Encouraging prospects for K3
Business and software provider K3 today reported “significant” restructuring costs, but said long term prospects are “encouraging”.
Revenue for the 17 months to November 2017 for the AIM-listed venture were £118.2m, compared with £89.2m for the 12 months to June 30, 2016.
However, repositioning has incurred exceptional costs of £8.9m – £4.5m of which is non-cash – linked to organisational and management changes across the group, as well as a non-cash impairment of development costs.
Today’s results show an adjusted loss before tax of £3m, against a pre-tax profit of £8.8m in 2016, and a reported loss before tax of £16.1m, compared with a £4.4m pre tax profit previously.
The Salford-based company completed a £7.75m fund raising in Juy last year. Net debt reduced to £4.3m by November 30, 2017, down from £15.6m in June 2017.
K3 is proposing a final, and total, dividend for the period of 1.4p per share.
Chief executive Adalsteinn Valdimarsson said today: “We have implemented significant changes at K3 over the last 18 months, aimed at placing the group on a better footing for long-term revenue and profit growth and improved cash generation.
“The group’s operations are now more streamlined and integrated, and we have refocused our IP development roadmap.
“While the process has involved cultural change and substantial one-off costs, we are seeing the benefits come through. ”
He added: “We have strong offerings in our chosen markets across the supply chain, including our new cloud-native IP.
” Since the period end, trading has been encouraging, especially for own IP sales. While there is still work to be done, we remain confident about prospects for continuing progress.”
K3, based near Media City, provides IT solutions to retailers such as IKEA, manufacturers and distribution bodies.
It supports around.3,700 customers predominantly based in the UK, but also in Europe, the Far East and the USA.
It said it was necessary to simplify its structure to create more integrated and streamlined operations, reduce its cost base, and refocus its IP strategy.
The group said it is now “significantly better positioned for long-term revenue growth, higher quality earnings and improved cash generation.”
As a result of the restructuring, K3 says it is making annual savings of £5m.
Looking ahead, it reports current trading is encouraging, particularly with its own IP product sales, and the board expects financial and operational progress to continue throughout the year.
