognised at 31 July 2022 was invoiced. Deferred income (contract liabilities) relates to payments received from
customers prior to satisfaction of performance obligations and the revenue being recognised. During the year, all of
the opening deferred revenue balance (2022: all) has been recognised as revenue.
The following is an analysis of the Group net revenue by sector:
Financial services
Retail and distribution
Industrials and agriculture
Transportation
Public sector
Healthcare
Technology, digital and media
Other
Total net revenue
Project-related costs
Total revenue
Project-related costs are incurred across a broad range of the sectors noted.
2023
£’000
69,043
41,409
27,314
19,054
13,729
7,627
6,837
6,999
192,012
3,858
195,870
2022
£’000
53,278
43,764
30,444
19,028
7,611
11,417
19,028
5,707
190,277
6,846
197,123
4. Segment reporting
During the year, the Group was managed on a regional basis. Corporate costs, comprising certain costs that are not
allocated to the operating regions, are disclosed separately.
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– this segment generates revenue from services offered to our global clients by our operating businesses,
which are located in Europe
Corporate costs are those that 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 Makers (“CODMs”). The CODM has been determined to be the Chief Executive Officer and the
Chief Financial and Chief Operating Officer, who are primarily responsible for the assessment of the performance of
the Group. The full segmental balance sheet is not disclosed as this information is not reported to the CODM.
Results from continuing operations for the current year ended 31 July 2023
Revenue
Net revenue
Statutory operating (loss)/profit
Adjusting items
Adjusted operating profit/(loss)
2023
Europe
£’000
62,086
57,246
(22,699)
26,450
3,751
Americas
£’000
157,995
134,766
10,097
8,918
19,015
Corporate
costs
£’000
Total
£’000
(24,211)
195,870
–
192,012
(6,677)
(19,279)
2,367
(4,310)
37,735
18,456
Results from continuing operations for the prior year ended 31 July 2022
Revenue
Net revenue
Statutory operating loss/(profit)
Adjusting items
Adjusted operating profit/(loss)
2022
Americas
£’000
154,037
132,227
Corporate
costs
£’000
(18,686)
–
Restated¹
total
£’000
197,123
190,277
660
(13,058)
(14,086)
22,848
23,508
7,507
(5,551)
36,482
22,396
Europe
£’000
61,772
58,050
(1,688)
6,127
4,439
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 for further details.
218 |
kinandcarta.com
Building a world that works better for everyone
| 219
Financial StatementsNotes to the consolidated financial statements continued 4. Segment reporting (continued)
The Group’s non-current assets (excluding deferred tax assets and the retirement benefit surplus) are located as
follows:
5. Profit/(loss) for the year
Profit/(loss) from operations has been arrived at after charging/(crediting):
Europe
Americas
Corporate costs
2023
£’000
49,616
39,129
4,878
93,623
2022
£’000
66,684
41,235
4,901
112,820
The non-current assets recorded under corporate costs comprise, principally, the Group’s investment property.
Geographical split of revenue from continuing operations
Revenue and net revenue by geographical area is based on the location where the provision of services has been
provided.
Continuing operations
United States of America
United Kingdom
Rest of the world
Significant customer
2023
£’000
2022
£’000
Revenue Net revenue
Revenue
Net revenue
140,079
45,676
10,115
195,870
139,329
42,730
9,953
192,012
139,556
52,226
5,341
197,123
132,230
55,607
2,440
190,277
Staff costs
Depreciation of property, plant and equipment– continuing operations
Depreciation of property, plant and equipment– discontinued operations
Amortisation of acquired intangible assets– continuing operations
Amortisation of acquired intangible assets– discontinued operations
Impairment of goodwill
Impairment of other non-current assets– continuing operations
Expenses relating to short leases and leases of low value
Note
6
15
15
18
18
18
15
16
The analysis of auditors’ remuneration is as follows:
Audit fees
– Audit of the Company accounts
– Audit of the accounts of the Company’s subsidiaries
Total audit fees
– Review of the interim report
Total audit-related fees
6. Staff numbers and costs
The average monthly number of employees, including Executive Directors, during the year were:
For the year ended 31 July 2023, one customer, based in the Americas Financial Services sector, accounted for
£48.0 million (2022: £22.2 million) or 24.5% (2022: 11.3%) of total Group revenue and £47.9 million (2022: £21.9 million)
or 24.9% (2022: 11.5%) of total Group net revenue. No other single customer contributed more than 10% to Group
revenue or net revenue in the current or prior period.
Continuing operations
Operations
Sales
Administration
The aggregate staff costs of the Group, including Executive Directors, during the year were:
Continuing operations
Wages and salaries
Social security costs
Defined contribution pension costs
Contractor costs
220 |
kinandcarta.com
Building a world that works better for everyone
| 221
Contingent consideration deemed as remuneration
Share-based payment charges including employer taxes
Fees payable to Non-Executive Directors totalled £0.3 million (2022: £0.3 million).
153,018
150,739
9,849
3,749
13,229
3,234
166,616
167,202
2023
£’000
2022
£’000
166,616
167,202
4,361
–
9,256
–
14,598
1,847
279
316
55
371
55
426
2023
Number
1,406
108
355
1,869
2023
£’000
131,365
11,184
3,648
6,821
3,886
238
6,390
94
–
6,207
204
450
55
505
45
550
2022
Number
1,464
89
301
1,854
2022
£’000
117,491
9,684
4,276
19,288
Financial StatementsNotes to the consolidated financial statements continued 7. Adjusting items
Adjusted items are presented in the middle column of the Consolidated Income Statement. In the opinion of the
Directors, their separate presentation aids understanding of the financial performance of the Group. These are
detailed below:
Expense/(income)
Continuing operations
Costs related to acquisitions
Amortisation of acquired intangibles
Contingent consideration required to be treated as remuneration
Deferred consideration adjustments
Acquisition and integration costs
Impairment
Impairment of goodwill
Fair value gain from deemed sale on step acquisition
Step up in value on notional disposal
Share-based payments charges
2023
£’000
9,256
9,849
(261)
655
Restated¹
2022
£’000
6,390
13,229
–
1,421
19,499
21,040
14,598
–
–
(1,621)
Share-based payments charges related to employee share schemes
3,749
3,234
St Ives Defined Benefit Pension Scheme costs
Scheme administrative costs
Other related costs
Past service cost (GMP equalisation uplift)
Client disputes and litigation
Cost of client disputes and litigation
Related insurance proceeds
Restructuring and other items
Redundancies and other charges
Impairment of right-of-use asset
(Credit)/charges associated with empty properties
Credit associated with lease modification and early termination
Other credits
Adjusting items before interest and tax
Net pension finance income in respect of defined benefit pension scheme
Interest charges related to non-pension adjusting items
Adjusting items before tax
Income tax credit
Continuing operations adjusting items after tax
715
804
–
1,519
5,033
(1,455)
3,578
3,806
1,847
(4,228)
(5,421)
(1,212)
(5,208)
37,735
(1,376)
140
36,499
(2,714)
33,785
787
821
3,884
5,492
380
–
380
1,693
6,207
4,462
(4,405)
–
7,957
36,482
(340)
–
36,142
(3,411)
32,731
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of the share-based payments charge from adjusted results to adjusting items.
Refer to note 1 for further details.
7. Adjusting items (continued)
As adjusted results include the benefits of acquisitions and restructuring programmes, but exclude significant costs
(such as significant acquisition costs, legal, major restructuring and transaction items), they should not be regarded
as a complete picture of the Group’s financial performance, which is presented in its statutory results. The exclusion
of other adjusting items may result in adjusted earnings being materially higher or lower than statutory earnings. In
particular, when significant impairments, restructuring charges and legal costs are excluded, adjusted earnings will
be higher than statutory earnings.
On the face of the Consolidated Income Statement, administrative expenses relating to adjusting items comprise
the St Ives Defined Benefit Pension Scheme costs of £1.5 million, redundancies and other charges of £3.8 million,
and other credits of £1.2 million. Contingent consideration treated as remuneration and consideration adjustments
comprises contingent consideration required to be treated as remuneration (£9.8 million), offset by a credit of
£0.3 million in respect of an adjustment to deferred consideration for a prior period acquisition. All other items in
the adjusting items table above are separately identified on the face of the Consolidated Income Statement.
Costs related to acquisitions
Charges relating to the amortisation of acquired customer relationships, proprietary techniques and trademarks
amounted to £9.3 million (2022: £6.4 million).
During the year, charges relating to contingent consideration required to be treated as remuneration of £9.8 million
(2022: £13.2 million) were recorded in the Consolidated Income Statement as adjusting items. These charges arose
in respect of the prior year acquisitions of Cascade Data Labs £4.3 million (2022: £9.0 million), Spire £1.0 million
(2022 £1.9 million), Melon Group £3.1 million (2022: £0.9 million), Loop £0.6 million (2022: £1.2 million) and Octain
£0.2 million (2022: £0.2 million); and £0.6 million in relation to the current year acquisition of Forecast Data Services
Limited (rebranded Kin and Carta Data).
During the year, deferred consideration adjustments credits relating to prior period acquisitions totalled
£0.3 million.
Acquisition and integration costs of £0.7 million (2022: £1.4 million) were incurred during the year. These relate to
advisor costs incurred in respect of acquisitions and potential acquisition targets, and one-off costs associated
with the integration of acquisitions onto Kin and Carta operating platforms. In the prior year, £1.4 million was incurred
in respect of similar activities.
Impairment of goodwill
During the year, an impairment charge of £14.6 million against the carrying value of goodwill relating to the
“UK excluding Kin and Carta Data” cash generating unit was recorded. The impairment arose due to a reduction in
actual and projected UK revenue arising from external market factors and client caution. This, coupled with a higher
cost of capital, reduced the value-in-use of the UK cash generating unit below its carrying value at 31 July 2023. The
impairment was recorded in the Consolidated Income Statement as an adjusting item within the Europe segment.
There were no impairment charges associated with goodwill in the prior year.
Fair value gain from deemed sale on step acquisition
In the prior year, the Group acquired the 50% interest in Loop it did not previously own. The acquisition was
accounted for as a disposal followed by a full acquisition in line with IFRS 3 ‘Business Combinations’. The notional
disposal of the existing 50% gave rise to a step up to fair value of the investment, resulting in a gain of £1.6 million,
which was recorded through the Consolidated Income Statement as an adjusting item within the Americas segment.
222 |
kinandcarta.com
Building a world that works better for everyone
| 223
Financial StatementsNotes to the consolidated financial statements continued 7. Adjusting items (continued)
Share-based payments
Charges of £3.7 million (2022: £3.2 million) were recorded in the year in respect of actual and potential future
settlements to staff under the Group’s share-based employee incentive schemes, including related employer taxes,
where applicable. The classification of share-based payments as an adjusting item is in line with global, publicly
listed peer group companies in digital transformation, where equity-based remuneration typically represents a
significant portion of remuneration, therefore aiding comparability of adjusted profitability. Of these costs,
£1.8 million (2022: £1.3 million) were recorded within the Americas segment, £0.7 million (2022: £0.5 million) within
the Europe segment and £1.2 million (2022: £1.4 million) within corporate costs
St Ives Defined Benefit Pension Scheme costs
The Scheme charges include service costs of £0.7 million (2022: £0.8 million) and costs in relation to levies payable
and other costs of the sponsor’s obligations towards the Scheme of £0.8 million (2022: £0.8 million). In the prior
year, £3.9 million of past service costs were incurred related to Guaranteed Minimum Pension equalisation (refer
to note 27 for further details). The costs of the Scheme are not considered to be part of the ongoing performance
of the Group. As such, they are treated as adjusting items. The costs are classified in the Consolidated Income
Statement as administrative expenses and are recorded within corporate costs.
Client disputes and litigation
Client disputes and litigation net expense of £3.6 million (2022: £0.4 million) includes the direct costs of settlement
and related external advisor costs associated with the resolution of certain client disputes which, were significant
in value and expected to be non-recurring in nature. These related to legal disputes with two legacy, non-enterprise
clients, one arising during the year and one in the prior year.
Full and final settlement amounts of £4.0 million were cash-settled in respect of these disputes in the second half
of FY23. During the year, £1.0 million (2022: £0.4 million) was incurred for external legal advisor costs in defending
the separate legal disputes.
Insurance proceeds of £1.5 million, relating to one of the claims, were received under the Group insurance policies
during the year, comprising partial recovery of the costs incurred. There were no other material client disputes
at the reporting date. The net costs are recorded within the Americas segment. After the year end, the Group’s
insurer confirmed that £3.3 million of further reimbursement will be paid in respect of the second claim. As the
reimbursement was not virtually certain at the balance sheet date no insurance income in respect of this claim were
recorded in FY23. The income will be recorded as an adjusting item in the Consolidated Income Statement in FY24
within the Americas segment. No further costs or insurance recoveries are expected in respect of these claims.
Restructuring and other items
During the year, restructuring expenses of £3.8 million (2022: £1.7 million) were incurred. These relate primarily to the
reorganisation of the Group, which commenced in 2022, following the switch to a fully regionally based organisation,
and the expenses of simplifying the Group’s legal structure leading to the liquidation of a number of legal entities.
Charges also include those linked to the set-up costs and the transition of certain roles to nearshore centres. These
costs are classified in the Consolidated Income Statement as administrative expenses and are recorded within the
Americas segment (£2.1 million), Europe segment (£1.0 million) and corporate costs (£0.7 million).
7. Adjusting items (continued)
During the prior year, a decision was made to vacate a significant portion of the Group’s leasehold property in
Chicago from September 2022 and to exercise an early break on the whole lease in November 2026. Following this
decision, a net cost of £6.3 million was recorded in adjusting items in the prior year. The net charge was comprised
of an impairment charge of the related right-of-use asset of £6.2 million; empty property costs of £4.5 million
consisting of the early termination payment and the contractually unavoidable future expenses relating to the
property tax and maintenance charges; and a credit of £4.4 million in relation to the reduction of the lease liability
as a result of the decision to exercise the early break clause. The items were recorded as adjusting items within the
America segment because of their material size and non-recurring nature.
During the current year, the Group renegotiated the lease of premises in Chicago, with the agreement signed in
February 2023. This will result in swapping the current premises for a space of less than half the size in the same
building from January 2024 under a new lease, with the term on the lease on the smaller premises extending to
December 2033. This resulted in a net credit of £7.8 million recorded during the year, consisting of: a release of the
provision for empty property costs of £4.2 million in respect of the early termination payment of the previous lease,
which was waived and a portion of the provision for contractually unavoidable future expenses that is no longer
required; a £5.4 million write-down of the lease liability to reflect the reduction in the lease term and associated
payment; and an impairment to the right-of-use asset of £1.8 million to reflect the reduction in the useful value of
the remaining asset under the old lease to December 2023, after applying the 45% impairment applied in the prior
year.
During the year, other credits of £1.2 million were recorded in respect of accrual releases associated with warranties
provided to buyers of businesses that were disposed of in prior periods. Following the expiration of related warranty
survival periods, the amounts previously provided are no longer considered necessary.
Finance (income)/expense
Net pension finance income of £1.4 million (2022: £0.3 million) is recorded in respect of the surplus in the St Ives
Defined Benefit Pension Scheme. This is recorded in corporate costs.
During 2022, a provision for empty property costs was recognised following the decision to partially vacate the
leasehold property in Chicago, USA from September 2022, and a portion of the lease was identified as onerous in
nature due to under-occupancy. During the current year, notional interest costs of £0.1 million related to the unwind
of the discounting of the onerous cost provision and the interest charge on the onerous portion of the lease liability
are recorded as adjusting items within the Americas segment.
Taxation on adjusting items
In the current year, the tax credit of £2.7 million (2022: £3.4 million credit) relates to several of the items noted
above. There is no tax charge or credit associated with other items, most significantly the goodwill impairment
charge in the current year and the portion of the deemed remuneration charge that relates to UK acquisitions in
the current year (£0.6 million). There are potential deferred tax credits associated with the deemed remuneration
charges for some of the US acquisitions, but the related deferred tax assets are reduced by valuation allowances
where this is judged to be appropriate.
