Bits and Splits -

K3 boss upbeat on business transformation progress

The ERP specialist has indicated it continues to improve its fortunes, despite issuing some challenging H1 numbers

There were further signs of pain at ERP specialist K3 but the transition that the firm has been going through for the past 18 months are providing more light at the end of the tunnel.

The last couple of years have been ones of transformation at K3 and those efforts appear to be delivering the desired outcome with the firm reporting a modest profit for its last fiscal year.

The firm has been going through a review of the Group's resources with the idea of focusing the growth strategy around the cash generating business units and its large SME customer base.

Interim results for the half year to 31 May indicated that revenue was down from £41.1m to £38.2m and gross profit decreased 10 £19.5m from £21.6m, with contract delays being partly to blame for that situation.

The business has been focused on developing IP around its K3 I imagine product and it has already seen it contribute to the number, since it was launched in Q4 2018.

H1 saw the SME accounts hold up and a growing sense that more managed services could be rolled out across the existing customer base. The interim update also indicated that significant software licence and maintenance renewals often come in the second half.

Adalsteinn Valdimarsson, CEO of K3, has been consistently upbeat about the progress of the efforts to turnaround the firm's fortunes and was so again with these numbers.

"K3's transformation programme continues to make good progress, and while first half results are below the same period last year,
the Group remains on track to meet market expectations for the full year and to show good year‐on‐year earnings progression," he said.

"Delays to certain contract signings affected first half results, however we have now largely caught up on the outstanding delays,
and the second half includes significant licence and maintenance contract renewals where renewal rates are very high ‐ around 98%.
The near‐term pipeline also remains encouraging," he added "Our growth strategy ‐ based on selling more of our own IP ‐ has the potential to drive earnings and recurring income significantly."

"'K3 I imagine', our new, cutting‐edge product, is especially exciting, and is relevant for both new and existing customers. We remain very positive about prospects," he concluded.

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