Share Name Share Symbol Market Type Share ISIN Share Description
K3 Business Technology Group Plc LSE:KBT London Ordinary Share GB00B00P6061 ORD 25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 211.00p 210.00p 212.00p 211.00p 211.00p 211.00p 18,106 08:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Software & Computer Services 83.3 0.0 -1.1 - 67

K3 Business Technology Group PLC Final Results

19/03/2019 7:02am

UK Regulatory (RNS & others)


K3 Business Technology (LSE:KBT)
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TIDMKBT

RNS Number : 2729T

K3 Business Technology Group PLC

19 March 2019

AIM: KBT

19 March 2019

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

K3 BUSINESS TECHNOLOGY GROUP PLC

("K3" or "the Group" or "the Company")

Provider of mission-critical software (owned and third party), cloud solutions and managed services to the supply chain sector

Final results for the 12 months to 30 November 2018

Key Points

Summary

   --      Benefits of transformation strategy initiated two years ago now beginning to come through 

-- Balance sheet strengthened with net debt reduced to GBP0.6m at year end, helped by stronger cash generation

-- Prospects for continuing progress, especially own IP sales strategy, remain very encouraging

Financial

 
                              The comparatives for 2017 are for a 17-month period to 
                                                                    30 November 2017 
                                                        12 months          17 months 
                                                   to 30 November     to 30 November 
                                                             2018               2017 
 Revenue                                                 GBP83.3m          GBP118.2m 
 
        *    recurring revenue as a % of total              48.3%              48.7% 
 
       *    own IP revenue as a % of total                  21.0%              19.8% 
 Gross margin                                               52.7%              51.6% 
 Adj. profit from operations(*1)                          GBP4.6m    Loss of GBP1.6m 
 Reported profit from operations                          GBP0.7m   Loss of GBP14.8m 
 Adj. profit before tax(*1)                               GBP4.0m    Loss of GBP3.0m 
 Reported profit/(loss) before                           GBP0.02m   Loss of GBP16.1m 
  tax 
 Adj. earnings per share(*2)                                 6.8p     Loss per share 
  (2017 restated)                                                               3.0p 
 Reported earnings per share                               (1.1)p            (35.3)p 
 Net cash generated from operating                        GBP7.8m            GBP5.1m 
  activities 
 Net debt(*3)                                             GBP0.6m            GBP4.3m 
 Dividend per share (final 
  and total)                                                1.54p              1.40p 
 
   --      Own IP gross margin increased to 73.6% (17 months to 30 November 2017: 64.1%) 

-- Recurring revenue gross margin on Own IP increased to 79.8% (17 months to 30 November 2017: 76.0%)

Operational

-- 'K3 I Imagine' platform formally launched - a cornerstone product in Group's own IP strategy

o offers an easy-to-implement solution that provides latest functionality

o post year end sales are encouraging

-- Enterprise-focused product, 'K3 I fashion', delivered a very strong performance, with channel partner strategy working very well

o 11 major deals won compared to 7 over the 17 months period in 2017

-- Global Accounts unit grew strongly. Office opened in Malaysia to support demand in the Far East

-- Microsoft Dynamics businesses combined into a single practice - enhances customer service capability

-- A firm platform for ongoing growth is now in place, following reorganisation and strategic refocusing

-- Trading since the year end has been encouraging and the Board is confident of continuing progress

Adalsteinn Valdimarsson, Chief Executive Officer of K3, commented:

"I am pleased to report that K3 has moved from losses into profit at the operating level, with the transformation strategy initiated two years ago now bearing fruit. Its positive effects are also evident in improved cash generation and significantly reduced net debt at the year end.

"A key part of our growth strategy is increasing sales of products that contain our own IP, and the formal launch of the 'K3 I Imagine' platform was a significant milestone in this plan. It has the potential to be a major driver of profits and recurring revenues for the Group.

"K3 now has a firm platform for ongoing growth and we remain positive about future prospects across the Group. Trading since the end of the financial year has been encouraging, and we expect to see continued momentum over the new financial year."

Enquiries:

 
 K3 Business Technology   Adalsteinn Valdimarsson        T: 020 3178 6378 (today) 
  Group plc                (CEO) 
 www.k3btg.com            Robert Price (CFO)             Thereafter 0161 876 
                                                          4498 
 finnCap Limited          Julian Blunt/ James Thompson   T: 020 7220 0500 
  (NOMAD & Broker)         (Corporate Finance) 
                           Camille Gochez 
                           (Corporate Broking) 
 
 KTZ Communications       Katie Tzouliadis/ Dan          T: 020 3178 6378 
                           Mahoney 
 

Notes:

 
 Note   Calculated before amortisation of acquired intangibles 
  1      of GBP2.51m (2017: GBP3.93m), exceptional reorganisation 
         costs of GBP1.36m (2017: GBP4.73m), exceptional impairment 
         of development costs of GBPnil (2017: GBP4.54m), acquisition 
         costs of GBPnil (2017: GBP0.31m), share-based payment 
         charge of GBP0.10m (2017: GBPnil) and release of contingent 
         consideration of GBPnil (2017: GBP0.39m). 
 Note   Calculated before amortisation of acquired intangibles 
  2      (net of tax) of GBP1.95m (2017: GBP3.04m), exceptional 
         reorganisation costs (net of tax) of GBP1.36m (2017: 
         GBP4.73m), exceptional impairment of development costs 
         (net of tax) of GBPnil (2017: GBP4.54m), acquisition 
         costs (net of tax) of GBPnil (2017: GBP0.31m), share-based 
         payment charge (net of tax) of GBP0.10m (2017: GBPnil) 
         and release of contingent consideration (net of tax) 
         of GBPnil (2017: GBP0.39m). The adjusted EPS/(LPS) for 
         the 17 months ended 30 November 2017 has been amended 
         to reflect that there was no tax charge or credit recognised 
         in the period on either the exceptional reorganisation 
         costs or on the exceptional impairment charge. The calculation 
         has been amended to reflect the actual tax charge or 
         credit directly allocable rather than on an effective 
         tax rate as previously determined as the directors consider 
         this to be a fairer representation. 
 Note   Net debt is gross debt net of cash and cash equivalents. 
  3 
 
        The above comparatives for 2017 are for a 17-month period 
         to 30 November 2017 
 

CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT

Overview

We are very pleased to report that K3 has returned to profitability at the operating level, with an adjusted profit from operations (*1) for the financial year of GBP4.6m, against an adjusted loss from operations(*1) of GBP1.6m in the 17-month period to 30 November 2017. Reported profit from operations was GBP0.7m (17 months ended 30 November 2017: loss of GBP14.8m). As importantly, cash generation was significantly stronger too and helped to drive an 86% reduction in net debt at the year end to GBP0.6m from GBP4.3m at 30 November 2017.