224 |
kinandcarta.com
Building a world that works better for everyone
| 225
Financial StatementsNotes to the consolidated financial statements continued 8. Discontinued operations
There have been no divestments in the current year. Discontinued operations in the prior year include the results of
three businesses, Incite, Edit and Relish, which were divested in the year ended 31 July 2022.
The results of the discontinued operations for the prior year were as follows:
Revenue
Project-related costs
Net revenue
Costs of service
Gross profit
Selling costs
Administrative expenses
Gain on divestment of discontinued operations
Amortisation of acquired intangibles
Share-based payments related to employee share schemes
Release of provision
Operating profit
Other finance costs
Profit before tax
Income tax charge
Net profit for the period
Restated¹
Year to 31 July 2022
Adjusted
results
£’000
Adjusting
items
£’000
Statutory
results
£’000
10,116
(4,222)
5,894
(2,349)
3,545
(693)
(1,188)
–
–
–
–
1,664
(32)
1,632
(226)
1,406
–
–
–
–
–
–
–
10,116
(4,222)
5,894
(2,349)
3,545
(693)
(1,188)
24,059
24,059
(94)
(210)
265
(94)
(210)
265
24,020
25,684
–
(32)
24,020
25,652
(1,445)
22,575
(1,671)
23,981
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items, as detailed in
note 1.
9. Net pension finance income
Investment income on defined benefit pension scheme assets (note 27)
Interest costs on defined benefit pension scheme obligations (note 27)
2023
£’000
11,749
(10,373)
1,376
2022
£’000
6,850
(6,510)
340
10. Other finance costs
Interest on bank overdrafts and loans
Bank arrangement fee relating to the bank revolving facility
Interest on lease liabilities
Notional interest on provisions
2023
£’000
1,764
315
636
51
2,766
2022
£’000
415
690
732
–
1,837
Included in finance costs, within interest on lease liabilities and interest unwind on provisions, are £0.1 million relating
to adjusting items. Refer to note 7 for further details.
11. Income tax credit/(charge)
Income tax on the profit/(loss) as shown in the Consolidated Income Statement is as follows:
Continuing operations:
Total current tax credit/(charge):
Current period credit/(charge)
Adjustments in respect of prior periods
Total current tax credit/(charge)
Deferred tax on origination and reversal of temporary differences:
Current period credit
Adjustments in respect of prior periods
Total deferred tax credit
Total income tax credit
2023
£’000
280
1,311
1,591
482
(169)
313
1,904
Restated¹
2022
£’000
(2,492)
984
(1,508)
3,123
(6)
3,117
1,609
1 The 2022 tax credit has been restated in respect of a change in accounting policy for investment property to move from a cost model to a fair value model, which has
been applied retrospectively. Following the change, the basis for the valuation of deferred tax changed to assume a sales scenario. Refer to note 1 for further details.
UK corporation tax has been calculated at 21% (2022: 19%) being the blended rate in the period given the increase in
statutory rate to 25%, from 19%, as at 1 April 2023. Deferred tax balances at 31 July 2023 in the UK are valued using a
rate of at 25%, being the rate prevailing at the balance sheet date.
Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. For the US
subsidiaries, the tax charge has been calculated using a rate of 28.17% (2022: 28.51%), which includes the federal
rate of 21% and the US state and local level income tax rates, which vary from 0% to 9.5% (2022: 0% to 8%). For
Colombia and Argentina the statutory rates of 35% and 25%, respectively have been used. For Bulgaria, North
Macedonia and Kosovo, the statutory rate of 10% has been used.
226 |
kinandcarta.com
Building a world that works better for everyone
| 227
Financial StatementsNotes to the consolidated financial statements continued 11. Income tax credit/(charge) (continued)
Income tax as shown in the Consolidated Statement of Comprehensive Income is as follows:
Current tax credit/(charge) on foreign exchange movements
Deferred tax credit/(charge) on origination and reversal of temporary differences
Total income tax credit/(charge)
2023
£’000
–
7,203
7,203
2022
£’000
(1,105)
(6,209)
(7,314)
The tax credit for continuing operations can be reconciled to the loss before tax shown in the Consolidated Income
Statement as follows:
Loss before tax from continuing operations
UK corporation tax calculated at a rate of 21% (2022: 19%)
Tax charged at rates other than 21% (2022: 19%)
Effect of change in United Kingdom corporate tax rate
Expenses not deductible for tax purposes
Effect of tax deductible goodwill
Credit on research and development activities
Movements on deferred tax assets not recognised
Adjustments in respect of prior periods
Total income tax credit
Effective tax rate
2023
£’000
Restated¹
2022
£’000
(20,669)
(15,583)
4,340
(797)
877
2,961
316
–
(3,910)
(3,623)
1,141
67
(840)
1,026
1,904
9.2%
758
96
320
781
1,609
10.3%
1 The 2022 tax credit has been restated in respect of a change in accounting policy for investment property to move from a cost model to a fair value model, which has
been applied retrospectively. Following the change, the basis for the valuation of deferred tax changed to assume a sales scenario. Refer to note 1 for further details.
The Group’s effective tax rate was 9.2% (2022: 10.3%). This is driven by the blend of statutory tax rates and taxable
profit/losses in the jurisdictions in which the Group operates, adjusted for the non-taxable nature of some of the
accounting charges, most significantly the impairment of goodwill taken in the UK, the effect of tax-deductible
goodwill in the US, the revaluation of deferred tax assets in the US based on judgements of recoverability, and in the
UK based on changes in statutory tax rates.
12. Acquisitions
Current year acquisition of Kin and Carta Data Limited (formerly known as Forecast Data Services Limited)
On 5 May 2023, the Group acquired 100% of the issued share capital of Kin and Carta Data Limited (formerly known
as Forecast Data Services Limited), a data and artificial intelligence business based in Edinburgh, Scotland and,
through its Polish subsidiary, in Wroclaw, Poland. The initial cash consideration, net of cash acquired, was
£2.2 million.
Further amounts may be payable in respect of the growth in adjusted EBITDA from the acquisition date to
30 September 2024, subject to service conditions. Any further amounts payable are based on two measurement
periods: the 12 months to 30 September 2023, which will be settled in cash in the event that a payment is due,
and the 12 months to 30 September 2024, up to 75% of which may be settled in shares of Kin and Carta plc at the
Company’s discretion, with the balance settled in cash. The total further consideration payable after 31 July 2023,
all of which is accounted for as deemed remuneration because of employment service conditions, is capped at
£10.1 million. The Group currently estimates that the further consideration payable after the balance sheet date will
amount to £4.3 million.
The fair value of intangible assets acquired represent the fair value of customer relationships and of a trademark.
Goodwill arising on acquisition can be attributed to the value of future growth from new customers and the
assembled workforce. The goodwill is not expected to be deductible for tax purposes. Acquisition costs of
£0.3 million were expensed to the income statement in the period as an adjusting item.
In the period to 31 July 2023, the acquisition contributed £1.2 million to revenue and a loss before tax of £1.0 million.
The loss includes charges for deemed remuneration of £0.6 million, and amortisation of acquired intangibles of
£0.5 million (including amortisation of £0.4 million relating to the trademark, which was fully amortised in the year),
which are recorded as adjusting items in the period. Had the acquisition taken place on 1 August 2022, total Group
revenue would have been £198.9 million and statutory loss before tax for the period would have been £20.0 million.
228 |
kinandcarta.com
Building a world that works better for everyone
| 229
Financial StatementsNotes to the consolidated financial statements continued 12. Acquisitions (continued)
Purchase price allocation
The amounts recognised for each class of assets and liabilities at the acquisition date were as follows:
Assets
Customer relationships
Trademark
Property, plant and equipment
Trade and other receivables¹
Cash and cash equivalents
Liabilities
Lease liabilities
Loans and borrowings
Trade and other payables
Provisions
Other liabilities
Current tax liabilities
Deferred tax liabilities
Total identifiable net assets
Goodwill
Initial cash consideration
Satisfied by:
Initial consideration before debt and working capital adjustments
Less:
Debt and working capital adjustments
Total consideration
Acquisition of subsidiary, per the Cash Flow Statement:
Initial cash consideration (net of debt and working capital adjustments)
Less cash acquired
1 The gross contractual amounts for trade receivables due of £1.4 million is equal to their fair value.
Carrying
amount
£’000
Fair value
adjustments
£’000
Fair value
£’000
–
–
212
1,353
107
1,672
(169)
(414)
(899)
–
(34)
(3)
–
(1,519)
1,678
354
–
–
–
2,032
–
–
–
(41)
34
–
1,678
354
212
1,353
107
3,704
(169)
(414)
(899)
(41)
–
(3)
(507)
(514)
(507)
(2,033)
153
1,518
1,671
633
2,304
3,000
(696)
2,304
2,304
(107)
2,197
12. Acquisitions (continued)
The fair value of the estimated total amounts paid and payable are as follows:
Charge for
estimated deemed
remuneration
recorded in the
current year
£’000
Estimated charge
for deemed
remuneration to be
recorded in future
years
£’000
Estimated total
consideration paid
and payable
£’000
600
–
600
3,688
–
3,688
7,288
(696)
6,592
Non-contingent
consideration
£’000
3,000
(696)
2,304
Consideration
Debt and working capital
adjustments
Total
Acquisitions in the prior year ending 31 July 2022
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”).
On 14 February 2022, the Group acquired the remaining 50% of the membership units of Loop Integration LLC
(“Loop”), an e-commerce consultancy that it did not previously own.
On 9 May 2022, the Group completed the acquisition of Melon AD (“Melon Group”), a software engineering
business.
The total initial consideration paid in the prior year, the fair value of net assets acquired and goodwill are detailed
below:
Octain
Loop
Melon
Total initial
consideration
£’000
Fair value of
net assets
acquired
£’000
200
6,868
19,444
–
5,554
9,739
Goodwill
£’000
200
1,314
9,705
13. Dividends
No final dividend is proposed. The total dividend for the year is £nil per share (2022: £nil per share). Where
employee share options that accrue dividends from prior periods were exercised in the year, the dividends were
paid to the staff upon exercise of the options. £3,000 (2022: £38,000) of such option-linked dividends were paid in
the year, as noted in the cash flow statement.
230 |
kinandcarta.com
Building a world that works better for everyone
| 231
Financial StatementsNotes to the consolidated financial statements continued 14. Earnings/(loss) per share
Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary equity holders of
the Parent by the weighted average number of ordinary shares outstanding during the year.
When the Group makes a profit, diluted earnings per share equals the profit attributable to equity holders of the
Parent adjusted for the dilutive impact divided by the weighted average diluted number of shares. When the Group
makes a loss, diluted earnings per share equals the loss attributable to the equity holders of the Parent divided by
the weighted basic average number of shares. This ensures that earnings per share on losses is shown in full and not
diluted by unexercised share awards.
Basic and diluted earnings/(loss) per share are calculated as follows:
Basic
Continuing and discontinued operations
Earnings/(loss) (£’000)
Adjusted earnings
Statutory (loss)/earnings
2023
15,020
Restated¹
2022
2023
Restated¹
2022
20,163
(18,765)
10,007
15. Property, plant and equipment
Cost or valuation
At 1 August 2021
Additions
Lease modifications
Acquired with businesses
Disposal of businesses
Disposals
Thousands
Thousands
Thousands
Thousands
Hyperinflation revaluation adjustment¹
Issued ordinary shares at 1 August
Less shares held in treasury
Less shares held in the Employee Benefit Trust (“EBT”)
177,961
172,546
177,961
172,546
(91)
(2,490)
(91)
(41)
(91)
(2,490)
(91)
(41)
Issued shares net of EBT and treasury at 1 August
175,380
172,414
175,380
172,414
Effect of shares purchased by the EBT in the period
Effect of share allotted out of the EBT in the period
Effect of shares issued in the period
(3,315)
1,095
50
(1,627)
887
2,026
(3,315)
1,095
50
(1,627)
887
2,026
Reclassification
Currency movements
At 31 July 2022
Additions
Acquired with businesses (note 12)
Lease modifications
Disposals
Weighted average number of ordinary shares²
173,210
173,700
173,210
173,700
Hyperinflation revaluation adjustment¹
Basic earnings/(loss) per share
8.67
11.61
(10.83)
5.76
Diluted
Continuing and discontinued operations
Earnings/(loss) (£’000)
Weighted average number of ordinary shares (basic)²
Dilutive effect of share options outstanding
Weighted average number of ordinary shares (diluted)²
Adjusted earnings
Statutory (loss)/earnings
2023
15,020
Restated¹
2022
2023
Restated¹
2022
20,163
(18,765)
10,007
Thousands
Thousands
Thousands
Thousands
173,210
3,496
176,706
173,700
5,628
173,210
3,496
179,328
176,706
173,700
5,628
179,328
Diluted earnings/(loss) per share
8.50
11.24
(10.83)
5.58
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 for further details.
2 The weighted average number of shares is stated net of those shares held in the Employee Benefit Trust and those held in Treasury.
Adjusted earnings are calculated by adding back adjusting items (note 7), as adjusted for tax, to the profit or loss for
the year.
Currency movements
At 31 July 2023
Accumulated depreciation and impairments
At 1 August 2021
Charge for the period
Hyperinflation revaluation adjustment¹
Disposal of businesses
Disposals
Impairments
Reclassification
Currency movements
At 31 July 2022
Charge for the period
Hyperinflation revaluation adjustment¹
Disposals
Impairments
Currency movements
At 31 July 2023
Net book value
At 31 July 2023
At 31 July 2022
Land and
buildings
£’000
Plant and
machinery
£’000
2,289
2,435
15
–
–
(880)
(377)
59
–
60
1,166
1,010
–
–
–
136
(142)
1,211
–
155
(696)
–
293
140
236
3,774
1,100
12
–
(42)
910
(747)
2,170
5,007
1,028
136
55
(436)
–
–
–
28
811
262
121
–
–
(127)
1,067
1,103
355
1,133
947
159
(623)
–
–
119
227
1,962
1,168
588
(42)
–
(462)
3,214
1,793
1,812
Fixtures,
fittings,
equipment
and motor
vehicles
£’000
899
109
–
166
(81)
(187)
44
–
224
1,174
264
30
–
–
105
(285)
1,288
377
297
35
(79)
(150)
–
–
178
658
315
88
–
–
(268)
793
495
516
Right-of-use
assets
£’000
Total
£’000
24,766
30,389
1,928
1,547
640
(2,306)
(7,132)
–
–
2,042
21,485
7,005
170
141
(159)
–
3,263
1,547
961
(3,963)
(7,696)
396
140
2,562
27,599
9,379
212
141
(201)
1,151
(1,083)
(2,257)
27,559
36,024
13,824
2,744
–
(2,124)
(7,725)
6,207
–
683
13,609
2,616
–
–
1,847
(815)
16,362
4,124
249
(3,262)
(7,875)
6,207
119
1,116
17,040
4,361
797
(42)
1,847
(1,672)
17,257
22,331
10,302
7,876
13,693
10,559
232 |
kinandcarta.com
Building a world that works better for everyone
| 233
1 The hyperinflation revaluation adjustment relates to property, plant and equipment in Argentina, recorded in the current and prior year.
Financial StatementsNotes to the consolidated financial statements continued 15. Property, plant and equipment (continued)
At the balance sheet date, the Group had contractual commitments for right-of-use assets relating to the Chicago
lease, commencing 1 January 2024 and a new lease in Prishtina, Kosovo, commencing 1 August 2023 (2022: none).
In the prior year, an impairment of right-of-use buildings arose following the decision to partially vacate premises in
Chicago, USA and to exercise a break on the same lease at an earlier point than anticipated at the inception of the
lease, an impairment charge on the related right-of-use assets of £6.2 million was taken and recorded in adjusting
items under the Americas segment. During H2 FY23, the Group agreed to swap the current premises for a space
of less than half the size in the same building from January 2024, with the term on the lease on the new, smaller
premises extending to December 2033. An impairment of the right-of-use asset of £1.8 million was recorded to
reflect the reduction in the useful life of the remaining asset under the previous lease to December 2023. Refer to
note 7 for further details.
