REG - K3 Bus Tech Grp PLC - Trading Update

K3 Business TechnologyAnnouncement

22/12/2021 07:00

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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                                       T: 0161 876 4498

                                       Rob Price, CFO
 finnCap Limited (NOMAD & Broker)      Julian Blunt/ James Thompson                             T: 020 7220 0500

                                       (Corporate Finance)

                                       Richard Chambers / Sunila de Silva (Corporate Broking)
 KTZ Communications                    Katie Tzouliadis/ Dan Mahoney                            T: 020 3178 6378

 

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