These results are very encouraging and better than original market expectations. They reflect the initiatives we started some two years ago to strengthen and reposition the Group.

The key elements of our transformation strategy have been focused on increasing sales of our intellectual property ("IP"), integrating our operations for greater synergies, and improving our customer delivery capability and routes to market. The formal launch of 'K3 I Imagine', our cutting-edge, cloud-native product, in the final quarter of the financial year was an important step in our growth strategy, and it has made good progress since then. We see 'K3 I Imagine' as a cornerstone product for the Group as we increase own IP sales within our overall offering.

Looking ahead, we remain very positive about K3's growth prospects in the new financial year and will continue to focus on growing own IP sales, operational efficiency, and cash generation.

Business Model and Performance

K3 is a leading provider of mission-critical Enterprise Resource Planning ("ERP") and other business solutions for customers who make, move and sell products in the supply chain sector.

We install and support software solutions based on own IP and on Microsoft, Sage and SYSPRO solutions. Our customer base is large, comprising around 3,700 companies in the UK, Europe, the Far East and USA. Once installed, our solutions typically generate high levels of recurring revenues through annual software maintenance renewals, support contracts and hosting, and customer relationships are very long, something we promote through high service levels. This also creates the opportunity for us to upgrade and offer additional products and solutions.

A core element of our growth strategy is to increase revenues from our own IP, which benefits margins and recurring revenues. Our IP underpins our 'stand-alone' products and is also embedded within specific third-party ERP solutions, including Microsoft's. As part of a third-party product, our IP enriches the existing solution with additional functionality and enables us to tailor it for specific market sectors. In doing so, we are able to strongly differentiate our offering from that of the competition, and it also helps to underpin strong customer relationships. While the majority of our sales are direct, through our sales teams, we also sell through channel partners. These indirect sales have the potential to be a major profit driver for the Group and remain a key focus for future growth.

Over the year, our reinvigorated model has supported good sales and margin growth. The change in our market approach for our Enterprise-related product, 'K3 I fashion' (our own IP add-on to a Microsoft ERP product that we previously sold as 'ax I is Fashion') - shifting more towards channel partner sales - is working well, and some major new wins were secured during the year through System Integrators ("SI"). We have also established a new "sell with" relationship with Microsoft, which has resulted in some good new customer wins, helped by a more confident outlook in international markets.

Our revenue percentage from non-UK markets is now 44.0% compared to 32.5% in the 17 months to 30 November 2017. This has been largely driven by the growth in sales from both our channel partner network and from our Global Accounts unit.

During the year we completed and launched the 'K3 I Imagine' platform, a class-leading, cloud native product, which offers customers a scalable platform and easy-to-integrate point solutions. These point solutions include simple apps such as our mobilePOS solution, as well as more complex solutions such as kiosks. We also intend to provide customers with access to the 'K3 I Imagine' platform itself for their own bespoke apps. All these propositions are provided to customers on a Software-as-a-Service ("SaaS") basis i.e. on a consumption model.

An important selling point for the 'K3 I Imagine' platform and our point solutions is that they can be easily and quickly integrated into any existing IT infrastructure. Customers therefore do not need to replace core systems, unlike traditional solutions. As a result, the whole offering enables customers to adopt innovative solutions and applications rapidly and flexibly. It also provides them with a faster return-on-investment and extends the life of their previous IT investments. We plan to develop new applications for 'K3 I imagine', working in conjunction with customers, and will be using proven routes to markets to develop sales in new geographies.

As previously announced, we created a single, Group-level IP unit that is responsible for software development and own IP management. This measure has improved resource utilisation and allows for a more commercially-focused approach, increasing the linkage between our 'build' and 'sell' teams.

Following the completion of the review into the Group's resources at the beginning of the financial year, we announced that we would be combining our Microsoft Dynamics businesses (AX, NAV and CRM) into a single practice to enhance our customer service capability. We are pleased to report that this was successfully concluded during the year. Together the restructuring and efficiency programmes are enabling us to convert earnings more efficiently into cash. At the same time, we are also investing in growth areas notably in our own IP and internationally.

During the year, we also opened an office in Kuala Lumpur, Malaysia, to support our continuing growth in the Far East, especially at our Global Accounts operation.

Financial Results

It should be noted that all comparative figures for 2017 refer to the 17-month period to 30 November 2017.

K3 generated an adjusted profit from operations(*1) of GBP4.6m (2017: adjusted loss from operations(*1) of GBP1.6m), a GBP6.2m turnaround. We incurred charges relating to our Microsoft Dynamics combination programme, including exceptional reorganisation costs of GBP1.4m (2017: GBP4.7m). After adjusting for these exceptional costs, and for amortisation of intangibles of GBP2.5m and share-based payment charge of GBP0.1m, the profit from operations was GBP0.7m (2017: loss from operations of GBP14.8m - with exceptional costs at GBP4.7m, amortisation of intangibles at GBP3.9m, and share-based payment charge at nil).The Board considers it useful to include the share-based payment charge separately because the amount can fluctuate significantly. The share-based payment charge related to the share options granted during the year to 30 November 2018.

Adjusted earnings per share(*3) was 6.8p (2017: adjusted loss per share(*3) of 3.0p as restated), and the basic loss per share reduced to 1.1p (2017: loss per share of 35.3p).

The Group's gross margin percentage increased, reflecting the increased focus of selling our IP, which carries a higher gross margin, as well as better resource utilisation and chargeability in Services. This will remain a focus for the Group over the new financial year.

The major factors influencing the outcome for the period are discussed in the Operational Review.

Balance Sheet and Cash Generation

The Group's working capital continues to improve and has helped to drive strong cash generation together with the improvement in adjusted profit from operations(*1) . At the financial year end, net debt stood at GBP0.6m, which is a GBP3.7m improvement from the same point in 2017 (30 November 2017: net debt of GBP4.3m).

The Group is currently close to finalising an expected extension of its current banking facilities, which expire in October 2019, to March 2021.