16. Lease liabilities
Set out below are the carrying amounts of lease liabilities and the movements during the year:
At 1 August
Acquired with businesses
Additions
Repayments
Disposal of businesses
Contract modifications
Interest expense
Currency movements
At 31 July
Current
Non-current
2023
£’000
12,858
169
7,005
(3,980)
–
(5,520)
636
(401)
10,767
2,574
8,193
2022
£’000
15,313
640
1,928
(3,812)
(763)
(2,854)
756
1,650
12,858
2,806
10,052
16. Lease liabilities (continued)
The following amounts of expense/(income) were recognised in the Consolidated Income Statement for continuing
operations in respect of right-of-use assets and associated lease liabilities:
Continuing operations
Expenses relating to short-leases and leases of low value
Depreciation of right-of-use assets
Credit associated with lease modification and early termination
Impairment of property-related assets
Net (credit)/charges to operating profit
Interest expense
Net (credit)/charges included in profit before tax
2023
£’000
279
2,616
(5,421)
1,847
(679)
636
(43)
2022
£’000
204
2,596
(4,401)
6,207
4,606
732
5,338
The net (credit)/charges included in profit before tax include a net credit of £3.5 million during the year
(2022: £1.8 million net charge) recorded within adjusting items in the Consolidated Income Statement relating
to the Chicago lease. Refer to note 7 for further details.
The following lease-related cash flows were recognised in the Consolidated Cash Flow Statement:
Continuing and discontinued operations:
Interest element of lease payments
Principal element of lease payments
Total cash outflow for leases
2023
£’000
2022
£’000
(636)
(3,344)
(3,980)
(732)
(3,080)
(3,812)
The following table sets out the maturity analysis of lease obligations, showing the undiscounted future lease
payments:
Additions in the current period include a £6.0 million addition related to a renegotiation on a lease interest in
premises in Chicago, USA, as well as new leases in Edinburgh, Scotland; Bogotá, Colombia; and Buenos Aires,
Argentina. The lease renegotiation in Chicago resulted in swapping the current premises for a smaller space in the
same building from 1 January 2024, with a term to 31 December 2033.
Leases arising through acquisitions in the current period include leases over premises in Edinburgh, Scotland and
Wroclaw, Poland, which were brought into the Group with the acquisition of Kin and Carta Data.
Amounts payable:
Within one year
In two to five years
After five years
Undiscounted lease liabilities at 31 July
2023
£’000
3,124
5,730
4,281
13,135
2022
£’000
3,507
11,714
–
15,221
234 |
kinandcarta.com
Building a world that works better for everyone
| 235
Financial StatementsNotes to the consolidated financial statements continued 17. Investment property
Investment property comprises a commercial property in the UK that is leased to a third party. The remaining lease
length is 45 years, with a break clause in April 2025 and every five years thereafter. It is not currently expected that
the clause permitting early termination in April 2025 will be exercised.
IAS 40 permits investment properties to be held at either the cost or fair value model. The continued significant level
of maintenance of the property has sustained its fair value and this is considered likely to continue to be the case in
the future. During the year to 31 July 2023, there was a change in accounting policy to move from a cost model to a
fair value model. The fair value model was judged to be more appropriate as it better reflects the manner of recovery
of value of the asset. This change in accounting policy has been applied retrospectively from 1 August 2021, being the
beginning of the earliest prior period presented as required by IAS 8. Further detail is provided in note 1.
The fair value of the property as at 31 July 2023 was £4.8 million, based on the market value as determined by an
independent property valuer, having appropriately recognised professional qualifications and experience. The report
was finalised in July 2023. The fair value obtained was applied as at 1 August 2021 and 31 July 2022 in restating
the prior period values in line with the new policy, as management’s assessment is that the fair value would have
not been materially different at either date. The difference between the previous carrying amount, as per the cost
model previously adopted, and the fair value as at 1 August 2021 is £0.35 million, which is presented in accumulated
retained earnings within equity as an adjustment to opening equity at 1 August 2021. There was no movement in the
fair value in the year to 31 July 2022 and 31 July 2023.
18. Goodwill and other intangible assets
Cost and carrying amount of goodwill
At 1 August 2021
Acquisition of businesses
Disposals
Currency movements
At 31 July 2022
Acquisition of businesses
Adjustment to goodwill in respect of acquisitions made in the prior year
Impairment charge
Currency movements
At 31 July 2023
Impairment testing of goodwill
£’000
68,372
11,244
(5,990)
3,309
76,935
633
66
(14,598)
(1,277)
61,759
At 1 August 2021:
Cost
Accumulated depreciation
Net book value (as previously reported)
Adjustment to fair value taken to retained earnings
Fair value at 1 August 2021 (restated)
Fair value at 31 July 2022 (restated)
At 31 July 2023
Investment
property
£’000
8,144
3,706
4,438
352
4,790
4,790
4,790
The fair value measurement of investment properties has been categorised as a Level 3 fair value based on the
inputs to the valuation technique used.
An investment capitalisation method of valuation was used to arrive at the market value. An income weighted
average equivalent yield of 13% is applied to the net income, reflecting the comparable evidence within the market
for guidance on capitalisation rates and capital values per sq ft. When adopting an appropriate yield, reference is
made to the age and size of the property and its condition, the risk of the tenant exercising the lease break, and
the alternative demand for the property. The estimated fair value would increase/(decrease) if the expected market
rental growth was higher/(lower) and if the risk adjusted yield rate was lower/(higher).
An amount in relation to rental income from investment properties of £0.8 million (2022: £0.8 million) has been
recognised in the Consolidated Income Statement, recorded as a credit to adjusted administrative expenses.
For the purpose of impairment testing, the goodwill has been allocated to four different cash-generating units
(“CGUs”). The carrying amount of the goodwill allocated to each CGU are set out below, together with the pre-tax
discount rate.
CGU
Americas
UK excluding Kin and Carta Data
Melon
Kin and Carta Data
2023
2022
Pre-tax
discount
rate
%
17.4
16.1
16.0
16.1
Carrying
value
£’000
26,093
25,074
9,959
633
61,759
Carrying
value
£’000
27,588
39,672
9,675
–
76,935
Pre-tax
discount
rate
%
15.2
13.5
13.2
–
The Group tests goodwill annually for impairment or more frequently if there are indicators that goodwill might be
impaired. For the purpose of impairment testing, goodwill is allocated to the CGU, which represents the lowest level
within the Group at which goodwill is monitored.
The recoverable amount of the CGUs is determined using value-in-use calculations. These use the cash flows
derived from the Group’s budget for FY24 and long range plan for FY25 to FY27 as the basis for input into the value-
in-use calculation, with cash flows thereafter calculated using a terminal value methodology. The budget and long
range plan were approved by the Board in October 2023. A margin for historical forecasting error has also been
factored into the value-in-use model for the explicit forecast period where relevant. For all CGUs, cash flows beyond
FY28 have been extrapolated using a forecast growth rate of 2%. The discount rates used in the value-in-use
calculation are based on the pre-tax weighted average cost of capital and reflect current market assessments of
the time value of money and the risks specific to the CGUs.
Key assumptions in the value-in-use calculations are those regarding cash flow forecasts in the medium term,
terminal growth rates and discount rates. Management considers all the forecast revenues, margins and profits to
be reasonably achievable given recent performance and the historic trading results of the relevant CGUs. Forecasts
consider macro economic factors and forecast growth in the digital transformation sector.
236 |
kinandcarta.com
Building a world that works better for everyone
| 237
Financial StatementsNotes to the consolidated financial statements continued 18. Goodwill and other intangible assets (continued)
Summary of results
The impairment tests identified a shortfall of the value-in-use compared to the carrying value for the UK excluding
Kin and Carta Data CGU of £14.6 million driven by a reduction in projected UK-sourced cash flows associated
principally with an acceleration of the shift for European clients from onshore to nearshore delivery from our
operations in South East Europe (“SEE”). The cash flows associated with delivery activities from SEE are measured
under the Melon CGU. The reduction in projected UK-sourced cash flows was exacerbated by a higher cost of
capital arising from significantly higher UK bank interest rates, resulting in a higher discount rate being used to
determine the present value of the cash flows in the value-in-use calculation.
The value-in-use calculations for the other CGUs did not identify any impairments, with a substantial excess of the
value-in-use over the carrying value for the other three CGUs as set out in the table below.
There were no goodwill or acquired intangible impairments in the prior year.
Sensitivity analysis
The Group conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions.
These sensitivities do not include the UK excluding Kin and Carta Data CGU, as the base case testing resulted in an
impairment as detailed above.
The results of the sensitivity tests are detailed below:
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)
17.4
16.0
16.1
181,602
27,635
12,129
140,721
24,207
11,776
154,912
21,957
10,229
Americas
Melon
Kin and Carta Data
Management concluded that no reasonably possible change in any of the key assumptions for these CGUs would
reduce the recoverable amount below its carrying value at the balance sheet date.
18. Goodwill and other intangible assets (continued)
Other intangible assets
Cost
At 1 August 2021
Acquisition of businesses
Disposal of businesses
Reclassification
Currency movements
At 31 July 2022
Acquisition of businesses
Disposals
Currency movements
At 31 July 2023
Accumulated amortisation
At 1 August 2021
Charge for the period
Disposals
Reclassification
Currency movements
At 31 July 2022
Charge for the period
Disposals
Impairment
Currency movements
At 31 July 2023
Net book value
At 31 July 2023
At 31 July 2022
Computer
software
£’000
Customer
relationships
£’000
Proprietary
techniques
£’000
Trademarks
£’000
Total
£’000
1,671
–
(1,426)
(140)
15
120
–
–
–
21,856
10,871
(11,241)
–
726
22,212
1,678
–
(364)
36,296
–
(214)
–
2,203
38,285
–
–
(959)
120
23,526
37,326
1,649
–
(1,426)
(119)
16
120
–
–
–
–
19,285
2,565
(11,241)
–
631
11,240
4,727
–
–
(471)
120
15,496
24,341
3,703
(214)
–
1,736
29,566
3,429
–
–
(883)
32,112
2,473
972
62,296
11,843
(344)
(13,225)
–
291
3,392
354
(2,316)
(127)
1,303
2,473
216
(140)
3,235
64,009
2,032
(2,316)
(1,450)
62,275
47,748
6,484
(344)
(13,225)
–
303
2,648
1,100
(2,316)
–
(129)
1,303
(119)
2,686
43,574
9,256
(2,316)
–
(1,483)
49,031
–
–
8,030
10,972
5,214
8,719
–
744
13,244
20,435
All research and development costs were expensed in the current and prior year.
238 |
kinandcarta.com
Building a world that works better for everyone
| 239
Financial StatementsNotes to the consolidated financial statements continued 18. Goodwill and other intangible assets (continued)
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. Customer relationships and proprietary techniques are disclosed below.
Customer relationships
Kin and Carta Data
Melon
Loop
Cascade
Remaining amortisation
period (months)
at 31 July 2023
33
21
19
5
2023
£’000
1,539
4,574
1,569
348
8,030
2022
£’000
–
6,988
2,732
1,252
10,972
Customer relationships relating to Kin and Carta Data arose in the context of the acquisition in the current year as
detailed in note 12.
Proprietary techniques
Solstice
Spire
The App Business
AmazeRealise
Trademarks
Melon
Remaining amortisation
period (months)
at 31 July 2023
19
-
30
7
Remaining amortisation
period (months)
at 31 July 2023
–
2023
£’000
1,629
–
3,074
511
5,214
2023
£’000
–
–
2022
£’000
2,820
211
4,301
1,387
8,719
2022
£’000
744
744
Trademarks from the acquisition of Melon in 2022 were fully amortised during the FY23 year. The trademark
recognised on the acquisition of Kin and Carta Data of £0.4 million was fully amortised within the year.
19. Contingent and deferred consideration payable
The fair value of contingent and deferred consideration is calculated based on the amounts expected to be paid,
determined by reference to forecasts of future performance of the acquired businesses and the probability of
contingent events, including employment service conditions for the recipients.
The valuation methods of the Group’s contingent consideration carried at fair value are categorised as Level 3.
Level 3 financial assets and liabilities are considered to be the most illiquid. Their values have been estimated
using available management information, including subjective assumptions. There are no individually significant
unobservable inputs used in the fair value measurement of the Group’s contingent consideration as at
31 July 2023.
The table below reconciles the movements in the portion of consideration payable recorded under liabilities.
2023
£’000
2022
£’000
Contingent
Deferred
Total
Contingent
Deferred
Balance at 1 August
8,250
849
9,099
1,888
Charges for contingent
consideration required to be
treated as remuneration¹
Reclassification of contingent
consideration deemed as
remuneration from equity to
liabilities
Credits for consideration related
to acquisitions²
Payments³
Currency movements
Balance at 31 July
Current
Non-current
Total
4,320
10,623
–
(14,537)
(229)
8,427
4,849
3,578
8,427
–
–
(40)
(673)
(4)
132
106
26
132
4,320
6,005
10,623
(40)
(15,210)
(233)
8,559
4,955
3,604
8,559
–
–
–
357
8,250
6,346
1,904
8,250
–
–
–
849
–
–
Total
1,888
6,005
–
849
–
357
849
9,099
598
251
849
6,944
2,155
9,099
1 The total charge for the period, recorded as an adjusting item in the Consolidated Income Statement, is £9.9 million. Of this, £4.3 million is recorded as a liability and
£3.9 million recorded within equity. The remaining £1.7 million relates to the derivative, which economically hedged the currency exposure on deferred payments for the
Cascade Data Labs acquisition.
2 Relates to £0.1 million in respect of additional cash consideration in the year for the Melon acquisition in May 2022, netted against deferred consideration adjustments
credits relating to prior period acquisitions.
3
In addition to the £15.2 million noted above, £1.7 million was paid in respect of a derivative, which economically hedged the currency exposure on deferred payments for
the Cascade Data Labs acquisition.
240 |
kinandcarta.com
Building a world that works better for everyone
| 241
Financial StatementsNotes to the consolidated financial statements continued 19. Contingent and deferred consideration payable (continued)
Contractual commitments for consideration linked to acquisitions
At 31 July 2023, expected future payments accounted for, in relation to prior and current period acquisitions,
were £8.6 million, of which the entire balance was accrued as a financial liability. This followed a reclassification to
financial liabilities in the current year from the share option reserve within equity, as management now expects that
all future payments in respect of amounts outstanding on past acquisitions will be settled in cash. Further amounts
of £6.6 million, estimated at the exchange rates prevailing at 31 July 2023, are expected to accrue up to FY26 in
respect of past acquisitions, based on assumptions for time and performance vesting conditions.
Accrued charges at 31 July 2023 and estimated future charges to the Consolidated Income Statement in respect of
deemed remuneration for prior acquisitions, valued at the exchange rates prevailing at 31 July 2023, are detailed below:
Balance at 31 July 2023
Expected charged to the
Consolidated Income
Statement:
FY24
FY25
FY26
Total
Cascade
£’000
4,395
Octain
£’000
379
Loop
£’000
716
Melon
Group
£’000
2,469
Kin and
Carta Data
£’000
600
883
120
–
5,398
233
88
–
700
240
55
–
1,011
1,073
180
–
3,722
2,401
1,140
147
4,288
Total
£’000
8,559
4,830
1,583
147
15,119
Estimated future amounts payable for acquisitions, at the exchange rates prevailing at 31 July 2023, are detailed
below:
Period of acquisition
Acquired entity
Expected acquisition payments
FY24
FY25
FY26
Total estimated payments
payable after 31 July 2023
FY21
Cascade
£’000
2,699
2,699
–
5,398
FY22
Octain
£’000
–
700
–
700
FY22
Loop
£’000
FY22
Melon Group
£’000
594
417
–
2,573
1,149
–
FY23
Kin and
Carta Data
£’000
–
2,144
2,144
Total
£’000
5,866
7,109
2,144
1,011
3,722
4,288
15,119
End of final measurement period
Dec 2022
Dec 2024
Dec 2023
Dec 2023
Sep 2024
With the exception of Kin and Carta Data, which is determined in British Pounds, all other payments shown have
been, or will be, determined initially in US Dollars or Euros and are, therefore, subject to future currency fluctuations
when measured in British Pounds. Total amounts for each acquisition are subject to contractual maximum caps set
in British Pounds.
