K3 undimmed by failure of key customer

SALFORD-based K3, which provides software and managed services to the retail, manufacturing and distribution sectors, has enjoyed increases in revenue and profits despite one of its key customer My Local going into administration.

In the year to June 30 turnover increased 7% to £89.18m (2015: £83.43m) and pre-tax profits were up 22% to £8.8m (2015: £7.22m).

Earnings per share rose 21% to 23.5p from 19.4p and a dividend achieved of 1.75p, up 17% on 2015’s of 1.5p.

Net debt was down 26% to £8.88m from £12.08m.

The AIM-listed company said new orders hit a record high of £35.3m, up 66%.
It also benefited from recurring revenues – from software maintenance renewals, support contracts and hosting & managed services-  grew to £41.62m and remain high at 47% of total revenues.

Another highlight was the placing in April which raised £13.04m (net) for acquisition of DdD Retail and to support growth.

Chairman Lars-Olof Norell said: “The growth of the business has been encouraging with record levels of software licence sales and adjusted earnings per share up 21% to 23.5p. The group’s recurring income also increased and now stands at almost half of total revenues.

“We have continued to expand our channel partner network. This route to market for our products represents a significant opportunity and a strong pipeline is building with channel partners in addition to our own direct business.

“The acquisitions, of DdD Retail and Merac Limited, provide us with further excellent product sets to add to the K3 product portfolio.

“Prospects for our business in the new financial year remain very encouraging. There are strong growth drivers, including channel partner sales and hosting. This, combined with further initiatives to improve margins and costs, leaves the group well-positioned to increase profits and improve cash flows.”