K3 Business Technology looks for second half improvement
Salford software group K3 Business Technology saw first half revenues fall, and pre-tax losses increase, but said the results were in line with expectations.
Revenue from continuing operations was £19.9m, against £20.9m a year ago. The pre-tax loss of £2.8m compared with a £2.5m pre-tax loss in 2021.
However, K3 said this was after depreciation and amortisation, amortisation of acquired intangibles, exceptional reorganisation and acquisition costs, and share-based payment charges, which totalled £3.6m.
Net cash stood at £1.4m, against £4.4m a year ago. The group said the financial year-end position is expected to close significantly higher, reflecting strong seasonal weighting of cash inflows.
During the reporting period the business acquired ViJi, a sustainability-focused software developer, in January 2022.
K3 Products generated revenue of £6.5m and gross profit of £5.2m, against £7.9m and £6.0m, respectively, in 2021.
The group said there are initiatives to enhance future channel partner sales and build new revenues from the USA.
Third-party Solutions generated revenue of £13.4m and gross profit of £6.7m (2021: £13.0m and £6.1m, respectively).
It said Global Accounts continues to grow, with good visibility of ongoing services work.
A major IT system upgrade has begun, expected to improve operational efficiency.
Chief executive, Marco Vergani, said: “We are executing against the new growth strategy that we established in Q4 last year and have made encouraging progress in the first half.
“K3 Products has clear growth opportunities in its fashion and apparel markets and we are focusing on three critical areas for customers – Sustainability, Omni-channel and Business Insights. The acquisition of the sustainability-focused software developer, ViJi, in the period, will enhance our offering here.
“Third-party Solutions performed well and remains a significant cash generator. We are investing in products and delivery resource to support growth.”
He added: “The second half of the financial year is typically stronger than the first, with substantial cash inflows due from software licence and support and maintenance contract renewals.
“While there are increasing macroeconomic uncertainties, we remain confident of our long term strategic direction and will continue to focus on growth, cash and costs.”