Where amounts payable are dependent on future performance, the figures are based on best estimates of such
performance. Amounts eventually payable may be higher or lower. The estimated maximum amount payable
(based on exchange rates at 31 July 2023) if all businesses were to perform to a level corresponding to their
respective contractual caps, is GBP 22.5 million. The earnout measurement periods, corresponding to the period
of determination of amounts payable based on business performance metrics, and excluding employment service
conditions on seller recipients, are still running for all acquisitions other than Cascade, and will come to an end on
the dates shown above. Extended employment service conditions means that vesting extends beyond those dates
19. Contingent and deferred consideration payable (continued)
for a portion of the amounts shown. Amounts already paid at completion and contingent amounts, which have
already been settled at 31 July 2023 for the acquisitions noted above, are not included in the table.
In accordance with IFRS 2, amounts related to payments in respect of future contingent payments are recorded
within current liabilities and non-current liabilities at the balance sheet date, based on the current likelihood that all
amounts will be settled in cash, and the vesting periods associated with the contingent consideration amounts.
The Company’s decision to pay in equity or cash is based on considerations of relative earnings dilution, capital
allocation and optimisation of the Group’s bank leverage. Taking into account these factors, in H1 FY23, a decision
was made to settle all amounts 100% in cash for:
•
•
the first instalment of the year two earn out of Cascade Data Labs, corresponding to 50% of the total year two
earn out, which was paid in February 2023
the first earn out for Loop, of which 50% was paid in May 2023, with the remaining 50% payable equally in FY24
and FY25.
•
the first earn out for Melon Group, of which 50% was paid in July 2023, with the remaining 50% payable in FY24
It had been previously assumed at 31 July 2022 that a portion of these amounts, ranging from 60% to 75%
depending on the acquisition, would be equity-settled. Following the decision in H1 FY23 to settle all of the amounts
above 100% in cash, amounts of £6.2 million recorded in equity at 31 July 2022 were reclassified from equity to
current and non-current liabilities at 31 January 2023. In H2 FY23, it was determined that the most likely method of
settlement for future earn outs on the acquisitions shown would be cash, thus in H2 FY23, an additional £4.4 million,
which was recorded in equity at 31 July 2022, was reclassified to current and non-current liabilities, resulting in a
total reclassification for the year of £10.6 million. At 31 July 2023, there are no amounts recorded in equity in respect
of future payments for past acquisitions.
Subsequent to the year end, an amount in respect of the second instalment of the year two earnout for Cascade
Data Labs of GBP 2.7 million was settled in cash.
Although the balance sheet classification at 31 July 2023 reflects what is currently assessed to be the most likely
form of settlement, with the exception of the Cascade Data Labs payment made in September 2023, no final
decision has been made as to the split between equity and cash for settlement of the further remaining earn out
amounts payable for Cascade Data Labs, Melon Group, Loop and Kin and Carta Data, and the Company retains the
option to settle between 60% and 75% of such further amounts payable in shares of Kin and Carta plc, at its sole
discretion. Should the final decision result alternatively in equity settlement, there would be a reclassification from
liabilities to equity.
242 |
kinandcarta.com
Building a world that works better for everyone
| 243
Financial StatementsNotes to the consolidated financial statements continued 20. Other financial assets
Trade and other receivables
Trade receivables
Accrued income (contract assets)
VAT receivable
Other receivables
Prepayments and other assets
2023
£’000
16,023
11,676
156
210
3,367
31,432
2022
£’000
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. Trade
receivables and contract assets included in the balance sheet are shown net of expected credit losses and an
allowance for expected credit notes in respect of service issues, which are recorded against revenue.
Set out below is information about the credit exposure on the Group’s contract assets and trade receivables,
detailing the provision for expected credit loss and credit notes:
As at 31 July 2023
Contract
assets
Total
£’000
Current
£’000
<60 days
£’000
Trade receivables
Days past due
60-89
days
£’000
90-120
days
£’000
Contract assets
and trade
receivables
>120 days
£’000
Total
£’000
Total
£’000
Expected credit loss
rate
Estimated total gross
carrying amount
Provision for expected
credit loss
Provision for credit
notes
Carrying amount per
the balance sheet
As at 31 July 2022
Expected credit loss
rate
Estimated total gross
carrying amount
Provision for expected
credit loss
Provision for credit
notes
Carrying amount per
the balance sheet
244 |
2.0%
4.3%
4.6%
3.0%
2.6%
70.4%
5.9%
4.3%
11,915
13,358
3,506
233
152
422
17,671
29,586
(239)
(568)
(161)
–
(451)
(119)
(7)
(8)
(4)
(5)
(297)
(1,037)
(1,276)
(28)
(611)
(611)
11,676
12,339
3,226
218
143
97
16,023
27,699
Contract
assets
Total
£’000
Current
£’000
<60 days
£’000
Trade receivables
Days past due
60-89
days
£’000
90-120
days
£’000
>120 days
£’000
Total
£’000
2.6%
7.8%
5.6%
3.0%
3.9%
14.1%
6.9%
Contract assets
and trade
receivables
Total
£’000
5.5%
15,602
17,998
9,373
1,610
395
718
30,094
45,696
(407)
(1,397)
(526)
(49)
(15)
(101)
(2,088)
(2,495)
–
(842)
–
–
–
(66)
(908)
(908)
15,195
15,759
8,847
1,561
380
551
27,098
42,293
20. Other financial assets (continued)
The movement in the allowance for expected credit losses of trade receivables and contract assets, and provisions
for expected credit notes against revenue in respect of service and other client issues, is as follows:
Balance at 1 August
Additional provisions
Arising through acquisitions
Disposal of businesses
Unused amounts reversed
Utilised during the year
Currency movements
Balance at 31 July
2023
£’000
2022
£’000
Expected
credit losses
Provision for
credit notes
Expected
credit losses
Provision for
credit notes
(2,495)
(348)
(908)
(1,533)
–
–
1,527
45
(5)
(1,276)
–
–
–
1,802
28
(611)
(2,164)
(371)
(209)
27
249
–
(27)
(2,495)
(11)
(841)
(7)
–
–
11
(60)
(908)
The reversal of unused amounts during the year arises primarily as a result of the decrease in the gross trade
receivables balance and an improvement in the ageing profile of receivables.
Cash and cash equivalents
Cash and cash equivalents
2023
£’000
9,847
2022
£’000
12,609
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.
21. Derivative financial instruments
Derivative financial assets
Forward foreign currency contracts
Derivative financial liabilities
Forward foreign currency contracts
2023
£’000
31
2023
£’000
–
2022
£’000
2
2022
£’000
454
All forward foreign currency contracts are designated and effective as hedging instruments. Further disclosures can
be found under note 29.
kinandcarta.com
Building a world that works better for everyone
| 245
Financial StatementsNotes to the consolidated financial statements continued 22. Trade and other payables
25. Provisions
Trade payables
Accruals for goods and services
VAT payable
Employee related taxes
Other employee-related liabilities
Other payables
2023
£’000
3,249
6,181
2,026
1,410
10,449
219
23,534
2022
£’000
4,693
7,713
2,033
1,411
16,632
486
32,968
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
23. Loans and borrowings
Non-current liabilities
Bank loans– revolving credit facility
2023
£’000
29,815
29,815
2022
£’000
13,148
13,148
Bank loans – revolving credit facility
The Group’s revolving multi-currency credit facility of £85.0 million is committed to 26 September 2026. Up to
£10.5 million can be drawn as an overdraft facility. As at 31 July 2023, interest on loan drawdowns is charged at a
currency-specific interbank reference rate (SOFR/SONIA) plus a margin, which is linked to the leverage ratio of the
Group, calculated on 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 are charged at an average rate of 2.00% (2022: 2.00%)
over the UK base rate.
At 31 July 2023, the Group’s outstanding loans within this facility were £29.8 million (2022: £13.1 million), leaving an
unutilised commitment of £55.2 million (31 July 2022: £71.9 million).
The Directors consider that the carrying amount of the loans approximates to their fair value.
Changes in loans and borrowings in the year were as follows:
2022
£’000
Drawdown
£’000
Acquisition
£’000
Repayment
£’000
Foreign
exchange
gains
£’000
2023
£’000
13,148
26,672
421
(8,809)
(1,617)
29,815
Bank loans – revolving credit
facility
24. Deferred income
Deferred income (contract liabilities)
For further information on deferred income, refer to note 3.
Provision for
repairs
£’000
Provision for
reorganisation
£’000
225
1,021
41
–
–
–
–
1,287
1,012
275
1,287
4,458
6,037
–
(5,188)
(4,228)
51
(158)
972
972
–
972
Provision
for client
disputes and
litigation
£’000
–
4,903
–
(4,903)
–
–
–
–
–
–
–
Total
£’000
4,683
11,961
41
(10,091)
(4,228)
51
(158)
2,259
1,984
275
2,259
Balance at 1 August 2022
Charged to the Consolidated Income Statement
Acquisition of businesses
Utilised during the year
Unused amounts reversed
Notional interest charge on provisions
Currency movements
Balance at 31 July 2023
Current
Non-current
Total
Provision for repairs
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 FY24 and FY26. Also included are provisions for Kin and Carta’s obligations as a lessor to
reimburse certain tenant maintenance costs under the lease in respect of the investment property, which are
classified as current.
Provision for reorganisation
The provision for reorganisation comprises staff redundancy, onerous property and other costs. The provision will
be utilised when the restructuring completes or where the obligations associated with onerous properties are fully
discharged.
Provision for client disputes and litigation
The provision for client disputes and litigation during the year related to settlements payable to two clients, as
detailed in note 7. These were provided for at H1 FY23 and paid during H2 FY23.
26. Deferred tax
Deferred tax assets and liabilities are offset against each other when they relate to income taxes levied by the same
tax jurisdiction and when the Group intends, and has the legally enforceable right, to settle its current tax assets
and liabilities on a net basis. Deferred tax assets and liabilities are classified in the Consolidated Balance Sheet as
follows:
2023
£’000
3,479
2022
£’000
5,159
Deferred tax assets
Deferred tax liabilities
1 The 31 July 2022 balance sheet has been restated in respect of a change in accounting policy for investment property to move from a cost model to a fair value model, which
has been applied retrospectively. Following the change, the basis for the valuation of deferred tax changed to assume a sales scenario. Refer to note 1 for further details.
2023
£’000
(4,678)
2,196
(2,482)
Restated¹
2022
£’000
(7,625)
10,500
2,875
246 |
kinandcarta.com
Building a world that works better for everyone
| 247
Financial StatementsNotes to the consolidated financial statements continued 26. Deferred tax (continued)
Deferred tax assets and liabilities are measured at the tax rates that are expected to prevail at the point at which
the related temporary differences reverse, based on the manner in which the related assets are expected to be
recovered or liabilities settled. At 31 July 2023, deferred tax balances in the UK are recognised at the UK corporation
tax rate of 25% and balances in the US are recognised at the rate of 28.17%, which includes the federal rate of 21%
and the US state level income tax rates, which vary from 0% to 9.5%.
The Group operates the St Ives Defined Benefit Pension Scheme (the “Scheme”) with assets held in separate
trustee administered funds. The Scheme has a net accounting surplus of £13.0 million (2022: £38.7 million) on an
IAS 19 basis. The Company expects to recover this asset through a reduction in future cash contributions payable
to the Scheme, reducing the UK corporation tax deductions associated with such contributions. Accordingly, the
deferred tax liability has been valued at the UK statutory corporation tax rate of 25%.
Deferred tax assets are recognised based on forecasts of future taxable profits that are expected to be available to
offset the reversal of the associated temporary differences, within the Group’s planning horizon of three years.
Unrecognised deferred tax assets
Deferred tax assets have not been realised in respect of the following items because it is not considered probable
that future taxable profits, within the Group’s planning horizon of three years, will be available to offset the reversal
of the associated temporary differences. All of these items have an unlimited life.
US goodwill
Other deductible temporary differences
Capital losses
2023
£’000
2022
£’000
Gross
amount
Estimated
tax benefit
31,062
3,107
18,711
52,880
8,750
875
4,678
14,303
Gross
amount
36,017
–
15,357
51,374
Estimated
tax benefit
10,268
–
3,839
14,107
The deductions in respect of the amortisation of US goodwill for tax are available over a 15-year period. The deferred
tax asset recognised at the balance sheet date is based on the Group’s planning horizon of three years and the
unrecognised amounts above correspond to the potential deductions beyond that time horizon, and they extend
out to 2038. The other deductible temporary differences are in respect of the unrelieved portion of historical
interest costs in the US. These can be carried forward indefinitely and set off against future profits subject to
limitations in individual years, but are unlikely to be utilised within the Group’s three-year planning time horizon.
26. Deferred tax (continued)
The individual movements in deferred tax liabilities/(assets) are as follows:
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
Goodwill
£’000
Acquired
intangible
assets
£’000
Total
£’000
Balance at 1 August
2021 (as reported)¹
Prior year adjustment
(note 1)
Balance at 1 August
2021 (restated)¹
(421)
3,363
(879)
–
(1,300)
3,363
Disposal of businesses
(82)
–
Charge/(credit) to the
Consolidated Income
Statement (restated)¹
Items taken directly to
Other Comprehensive
Income
Items taken directly to
equity
Acquisition-related
233
135
–
–
–
6,210
–
–
–
77
–
77
–
–
–
–
–
–
–
–
–
–
(599)
(1,764)
(3,496)
3,246
406
–
–
–
–
(879)
(599)
(1,764)
(3,496)
3,246
–
–
–
–
(473)
(82)
(103)
(1,525)
(242)
444
(2,015)
(3,073)
–
–
–
–
–
–
–
–
–
(250)
–
–
–
–
–
–
(2,053)
3,074
(744)
347
6,210
(250)
1,021
(478)
Currency movements
(81)
Balance at 31 July
2022 (restated)¹
Charge/(credit) to the
Consolidated Income
Statement
Items taken directly to
Other Comprehensive
Income
Items taken directly to
equity
Acquisition-related
Currency movements
Balance at 31 July
2023
Balances by
jurisdiction:
United Kingdom
United States of
America
Bulgaria
Other
(1,230)
9,708
77
(103)
(2,124) (2,256)
(5,849)
4,652
2,875
1,315
607
24
(1,834)
765
476
601
(2,267)
(313)
–
–
–
146
231
(7,074)
–
–
–
–
–
–
–
(129)
–
–
–
–
–
(13)
170
–
1,045
–
112
–
–
–
350
– (7,203)
–
1,045
507
(158)
507
607
3,241
101
(2,079)
(1,189)
(623)
(4,898)
2,734 (2,482)
208
3,241
101
(1,817)
(1,031)
(240)
–
1,280
1,742
25
–
(2)
231
–
–
–
–
–
–
(262)
(147)
(383)
(4,898)
999 (4,666)
–
–
(1)
(10)
–
–
–
–
455
454
–
(12)
3,241
101
(2,079)
(1,189)
(623)
(4,898)
2,734 (2,482)
1 The 31 July 2022 balance sheet has been restated in respect of a change in accounting policy for investment property to move from a cost model to a fair value model,
which has been applied retrospectively from 1 August 2021. Following the change, the basis for the valuation of deferred tax changed to assume a sales scenario. Refer to
note 1 for further details.
248 |
kinandcarta.com
Building a world that works better for everyone
| 249
Financial StatementsNotes to the consolidated financial statements continued 27. Retirement benefits
Defined contribution schemes
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 £3.6 million (2022: £4.3 million) represents contributions payable
to these schemes by the Group at rates specified in the rules of the schemes. At 31 July 2023, contributions of
£0.6 million (2022: £1.0 million), due in respect of the 2023 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.
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.
A full actuarial valuation of the scheme is carried out every three years by an independent actuary for the Trustee.
The last technical valuation prepared by XPS Pensions Limited, at 5 April 2022, showed a technical surplus of
£5.8 million and determined the cash contributions payable by the Group to April 2025.
