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Kin & Carta PLC on Thursday said its pretax loss widened and revenue decreased in its latest financial year, but that business has now stabilised and paved the way for ‘modest’ growth.
The London-based business software consultancy reported a £20.7 million pretax loss for the year to July 31, following a £15.6 million loss the year before.
Revenue meanwhile decreased 0.6% to £195.9 million from £197.1 million.
‘The market slowed significantly in Q2, presenting fewer new business opportunities as companies scrutinised their project spending,’ Kin & Carta explained. ‘Widespread macroeconomic volatility led to extended sales cycles, cautious client spending, and intense competition.’
Kin & Carta said the widened loss was due to a non-cash goodwill impairment in the UK and acquisition-related charges, totalling £34.1 million. Its selling costs meanwhile increased 24% to £20.4 million.
‘FY23 was undoubtedly a challenging year,’ Chief Executive Officer Kelly Manthey conceded, explaining: ‘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...Fewer opportunities led to more intense price competition as our larger peers leveraged their scale and offshore operations.’
However, she claimed Kin & Carta ‘used the disruption to accelerate operational change’, adding: ‘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.’
Kin & Carta said that this volatility has continued into the current year and sales cycles remain challenging, but said its business has stabilised regardless.
‘Assuming no further material headwinds that would further challenge our smaller scale and client concentration, we expect modest H1’24 growth over H2’23,’ the company said.
In mid-October, Kin & Carta said it had agreed to a recommended 110 pence per share takeover offer from funds advised by private equity advisory firm Apax Partners LLP, valuing the company at £203 million. On Thursday it said it expects the transaction to complete within the first three months of 2024.
Kin & Carta shares were down 1.7% at 105.60 pence on Thursday around midday in London.
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