Dividend

The Board is pleased to propose an increased final (and total) dividend for the financial year of 1.54p per share (2017: 1.4p), which will become payable, subject to shareholder approval, on the 14 June 2019 to all shareholders on the register on 17 May 2019.

K3's Annual General Meeting will be held on 22 May 2019 at 10.30am at the offices of finnCap Limited, 60 New Broad Street, London, EC2M 1JJ.

Staff

We would like to thank our employees for their dedication and efforts over the financial year. The Company's move into profitability has been supported by their ability and talent, and we look forward to building on the momentum that is now back in the business.

Brexit

The Board has assessed the risk from Brexit and currently does not believe that Brexit, including a 'no-deal' Brexit, will have a material impact on the Group. This view reflects the 'in-country' nature of software implementations and the fact that software deployment does not have physical logistics challenges. However, we are mindful of the potential impact it may have on economic activity in general and on our UK based customers, in particular potentially lengthening decision-making processes. However much of the Group's growth is focused on international markets. The Group's consolidated reported earnings, which are denominated in sterling, would be impacted by any changes in revaluation of non-sterling earnings caused by currency movements.

Outlook

The benefits of the extensive changes we have made to the business over the past two years are now increasingly showing through in our results.

Looking forward over the next financial year, the Group is in a significantly better position to increase profitability and to grow. Sales of products based on our own IP, particularly 'K3 I Imagine', have the potential to be a material driver of margins and recurring income. Since the year end, we have launched a number of 'K3 I Imagine' modules, including a warehouse management product, and early sales of these new applications have been encouraging, with uptake in Asia, Scandinavia and the UK. We have also consolidated sales and marketing into a global team and are in the process of strengthening our sales capability. We will continue to look for internal efficiencies and to realign resource to focus on growth opportunities. The pipeline of deals for 'K3 | fashion' is promising, with some large deals expected.

In addition, the Group is now generating stronger cash flows and its recurring income, which accounts for nearly half total revenues, provides a solid financial underpinning.

As we have highlighted before, K3's revenue profile is changing, reflecting the shift towards 'consumption-based' models, away from 'on-premise' solutions. The effect of this shift is a flattening of the Group's growth profile since revenues are spread over a longer term, rather than paid upfront under the traditional model, and we expect this trend to accelerate.

Trading since end of the financial year has been encouraging and we continue to view prospects positively notwithstanding any further Brexit-related uncertainties. We expect to see the traditional seasonality between the two halves of the financial year, with earnings and cash flows being stronger in the second half than the first half. The difference is principally being due to the timing of a large proportion of software licence and maintenance contract renewals.

S Darling

Chairman

Notes:

 
 (*1)   Group adjusted profit from operations is calculated before 
         amortisation of acquired intangibles of GBP2.51m (2017: GBP3.93m), 
         exceptional reorganisation costs of GBP1.36m (2017: GBP4.73m), 
         exceptional impairment of development costs of GBPnil (2017: 
         GBP4.54m), acquisition costs of GBPnil (2017: GBP0.31m), 
         share-based payment charge of GBP0.10m (2017: GBPnil) and 
         release of contingent consideration of GBPnil (2017: GBP0.39m). 
 (*2)   Group adjusted profit before tax is calculated before amortisation 
         of acquired intangibles of GBP2.51m (2017: GBP3.93m), exceptional 
         reorganisation costs of GBP1.36m (2017: GBP4.73m), exceptional 
         impairment of development costs of GBPnil (2017: GBP4.54m), 
         acquisition costs of GBPnil (2017: GBP0.31m), share-based 
         payment charge of GBP0.10m (2017: GBPnil) and release of 
         contingent consideration of GBPnil (2017: GBP0.39m). 
 (*3)   Group adjusted earnings/(loss) per share is calculated before 
         amortisation of acquired intangibles (net of tax) of GBP1.95m 
         (2017: GBP3.04m), exceptional reorganisation costs (net of 
         tax) of GBP1.36m (2017: GBP4.73m), exceptional impairment 
         of development costs (net of tax) GBPnil (2017: GBP4.54m), 
         acquisition costs (net of tax) of GBPnil (2017: GBP0.31m), 
         share-based payment charge (net of tax) of GBP0.10m (2017: 
         GBPnil) and release of contingent consideration (net of tax) 
         of GBPnil (2017: GBP0.39m). The adjusted EPS/(LPS) for the 
         17 months ended 30 November 2017 has been amended to reflect 
         that there was no tax charge or credit recognised in the 
         period on either the exceptional reorganisation costs or 
         on the exceptional impairment charge. The calculation has 
         been amended to reflect the actual tax charge or credit directly 
         allocable rather than on an effective tax rate as previously 
         determined as the directors consider this to be a fairer 
         representation. 
        Note: The comparatives for 2017 are for a 17-month period 
         to 30 November 2017 
 

Operational Review

Our segmental reporting reflects our objective to focus on driving own IP sales.

It should be noted that the comparative figures for 2017 cover a 17-month period to 30 November 2017

 
                                  Revenue           Gross profit       Adjusted Profit 
                              2018         2017   2018         2017    2018         2017 
                                      17 months           17 months            17 months 
-------------------------  -------  -----------  -----  -----------  ------  ----------- 
                              GBPm         GBPm   GBPm         GBPm    GBPm         GBPm 
 Own IP*(*4)                  17.5         23.4   12.9         15.0     4.2          0.9 
 Supply Chain Solutions 
  & Managed Services(*5)      65.8         94.8   31.0         46.0     6.5          4.7 
 Support costs(*6)                                                    (6.1)        (7.2) 
-------------------------  -------  -----------  -----  -----------  ------  ----------- 
 Total                        83.3        118.2   43.9         61.0     4.6        (1.6) 
-------------------------  -------  -----------  -----  -----------  ------  ----------- 
 
                              2018         2017 
                                      17 months 
                           -------  ----------- 
 Gross margin                52.7%        51.6% 
-------------------------  -------  ----------- 
 
 Recurring revenue: 
  as a percentage 
  of total revenue           48.3%        48.7% 
-------------------------  -------  ----------- 
 Own IP revenues: 
  as a percentage 
  of total revenue           21.0%        19.8% 
-------------------------  -------  ----------- 
 Own IP gross profit: 
  as a percentage 
  of total gross 
  profit                     29.3%        24.6% 
-------------------------  -------  ----------- 
 

Definitions:

 
 *Own IP revenues   includes initial and annual software licences 
                     and those additional revenues which flow directly 
                     from K3 IP. 
 Recurring          comprises software maintenance renewals, support 
  revenue            contracts, and hosting & managed services. 
 