The bid value of the scheme’s assets, as at 31 July 2023, 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
Price inflation
Expected rate of salary increases
Rate of pension increases
2023
%
5.10
3.15
nil
3.05
2022
%
3.50
3.15
nil
3.05
The mortality rate assumptions are based on published statistics and adjusted for scheme specific experience
reflecting analysis performed at the time of the trustees’ technical actuarial valuation effective 5 April 2022.
Assumed life expectancies for retirement at the age of 65 are as follows:
Members retiring immediately
Members retiring in 20 years time
2023
Male
20.1
21.3
Female
23.0
24.4
2022
Male
20.7
22.0
Female
23.5
25.0
27. Retirement benefits (continued)
The amount recognised in the Consolidated Balance Sheet in respect of the Scheme is as follows:
Present value of defined benefit obligations
Fair value of scheme assets
Net retirement benefit surplus
2023
£’000
2022
£’000
(245,673)
(302,586)
258,637
12,964
341,334
38,748
The lower surplus is due to a decrease in the value of Scheme assets of £82.7 million, driven primarily by the
reduction in the value of the gilt portfolio, which comprises a large proportion of Scheme assets, following the large
increase in UK gilt yields in the period. This was partially offset by a decrease in the Scheme liabilities of
£56.9 million, driven by increases in the AA corporate bond yield, which is used to discount the Scheme liabilities.
On the basis of the assumptions used in the measurement of the technical liability used to determine statutory
funding levels, the Scheme remains fully hedged against interest rate and long-term inflation rate risk. The technical
liability is discounted using gilt yields rather than AA corporate bond yields.
Amounts recognised in the Consolidated Income Statement, in respect of the Scheme as adjusting items, are as
follows:
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)
2023
£’000
715
10,373
(11,749)
–
(661)
2022
£’000
787
6,510
(6,850)
3,884
4,331
Amounts recognised in the Consolidated Statement of Comprehensive Income, in respect of the Scheme, are as follows:
Net measurement gains – changes in financial assumptions
Net measurement losses – experience adjustments
Net measurement gains– changes in demographic assumptions
Return on assets, in excess of interest income recorded in the Consolidated Income
Statement
2023
£’000
60,217
(11,014)
5,542
2022
£’000
102,115
(11,802)
5,986
(83,040)
(75,964)
(28,295)
20,335
250 |
kinandcarta.com
Building a world that works better for everyone
| 251
Financial StatementsNotes to the consolidated financial statements continued 27. Retirement benefits (continued)
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 £94.6 million (2022: £146.0 million) 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.
Market (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.
A sensitivity analysis of the principal assumptions used to measure the defined benefit pension obligation, as at
31 July 2023, 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.
Discount rate
Price inflation
Assumed life expectancy at age 65
Change in assumption
Reduce by 0.25%
Increase by 0.25%
Increase by 1 year
Increase in present value of
defined benefit obligations
£’000
7,896
4,828
9,007
As 31 July 2023, approximately 35% (2022: 40%) of the plan assets were invested in return-seeking assets, providing
a higher level of return over the long term.
27. Retirement benefits (continued)
Changes in the present value of the Scheme obligations are as follows:
Opening defined benefit obligation
Interest cost
Net measurement gains- changes in financial assumptions
Net measurement gains– changes in demographic assumptions
Net measurement losses – experience adjustments
Benefits paid
Past service cost
Closing defined benefit obligation
2023
£’000
2022
£’000
302,586
400,514
10,373
(60,217)
(5,542)
11,014
6,510
(102,115)
(5,986)
11,802
(12,541)
(12,023)
–
3,884
245,673
302,586
The weighted average duration of the defined benefit obligation is approximately 13 years (2022: 16 years).
The Trust Deed provides the Company with an unconditional right to a refund of any surplus at the end of the
Scheme’s duration. Based on these rights, any net surplus in the UK scheme is recognised in full.
A deferred tax liability of £3.2 million (2022: £9.7 million) has been recognised in relation to the retirement benefit
surplus. The Company expects to recover this asset through a reduction in future cash contributions payable to the
Scheme, reducing the UK corporation tax deductions associated with such contributions. Accordingly, the deferred
tax liability has been valued at the UK statutory corporation tax rate of 25%.
Changes in the fair value of the Scheme assets are as follows:
Opening fair value of scheme assets
Interest income on scheme assets
Return on assets, excluding interest income, recorded in the Consolidated Statement of
Comprehensive Income
Employer contributions
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:
Equity instruments
Government bonds
Other debt instruments
Liability hedging derivatives
Cash
Other
252 |
2023
£’000
341,334
11,749
2022
£’000
419,781
6,850
(83,040)
(75,964)
1,850
3,477
(12,541)
(12,023)
(715)
(787)
258,637
341,334
Value at
31 July 2023
£’000
Value at
31 July 2022
£’000
38,100
164,774
40,330
46,514
190,351
53,701
(13,072)
(8,090)
7,907
20,598
16,944
41,914
258,637
341,334
kinandcarta.com
Building a world that works better for everyone
| 253
Financial StatementsNotes to the consolidated financial statements continued 28. Financial instruments
The financial instruments by category and maturity profile are as follows:
28. Financial instruments (continued)
As at 31 July 2022
Financial assets measured at fair value through profit
or loss
Derivative financial instruments
Financial assets measured at amortised cost
Trade and other receivables
Cash and cash equivalents
Financial liabilities at fair value through profit or loss
Derivative financial instruments
Contingent consideration payable- current
Contingent consideration payable- non-current
Financial liabilities measured at amortised cost
Trade and other payables
Deferred income (contract liabilities)
Loans and borrowings
Lease liabilities- current
Lease liabilities- non-current
Deferred consideration payable- current
Deferred consideration payable- non- current
Note
2023
£’000
2022
£’000
Maturity profile
21
20
20
21
19
19
22
24
23
16
16
19
19
31
2 Less than 12 months
31,432
9,847
45,393 Less than 12 months
12,609 Less than 12 months
–
(454) Less than 12 months
(4,849)
(3,578)
(6,346) Less than 12 months
(1,904) More than 12 months
(25,534)
(32,968) Less than 12 months
(3,479)
(29,815)
(2,574)
(8,193)
(106)
(26)
(5,159) Less than 12 months
(13,148) More than 12 months
(2,806) Less than 12 months
(10,052) More than 12 months
(598) Less than 12 months
(251) More 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 and liabilities at 31 July 2023, based on contractual undiscounted receipts and
payments.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual
undiscounted payments:
At at 31 July 2023
Loans and borrowings
Lease liabilities
Contingent and deferred consideration payable
Deferred income (contract liabilities)
Trade and other payables
Within
one year
£’000
In two to
five years
£’000
After
five years
£’000
–
3,124
4,955
3,479
23,534
35,092
29,815
5,730
3,604
–
–
–
4,281
–
–
–
39,149
4,281
Total
£’000
29,815
13,135
8,559
3,479
23,534
78,522
Loans and borrowings
Derivative financial instruments
Lease liabilities
Contingent and deferred consideration payable
Deferred income (contract liabilities)
Trade and other payables
Within
one year
£’000
In two to
five years
£’000
After
five years
£’000
–
454
3,507
6,944
5,159
32,968
49,032
13,148
–
11,714
2,155
–
–
27,017
–
–
–
–
–
–
–
Total
£’000
13,148
454
15,221
9,099
5,159
32,968
76,049
29. Financial risk management
The Group is exposed to currency, credit, interest rate and liquidity risks, which arise in the normal course of
business. Derivative financial instruments are used to hedge exposure to fluctuations in foreign exchange rates.
The Group does not trade in financial instruments nor does it engage in speculative derivative transactions.
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. Treasury risk management is
performed at the Group’s head office.
At 31 July 2023, the Group’s borrowings consisted of loan drawdowns under the Group’s revolving multi-currency
credit facility, which 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.
Interest rate management
An analysis of financial assets and liabilities exposed to interest rate risk by currency is set out below:
Financial assets subject to interest rate risk are as follows:
US Dollar
British Pound Sterling
Euro
Argentine Peso
Other
The Group’s financial assets comprise cash and cash equivalents, all of which attract interest.
2023
£’000
4,883
3,026
662
372
904
2022
£’000
10,090
788
924
623
184
9,847
12,609
254 |
kinandcarta.com
Building a world that works better for everyone
| 255
Financial StatementsNotes to the consolidated financial statements continued 29. Financial risk management (continued)
Financial liabilities subject to interest rate risk are as follows:
Sterling bank loans
US Dollar bank loans
2023
£’000
6,500
23,315
29,815
2022
£’000
–
13,148
13,148
The Group’s bank liabilities comprise loan borrowings, which bear interest at floating rates based upon Sterling
SONIA and US Dollar SOFR, and overdraft borrowings, which bear interest at floating rates based upon the UK bank
base rate. The Group’s lease liabilities are not subject to interest rate risk.
Interest rate sensitivity analysis
The analysis shows the additional charge to profit before tax in the Consolidated Income Statement that would have
arisen if the amount of the loan liabilities outstanding at the respective balance sheet dates were outstanding for
the entire duration of the respective periods.
Assumed Sterling SONIA change of 1%
Assumed US Dollar SOFR change of 1%
2023
£’000
65
233
2022
£’000
–
131
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 currency risk management
The Group faces foreign currency risk on its exposures on 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 denominated 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.
Foreign currency sensitivity analysis
29. Financial risk management (continued)
The following table shows the estimated effect a 10% adjustment of the British Pound Sterling against the US Dollar
and the Euro would have on Group profit before tax and equity. This sensitivity relates to the impact of retranslation
of entities with a presentation currency of the US Dollar or Euro (including entities that have currencies pegged to
the US Dollar/Euro). A positive number below shows a gain/increase in equity and a negative shows a loss/reduction
in equity.
31 July 2023
USD (10% movement)
Euro (10% movement)
31 July 2022
USD (10% movement)
Euro (10% movement)
Profit or loss
Equity
Strengthening
Weakening Strengthening
Weakening
272
418
(165)
121
(272)
(418)
165
(121)
(1,365)
469
(1,560)
180
1,365
(469)
1,560
(180)
Forward foreign exchange contracts
The Group enters into forward foreign exchange contracts to cover specific foreign currency payments and
receipts. Forward foreign exchange contracts have been used to hedge the exchange rate risk arising from these
commitments, some of which are designated as cash flow hedges. As at 31 July 2023, 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 £30,642. The receipts for intercompany
recharges have been settled since the balance sheet date.
The following table details the forward currency contracts outstanding at the period end:
Buy British Pounds, sell US Dollars (up to 12 months)
1.26
1,891
1,500
1,469
Average contracted
exchange rate
British Pounds: US
Dollars
US Dollars
$’000
Contract
value
£’000
Notional
value
£’000
The following key exchange rates against British Pound Sterling were applied in the financial statements:
Credit risk management
US Dollar
Euro
2023
2022
Average
rate
Year end
rate
Average
rate
Year end
rate
1.21
1.15
1.29
1.17
1.32
1.18
1.22
1.19
The Group’s principal financial assets are bank and cash balances, trade and other receivables and a limited number
of derivatives held to hedge certain Group exposures. These represent the Group’s maximum exposure to credit risk
in relation to financial assets.
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss
to the Group. The Group has procedures to manage counterparty risk. The Group evaluates each new customer and
assesses their creditworthiness before any contract is undertaken.
The typical credit period extended to customers is 30 days. The maximum exposure on trade receivables and
accrued income (contract assets), as at the reporting date, is their carrying value. Credit approvals and other
monitoring procedures are also in place to ensure that follow-up action is taken to recover overdue debts on an
ongoing basis. The Group’s credit risk is limited as the Group maintains credit insurance up to a maximum aggregate
claim in any one year of £7.5 million with an aggregate annual deductible of £0.3 million, of which 90% is insured
over the deductible, subject to certain conditions on individual customers. The ageing of trade receivables that
were past due but not impaired, is shown in note 20.
256 |
kinandcarta.com
Building a world that works better for everyone
| 257
Financial StatementsNotes to the consolidated financial statements continued 29. Financial risk management (continued)
Consideration of expected credit losses
At each reporting date, the Group reviews the estimated recoverability of trade receivables (including contract
assets) on an ageing basis and provides against expected unrecoverable amounts. Experience has shown the level
of historical losses to be relatively low. Credit loss provisioning reflects past experience, economic factors and
client-specific conditions. The Group’s estimated exposure to credit risk for trade receivables and contract assets
is disclosed in note 20 and the detailed accounting policy in note 2.
Liquidity risk management
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, committed
until September 2026. Up to £10.5 million of this facility can be drawn as an overdraft facility. The contractual
maturities of drawn down borrowings are between one and three months, as 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 a currency-specific reference interbank rate (SOFR for loans drawn in
US Dollars or SONIA for loans drawn in Pounds Sterling) plus a margin, which is linked to the level of leverage (the
ratio of net debt to adjusted EBITDA for bank purposes). The margin charged to by our lenders on bank borrowings
throughout 2023 was 1.7%. Interest on overdraft drawdowns is charged at a rate of 2.00% (2022: 2.00%) over the
UK base rate.
The Group is subject to bank covenants on its borrowings, 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 year end, the Group’s leverage ratio for bank covenant purposes was 1.04 times (2022: 0.01 times) against a
maximum limit of 2.5 times, and interest cover was 10.5 times (2022: 18.5 times) against a minimum of four times.
The Group has fully complied with the requirements of these covenants during the year and expects to continue
to do so.
30. Share capital
Issued and fully paid:
Balance at 1 August 2021
Issued during the period
Balance at 31 July 2022
Issued during the period
Balance at 31 July 2023
Ordinary
shares of 10p
each
£’000
Number of
shares
172,545,721
5,414,958
177,960,679
61,318
17,255
542
17,797
6
178,021,997
17,803
All authorised and issued share capital is represented by equity shareholdings. During the period, 61,318 shares
were issued to satisfy share options exercised under the SAYE scheme. These shares were issued at a premium
of £44,983.
31. Additional paid-in capital
Balance at 1 August 2021
Reclassification to retained earnings
Shares issued during the period
Balance at 31 July 2022
Shares issued during the period
Balance at 31 July 2023
Share
premium
£’000
76,085
–
303
76,388
45
76,433
Merger
reserve
£’000
9,190
(5,357)
7,843
11,676
–
11,676
Capital
redemption
reserve
£’000
1,238
–
–
1,238
–
1,238
Total
£’000
86,513
(5,357)
8,146
89,302
45
89,347
The additional paid-in capital includes share premium, merger reserve and capital redemption reserve.
The merger reserve arises from acquisitions made in prior periods. During the prior year, 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 prior period related to the share
premium on share issues for consideration as part of the acquisitions of Loop and Melon Group of £0.6 million and
£7.2 million, respectively.
The capital redemption reserve represents the purchase by the Company of Kin and Carta plc ordinary shares in
prior periods.
Additional details of the shares issued in respect of the SAYE scheme are detailed in note 30.
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:
• The 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 as at 31 July 2023 (31 July 2022: 90,637 shares). In addition, 4,660,263 Kin and Carta plc
ordinary shares (31 July 2022: 2,489,665 shares) were held by the EBT as at 31 July 2023. All shares held in the
EBT are expected to be used to settle awards vesting in the 24 months following the balance sheet date
• The share option reserve, which includes the cumulative charge related to the unvested options granted to
Group’s employees of Kin and Carta plc ordinary shares
• The 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
258 |
kinandcarta.com
Building a world that works better for everyone
| 259
Financial StatementsNotes to the consolidated financial statements continued Notes to the consolidated
financial statements
continued
33. Share-based payments
The Company operates a number of equity-settled share-based payment schemes for certain employees of the
Group.
Long-term Incentive Plan 2010 (“LTIP”)
Executive Directors and employees above a certain band level have been granted nil-cost share options under
the Company’s LTIP programme, as determined by the Remuneration Committee. The options cannot generally be
exercised within the three-year vesting period. For UK participants, awards are generally required to be exercised
within seven years of vesting. For US participants, exercising is automatic at the point of vesting. The options may be
settled by the issue of new shares or by the allocation of shares from the Company‘s Employee Benefit Trust (“EBT”).
