K3 Capital beats consensus market expectations following strong year

John Rigby, chief executive of K3 Capital
X The Business Desk

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Bolton-based professional services specialist K3 Capital Group, announced in a full year trading update today that it delivered an “exceptionally strong performance.”

Final figures for the year to May 31, will exceed the full year guidance provided by the company in March and April.

The group expects to report revenues of approximately £46m and adjusted EBITDA of not less than £14.25m. The adjusted EBITDA figure is significantly ahead of current consensus market expectations of £13.27m, and £45.02m for revenues.

K3 said its M&A division had a strong year with material organic growth delivering revenue and adjusted EBITDA significantly ahead of expectations and delivering a high profit margin contribution.

Alongside the transformational acquisitions of Quantuma and randd and in line with the group’s strategy, three complementary bolt-on acquisitions were also completed during the period and have all contributed to growth and provided further diversification of revenues.

These new revenue lines, together with the new tax advisory and debt advisory offerings and the newly established Market Mapping joint venture, all provide additional layers of diversification and will financially contribute to the group in fiscal year 2022 and beyond.

The group’s balance sheet is strong with an unaudited cash balance of approximately £14m as at May 31. In addition, shortly before the end of the financial year, the group announced that it had agreed maiden debt facilities of £15m, which remain undrawn and give the company greater flexibility in funding future bolt-on acquisitions.

Chief executive, John Rigby, said: “In a year of challenging conditions, particularly in the context of the suppressed insolvency market, we are extremely proud that we have delivered results for the FY21 Financial Year that are significantly ahead of initial market expectations, beating multiple upgrades made to market expectations across the year.

“The FY21 Financial Year has been a transformational and very important year for the group, notably being our first period of reporting post the acquisitions of Quantuma and randd. It represents a year of significant growth in the scale, diversity and quality or our business which sees a significant increase across revenue and profits as well as progression in our strategy to build a wider group of growing and complementary professional services businesses.”

He said all business divisions performed well and integration projects proceeded in line with expectations: “We believe that these results are testament to the group’s ability to identify, acquire and integrate high quality and accretive acquisitions and we are proud to have built a diverse group of businesses that are positioned to deliver robust performances across all economic cycles.”

He added: “As ever there remains a degree of uncertainty in the markets in which we operate, however we begin the 2022 financial year with great confidence.

“Along with investing in the group to expand the range and depth of our service lines, we have also invested in our internal resource to provide us with the flexibility and capacity to service an increase in demand.

“Additionally, we continue to identify further opportunities to expand the range and depth of our service lines. In summary, the board is delighted with the performance of the group and remains confident of continuing its strategy and making further progress in the upcoming financial year.”