The Group generated revenue of GBP83.3m for the year. This can be compared to unaudited revenue of GBP82.7m for the 12-month period to 30 November 2017, and shows an 0.8% increase.

Recurring revenue accounted for 48.3% of the Group's total revenue for the year (17 months to 30 November 2017: 48.7% - which benefited from two cycles of SYSPRO licence and support renewals).

Own IP revenue of GBP17.5m made up 21.0% of total revenues (17 months to 30 November 2017: 19.8%), which is very encouraging.

Gross profit for the year was GBP43.9m and an unaudited equivalent comparison would show a 5.5% increase year-on-year. The impact of own IP sales on gross profit is very pronounced, with own IP gross profit making up 29.3% of the Group's gross profit (17 months to 30 November 2017: 24.6%).

In addition, the Group has a very high proportion of 'low risk' gross profit, which is derives from recurring revenue, long-term contracted services and account management revenue. Circa 80% of gross profit is generated from these sources.

The Group has moved from an adjusted loss from operations(*2) of GBP1.6m for the 17 months to 30 November 2017 to an adjusted profit from operations(*2) of GBP4.6m for the 12 months to 30 November 2018. This excellent result was driven by the increase in sales of own IP, especially 'K3|fashion', together with services growth and margin expansion in Supply Chain Solutions.

Supply Chain Solutions and Managed Services

K3's business solutions and managed services are tailored to the requirement of the supply chain industry, including retailers, manufacturers and distributors. The Group's core offering is based on Microsoft, SYSPRO and Sage solutions.

 
                            Revenue (GBPm)            Gross profit                    Gross margin 
                                                            (GBPm) 
                         2018         2017        2018        2017                2018        2017 
                                  17 month                17 month                        17 month 
                                                                                            period 
                                    period                  period 
---------------------  ------  -----------  ---  -----  ----------  ---  -------------  ---------- 
 
 Software licences        5.3         10.4         2.7         5.6               50.7%       54.0% 
 Services *              27.4         34.7         7.3         8.8               26.8%       25.3% 
 Recurring **            31.4         45.4        20.5        30.5               65.0%       67.0% 
 Hardware and 
  other                   1.7          4.3         0.5         1.1               31.1%       26.7% 
---------------------  ------  -----------  ---  -----  ----------  ---  -------------  ---------- 
 Total                   65.8         94.8        31.0        46.0               47.1%       48.4% 
---------------------  ------  -----------  ---  -----  ----------  ---  -------------  ---------- 
 
   * Services revenue comprises installation, integration and 
   software development services. 
   ** Recurring revenue comprises software maintenance renewals, 
   support contracts, and hosting & managed services. 
 
 
 
                                         2018    2017 
 Adjusted profit from operations(*4) 
  (GBPm)                                  6.5     4.7 
 Recurring revenue as % of total 
  revenues                              47.8%   47.9% 
 Customer adds (like-for-like)             82      87 
 

Supply Chain Solutions & Managed Services' revenue for the year was GBP65.8m (17 months to 30 November 2017: GBP94.8m), with gross margin at 47.1% (17 months to 30 November 2017: 48.4 %). Recurring revenues made up 47.8% of total revenues. Gross margin was 47.1% and shows a decrease on the 17-month period to 30 November 2017, because 2017 benefited from two cycles of SYSPRO renewals, which has higher associated margin. Services gross margins benefited from better utilisation following the integration of the Dynamics practices and Global Accounts growth. The Microsoft Dynamics integration resulted in the operational and legal merger of our three Dynamics practices and resulted in some exceptional costs. Software margins reduced due to a higher proportion of resale software being from lower margin vendors.

Our Global Accounts business, which includes our relationship with Inter IKEA Systems B.V. (the owner and franchisor of the IKEA concept) and the Inter IKEA Concept franchisees, performed very strongly. Growth is coming from the expansion of franchisee stores, new franchisees being appointed, as well as penetration of own IP into franchisees. Over the last two years, we have doubled the headcount within Global Accounts, and in Spring 2018, we opened an office in Kuala Lumpur, Malaysia to better service growth from the Far Eastern franchisee. We will continue to add resource as required. During the year, we delivered the first franchisee roll out of the IKEA CRM platform. We have also started to sell our Dataswitch product to the Global Accounts customer base and, after the year end, we delivered the first 'K3 I Imagine' warehouse solution, Mobile Goods Flow in Asia.

The SYSPRO business continues to generate strong cash flows and delivered good results. Customer renewals of software licences remained high at 98% (2017: 98%). Both the Sage and Managed Service & Hosting practices continued to improve and generated good profits. As mentioned above, we combined the Microsoft Dynamics units (AX, NAV, CRM) into one practice, benefiting Services gross margins.

Within the Microsoft Dynamics space, we are experiencing a gear-shift in how technology is being delivered, with the model changing from 'on-premise' technology to cloud-based delivery and the associated move to the consumption/subscription pricing model, away from large up-front software licence payments. However, we believe the benefit for K3 will be cloud-based solutions becoming more standardised and thus creating additional opportunities for our products, including 'K3 I fashion' and 'K3 I Pebblestone'. There is also less complexity to implementations, so reducing risk. The move towards cloud-based consumption licensing has positive long-term implications for the Group. The lifetime value of customer relationships under this new model has the potential to be significantly higher compared to the traditional model of perpetual software licences (which are typically paid upfront at the start of a relationship). The shift will affect the Group's rate of reported revenue growth though, since income from cloud/consumption-based contracts is recognised over longer periods. We also report consumption-based income as recurring revenue (as opposed to software revenue under the perpetual software licence model).

Own IP

K3's IP is used in two ways:

 
 --   it is embedded into third party solutions to add extra functionality 
       and produce a richer overall solution for K3's target markets; 
       and 
 --   sold in solely-authored stand-alone solutions. 
 

For instance, 'K3 I fashion' and 'K3 I Pebblestone' are two products that are based on Microsoft Dynamics, while 'Dataswitch', 'DdD' and 'K3 I Imagine' have been solely authored by K3 and are sold as discrete solutions. K3's strategy is to increase the proportion of own IP sales.