The specific performance conditions are detailed further in 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
2023
‘000
2022
‘000
7,591
4,236
(3,046)
(1,824)
6,957
409
73%
7,475
2,745
(1,324)
(1,305)
7,591
210
68%
The fair value of the options granted in the current period under the LTIP scheme 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 at grant (pence)
LTIP
2.26
£nil
3 years
47.66%
2.00%
0.03%
2.25
33. Share-based payments (continued)
CSOP Incentive
Certain employees were granted share options at market value under the Company’s LTIP programme, as
determined by the Remuneration Committee, on 4 September 2020. These options vested on 4 September 2023.
For the UK participants, CSOP options were granted, which have UK personal income tax advantages pursuant to the
provisions of Schedule 4 to the Income Tax (Earnings and Pensions) Act 2003. Participants have seven years from
the date of vesting to exercise these market value options. The options may be settled by the issue of new shares or
by allotment from the EBT.
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 the next three years
2023
‘000
2,145
–
(567)
–
1,578
–
100%
The fair value of the options granted in the prior period under the CSOP scheme 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)
2022
‘000
3,124
–
(785)
(194)
2,145
–
87%
CSOP
0.67
0.67
3 years
52.48%
2.00%
0.03%
0.22
260 |
kinandcarta.com
Building a world that works better for everyone
| 261
Financial Statements Notes to the consolidated
financial statements
continued
33. Share-based payments (continued)
Save As You Earn Share Option Plan (“Sharesave Plan”)
The Company has granted share options to eligible employees under an HMRC-approved all-employee Sharesave
Plan. Employees who participate enter into a savings contract under which they agree to save between £5 and £350
per month (or such limit as may be permitted by the tax legislation governing SAYE schemes from time to time) for
three years. Options cannot be ordinarily exercised within the three years and must be exercised within 12 months
of the end of the three-year period. Options ordinarily are forfeited if the employee leaves the Group before the
options vest. There are no cash settlement alternatives.
A reconciliation of the movement in the share options is shown below:
Number of options
Weighted average
exercise price
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
2023
‘000
465
914
(404)
(61)
914
46
2022
‘000
251
426
(82)
(130)
465
46
2023
2.18
0.80
2.25
–
0.80
–
Estimated % of options vesting in the future years
100%
100%
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)
Employee Share Purchase Plan (“ESPP Plan”)
2022
0.83
2.33
0.83
0.83
2.18
–
SAYE
0.66
0.80
3 years
47.66%
2.00%
0.03%
0.17
The Company has granted share options to eligible employees under an Employee Share Purchase Plan. Details of
the plan are included in the Directors’ Remuneration Report.
A reconciliation of the movement in the related 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
Estimated % of options vesting in the future years
Number of options
Weighted average
exercise price
2023
‘000
138
122
(260)
–
–
–
0%
2022
‘000
161
148
(47)
(124)
138
–
93%
2023
2.72
2.00
2.38
–
–
–
2022
0.92
2.46
0.92
0.94
2.72
–
33. Share-based payments (continued)
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 current period under the ESPP scheme 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 at date of grant (pence)
ESPP
2.35
2.00
1 year
47.66%
2.00%
0.00%
0.63
The options outstanding at 31 July 2023 had an exercise price in the range of £nil to £0.80 (2022: £nil to £2.46) and
a weighted-average contractual life of 1.44 years (2022: 1.35 years).
Share-settled bonus payments
A limited number of US staff received a portion of their bonus linked to substantial out performance for the FY23
year in the form of fully vested shares in Kin and Carta plc. The number of shares used to settle was calculated
based on the average price of £0.86. The related charge included within trade and other payables at 31 July 2023 is
£0.3 million (2022: £nil).
Share-based contingent consideration required to be treated as remuneration
The Group recognised a charge for share-based payments of £3.9 million (2022: £7.7 million) relating to contingent
consideration for acquisitions, which is recorded as part of deemed remuneration within adjusting items (note 7)
under the Americas, Europe and Melon reporting segments.
Share-based payment expense
The Group recognised a total expense in the profit and loss of £3.7 million in the current year (2022: charge of
£3.4 million) relating to equity-settled share-based payments other than in the context of acquisitions. Of this
amount, £3.1 million (2022: £3.1 million) has been recognised as an expense in the share-based payment reserve,
the remaining expense relates to employer tax national insurance and social security contributions associated with
share-based payments and amounts in respect of the share-settled bonus payments. The exercise price of options
outstanding at 31 July 2023 ranges between £nil and £2.45.
262 |
kinandcarta.com
Building a world that works better for everyone
| 263
Financial Statements Notes to the consolidated
financial statements
continued
34. Hedging and translation reserves
Hedging reserve
The hedging 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.
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
Translation reserve
2023
£000
–
2022
£000
(39)
The translation reserve comprises foreign currency differences arising from the translation into British Pounds of the
financial statements of Group entities whose functional and reporting currency is other than British Pounds.
35. Investment in joint arrangement
Balance at 1 August
Disbursement from joint arrangement
Share of results of joint arrangement
Disposal
Currency movements
Balance at 31 July
2023
£000
–
–
–
–
–
–
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. In the prior year, the Group acquired the
remaining 50% of the interest in Loop. Following the purchase of the remaining interest, the results of Loop were
fully consolidated in the Group’s results.
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 year, 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 year.
Remuneration of key management personnel
The remuneration of the Executive and Non-Executive Directors, who are the key management personnel of the
Group, is set out below in aggregate for each of the categories specified in IAS 24 ‘Related Party Disclosures’.
Short-term employee benefits (emoluments)
Post-employment benefits (pension contributions)
Gains on exercise of share awards
Share-based payment charge
2023
£000
1,115
38
1,264
547
2,964
2022
£000
1,640
73
940
623
3,276
Highest paid Director
Remuneration of the highest paid Director was £0.5 million (2022: £1.6 million), including pension contributions
of £0.02 million (2022: £0.06 million). The highest paid Director exercised 125,000 share options in the year
(2022: 287,061).
Further information about the remuneration of individual Directors is provided in the Directors’ Remuneration Report.
Aggregate Executive Directors’ remuneration
Short-term employee benefits (emoluments)
Post-employment benefits (pension contributions)
Gains on exercise of share awards
Share-based payment charge
2023
£000
806
38
1,264
547
2,655
2022
£000
1,360
73
940
623
2,996
Two Directors (2022: two) received part payment into a Group Personal Pension Plan and part payment as cash in
lieu of pension. Two Directors exercised share options during the year (2022: two).
At 31 July 2023, 60,700 ordinary shares of Kin and Carta plc were held by close family members of Chris Kutsor, one
of the Executive Directors (2022: nil).
264 |
kinandcarta.com
Building a world that works better for everyone
| 265
Financial Statements Notes to the consolidated
financial statements
continued
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 2023.
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 as at 31 July 2023, and their results are fully consolidated into the
Group’s Financial Statements.
As of 31 July 2023, the subsidiary undertakings were as follows:
Subsidiaries
Cascade Data Labs, 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 Tehnologii DOOEL Skopje
Solstice Consulting LLC
Solstice Mobile Argentina Srl
SpireMedia, Inc.
Kin and Carta Services UK Limited
Kin and Carta Colombia Holdings S.A.S
Kin and Carta Group Limited
Kin and Carta Americas Holdings LLC
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 Services LLC
Solstice Consulting Argentina LLC
Solstice Consulting Latin America LLC
Kin and Carta Services Bulgaria EOOD
Kin and Carta Data Holdings Limited
Kin and Carta Data Limited
Kin and Carta Data Poland Sp. Z.o.o.
Non-trading subsidiaries
Kin and Carta Advisory LLC
Kin + Carta Limited
Pollen Health (US) LLC
St Ives Pension Scheme Trustees Limited
Note
g
i
k
l, m
a
d, m
c
a
b, m
h
j
d, m
e
f, n
a
k
a
b, m
a
b, m
Place of incorporation
United States of America
Kosovo
Colombia
Greece
England and Wales
United States of America
Scotland
England and Wales
United States of America
Bulgaria
North Macedonia
United States of America
Argentina
United States of America
England and Wales
Colombia
England and Wales
United States of America
England and Wales
United States of America
b, m
United States of America
b, m
United States of America
b, m, o United States of America
United States of America
b, m
United States of America
b, m
Bulgaria
h
Scotland
c
Scotland
c
Poland
p
Place of incorporation
Note
United States of America
b, m
England and Wales
a
United States of America
b, m
England and Wales
a
Nature of business
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Digital Transformation
Holding company
Holding company
Holding company
Treasury company
Provision of management
services
Provision of management
services
Holding company
Holding company
Holding company
Holding company
Shared service centre
Holding company
Digital transformation
Digital transformation
Nature of business
37. List of undertakings (continued)
a. Registered office: The Spitfire Building, 71 Collier Street, London N1 9BE
b. Registered office: 251 Little Falls Drive, Wilmington DE 19808, United States
c. Registered office: Second Floor, 132 Princes Street, Edinburgh EH2 4AH, Scotland. On 22 September 2022,
Kin and Carta Scotland Limited’s registered office address changed from Exchange Tower, 19 Canning Street,
Edinburgh EH3 8EH.
d. Registered office: 801 Adlai Stevenson Dr, Springfield IL 62703-4261, United States
e. Registered office: Avenida Cabildo 1507, Piso 10, Ciudad Autonoma de Buenos Aires, Argentina. On 3 April 2023,
Solstice Mobile Argentina Srl’s registered office address changed from Solstice Argentina, Aguirre 1169, Ciudad
Autonoma de Buenos Aires, Argentina.
f. Registered office: 1900 W. Littleton Boulevard, Littleton CO 80120, United States
g. Registered office: 1127 Broadway Street NE, Suite 310, Salem OR 97301, United States
h. Registered Office: Sofia 1113, Slatina district, 20 Kosta Lulchev Street, 3rd floor, Bulgaria
i. Registered Office: Bekim Fehmiu Str. Arting Building, 5th Floor, Pristina, Kosovo
j. Registered Office: 1737 Street no. 32, Municipality Centar, Skopje, Macedonia
k. Registered Office: Carrera 7 No. 71-52, Torre-B Piso 10, Bogotá, Colombia. On 27 June 2023, Kin and Carta
Colombia S.A.S’s and Kin and Carta Colombia Holdings S.A.S’s registered office address changed from Carrera 16
#97 Piso 8 Bogotá, 97-46 Edificio Torre, 97 Piso 8, Bogotá, Colombia Barrio Chicó, Colombia.
l. Registered Office: 62 Kifissias Avenue, Maroussi, 15125, Athens, Greece
m. Membership interest
n. Class A Common Stock
o. On 18 October 2022, Kin and Carta Marketing Services (Delaware) LLC changed its name to Kin and Carta
Services LLC.
p. Registered Office: Rzeznicza, No 28, Wroclaw, p.c. 50130, Poland
38. Contingent assets
At 31 July 2023, the Group identified one contingent asset. This related to an insurance claim to reimburse in full
the settlement costs paid in H2 FY23 in relation to a client dispute arising in the year, as detailed further in note 7.
At the year end, the claim was being reviewed by the insurers and as such the outcome and amount was uncertain.
In accordance with IAS 37, the amount has not been recognised in the Group Financial Statements at 31 July 2023.
Following the end of year, and before the approval of these financial statements, the Group’s insurers agreed to
reimburse in full the settlement cost. Insurance proceeds of £3.3 million are expected to be received before the end
of the half year FY24. There were no contingent assets identified as at 31 July 2022.
39. Post-balance sheet events
As noted above, after the year end, the Group’s insurers agreed to reimburse in full the settlement costs paid in H2
FY23 in respect of a client dispute arising in the year, as detailed further in note 7. The insurance proceeds of £3.3
million are expected to be received before the end of the half year FY24 and will be recorded as an adjusting item in
the Consolidated Income Statement in FY24 within the Americas segment.
On 18 October 2023, it was announced that the boards of directors of Kelvin UK Bidco Limited (‘Bidco’), a newly
formed company owned indirectly by funds advised by Apax Partners LLP (‘Apax’), and Kin + Carta had reached
agreement on the terms and conditions of a recommended cash offer made by Bidco to acquire the entire issued
share capital of Kin + Carta (the ‘Acquisition’). The Acquisition is conditional inter alia on approval by the Company’s
shareholders and certain regulatory approvals. Completion of the Acquisition is currently expected to take place in
the first quarter of 2024.
266 |
kinandcarta.com
Building a world that works better for everyone
| 267
Financial Statements Company balance sheet
Company number 01552113
Company statement of
changes in equity
Assets
Tangible assets
Investment property
Investments
Retirement benefit surplus
Non-current assets
Trade and other debtors
Cash and bank balances
Derivative financial instruments
Current assets
Liabilities
Trade and other creditors
Provisions
Derivative financial instruments
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Bank loans
Deferred taxation
Creditors: amounts falling due after more than one year
Net assets
Capital and reserves
Share capital
Share premium account
Other reserves
Profit and loss account
Total equity
Note
5
7
8
13
9
10
11
14
10
12
16
15
15
15
31 July
2023
£’000
52
4,790
181,857
12,964
Restated¹
31 July
2022
£’000
111
4,790
203,853
38,748
199,663
247,502
4,291
4,573
31
8,895
(7,107)
(1,000)
–
(8,107)
788
12,062
2,492
2
14,556
(7,524)
–
(454)
(7,978)
6,578
200,451
254,080
(6,500)
(1,089)
(7,589)
–
(8,553)
(8,553)
192,862
245,527
17,803
76,433
7,034
91,592
17,796
76,389
19,185
132,157
192,862
245,527
1 The Company Balance Sheet at 31 July 2022 has been restated in respect of investment property following a change in accounting policy to move from a cost model to a
fair value model, which has been applied retrospectively. Refer to note 1 for further details.
As permitted by section 408 of the Companies Act 2006, the Parent Company has elected not to present its own
profit and loss account for the year. The loss for the financial year for the Company was £20.4 million (2022 restated
profit: £35.3 million).
These Financial Statements were approved by the Board of Directors and authorised for issue on 1 November 2023.
