Profits up as K3 makes fresh swoop

NORTH West business software provider K3 Business Technology Group announced a jump in half-year earnings and revealed a new acquisition.

The AIM-listed Salford company is paying an initial £1.5m, rising to a possible £2.4m, for Nottinghamshire-based Sense Enterprise Solutions, a software supplier to manufacturing and distribution markets.

It brings around 40 customers to K3. In the year to the end of December, Sense generated sales of £1.8m, of which approximately 33% was recurring revenues, and an underlying operating profit of £0.3m.

Richard Faulkner at Barclays Corporate in Manchester supported K3 in the acquisition.

Andy Makeham, chief executive of K3 said the acquisition was ‘strategically important’ as Sense is a supplier of a program called Microsoft Dynamics AX – a fast growing market.

In the six months to the end of December K3’s revenues rose 5% to £24.67m – including a £1.2m contribution from two earlier acquisitions.

Adjusted profits rose 14% to £6.24m and the group said the outlook for the full year was ‘positive’ despite challenging market conditions.

It said it had grown its customer base from 1,500 to 1,800 since 2009.

Chairman Tom Milne said: “We are pleased with K3’s performance. Results were supported by the high levels of recurring income the group enjoys from annual software licence and support renewals across our very large customer base.”
He said acquisitions in March and June of last year had helped move the business forward.

“With the growth opportunities available and our strong financial position, we expect K3 to continue to make good progress over the remainder of the financial year and beyond.”