 
                      Revenue (GBPm)                          Gross profit           Gross margin 
                                                                    (GBPm) 
                                2018         2017        2018         2017         2018         2017 
                                        17 months                17 months                 17 months 
-------------------  ---------------  -----------  ---  -----  -----------  ---  ------  ----------- 
 
 Software licences               4.3          2.9         4.0          2.6        94.4%        88.4% 
 Services*                       1.6          3.4         0.7          1.3        44.9%        38.2% 
 Recurring **                    8.8         12.1         7.1          9.2        79.8%        76.0% 
 Hardware and 
  other                          2.8          5.0         1.1          1.9        38.2%        38.4% 
-------------------  ---------------  -----------  ---  -----  -----------  ---  ------  ----------- 
 Total                          17.5         23.4        12.9         15.0        73.6%        64.1% 
-------------------  ---------------  -----------  ---  -----  -----------  ---  ------  ----------- 
 
   * Services revenue comprises installation, integration and 
   software development services. 
   ** Recurring revenue comprises software maintenance renewals, 
   support contracts, and hosting & managed services. 
 
 
 
                                         2018         2017 
                                                 17 months 
 Adjusted profit from operations(*5) 
  (GBPm)                                  4.2          0.9 
 Recurring revenue as % of total 
  revenues                              50.6%        52.0% 
 Customer adds (like-for-like)            280          340 
 

Total revenue from own IP over the year amounted to GBP17.5m (17 months to 30 November 2017: GBP23.4m), with gross margins at 73.6% (17 months to 30 November 2017: 64.1%). Recurring revenues gross margin was 79.8% in 2018, up from 76.0% in 2017. Gross profit was GBP12.9m (17 months to 30 November 2017: GBP15.0m) up 22% on a pro-rata basis.

As a share of gross profit, software licences accounted for 31.0% (17 months to 30 November 2017: 17.3%), driven by the strong sales of 'K3 I fashion' through channel partners and SI's, where K3 does not take on the implementation process.

Sales of 'K3 I fashion' recovered markedly in the year. We closed 11 deals in 2018 compared to 7 deals in the 17-month period to November 2017, a pro-rata increase of 220%. Average deal size also increased. In addition, existing customers of 'K3 I fashion' also increased the number of their licences of the product. Channel partner sales were especially strong and we were pleased to see four deals won in the North American market. Major new customer wins included SanMar, a leading US-based supplier of apparel and accessories, Columbia Sportswear, the US-based manufacturer and distributor of outdoor apparel and products, and Oberalp, the European sports clothing and equipment manufacturer and retailer. The strong upturn in deals reflects a number of factors including increasing acceptance of the cloud-based Dynamics 365, our "sell with" relationship with Microsoft, a reinvigorated K3 sales force and IP team. The standardised evergreen nature of Dynamics 365 with continuous updates also means that customers are seeking IP solutions such as 'K3 I fashion' instead of updating bespoke work.

Sales of 'K3 I Pebblestone', our leading business software for the mid-market fashion industry, which we also sell through channel partners, continued to be strong, as in the prior year.

Dataswitch, which is K3's integration suite saw its first full year of trading as a stand-alone product and it generated good sales in line with our expectations. Dataswitch technology also forms the integration layer of our 'K3 I Imagine' suite, linking it to any IT infrastructure.

DdD, which was acquired in 2016, performed well. The DdD product offering has been migrated to our 'K3 I Imagine' mPOS point solution and we are excited about new geographic opportunities for sales expansion.

The development and formal launch this year of the 'K3 I Imagine' platform and modules have been an important step for us. The platform enables us to integrate leading-edge 'module' solutions into any existing IT infrastructure swiftly and cost-effectively. It therefore enables us to bring product innovation and the full power of the cloud to customers in a commercially and operationally attractive way. Our first suite of modules for Imagine are based around our retail offerings, and Imagine mPOS is currently being rolled out in mainland Europe. We plan to expand our portfolio of Imagine solutions so that they are relevant across the supply chain sector. Our offering will range from simple apps to more complex solutions, such as kiosks, and in a further innovation will enable customers to access the Imagine platform for their own bespoke apps. We are working on a number of exciting 'K3 I Imagine' projects and implementations with new and existing customers, and view prospects for the platform and modules very positively.

Support Costs

Support costs include PLC-related costs, director costs, human resources, internal IT, accounting and legal personnel, as well as Group marketing costs. Costs are stated net of recovery of elements recharged to operating units. Support costs(*6) for the 12-month period amounted to GBP6.0m (17 months to 30 November 2017: GBP7.3m).

Outlook

We are encouraged by the progress the Group has made, in particular by own IP business units and by the volume and quality of recent new deals for 'K3 I fashion'. We believe that 'K3 I Imagine' has very strong growth potential and have a clear strategy to expand and drive its growth, both with new and existing customers.

We remain focused on improving the Group's performance and in particular driving own IP revenues, and are confident of continuing progress.

Adalsteinn Valdimarsson

Chief Executive Officer

Notes

 
 
 (*4)   Supply Chain Solutions & Managed Services adjusted profit 
         from operations is calculated before amortisation of acquired 
         intangibles of GBP1.53m (2017: GBP2.10m), exceptional reorganisation 
         costs of GBP1.06m (2017: GBP2.93m), and exceptional impairment 
         of development costs of GBPnil (2017: GBP2.95m). 
 (*5)   Own IP adjusted profit from operations is calculated before 
         amortisation of acquired intangibles of GBP0.98m (2017: 
         GBP1.83m), exceptional reorganisation costs of GBP0.25m 
         (2017: GBP0.25m), exceptional impairment of development 
         costs of GBPnil (2017: GBP1.59m), and release of contingent 
         consideration of GBPnil (2017: GBP0.39m). 
 (*6)   Support costs are calculated before exceptional reorganisation 
         costs of GBP0.09m (2017: GBP1.56m), acquisition costs of 
         GBPnil (2017: GBP0.31m) and share-based payment charge of 
         GBP0.10m (2017: GBPnil). 
 
          Note: The comparatives for 2017 are for the 17 months ended 
          30 November 2017. 
 