They were signed on its behalf by:
Kelly Manthey
Chief Executive Officer
Chris Kutsor
Chief Financial Officer
Chief Operating Officer
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
£
’
e
v
r
e
s
e
r
r
e
g
r
e
M
0
0
0
£
’
76,085 9,190
–
–
76,085 9,190
–
–
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
£
’
1,238
–
1,238
–
–
–
–
189
352
–
–
–
Balance at 1 August 2021 (as reported) 17,255
Prior year adjustment (note 1)
–
17,255
Balance at 1 August 2021 (restated)
Profit for the year (restated)
–
Actuarial gain on defined benefits
pension scheme
Total comprehensive income
Dividends paid
Shares issued to settle consideration
for acquisitions
Shares issued to settle employee share
options
Purchase of own shares by Employee
Benefit Trust
Settlement of share-based payment
using own shares
Recognition of share-based payments
in respect of employee share schemes
Recognition of share-based
contingent consideration deemed as
remuneration for a subsidiary
Tax on share-based payments
Reclassification to retained earnings
Balance at 31 July 2022 (restated)
Loss for the year
Other comprehensive income
Actuarial loss on defined benefits
pension scheme net of tax
Total comprehensive expense
Dividends paid
Shares issued to settle employee share
options
Purchase of own shares by Employee
Benefit Trust
Reclassification of share-settled
amount from liabilities
Recognition of share-based payments
in respect of employee share schemes
Recognition of share-based
contingent consideration deemed as
remuneration
Reclassification of contingent
consideration deemed as
remuneration from equity to liabilities
Tax on share-based payments
Reclassification to retained earnings²
–
–
–
17,796
–
–
–
–
–
–
–
–
–
7
–
–
–
17,803
–
–
–
–
–
–
– 7,843
304
–
–
–
–
–
–
–
–
–
–
– (5,357)
76,389 11,676
–
–
–
–
–
–
–
44
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
e
v
r
e
s
e
r
P
O
S
E
0
0
0
£
’
(68)
–
(68)
–
–
–
–
–
(17)
–
–
–
–
–
– (5,593)
–
–
353
–
–
–
–
–
–
–
1,238 (5,325)
–
–
–
–
–
–
–
–
–
–
– 3,872
– (8,395)
–
–
–
–
–
–
362
–
–
–
–
–
n
o
i
t
p
o
e
r
a
h
S
e
v
r
e
s
e
r
0
0
0
£
’
s
e
v
r
e
s
e
r
r
e
h
t
O
0
0
0
£
’
s
s
o
l
d
n
a
t
i
f
o
r
P
¹
t
n
u
o
c
c
a
0
0
0
£
’
0
0
0
£
’
l
a
t
o
T
3,681
–
3,681
–
13,878
–
13,878
–
1,082
75,238 182,456
1,082
76,320 183,538
35,294 35,294
y
r
u
s
a
e
r
T
s
e
r
a
h
s
0
0
0
£
’
(163)
–
(163)
–
–
–
–
–
–
–
–
–
–
–
–
(163)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14,126
14,126
49,420 49,420
(38)
(38)
– 7,843
–
8,195
(1,242) (1,259)
1,098
332
– (5,593)
–
353
3,118
3,118
–
–
–
(5,593)
353
3,118
249
5,953 5,953
249
(5,357)
11,759 19,185
–
–
5,357
5,953
249
–
132,157 245,527
– (20,420) (20,420)
11
11
–
(21,221)
(21,221)
–
– (41,630) (41,630)
(3)
(3)
–
–
–
–
–
–
(1,660) 2,212
(2,211)
52
– (8,395)
–
362
3,128
3,128
–
–
–
(8,395)
362
3,128
–
3,042 3,042
–
3,042
–
–
–
(8,176) (8,176)
(1,045) (1,045)
(3,279) (3,279)
3,769 7,034
(8,176)
–
(1,045)
–
–
3,279
91,592 192,862
268 |
kinandcarta.com
Building a world that works better for everyone
| 269
1 The results for the year to 31 July 2022 have been restated in respect of the restatement of depreciation on investment property following a change in accounting policy to
move from a cost model to a fair value model, which has been applied retrospectively. Refer to note 1 for further details.
2 Following the full vesting in the period of shares, in respect of deferred consideration for the Spire acquisition that were allotted in a prior period, related amounts have
been transferred from the share option reserve to retained earnings.
Balance at 31 July 2023
76,433 11,676
1,238 (9,486)
(163)
Financial Statements
Notes to the Company
financial statements
1. Accounting policies and general information
Kin and Carta plc is a public company limited by shares incorporated and domiciled in the United Kingdom and
registered in England and Wales (company registration number 01552113) under the Companies Act 2006. The
address of the registered office is The Spitfire Building, 71 Collier Street, London N1 9BE.
These Company Financial Statements have been prepared on the going concern basis under the historical cost
convention, 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. The financial
statements are presented in Pounds Sterling as this is the currency of the primary economic environment in which
the Company operates, generally rounded to the nearest thousand, except when otherwise indicated.
Financial Reporting Standard 101 – reduced disclosure exemptions
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework (“FRS 101”). In preparing these financial statements, the Company applies the recognition, measurement
and disclosure requirements of UK-adopted international accounting standards (“Adopted IFRSs”) but makes
amendments where necessary in order to comply with the Companies Act 2006 and has set out below where
advantage of the FRS 101 disclosure exemptions has been taken.
The Company is taking advantage of the following applicable disclosure exemptions permitted by FRS 101 in its
financial statements:
• Cash flow statement and related notes
• Comparative period reconciliations for share capital
• Disclosures in respect of transactions with wholly owned subsidiaries
• The effects of new, but not yet effective, IFRSs
• Disclosures in respect of capital management
As the Consolidated Financial Statements include the equivalent disclosures, the Company has also taken the
exemptions under FRS 101 available in respect of IFRS 2 ‘Share-based Payments’ and certain disclosures required by
IFRS 13 ‘Fair Value Measurement’, and the disclosures required by IFRS 7 ‘Financial Instrument Disclosures’.
The principal accounting policies adopted are the same as those set out in note 2 to the Consolidated Financial
Statements , including the following policies applicable to the Company. The accounting policies set out below,
unless otherwise stated, have been applied consistently to all periods presented in these Financial Statements.
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.
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 that 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 £13.0 million (2022: £38.7 million). A sensitivity analysis can be found in note 27 to
the Consolidated Financial Statements.
1. Accounting policies and general information (continued)
Prior year restatement
IAS 40 permits investment properties to be held at either the cost or fair value model. During the year to 31 July 2023,
there was a change in accounting policy to move from a cost model to a fair value model. The change arose because
management judged that the fair value model was more appropriate as it better reflects the manner of recovery of
value of the asset. The property is well maintained by the current tenant which contributes to sustaining the fair value
of the property. This change in accounting policy has been applied retrospectively from 1 August 2021, being the
beginning of the earliest prior period presented as required by IAS 8.
The previously reported carrying amount at 1 August 2021, under the cost model, was £4.6 million. The fair value,
being the market value as determined by an independent property valuer during July 2023, was £4.8 million. The fair
value thus obtained was also applied as at 1 August 2021 and 31 July 2022 as management’s assessment is that the
fair value would have not been materially different at either date. The difference between the carrying amount as
per the cost model previously adopted and the fair value as at 1 August 2021 is £0.20 million, which is presented in
the profit and loss account within equity as an adjustment to opening equity at 1 August 2021. The difference to the
restatement in the Consolidated Group Accounts of £0.35 million is due to an intra-group profit on the sale of the
property arising in the Company accounts of £0.15 million, which is eliminated on consolidation.
At 1 August 2021, there was a deferred tax liability of £0.88m recognised in respect of the investment property.
Following the change in accounting policy, the treatment assumed basis for the valuation of deferred tax changed
to assume a sales scenario. In line with IAS 12, the change in accounting policy resulted in a deferred tax asset. A full
valuation allowance was taken against the asset. The deferred tax liability was at 1 August 2021 was restated through
the profit and loss account within equity.
These two items result in a total adjustment to equity at 1 August 2021 of £1.08 million. The difference to adjustment
in the Consolidated Group Accounts is due to an intra-group profit on the sale of the property arising in the
Company accounts.
In the prior year to 31 July 2022, £0.27 million depreciation was previously recorded in respect of the investment
property. This has been restated to nil following the accounting policy change. In addition, there was a tax credit
of £0.04 million recorded in the year in respect of deferred tax, which has been restated to nil, resulting in a net
increase in net profit after tax for the prior period of £0.22 million.
Restatement as at and for the prior year ended 31 July 2022
Balance Sheet (extract)
Investment property
Deferred taxation
Net assets
Profit and loss account
Total equity
Profit and loss
Administrative expenses
Income tax charge
Net profit for the year
31 July
2022
(statutory- as
previously
reported)
£’000
Investment
property
accounting
policy change
£’000
31 July
2022
(statutory-
restated)
£’000
4,318
(9,387)
244,221
130,851
244,221
(12,055)
90
35,070
472
834
1,306
1,306
1,306
269
(45)
224
4,790
(8,553)
245,527
132,157
245,527
(11,786)
45
35,294
270 |
kinandcarta.com
Building a world that works better for everyone
| 271
Financial Statements Notes to the Company
financial statements
continued
1. Accounting policies and general information (continued)
Restatement as at 1 August 2021
Balance Sheet (extract)
Investment property
Deferred taxation
Net assets
Profit and loss account
Total equity
1 August
2021
(statutory- as
previously
reported)
£’000
Investment
property
accounting
policy change
£’000
1 August
2021
(statutory-
restated)
£’000
4,587
(2,530)
182,456
75,232
182,456
203
879
1,082
1,082
1,082
4,790
(1,651)
183,538
76,314
183,538
2. (Loss)/profit of the Parent Company
The Company has taken advantage of section 408 of the Companies Act 2006 and, consequently, the Statement of
Comprehensive Income (including the profit and loss account) of the Parent Company is not presented as part of
these accounts. The loss for the financial year for the Company was £20.4 million (2022 restated profit: £35.3 million).
3. Auditors’ remuneration
The auditor’s remuneration for audit and other services is disclosed in note 5 to the Consolidated Financial
Statements.
4. Employee information
The average monthly number of employees (including Executive Directors) was:
Administration
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other pension costs
2023
Number
86
2022
Number
74
2023
£’000
8,149
489
177
8,815
2022
£’000
8,370
432
267
9,069
5. Tangible assets
Cost
At 1 August 2021
Additions
Reclassification from software
At 31 July 2022
Additions
At 31 July 2023
Accumulated depreciation and impairment
At 1 August 2021
Charge for the year
Reclassification from software
At 31 July 2022
Charge for the year
At 31 July 2023
Net book value
At 31 July 2022
At 31 July 2023
6. Intangible assets
Cost
At 1 August 2021
Reclassification to plant and machinery
At 31 July 2022 and 31 July 2023
Accumulated amortisation and impairment
At 1 August 2021
Reclassification to plant and machinery
At 31 July 2022 and 31 July 2023
Net book value
At 31 July 2022 and 31 July 2023
Plant and
machinery
£’000
Total
£’000
–
124
140
264
16
280
–
34
119
153
75
228
111
52
–
124
140
264
16
280
–
34
119
153
75
228
111
52
Software
£’000
Total
£’000
140
(140)
–
119
(119)
–
140
(140)
–
119
(119)
–
–
–
272 |
kinandcarta.com
Building a world that works better for everyone
| 273
Financial Statements Notes to the Company
financial statements
continued
7. Investment property
The investment property is a commercial building in the UK that is leased to a third party. The remaining lease
length is 45 years, with a break clause in April 2025 and every five years thereafter. The break clause in April 2025 is
not expected to be exercised. For further detail, refer to note 17 of the Consolidated Financial Statements.
At 1 August 2021
Cost
Accumulated depreciation
Net book value (as previously reported)
Adjustment to fair value taken to profit and loss reserve
Fair value at 1 August 2021 (restated)
Fair value at 31 July 2022 (restated)
At 31 July 2023
Investment
property
£’000
7,944
3,357
4,587
203
4,790
4,790
4,790
For further details on the restatement, refer to note 1 of the Company Financial Statements.
Rental income of £0.8 million (2022: £0.8 million) in relation to the investment properties has been recorded to the
profit and loss account in the current year.
8. Investments
All of the below are unlisted investments. Details of the Group’s subsidiaries as at 31 July 2023 are listed in note 37
of the Consolidated Financial Statements.
At 1 August 2021
Capital contributions
Impairments
Loan advances
Loan repayments
Currency movements
At 31 July 2022
Capital contributions
Impairments
Reclassifications
Loan advances
Loan repayments
Currency movements
At 31 July 2023
Shares in
subsidiaries
at cost
£’000
Loans to
subsidiaries
£’000
Total
£’000
175,871
60,703
(780)
12,126
103,831
(50,750)
(330)
12,126
(46,992)
(46,992)
2,925
20,810
(6,656)
2,925
203,853
–
–
(12,430)
(1,760)
7,585
(1,760)
7,585
(15,327)
(15,327)
(64)
(64)
72,040
111,453
(450)
–
–
–
183,043
6,656
(12,430)
–
–
–
–
177,269
4,588
181,857
9. Trade and other debtors
Trade debtors
Amounts owed by Group undertakings
Other debtors
Prepayments and accrued income
Corporation tax receivable
2023
£’000
7
2,106
14
1,804
360
4,291
2022
£’000
36
10,054
102
1,870
–
12,062
Amounts owed by Group undertakings are repayable on demand. They are non-interest bearing and unsecured.
Management has assessed that the estimated credit loss on such balances is insignificant and, on this basis, have
not provided for an expected credit loss on this balance.
10. Derivative financial instruments
Derivative financial assets
Forward foreign currency contracts
Derivative financial liabilities
Forward foreign currency contracts
11. Trade and other creditors
Amounts owing to Group undertakings
Trade creditors
Corporation tax payable
Tax and social security
Other creditors
Accruals and deferred income
2023
£’000
31
2023
£’000
–
2023
£’000
2,474
614
–
243
827
2,949
7,107
2022
£’000
2
2022
£’000
454
2022
£’000
1,248
720
92
227
2,740
2,497
7,524
Amounts owed by Group undertakings are repayable on demand. They are non-interest bearing and unsecured.
274 |
kinandcarta.com
Building a world that works better for everyone
| 275
Financial Statements Notes to the Company
financial statements
continued
12. Bank loans
Amounts falling due after more than one year
Bank loans
2023
£’000
2022
£’000
6,500
–
15. Called up share capital, share premium account and other reserves
Information on share capital, share premium and other reserves and movements during the year is included in notes
30, 31 and 32 of the Consolidated Financial Statements.
16. Deferred tax
Deferred tax assets and liabilities are classified in the Balance Sheet as follows:
The Company has access to the Group’s revolving multi-currency credit facility of £85 million, which is committed
until September 2026. Up to £10.5 million may be drawn as an overdraft facility. As at 31 July 2023, interest on loan
drawdowns is charged at a currency-specific reference interbank rate (SONIA for Pounds Sterling, SOFR for US
Dollars) plus a margin. The margin is linked to the leverage ratio of the Group calculated on 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 in GBP is charged at an average rate of 2.00% (2022: 2.00%) over the UK base rate.
As at 31 July 2023, the Company had a loan of £6.5 million drawn on the facility (2022: £nil). The Group’s
outstanding loans within this facility are detailed in note 23 of the Consolidated Financial Statements.
Deferred tax assets
Deferred tax liabilities
2023
£’000
(2,279)
3,368
1,089
Restated¹
2022
£’000
(1,310)
9,863
8,553
1 The 31 July 2022 balance sheet has been restated in respect of a change in accounting policy for investment property to move from a cost model to a fair value model, which
has been applied retrospectively. Following the change, the basis for the valuation of deferred tax changed to assume a sales scenario. Refer to note 1 for further details.
13. Retirement benefits
Retirement benefit surplus
2023
£’000
12,964
2022
£’000
38,748
The individual movements in deferred tax liabilities/(assets) are as follows:
Accelerated
tax
depreciation
£’000
Retirement
benefit
obligations
£’000
Revenue tax
losses
£’000
Short-term
timing
differences
£’000
Share
options
£’000
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 IAS 19 ‘Employee Benefits’. The IAS 19
disclosures are included in note 27 of the notes to the Consolidated Financial Statements.
14. Provisions
Balance at 1 August 2022
Charged to the Income Statement
Balance at 31 July 2023
Current
Non-current
Total
Provision for
repairs
£’000
–
1,000
1,000
1,000
–
1,000
Total
£’000
–
1,000
1,000
1,000
–
1,000
The provision relates to Kin and Carta’s obligations as a lessor to reimburse certain tenant maintenance costs under
the lease in respect of the investment property, which are classified as current.
Balance at 1 August 2021
(as reported)¹
Prior year adjustment (note 1)
Balance at 1 August 2021
(restated)¹
(Credit)/charge to the Income
Statement
Items taken directly to Other
Comprehensive Income
Items taken directly to equity
Balance at 31 July 2022
(restated)¹
(Credit)/charge to the Income
Statement
Items taken directly to Other
Comprehensive Income
Items taken directly to equity
Balance at 31 July 2023
1,036
(879)
3,275
–
157
3,275
–
–
–
(26)
247
(103)
6,210
–
–
–
Total
£’000
2,530
(879)
(87)
–
(1,694)
–
(87)
(1,694)
1,651
–
–
–
823
941
–
(249)
6,210
(249)
9,732
(103)
(87)
(1,120)
8,553
583
(1,763)
(207)
(44)
(1,435)
(7,074)
–
3,241
–
–
–
–
(1,866)
(294)
–
(7,074)
1,045
(119)
1,045
1,089
–
–
131
(4)
–
–
127
1 The 31 July 2022 balance sheet has been restated in respect of a change in accounting policy for investment property to move from a cost model to a fair value model,
which has been applied retrospectively. Following the change, the basis for the valuation of deferred tax changed to assume a sales scenario. Refer to note 1 for further
details.
