K3 Business Technology ends first half in line with forecasts

(Sharecast News) - K3 Business Technology reported first half results from continuing operations in line with its expectations on Monday, with revenue steady at £23.2m, compared to £23.1m a year earlier.
The AIM-traded firm said recurring or predictable income accounted for 68.7% of total revenue, down from 73.4%, while its own intellectual property revenue made up £8.4m, or 36%, of total revenue, compared to £8.5m or 37% in the prior first-half.

Its gross margin narrowed to 56.2% for the six months ended 31 May, from 60.4% a year earlier, which the board puto down to the effect of the coronavirus crisis on the customer base for third-party products, which included smaller retailers and distributors.

Adjusted EBITDA fell to £0.9m from £1.7m, while its loss before tax from continuing operations widened to £4.3m from £1.4m.

The company's adjusted losses per share totalled 11.9p, compared to 3.5p a year earlier, while it swung to reported earnings per share of 11.6p from a loss of 12.2p, due to profit from discontinued activities.

"The group delivered a resilient performance despite certain parts of the customer base being significantly disrupted by the pandemic," said chief executive officer Marco Vergani.

"Since joining K3 in late March, my priority has been a thorough evaluation of the group's operations and market strategy.

"This process is expected to be substantially completed over the coming months - it will help to set a clear strategic course."

Vergani said K3 had an "exciting product offering" and "talented" teams.

"This gives us a firm basis from which to move forward as we continue to build own-IP sales, which will generate long-term, high-margin recurring income.

"We remain very confident that there is a significant market opportunity for the group, particularly in the fashion, apparel and design market.

"We expect to make good strategic progress in the second half."

At 0829 BST, shares in K3 Business Technology Group were down 4.5% at 201.5p.