K3 shows further evidence of its turnaround

Channel player shares FY21 numbers and underlines the progress made by its recently installed CEO to reshape the business

K3 has been a channel business undergoing a transformation in recent years and its latest results provide more evidence that the strategy is working.

K3 Business Technology Group’s results for the 12 months to 30 November 2021 show revenues up 3% to £45.3m and recurring revenues holding firm at 75% of turnover at £33.9m. Pre-tax losses from continuing operations have also been trimmed from £20.8m last year to £7.8m this year.

During the year, the firm made a couple of disposals – the Starcom Managed Services unit and Sage business – and welcomed a new CEO, Marco Vergani, who was appointed in March last year.

The channel player is now operating around two main planks – K3 Products, which includes the firm’s own IP and then Third Party Solutions, which includes SYSPRO and Global Accounts activities.

Vergani has been following a growth strategy based on K3’s core activities and focused on the fashion, apparel and related large retail brands. The firm also identified opportunities around sustainability with more supply-chain traceability and recently acquired ViJi, a software developer with sustainability products, to add depth on that front.

K3 reported that its sales in the fashion and apparel space improved by 16% to £5m where it was able to flex its own IP offering, but saw its legacy POS sales continue to decline.

On the third-party solution front, the company reported high levels of renewal of SYSPRO software licences and support and maintenance contracts – 98%. It also reported a strong order book for fiscal 2022, with an increase in the average size of new orders. Global Accounts also continued to expand, with the firm supporting the roll-out of stores for Inter IKEA Concept franchisees in the Far East and in Central and South America.

Tom Crawford, chairman of K3 Business Technology Group, said the change in leadership and the narrowing of focus was starting to deliver results.

“This has been a transformational year for K3,” he said. “Under our new CEO, Marco Vergani, we have established a clear and focused growth strategy and made substantial organisational changes, including two disposals, which support our growth objectives.

“We have also simplified the way we present the business by creating two clear divisions of K3 Products and Third Party Solutions. The group is now financially stronger and better placed to take advantage of the significant market opportunities we have identified across our core areas of activity.”

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