 
              CONSOLIDATED INCOME STATEMENT 
               For the year ended 30 November 2018 
                                                          Notes                 Year   17 months 
                                                                   ended 30 November    ended 30 
                                                                                2018    November 
                                                                                            2017 
                                                                             GBP'000     GBP'000 
 
                Revenue                                                       83,335     118,176 
                Cost of sales                                               (39,446)    (57,197) 
               ----------------------------------------  ------  -------------------  ---------- 
                Gross profit                                                  43,889      60,979 
                Administrative expenses                                     (43,205)    (75,762) 
 
                Adjusted profit/(loss) from operations                         4,649     (1,666) 
                Amortisation of acquired intangibles                         (2,507)     (3,930) 
                Acquisition costs                           1                      -       (308) 
                Exceptional reorganisation costs            1                (1,355)     (4,731) 
                Exceptional impairment charge               1                      -     (4,541) 
                Share-based payment charge                  1                  (103)           - 
                Release of contingent consideration         1                      -         393 
 
                Profit/(loss) from operations                                    684    (14,783) 
                Finance expense                                                (667)     (1,360) 
               ----------------------------------------  ------  -------------------  ---------- 
                Profit/(loss) before taxation                                     17    (16,143) 
                Tax (expense)/credit                        2                  (505)       2,773 
                Loss for the year/period                                       (488)    (13,370) 
               ----------------------------------------  ------  -------------------  ---------- 
 
 
 
               All of the profit for the period is attributable to equity shareholders 
               of the parent. 
                (Loss)/earnings per share 
                Basic                        3   (1.1)p   (35.3)p 
 
                Diluted                      3   (1.1)p   (35.3)p 
 
 
 
               CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 
               For the year ended 30 November 2018 
                                                                      Year   17 months 
                                                         ended 30 November    ended 30 
                                                                      2018    November 
                                                                                  2017 
                                                                   GBP'000     GBP'000 
 
                Loss for the year                                    (488)    (13,370) 
               --------------------------------------  -------------------  ---------- 
                Other comprehensive income 
                Exchange differences on translation 
                 of foreign operations                                 300       1,110 
               --------------------------------------  -------------------  ---------- 
                Other comprehensive income                             300       1,110 
               --------------------------------------  -------------------  ---------- 
                Total comprehensive expense for the 
                 year/period                                         (188)    (12,260) 
               --------------------------------------  -------------------  ---------- 
 
 
               All of the total comprehensive expense is attributable to equity 
               holders of the parent. All of the other comprehensive income will 
               be reclassified subsequently to profit or loss when specific conditions 
               are met. None of the items within other comprehensive (expense)/income 
               had a tax impact. 
 
 
 
 
 
               CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
               As at 30 November 2018 
                                                       Notes      2018      2017 
                                                               GBP'000   GBP'000 
                ASSETS 
                Non-current assets 
                Property, plant and equipment                    2,326     2,479 
                Goodwill                                        51,187    51,019 
                Other intangible assets                         18,184    20,539 
                Deferred tax assets                              1,307     1,281 
                Available-for-sale investments                      98        98 
                Total non-current assets                        73,102    75,416 
               -------------------------------------  ------  --------  -------- 
                Current assets 
                Trade and other receivables                     27,006    30,429 
                Cash and cash equivalents                        6,914     1,941 
                Total current assets                            33,920    32,370 
               -------------------------------------  ------  --------  -------- 
                Total assets                                   107,022   107,786 
               -------------------------------------  ------  --------  -------- 
                LIABILITIES 
                Non-current liabilities 
                Long-term borrowings                       4        15     6,170 
                Deferred tax liabilities                         1,814     2,524 
               -------------------------------------  ------  --------  -------- 
                Total non-current liabilities                    1,829     8,694 
               -------------------------------------  ------  --------  -------- 
                Current liabilities 
                Trade and other payables                   5    28,428    29,249 
                Current tax liabilities                            279       127 
                Short-term borrowings                      4     7,517        59 
               -------------------------------------  ------  --------  -------- 
                Total current liabilities                       36,224    29,435 
               -------------------------------------  ------  --------  -------- 
                Total liabilities                               38,053    38,129 
                EQUITY 
                Share capital                                   10,737    10,737 
                Share premium account                           28,897    28,897 
                Other reserves                                  10,448    10,448 
                Translation reserve                              2,486     2,186 
                Retained earnings                               16,401    17,389 
                Total equity attributable to equity 
                 holders of the parent                          68,969    69,657 
               -------------------------------------  ------  --------  -------- 
                Total equity and liabilities                   107,022   107,786 
               -------------------------------------  ------  --------  -------- 
 
 
 
 
 
 
 
               CONSOLIDATED STATEMENT OF CASHFLOWS 
               For the year ended 30 November 2018 
 
 
                                                                  Notes     Year ended    17 months 
                                                                           30 November     ended 30 
                                                                                  2018     November 
                                                                                               2017 
                                                                               GBP'000      GBP'000 
                Cash flows from operating activities 
                Loss for the period                                              (488)     (13,370) 
                Adjustments for: 
                Share-based payments charge                                        103           67 
                Depreciation of property, plant and equipment                      885        1,373 
                Amortisation and impairment of intangible 
                 assets and development expenditure                              5,091       13,481 
                Loss on sale of property, plant and equipment                       22            - 
                Finance expense                                                    667        1,360 
                Tax expense/(credit)                                               505      (2,773) 
                Decrease in trade and other receivables                          2,697       10,022 
                Decrease in trade and other payables                             (853)      (4,206) 
               -----------------------------------------------  -------  -------------  ----------- 
                Cash from operations                               6             8,629        5,954 
                Finance expense paid                                             (662)      (1,237) 
                Income taxes (paid)/received                                     (151)          356 
               -----------------------------------------------  -------  -------------  ----------- 
                Net cash generated from operating activities                     7,816        5,073 
               -----------------------------------------------  -------  -------------  ----------- 
                Cash flows from investing activities 
                Acquisition of subsidiaries, net of cash 
                 acquired                                                            -        (989) 
                Development expenditure capitalised                            (2,627)      (6,158) 
                Purchase of property, plant and equipment                        (748)      (1,307) 
                Net cash used in investing activities                          (3,375)      (8,454) 
               -----------------------------------------------  -------  -------------  ----------- 
                Cash flows from financing activities 
                Net proceeds from issue of share capital                             -        8,408 
                Proceeds from long-term borrowings                               1,204        5,715 
                Payment of long-term borrowings                                      -     (10,885) 
                Payment of finance lease liabilities                              (58)         (77) 
                Dividends paid                                                   (601)        (630) 
               -----------------------------------------------  -------  -------------  ----------- 
                Net cash from financing activities                                 545        2,531 
               -----------------------------------------------  -------  -------------  ----------- 
                Net change in cash and cash equivalents                          4,986        (850) 
                Cash and cash equivalents at start of 
                 period                                                          1,941        2,772 
                Exchange gains (losses) on cash and cash 
                 equivalents                                                      (13)           19 
                Cash and cash equivalents at end of year                         6,914        1,941 
               -----------------------------------------------  -------  -------------  ----------- 
 
