Profits tank at K3 Business Technology
SALFORD business software provider K3 Business Technology has posted a sharp fall in profits, blaming the week retail sector and deferred spending decisions by some customers.
In the six months to the end of December pre-tax profits plunged from £3.9m to £185,000. Revenue fell 5% to £31.5m.
Its adjusted profit figure, which takes into account amortisation and one-off costs, was £2.9m, down from £6.9m.
AIM-listed K3 supplies and supports Microsoft-based enterprise resource planning (ERP) software – a system that manages everything from stock to till sales.
The company also said its figures had been affected by “project gemstone” – an investment in new retail software built around Microsoft’s latest AX technology. It committed £2.1m during the period.
In its figures K3 stressed the “robustness” of its recurring income from software licence renewals and support contracts, which increased by 3% year-on-year to £17.6m. Net debt reduced by 8% to £12.3m.
Chairman Tom Milne said: “This has been a difficult period for K3 with delays in closing key deals in our UK retail software business combining with a major investment in AX for retail development and resourcing.
“Economic difficulties in the UK and European retail markets are leading to deals being deferred. Despite this background our other operations have been holding up well with Syspro performing exceptionally in the first six months.
“Results were supported by the high levels of recurring income the group enjoys from annual software licence and support renewals across our customer base. Cashflows were also strong as usual in this period.”
