K3 Business Technology Group PLC Delay to Final Results (2941H)

TIDMKBT

RNS Number : 2941H

K3 Business Technology Group PLC

24 March 2020

AIM: KBT

24 March 2020

K3 Business Technology Group plc

("K3" or "the Company")

Delay to announcement of Final Results, Trading Update and Cancellation of Dividend

K3, which provides mission--critical business software, cloud solutions and managed services intended to announce its preliminary results for the year ended 30 November 2019 on 26 March 2020. However, following guidance from the Financial Conduct Authority ("FCA") and AIM, and having consulted with its advisers including the Group's auditors, K3 will be delaying the publication of these results. The Company will advise when it is able to clarify a date for release.

In the interim, the Company provides the following update on trading.

The Board expects results for the year to 30 November 2019 to be in line with guidance provided by the Company on 22 October 2019, and reports that net bank debt at 20 March stood at approximately GBP5.5m. Whilst the Board was encouraged by the Company's trading prospects at the start of the current financial year, the unprecedented events now being experienced due to the Coronavirus outbreak, which has resulted in contract delays and deferrals, make it difficult to forecast revenues for the year to 30 November 2020. The Board is therefore withdrawing current guidance until normal operations resume globally. It will provide a further trading update following the close of K3's half year trading period ending 31 May 2020.

The Coronavirus pandemic and its potential impact on the business is now the Board's primary focus. The Company's priority is the welfare of its employees and supporting customers and business partners during this crisis. A number of measures are being taken to mitigate its impact, and material steps are being taken to reduce costs. This includes a decision to cancel the dividend in respect of the year ended 30 November 2019. Separately, the Board is actively reviewing options to wind-down one of the Group's underperforming third-party solutions units in the UK. Plans are being assessed and updated as the situation evolves.

The Board has also taken pre-emptive steps to improve the Company's liquidity. Productive discussions are being held with Barclays and K3's two major shareholders, Kestrel Partners LLP (which has a non-executive director representative on the Board) and Johan Claesson (a non--executive director) with the objective of significantly strengthening the Company's balance sheet. All parties remain supportive of K3 and an announcement regarding the successful completion of these funding discussions is expected to be made over the course of the next week.

The Board intends to focus on maintaining and growing the Company's core profitable business units and is accelerating the transition towards its own IP, with the new flagship Imagine product starting to see promising levels of adoption, having already signed up 106 customers.

Adalsteinn Valdimarsson, Chief Executive Officer, commented:

"K3 provides mission critical software to a range of sectors worldwide, with an installed base of 3,700 business customers and a significant proportion of revenues that are recurring in nature. We believe these attributes together with the pre-emptive action taken by the Board in relation to cost-cutting and securing additional liquidity will help us weather the challenges caused by the Coronavirus global pandemic. Looking beyond this crisis, we see good growth opportunities ahead."

This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

Enquiries:

 
 K3 Business Technology     Adalsteinn Valdimarsson,  T: 0161 876 4498 
  Group plc                                      CEO 
                                      Rob Price, CFO 
finnCap Limited (NOMAD   Julian Blunt/James Thompson  T: 020 7220 0500 
 & Broker)                       (Corporate Finance) 
                           Camille Gochez (Corporate 
                                            Broking) 
KTZ Communications              Katie Tzouliadis/Dan  T: 020 3178 6378 
                                             Mahoney 
 

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March 24, 2020 03:00 ET (07:00 GMT)