 
 
 
 
               CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
               For the year ended 30 November 2018 
                                    Share      Share         Other   Translation    Retained      Total 
                                  capital    premium       reserve       reserve    earnings     equity 
                                  GBP'000    GBP'000       GBP'000       GBP'000     GBP'000    GBP'000 
                At 30 June 
                 2016               9,000     21,586        10,448       (1,997)      27,633     53,495 
               ---------------  ---------  ---------  ------------  ------------  ----------  --------- 
                Changes in 
                equity 
                for period 
                ended 
                30 November 
                2017 
                Loss for the 
                 period                 -          -             -             -    (13,370)   (13,370) 
                Other 
                 comprehensive 
                 income for 
                 the 
                 year                   -          -             -         1,110           -      1,110 
               ---------------  ---------  ---------  ------------  ------------  ----------  --------- 
                Total 
                 comprehensive 
                 income                 -          -             -         1,110    (13,370)   (12,260) 
                Share-based 
                 payment 
                 credit                 -          -             -             -          67         67 
                Warrants 
                 exercised            175        488             -             -           -        663 
                Conversion of 
                 shareholder 
                 loan to 
                 equity               114        526             -             -           -        640 
                Issue of new 
                 shares             1,448      6,297             -             -           -      7,745 
                Movement in 
                 own shares 
                 held                   -          -             -             -          22         22 
                Dividends to 
                 equity 
                 holders                -          -             -             -       (630)      (630) 
               ---------------  ---------  ---------  ------------  ------------  ----------  --------- 
                At 30 November 
                 2017              10,737     28,897        10,448         2,186      17,389     69,657 
               ---------------  ---------  ---------  ------------  ------------  ----------  --------- 
                Changes in 
                equity 
                for year ended 
                30 November 
                2018 
                Loss for the 
                 period                 -          -             -             -       (488)      (488) 
                Other 
                 comprehensive 
                 income for 
                 the 
                 period                 -          -             -           300           -        300 
               ---------------  ---------  ---------  ------------  ------------  ----------  --------- 
                Total 
                 comprehensive 
                 income                 -          -             -           300       (488)      (188) 
                Share-based 
                 payment 
                 credit                 -          -             -             -         103        103 
                Movement in 
                 own shares 
                 held                   -          -             -             -         (2)        (2) 
                Dividends to 
                 equity 
                 holders                -          -             -                     (601)      (601) 
               ---------------  ---------  ---------  ------------  ------------  ----------  --------- 
                At 30 November 
                 2018              10,737     28,897        10,448         2,486      16,401     68,969 
               ---------------  ---------  ---------  ------------  ------------  ----------  --------- 
 
 
 
 
 
 
 
               NOTES 
 
               1. Profit/(loss) from operations and exceptional costs 
 
               During the year, the Group carried out a programme to combine its 
               UK Microsoft Dynamics businesses in addition to continuing the 
               programme commenced during the previous period, and incurred reorganisation 
               costs, predominantly redundancy costs, of GBP1.36m. During the 
               previous period, the Group implemented a programme to simplify 
               and more closely integrate the Group's operations. In order to 
               achieve this, significant changes were made which resulted in exceptional 
               reorganisation costs of GBP4.73m, of which the vast majority were 
               redundancy costs. Also during the prior period, following a review 
               of development costs, the costs relating to certain products that 
               are no longer core to the Group's strategy were written down to 
               GBPnil at a cost of GBP4.54m. This impairment charge had no cash 
               impact. Also during the prior period, the Group incurred costs 
               in relation to acquiring new businesses of GBP0.31m and contingent 
               consideration not required to be paid of GBP0.39m. During the year 
               the Group granted share options for which the charge for the year 
               was GBP0.10m. 
 
               2. Tax expense                                                Year   17 months 
                                                           ended 30    ended 30 
                                                           November    November 
                                                               2018        2017 
                                                            GBP'000     GBP'000 
                Current tax expense/(credit) 
                UK corporation tax on profits/(losses) 
                 for the period                                   -       (508) 
                Income tax of overseas operations for 
                 the period                                     472         120 
                Adjustment in respect of prior periods          745       (176) 
               ----------------------------------------  ----------  ---------- 
                Total current tax expense/(credit)            1,217       (564) 
               ----------------------------------------  ----------  ---------- 
                Deferred tax income 
                Origination and reversal of temporary 
                 differences                                  (629)     (2,046) 
                Effect of change in rate of deferred 
                 tax                                           (83)       (163) 
               ----------------------------------------  ----------  ---------- 
                Total deferred tax income                     (712)     (2,209) 
               ----------------------------------------  ----------  ---------- 
                Total tax expense/(credit) in current 
                 period                                         505     (2,773) 
               ----------------------------------------  ----------  ---------- 
 
 
               3. (Loss)/earnings per share 
 
               The calculations of (loss)/earnings per share are based on the 
               profit/(loss) for the year and the following numbers of shares:                                                 2018         2017 
                                                           Number of       Number 
                                                              shares    of shares 
                Denominator 
 
                Weighted average number of shares 
                 used in basic EPS                        42,871,000   37,893,951 
 
                Effects of: 
                Employee share options and warrants                -            - 
 
                Weighted average number of shares 
                 used in diluted EPS                      42,871,000   37,893,951 
                                                         -----------  ----------- 
 
 
 
 
               Certain employee options and warrants have not been included in 
               the calculation of diluted EPS because their exercise is contingent 
               on the satisfaction of certain criteria that had not been met at 
               the end of the period. 
 
               The alternative earnings per share calculations have been computed 
               because the directors consider that they are useful to shareholders 
               and investors. These are based on the following profits/(losses) 
               and the above number of shares. 
 