Deferred tax assets and liabilities are measured at the tax rates, which are expected to prevail at the point at which
the related temporary differences reverse, based on the manner in which the related assets are expected to be
recovered or liabilities settled, which is the current UK statutory corporation rate of 25%.
276 |
kinandcarta.com
Building a world that works better for everyone
| 277
Financial Statements Notes to the Company
financial statements
continued
16. Deferred tax (continued)
Deferred tax assets are recognised based on forecasts of future taxable profits that are expected to be available
to offset the reversal of the associated temporary differences. The Company’s deferred tax assets at the balance
sheet date are expected to be utilised within the Group’s planning horizon of three years, either against the profit of
the company or available future profits of the UK tax group, through group relief.
The Group operates the St Ives Defined Benefit Pension Scheme (the “Scheme”) with assets held in separate
trustee-administered funds. The Scheme has a net accounting surplus of £13.0 million (2022: £38.7 million) on an
IAS 19 basis. The Company expects to recover this asset through a reduction in future cash contributions payable
to the Scheme, reducing the UK corporation tax deductions associated with such contributions. Accordingly, the
deferred tax liability has been valued at the UK statutory corporation tax rate of 25%.
Unrecognised deferred tax assets
Capital losses
2023
£’000
2022
£’000
Gross
amount
18,511
18,511
Estimated
tax benefit
4,628
4,628
Gross
amount
15,357
15,357
Estimated
tax benefit
3,839
3,839
17. Related party transactions
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.
18. Post balance sheet events
On 18 October 2023, it was announced that the boards of directors of Kelvin UK Bidco Limited (‘Bidco’), a newly
formed company owned indirectly by funds advised by Apax Partners LLP (‘Apax’), and Kin + Carta had reached
agreement on the terms and conditions of a recommended cash offer made by Bidco to acquire the entire issued
share capital of Kin + Carta (the ‘Acquisition’). The Acquisition is conditional inter alia on approval by the Company’s
shareholders and certain regulatory approvals. Completion of the Acquisition is currently expected to take place in
the first quarter of 2024.
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 2023 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 2023 by virtue of section 479A of that Act:
Company
Kin + Carta Limited
Kin and Carta Data Holdings Limited
Kin and Carta Data Limited
Kin and Carta Scotland Limited
Kin and Carta Services UK Limited
Kin and Carta Group Limited
Kin and Carta Investments Limited
Kin and Carta Partnerships Limited
St Ives Pension Scheme Trustees Limited
Company
registration number
11403627
SC468131
SC451730
SC172507
11442056
08417677
00190460
09569438
02286545
Alternative Performance Measures
(“APMs”)
The full year results include both statutory and adjusted results. The adjusted results reflect how management
assesses and monitors the ongoing financial performance of the Group and allows for a consistent and meaningful
comparison from period-to-period and with our peer group.
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 “adjusting items” to reflect the manner in which performance is tracked and assessed
internally by management.
Adjusting items are presented in the middle column of the Consolidated Income Statement. In the opinion of the
Directors, their separate presentation aids understanding of the financial performance of the Group. Adjusting items
include acquisition and disposal-related costs, amortisation of acquired intangibles, impairments, share-based
payment charges, administrative expenses related to St Ives Defined Benefit Pension Scheme, client disputes and
litigation and associated insurance income, and restructuring charges. For further details, refer to note 7 of the
Consolidated Financial Statements.
As adjusted results include the benefits of acquisitions and restructuring programmes but exclude significant costs
(such as significant acquisition costs, share-based payments, legal and major restructuring items), they should not
be regarded as a complete picture of the Group’s financial performance, which is presented in its statutory results.
The exclusion of adjusting items may result in adjusted earnings being materially higher or lower than statutory
earnings. In particular, when significant impairments and amortisation charges, share-based payments, restructuring
charges and legal costs are excluded, adjusted earnings will be higher than statutory earnings.
The key APMs frequently used by the Group for continuing operations are:
Net revenue: This measure is defined as revenue less project-related costs as shown on the Consolidated Income
Statement. Project-related costs comprise primarily of certain third-party expenses directly attributable to a project.
Revenue
Project-related costs
Net revenue
Year to
31 July
2023
£’000
195,870
(3,858)
Year to
31 July
2022
£’000
197,123
(6,846)
192,012
190,277
Like-for-like net revenue at constant currency: This measure is defined as the net revenue from continuing
operations when comparing the current period to the prior period at the constant currency rate of exchange,
excluding the effects of acquisition or disposal.
Europe
Americas
Group
Year to
31 July
2023
£’000
57,246
134,766
192,012
Impact of ¹
acquisitions
£’000
Impact of ²
exchange
movements
£’000
Like-for-like
adjusted net
revenue
£’000
(8,182)
(3,921)
(157)
(9,699)
48,907
121,146
(12,103)
(9,856)
170,053
Year to
31 July
2022
£’000
58,050
132,227
190,277
Like-for-like
adjusted
net revenue
decline %
(15.8%)
(8.4%)
(10.6%)
1 Representing (i) for Loop in Americas and Melon Group in Europe, the net revenue for the period from 1 August 2022 to the one year anniversary of the date of the
respective acquisitions, both of which took place in the prior year, and (ii) for Kin and Carta Data (completed in 2023) the FY2023 post-acquisition revenue.
2 The impact of retranslating 2023 net revenue at the 2022 average exchange rates.
278 |
kinandcarta.com
Building a world that works better for everyone
| 279
Other information Alternative Performance Measures
(“APMs”)
continued
Adjusted operating profit: This measure is defined as the statutory operating profit or loss after adjusting items.
Statutory operating loss
Add back total adjusting items
Adjusted operating profit
Year to
31 July
2023
£’000
Restated¹
Year to
31 July
2022
£’000
(19,279)
(14,086)
37,735
18,456
36,482
22,396
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model which has
been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
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
Add back total adjusting items after tax
Adjusted profit after tax
Year to
31 July
2023
£’000
Restated¹
Year to
31 July
2022
£’000
(18,765)
(13,974)
33,785
15,020
32,731
18,757
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
Like-for-like adjusted operating profit at constant currency: This measure is defined as the adjusted organic
operating profit from continuing operations when comparing the current period to the prior period at the constant
currency rate of exchange, excluding the effects of acquisition or disposal.
Adjusted basic earnings per share from continuing operations: This measure is defined as basic earnings per
share after adjusting items
Europe
Americas
Corporate costs
Group
Year to
31 July
2023
£’000
3,751
19,014
(4,309)
18,456
Impact of ²
exchange
movements
£’000
Like-for-like
adjusted
operating
profit
£’000
Restated³,⁴
Year to
31 July
2022
£’000
Like-for-like
adjusted
operating
profit decline
%
Impact of ¹
acquisitions
£’000
(2,037)
(1,152)
–
(94)
(1,329)
–
(3,189)
(1,423)
1,620
16,533
(4,309)
13,844
4,439
23,508
(5,551)
(63.5%)
(29.7%)
22.4%
22,396
(38.2%)
1 Representing (i) for Loop in Americas and Melon Group in Europe, the results for the period from 1 August 2022 to the one year anniversary of the date of the respective
acquisitions both of which took place in the prior year, and (ii) for Kin and Carta Data (completed in 2023) calculated using the FY23 post-acquisition results.
2 The impact of retranslating 2023 net revenue at the 2022 average exchange rates.
3 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
4 The prior year allocation of corporate costs to the segments have been updated to reflect a change in allocation basis in the current year.
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 before tax
Add back total adjusting items before tax
Adjusted profit before tax
Year to
31 July
2023
£’000
Restated¹
Year to
31 July
2022
£’000
(20,669)
(15,583)
36,499
15,830
36,142
20,559
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
Adjusted profit after tax
Weighted average number of shares (‘000)
Adjusted basic earnings per share (pence)
Year to
31 July
2023
£’000
15,020
173,189
8.67
Restated¹
Year to
31 July
2022
£’000
18,757
173,700
10.80
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
Adjusted operating margin: This measure is defined as the percentage of adjusted operating profit over net revenue.
Net revenue
Adjusted operating profit
Adjusted operating margin
Year to 31 July 2023
£’000
Restated1 Year to 31 July 2022
£’000
Group
192,012
18,456
9.6%
Europe
57,246
3,751
6.6%
Americas
Group
Europe
Americas
134,766
190,277
58,050
19,014
14.1%
22,396
11.8%
4,439
7.6%
132,227
23,508
17.8%
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
280 |
kinandcarta.com
Building a world that works better for everyone
| 281
Other information Alternative Performance Measures
(“APMs”)
continued
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,
as defined in the facility agreement, includes an adjustment to present on a “frozen GAAP” pre-IFRS 16 basis and
a pro-forma adjustment to incorporate the results of acquisitions in the preceding 12-month period that have not
already been consolidated in the Group results.
The adjusted EBITDA for 2022 below has been determined on the basis of continuing and discontinued 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- FY23 presentation basis
2022 share-based payments charge presented within adjusted results
Adjusted EBITDA for covenant purposes as reported to the bank
Year to
31 July
2023
£’000
18,456
13,617
(9,256)
22,817
(2,614)
20,203
–
20,203
Restated¹
Year to
31 July
2022
£’000
22,396
10,278
(6,390)
26,284
(1,518)
24,766
(3,234)
21,532
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose from an accounting policy change to measure investment property using a fair value model, which has
been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
Net debt/(cash): This measure is calculated as the total of loans and other borrowings excluding leases, less cash
and cash equivalents.
For the measurement of the bank covenants, cash, cash equivalents and borrowings denominated in currencies
other than Pounds 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.
Cash and cash equivalents
Bank loans
Net debt before covenant adjustments
Foreign exchange difference between spot rate and average rate
Net debt for covenant purposes
Year to
31 July
2023
£’000
9,847
(29,815)
(19,968)
(1,035)
(21,003)
Year to
31 July
2022
£’000
12,609
(13,148)
(539)
353
(186)
Net debt/(cash) to adjusted EBITDA for bank covenant purposes: This measure is calculated by dividing net
debt/(cash) 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
2023
£’000
20,203
(21,003)
1.04
Restated¹
Year to
31 July
2022
£’000
24,467
(186)
0.01
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose following an accounting policy change to measure investment property using a fair value model, which
has been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
Backlog: 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 less revenue recognised to date.
Adjusted operating cash inflows before movements in working capital: This measure is calculated by adding
back non-cash items included within adjusted operating profit.
Adjusted operating profit
Depreciation of property, plant and equipment
Increase in provisions related to adjusted results
Share of profit from joint arrangement
Disbursement from joint arrangement
Adjusted operating cash inflow from before working capital
Year to
31 July
2023
£’000
18,456
4,361
1,062
–
–
23,879
Restated1
Year to
31 July
2022
£’000
22,396
3,886
32
(442)
147
26,019
1 The results for the year to 31 July 2022 have been restated to reflect the reclassification of share-based payments from adjusted results to adjusting items and the
restatement of depreciation on investment property. The latter arose following an accounting policy change to measure investment property using a fair value model which
has been applied retrospectively. Refer to note 1 of the Consolidated Financial Statements for further details.
282 |
kinandcarta.com
Building a world that works better for everyone
| 283
Other information Shareholder Information
Glossary
Corporate information
Further information about the Group can be found on our website kinandcarta.com
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
the payment of dividends directly into a bank or building society accounts
Their contact details are: Kin + Carta plc Shareholder Services, Link Group, 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 and
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.
AGM
AI
APM
Articles
AWS
B Corp
Board
CAGR
Annual General Meeting
Artificial intelligence
Alternative performance measure
The articles of association of Kin and Carta plc
Amazon Web Services
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
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
CDS
DEI
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
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)
Diversity, Equity and Inclusion
Deferred Bonus Shares
Dollar or $
Unless otherwise specified, all references to Dollars or $ are to the currency of the US
DX
Edit
eNPS
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
Enterprise client
Enterprise client profiles are c.$1Bn+ in revenue and often multinational businesses.
This includes government-backed Public Sector
EPS
ESG
EU
EVP
EX
Earnings per share
Environmental, social and corporate governance
European Union
Employee value proposition
Employee experience
Executive Directors
The Chief Executive Officer and the Chief Financial Officer and Chief Operating Officer
Forecast Data
Forecast Data Services Limited (now known as Kin and Carta Data Limited), Forecast
Poland sp. z o.o. (now known as Kin and Carta Data Poland Sp. Z.o.o.), and MacDonald
Family Limited (now known as Kin and Carta Data Holdings Limited), acquired by the
Group on 5 May 2023
284 |
kinandcarta.com
Building a world that works better for everyone
| 285
Other information Glossary continued
FRC
Financial Reporting Council
Operations Platform Kin + Carta’s shared service functions, including legal, finance, HR operations, Connective
FTSE All-Share
The aggregation of the FTSE 100, FTSE 250 and FTSE Small Cap indices
GHG
GMP
Greenhouse gas
Guaranteed minimum pensions
Growth Platform
Global sales, marketing and partnerships, which drive Kin + Carta’s growth, market position
and penetration among key target audiences and industry sectors
IAS
IDEA
IFRS
Incite
IT
Kin
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
Information technology
Collective term for Kin + Carta employees
Kin + Carta Americas
or Americas
Cascade Data Labs, Kin and Carta Colombia S.A.S., Loop Integration, Spire, Solstice, and
Solstice Mobile Argentina Srl
Kin + Carta Europe or
Europe
Kin and Carta UK Limited, Melon Group,
Forecast Data and Kin and Carta Greece Μονοπρόσωπ
Μονοπρόσωπηη I.K.E
Kin + Carta or Group
The Company and its subsidiary undertakings
KPI
LatAm
Key performance indicator
Latin America
Loop Integration
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
LTIP
M&A
M&A Platform
MACH
Melon Group
Long-term incentive plan
Mergers and acquisitions
Kin + Carta’s approach to identifying, acquiring and integrating key acquisition target
businesses or intellectual property
Microservices based, API-first, Cloud-native SaaS and Headless ecosystem technology
Kin and Carta Bulgaria EAD (incorporated in Bulgaria), Melon Tehnologii DOOEL Skopje
(incorporated in North Macedonia) and Kin and Carta Kosovo 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, which was acquired by the Group on 22 December
2021 via the purchase of Datorium, LLC
Ops Council
Operating Council, which advises the Chief Executive Officer and Chief Financial Officer
and Chief Operating Officer on matters that have been delegated to them by the Board
to run the business of Kin + Carta and to ensure strong executive alignment on business
priorities and actions.
Digital Services (IT) and business intelligence
People Platform
Kin + Carta’s industry-leading employee value proposition and experience with clear
career paths and progressive learning and development #foreveryone
Platforms
Regions
Relish
Responsibility
Platform
SaaS
Scheme
SEE
Services Platform
Solstice
Spire
Our six platforms (Growth Platform; M&A Platform; Operations Platform; People Platform;
Responsibility Platform; Services Platform) 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
Kin + Carta Americas and Kin + Carta Europe
Relish Agency Limited
Kin + Carta’s 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
Software as a service
St Ives Defined Benefit Pension Scheme
South East Europe
Kin + Carta’s focus on 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
Solstice Consulting LLC (d.b.a. Kin and Carta U.S.), a digital transformation consulting firm,
organised in Illinois
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
Triple bottom line
Giving consideration to people, profit and planet
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.
286 |
kinandcarta.com
Building a world that works better for everyone
Other information i
K
n
a
n
d
C
a
r
t
a
p
c
l
Building a world
that works better
for everyone
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
f
o
r
t
h
e
y
e
a
r
e
n
d
e
d
2
0
2
3
C
o
m
p
a
n
y
n
u
m
b
e
r
:
1
0
5
5
2
1
1
3
Kin and Carta plc
The Spitfire Building
71 Collier Street
London
N1 9BE
Telephone
+44 (0) 20 7928 8844
Email
Website
cosec@kinandcarta.com
www.kinandcarta.com
Find us online @kinandcarta
Company number: 01552113
Building
a world
that works
better for
everyone
Kin and Carta plc
Annual Report and Accounts
For the year ended 31 July 2023
Company number: 01552113