Trading Update

RNS Number : 4025W

K3 Business Technology Group PLC

22 December 2021

 

AIM: KBT

K3 BUSINESS TECHNOLOGY GROUP PLC

("K3" or "the Company" or "the Group")

TRADING UPDATE

K3, which provides business‐critical software solutions, focused on fashion and apparel brands, is pleased to provide the following trading update for the financial year ended 30 November 2021.

Trading in the second half of the financial year to 30 November 2021 has been in line with management expectations. Adjusted EBITDA from continuing operations for the year is expected to be higher than last year with stronger operational cash generation. This follows a strong end to the financial year, particularly within the fashion and apparel business, with the signing of a number of new clients and upsell renewals with existing clients. New clients included a Swedish clothing brand for children, a German e-commerce fashion and homeware brand, and a Scandinavian designer brand. The SYSPRO and Global Accounts lines of business also continued to perform well.

In a transformational year, K3's balance sheet has been significantly strengthened, with net cash at 30 November 2021 substantially ahead of the same point six months ago at approximately £9.0 million (31 May 2021: £4.4 million and 30 November 2020: net debt of £1.9 million).

The Board views this performance, in a challenging market, as encouraging and K3 starts the new financial year in a notably stronger position. It is now well-placed to build on the foundational changes implemented over the past 12 months, which included:

-	the appointment of Marco Vergani as Chief Executive Officer in March 2021;
-	the strengthening of the senior management team with key commercially experienced hires;
-	the development of a clear strategic plan to drive future growth, with a focus on mid-market and enterprise fashion and apparel brands;
-	the sale of two non-core businesses, Starcom Technologies Limited in February 2021 and the Sage business in early October 2021, which were sold for £14.7m and £1.7m respectively; and
-	an internal reorganisation of the business completed in the second half, which included a comprehensive restructuring of the Group's go-to-market team. The reorganisation has reduced costs, established stronger US channel partner support, and improved the management of certain older, niche products that are in a process of decline.

Strategic Plan

The new strategic plan has identified growth opportunities across K3's core solutions, historically reported within three segments, Own IP, Global Accounts and Third-party products. Strategic Own IP products include fashion, apparel and omnichannel retail solutions, which are all underpinned by the Group's cloud-native unified commerce platform, K3|imagine.  

The new focus is to leverage the Group's strong industry and ERP heritage to provide a powerful end-to-end (Concept-to-Consumer) set of solutions for K3's chosen markets of fashion, apparel, designer and related large retail brands. Within these sectors, there are exciting opportunities, particularly serving the growth themes of Sustainability, Business Insights and Omnichannel. K3 will address these with the current strategic product offering, as well as through buy, build and partner models to further accelerate growth.

Ongoing investment will be funded from internal cash generation, and is being allocated strictly in line with commercial objectives to:

-	deepen K3's fashion offering;
-	enhance K3|imagine, which supports all the Group's strategic solutions;
-	target growing demand in SYSPRO's market for larger transformational projects in advanced and specialized manufacturing and distribution industries; and
-	support the continuing international expansion of the Global Accounts business' client base.

Publication of preliminary results

Preliminary results are scheduled to be published in late March 2022 when a further update on current trading will also be provided.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR.

Enquiries:

K3 Business Technology Group plc	Marco Vergani, CEO Rob Price, CFO	T: 0161 876 4498
finnCap Limited (NOMAD & Broker)	Julian Blunt/ James Thompson (Corporate Finance) Richard Chambers / Sunila de Silva (Corporate Broking)	T: 020 7220 0500
KTZ Communications	Katie Tzouliadis/ Dan Mahoney	T: 020 3178 6378

 

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