Software group targeting progress during second half period
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Salford software group K3 Business Technology announced half year figures for the six month period to May 31, today, which it said were in line with expectations, and is targeting progress during the second half.
Revenues of £23.246m were up from £23.080m previously, while pre-tax losses from continued operations widened from £1.434m in 2020 to £4.797m this year.
K3 concluded the sale of non-core unit, Starcom Technologies, in February for £14.7m, generating net cash flow of £13.8m and a profit after tax of £10.8m.
It significantly strengthened its balance sheet with net cash of £4.4m, compared with a £7.4m net debt a year ago.
K3’s own-IP generated £8.4m of revenue (2020: £8.5m) and gross profit of £6.2m (2020: £6.3m), with its key strategic product, K3|fashion, securing four new customer contracts worth a total of £1.7m (2020: £1.0m), while K3|imagine technology is market-leading and continues to offer exciting promise.
Global Accounts generated £9.2m of revenue (2020: £8.7m) and gross profit of £3.7m (2020: £3.8m), reflecting investment in service capability to support growth.
Third-party products generated £5.6m of revenue (2020: £5.9m) and gross profit of £3.2m (2020: £3.8m). The retail and distribution customer base was most disrupted by the coronavirus pandemic, said K3.
It also revealed that the SYSPRO customer base performed well with average deal size increasing, and said the second half will benefit from strong cash inflow from SYSPRO software licence and support and maintenance contract renewals, typically at approximately 98%.
Marco Vergani, who has more than 30 years’ experience in the technology industry, was appointed K3 CEO of K3 in March this year. He said:” Half year results are in line with management expectations. The group delivered a resilient performance despite certain parts of the customer base being significantly disrupted by the pandemic.
“Since joining K3 in late March, my priority has been a thorough evaluation of the group’s operations and market strategy. This process is expected to be substantially completed over the coming months. It will help to set a clear strategic course.”
He added: “K3 has an exciting product offering and talented teams.
“This gives us a firm basis from which to move forward as we continue to build own-IP sales, which will generate long term, high margin recurring income.
“We remain very confident that there is a significant market opportunity for the group, particularly in the fashion, apparel and design market. We expect to make good strategic progress in the second half.”