K3 delivers strong first half

BUSINESS software provider K3 Business Technology Group has hailed a successful half year which showed double-digit growth in revenue and adjusted profits.

Based in Salford near MediaCity, AIM-listed K3 provides IT solutions to retailers like IKEA, manufacturers and distribution companies.

It said it has produced strong results in the six months to December 31 and had made good progress with its new flagship retail product “ax l is” and had also boosted sales of existing established software products.

Chairman Lars-Olof Norell said: “These very encouraging results – with revenue up 21% to £41.67m and adjusted profit before tax up 13% to £3.56m – reflect the progress K3 has made on many fronts, with both our new and established solutions for the retail and manufacturing and distribution sectors.

“A key growth driver continues to be our flagship retail product, which is the outcome of a major development programme.  In the period, we achieved two key markers for this product, accreditation as a member of Microsoft’s GISV programme – making K3 one of only 25 companies globally to be included in this programme – and first sales through our newly expanded partner channel.

“We have a significant opportunity to broaden sales globally for this and other K3 product, which will drive gross margin and recurring revenues. While cost-related challenges remain, we continue to be confident of the exciting growth prospects available to us.”

K3 said it is looking to drive international sales through its 60-plus global partners.  It said customer numbers in the period had  increased 11% in the period to 3,100. Recurring revenues from customers in terms of software licence renewals, support contracts and hosting,  account for 48% of group income.

As its new product is powered by the Microsoft Dynamics AX solution, K3 said it had seen some negative cost implications as result of a shortage of Microsoft Dynamics AX skills in the UK.

Steps have been taken to mitigate this, with the company stating: “The investment we have made with in-house training and near-shore resourcing is starting to have an impact and we remain focused on reducing delivery costs.”