 
 
               3. (Loss)/earnings per share (continued) 
                                                    Year ended                   17 months ended 
                                                 30 November 2018          30 November 2017 (restated) 
                                           Earnings      Per        Per   Earnings      Per   Per share 
                                                       share      share               share      amount 
                                                      amount     amount              amount     Diluted 
                                                       Basic    Diluted               Basic 
                                             GBP000        p          p     GBP000        p           p 
                Numerator 
                Loss per share                (488)    (1.1)      (1.1)   (13,370)   (35.3)      (35.3) 
                Add back: 
                Amortisation 
                 of acquired intangibles 
                 (net of tax recognised)      1,952      4.6        4.6      3,037      8.0         8.0 
                Acquisition costs 
                 (net of tax recognised)          -        -          -        308      0.8         0.8 
                Exceptional 
                 reorganisation 
                 costs (net of 
                 tax recognised)              1,355      3.2        3.2      4,731     12.5        12.5 
                Exceptional impairment 
                 charge (net of 
                 tax recognised)                  -        -          -      4,541     12.0        12.0 
                Share-based payment 
                 charge (net of 
                 tax recognised)                103      0.1        0.1          -        -           - 
                Release of contingent 
                 consideration 
                 (net of tax recognised)          -        -          -      (393)    (1.0)       (1.0) 
 
                Adjusted EPS/(LPS)            2,922      6.8        6.8    (1,146)    (3.0)       (3.0) 
                                          ---------  -------  ---------  ---------  -------  ---------- 
 
 
               The adjusted EPS/(LPS) for the 17 months ended 30 November 2017 
               has been amended to reflect that there was no tax charge or credit 
               recognised in the period on either the exceptional reorganisation 
               costs or on the exceptional impairment charge. The calculation 
               has been amended to reflect the actual tax charge or credit directly 
               allocable rather than on an effective tax rate as previously determined 
               as the directors consider this to be a fairer representation. 
 
               4. Loans and borrowings                               2018      2017 
                                           GBP'000   GBP'000 
                Non-current 
                Bank loans (secured)             -     6,124 
                Finance lease creditors         15        46 
                                                15     6,170 
                                          --------  -------- 
                Current 
                Bank loans (secured)         7,485         - 
                Finance lease creditors         32        59 
                                             7,517        59 
                                          --------  -------- 
                Total borrowings             7,532     6,229 
                                          --------  -------- 
 
 
               The Group is currently close to finalising an expected extension 
               of its current banking facilities, which expire in October 2019, 
               to March 2021. 
 
 
 
 
 
 
 
 
               5. Trade and other payables - current                                              2018      2017 
                                                          GBP'000   GBP'000 
                Trade payables                              5,163     4,739 
                Other payables                                903       594 
                Accruals                                    6,945     8,818 
                                                         --------  -------- 
                Total financial liabilities, excluding 
                 loans and borrowings, classified 
                 as financial liabilities measured 
                 at amortised cost                         13,011    14,151 
                Other tax and social security taxes         4,897     3,961 
                Deferred revenue                           10,520    11,137 
                                                           28,428    29,249 
                                                         --------  -------- 
 
 
               6. Notes to the cash flow statement 
 
               Cash flows from operations include acquisition costs and exceptional 
               reorganisation costs arising as a result of acquisitions during 
               the period. The adjusted cash generated from operations has been 
               computed because the Directors consider it more useful to shareholders 
               and investors in assessing the underlying operating cash flow of 
               the Group. The adjusted cash generated from operations is calculated 
               as follows:                                                  Year   17 months 
                                                             ended 30    ended 30 
                                                             November    November 
                                                                 2018        2017 
                                                              GBP'000     GBP'000 
 
                Cash generated from operating activities        8,629       5,954 
                Add: 
                Exceptional reorganisation costs                1,355       4,731 
                Acquisition costs                                   -         308 
                Release of contingent consideration                 -       (393) 
                Adjusted cash generated from operations         9,984      10,600 
                                                           ----------  ---------- 
 
 
               Acquisition of subsidiaries and other business units, net of cash 
               acquired comprises: 
                                                               Year   17 months 
                                                           ended 30    ended 30 
                                                           November    November 
                                                               2018        2017 
                                                             GBP000      GBP000 
                Initial consideration                             -     (1,506) 
                Cash balances acquired                            -         324 
                Contingent consideration repaid 
                 from/(paid into) escrow                          -         393 
                Contingent and deferred consideration             -       (200) 
                                                        -----------  ---------- 
                                                                  -       (989) 
                ---------------------------------------------------  ---------- 
 
 
               7. The Board recommends the payment of a dividend of 1.54p per 
               share (17 month period ended 30 November 2017: 1.4p) payable on 
               14 June 2019 to shareholders on the register on 17 May 2019. 
 
               8. The financial information set out above does not comprise the 
               Company's statutory accounts. The Annual Report and Financial Statements 
               for the 17-month period ended 30 November 2017 have been filed 
               with the Registrar of Companies. The Independent Auditors' Report 
               on the Annual Report and Financial Statement for 17-month period 
               ended 30 November 2017 was unqualified, did not draw attention 
               to any matters by way of emphasis, and did not contain a statement 
               under 498(2) or 498(3) of the Companies Act 2006. 
 
               9. The Independent Auditors' Report on the Annual Report and Financial 
               Statement for the year ended 30 November 2018 was unqualified, 
               did not draw attention to any matters by way of emphasis, and did 
               not contain a statement under 498(2) or 498(3) of the Companies 
               Act 2006. These will be delivered to the Registrar of Companies 
               following the annual general meeting. 
 
               10. The Group's full statutory financial statements for 30 November 
               2018 have been prepared in accordance with International Financial 
               Reporting Standards (IFRSs and IFRIC interpretations) as endorsed 
               by the European Union ("endorsed IFRS") and with those parts of 
               the Companies Act 2006 applicable to companies preparing their 
               accounts under endorsed IFRS. Neither IFRS 15 "Revenue from Contracts 
               with Customers" nor IFRS 9 "Financial Instruments" has been implemented 
               during the year as the mandatory implementation date for the Group 
               is 1 December 2018. The initial impact assessment on both accounting 
               standards is that they will not have a material impact on the financial 
               statements. 
 
               11. This preliminary announcement was approved by the Board of 
               Directors on 18 March 2019. 
 
               12. The full financial statements will be posted to shareholders 
               on or around 17 April 2019. Further copies will also be available 
               on its website (www.k3btg.com) and from the Company's registered 
               office at Baltimore House, 50 Kansas Avenue, Manchester, M50 2GL 
               from that date. 
 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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