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Transition continuing at K3 Business Technology

Channel player updates investors on progress made in its fiscal H1 as it looks to build a business serving the retail sector

K3 Business Technology is a business in transition following a clear strategy to focus on its key retail customers and get their financials in good order.

Under the leadership of CEO Marco Vergani, who joined in March last year, that transition of K3 has been gathering pace, with disposals of non-core operations and renewed vigour around the firm’s own enterprise resource planning (ERP) solution.

Evidence of progress can be seen in interim results that show the first half (H1), for the six months to 31 May, is in line with management expectations. Those expectations include a slight dip in revenue to £19.9m from £20.9m in 2021, and a widening of pre-tax losses from £2.5m to £2.8m.

In the first half, the firm acquired sustainability focused software developer ViJi, which will give the firm the chance to help retailers with supply chain transparency.

There were also investments made in upgrading the IT system, and the firm has started to step up efforts to grow its partner network and channel activities in the US.

“We are executing against the new growth strategy that we established in Q4 last year, and have made encouraging progress in the first half [of 2022],” said Vergani.

“K3 products has clear growth opportunities in its fashion and apparel markets, and we are focusing on three critical areas for customers – sustainability, omni-channel and business insights. The acquisition of the sustainability focused software developer, ViJi, in the period, will enhance our offering here.

“Third-party solutions performed well and remains a significant cash generator. We are investing in products and delivery resource to support growth.”

When he spoke to MicroScope back in May, Vegani said that the firm’s three-pronged approach is one that would put it in the best position to support the needs of retailers.

He added that the business was in a strong position when it came to retail and just needed to sharpen that focus to increase its success levels.

The interim H1 numbers echo that assertion, with the business increasing margin, and the shift to more strategic products saw annualised revenue increase by 12% in that area. The firm is continuing to experience a decline in its legacy point-of-sale products. This all gave Vergani the confidence to strike a positive tone with investors as he looked to the prospects for the firm’s second half.

“The second half of the financial year is typically stronger than the first, with substantial cash inflows due from software licence and support and maintenance contract renewals. While there are increasing macroeconomic uncertainties, we remain confident of our long-term strategic direction and will continue to focus on growth, cash and costs,” he said.

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