K3 confident for second half trading performance
K3 Business Technology Group increased revenues and narrowed losses in the six months to May 31.
The Manchester-based software ‘disruptor’ said it is reaping the benefits of its refocused sales strategy.
Revenues at the AIM-listed group rose by 2.6% to £41.4m, compared with £40.3m the previous year.
Gross profit recovered significantly and was up by 14.3% to £21.6m, compared with £18.9m, helped by a substantially increased contributions from services, and software licences, and streamlined operations.
An adjusted profit from operations of £1.7m compared with an adjusted loss last year of £3.1m, while the pre-tax loss of £1m was an improvement from a £5.8m loss last year.
Net debt of £8.5m is down from £18.5m, and the company said c ash generation and earnings will benefit from the traditionally high levels of software licence/support contracts renewals in quarter four.
Today’s announcement revealed that global accounts continued to perform well, with strong visibility on future services work and increased growth opportunities, while SME-related activities performed steadily.
The board remains confident about prospects for the second half of the year, supported by the traditionally high weighting of software licence and support renewals in quarter four, with Syspro renewals typically at around 98%, and a healthy new business pipeline.
Chief executive Adalsteinn Valdimarsson said: “These results are very encouraging with the group returning to underlying profitability.
“They reflect the benefits of our restructuring to create a more streamlined and integrated business, as well as the refocused growth strategy.
“Increasing revenues from software products that we have developed in-house remains a core part of the group’s growth strategy, and we remain positive about sales prospects both for our existing products and our newer offering, Imagine, which we formally launched in the first half.
“Imagine offers customers the opportunity to adopt latest technology easily and at low cost, without changing existing IT infrastructure.
“We also see it as a ready-made upgrade path for existing customers, especially those using older systems.”
He added: “The second half is our stronger earnings period, reflecting the volume of software licence and support renewals in the final quarter of the financial year.
“It has started very encouragingly, with a healthy pipeline in place, and this, together with expected high renewals, gives us confidence that the group will make further progress over the remainder of the year.”
