K3 Business Technology satisfied with first half performance

Interim turnover at Salford software group, K3 Business Technology, rose slightly, but pre-tax losses deepened – however, the board is confident of a strong second half performance.

The group, which provides business‐critical software solutions focused on fashion and apparel brands, published its figures for the six months ending May 31, 2023, today, which revealed sales of £20.3m from continuing operations, compared with £19.9m the previous year.

Pre-tax losses on continuing operations were £2.9m, up from £2.8m a year ago.

Adjusted net cash stood at £2.9m, up from £1.4m in 2022.

The board said the overall performance is ahead of management expectations.

It said group earnings and adjusted net cash generation remain strongly weighted to the second half, reflecting the significant weighting of annual software licence and maintenance and support contract renewals.

K3 is targeting growth of 30% per annum in recurring revenue in the full year for 2023 and beyond in strategic fashion products.

The board said it is focused on further simplifying operations, reducing central cost, adjusted net cash generation and continued transition to higher margin growth activities.

Chief executive, Marco Vergani, said: “We made encouraging progress in key strategic areas of the business in the first half.

“We are especially pleased with the performance of our strategic products for the fashion and apparel market in the K3 Products division.

“Our flagship K3 Fashion product has the potential to maintain its high growth trajectory and has strong endorsement from Microsoft. Third-party Solutions remains a cash engine for the group, and the division will generate high cash inflows in the second half of the financial year as software licence and maintenance and support renewals come through.”

He added: “Our healthy balance sheet underpins the improvements that we are making to the business.

“We remain focused on our high-margin growth opportunities, cost discipline and adjusted net cash as we continue to move to higher quality earnings.”