Software firm’s profits hit by delays in key contracts
Delays in key contracts saw revenues and profits fall at software firm K3 Business Technology Group.
The Salford firm saw revenues for the six months to May decrease by 7% to £38.2m.
According to the interim results gross profit was 9.7% lower than the same period last year at £19.5m.
The firm said this reflected delayed contract signings, which severely impacted services activity and consequently utilisation and services gross margin.
Services gross profit decreased by £1.4m to £2.7m in the period and gross margin reduced by 7.1 percentage points to 21.8%.
Chief executive Adalsteinn Valdimarsson said: “K3’s transformation programme continues to make good progress, and while first half results are below the same period last year, the group remains on track to meet market expectations for the full year and to show good year-on-year earnings progression.
“Delays to certain contract signings affected first half results, however we have now largely caught up on the outstanding delays, and the second half includes significant licence and maintenance contract renewals where renewal rates are very high – around 98%. The near-term pipeline also remains encouraging.
“Our growth strategy – based on selling more of our own IP – has the potential to drive earnings and recurring income significantly. ‘K3 I imagine’, our new, cutting-edge product, is especially exciting, and is relevant for both new and existing customers. We remain very positive about prospects.”
