K3 Business Tech trades in line as new clients sign on

Business software, cloud solutions and managed services provider K3 Business Technology updated the market on its trading for the 17 months to 30 November on Tuesday, as well as the results of its operational resource review.

The AIM-traded company confirmed that trading over the remainder of the financial period to 30 November had been in line with management expectations.

New customers signed since 30 June included Barratts, Eton Shirts, Lifestyle Sports and Littlewoods, with the board reporting “encouraging growth” in the global accounts division.

Net debt at 30 November was expected to be “much improved” at approximately £4.7m, reflecting initiatives put in place to improve cash generation.

The board confirmed it also completed its operational resource review.

“The key outcome of this review is the integration of the Microsoft Dynamics businesses - AX, NAV and CRM - into a single unit to create a unified operation, with enhanced and streamlined customer delivery capability.

“This integration, together with a review of K3's IP development strategy, will result in additional reorganisation costs in FY2018 and a non-cash write-down relating to deferred capitalised development costs of up to £2.5m.”

K3 said further information on both would be provided with the announcement of results.

Other changes resulting from the review included the integration of software product development and own IP management functions into a single group-level IP unit, the creation of a single unit focusing on driving sales and support of K3's own software-as-a-service offering, and an increased focus on strategic co-operation with global system integrators in the enterprise market for delivery services and support, with K3 providing IP and industry expertise.

“These changes will support the board's plans to increase own IP sales and drive recurring revenues,” the company’s directors added.

“The board anticipates some associated cost savings as a result of the streamlining of certain operations but, given its ongoing investment plans for its own IP and sales, it does not anticipate a net reduction in the group's cost base beyond what has been previously communicated.”

K3 said its own IP strategy included its “easy-to-integrate” NextGen platform and accompanying market-leading modules, including the Imagine POS point of sale product.

“Management is pleased to report that Imagine POS has now been sold to 12 customers, with the pipeline of opportunities continuing to grow.

“K3 is also pleased to confirm that Stuart Darling, who became interim chairman of the company in early July 2017, has been appointed as chairman on a permanent basis,” the board added.

K3’s directors said they would provide a further update on trading towards the end of March, with the announcement of results for the 17 month period.

“[The board] remains confident of the group's continued progress in 2018.”