K3 Capital reports 'exceptionally strong' performance

Professional services company K3 Capital updated the market on its trading on Tuesday, reporting an “exceptionally strong” performance for the financial year just ended, having grown revenues and profits across all of its divisions.

The AIM-traded firm said that as a result, it expected to report revenues for the 12 months ended 31 May of £46m, and adjusted EBITDA of at least £14.25m - exceeding the guidance it issued in March and April.

Adjusted EBITDA would also be “significantly ahead” of current consensus market expectations.

The company said its mergers and acquisitions division had a “strong year”, with material organic growth delivering revenue and adjusted EBITDA significantly ahead of expectations, as well as a high profit margin contribution.

Alongside the acquisitions of Quantuma and Randd, and in line with the group's stated strategy, three complementary bolt-on acquisitions were also completed during the year and had all contributed to growth and provided further diversification of revenues, the board said.

Those new revenue lines, together with the new tax advisory and debt advisory offerings and the newly-established market mapping joint venture, provided “additional layers” of diversification and would financially contribute to the group in the 2022 financial year and beyond, the directors explained.

The group said its balance sheet was described as strong, with an unaudited cash balance of £14m at year-end.

Additionally, shortly before the end of the financial year, the firm announced that it had agreed maiden debt facilities of £15m, which remained undrawn and gave it “greater flexibility” in funding future bolt-on acquisitions.

“In a year of challenging conditions, particularly in the context of the suppressed insolvency market, we are extremely proud that we have delivered results for the 2021 financial year that are significantly ahead of initial market expectations; beating multiple upgrades made to market expectations across the year,” said chief executive officer John Rigby.

“The 2021 year has been a transformational and very important year for the group, notably being our first period of reporting post the acquisitions of Quantuma and Randd.

“It represents a year of significant growth in the scale, diversity and quality of our business which sees a significant increase across revenue and profits as well as progression in our strategy to build a wider group of growing and complementary professional services businesses.”

Rigby said all business divisions performed “well”, while integration projects had proceeded in line with expectations.

“We believe that these results are testament to the group's ability to identify, acquire and integrate high quality and accretive acquisitions and we are proud to have built a diverse group of businesses that are positioned to deliver robust performances across all economic cycles.

“As ever, there remains a degree of uncertainty in the markets in which we operate, however we begin the 2022 financial year with great confidence.”

Along with investing in the group to expand the range and depth of its service lines, Rigby said it had also invested in its internal resource to provide it with the “flexibility and capacity” to service an increase in demand.

“Additionally, we continue to identify further opportunities to expand the range and depth of our service lines.

“In summary, the board is delighted with the performance of the group and remains confident of continuing its strategy and making further progress in the upcoming financial year.”

At 1250 BST, shares in K3 Capital were up 2.48% at 375.6p.