[ADVERT]
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
  0.00 0.0% 176.50 175.00 178.00 176.50 176.50 176.50 0.00 07:37:51
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Software & Computer Services 48.8 -20.9 -49.3 - 56

K3 Business Technology Group PLC Interim Results

26/07/2021 7:00am

UK Regulatory (RNS & others)


K3 Business Technology (LSE:KBT)
Historical Stock Chart


From Jul 2021 to Sep 2021

Click Here for more K3 Business Technology Charts.

TIDMKBT

RNS Number : 3471G

K3 Business Technology Group PLC

26 July 2021

AIM: KBT

26 July 2021

K3 BUSINESS TECHNOLOGY GROUP PLC

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

Provider of mission-critical software (owned and third-party) and cloud solutions

Half year results for the six months ended 31 May 2021

Highlights

Financial

   --      First half results from continuing operations in line with management expectations 
   --      Revenue steady at GBP23.2m (2020: GBP23.1m) 

- recurring or predictable income (2) accounted for 68.7% of total revenue (2020: 73.4%)

- own-IP revenue made up GBP8.4m (36%) of total revenue (2020: GBP8.5m (37%))

-- Gross margin reduced to 56.2% (2020: 60.4%), mainly reflecting the effect of the coronavirus crisis on third-party products' customer base, which includes smaller retailers and distributors

   --      Adjusted EBITDA (1) of GBP0.9m (2020: GBP1.7m) 
   --      Loss before tax from continuing operations of GBP4.3m (2020: loss of GBP1.4m) 

-- Adjusted loss per share of 11.9p (2020: loss of 3.5p). Reported earnings per share of 11.6p (2020: loss of 12.2p) includes profit from discontinued activities

   --      Sale of non-core unit, Starcom Technologies, in February for GBP14.7m 

- generated net cash flow of GBP13.8m and a profit after tax of GBP10.8m

-- Significantly strengthened balance sheet with net cash (5) of GBP4.4m (2020: net debt of GBP7.4m)

*2020 results have been restated following the classification of Starcom Technologies Limited and UK Dynamics as discontinued activities

Operational

   --      Appointment of Marco Vergani as CEO on 30 March 2021 

- evaluation of operations and market strategy commenced - will underpin future strategy and allocation of resources. Expected to be substantially completed over the coming months

- management changes made, including appointment of Chief Commercial & Strategy Officer and Customer Success Officer in May and July 2021 respectively

-- Own-IP generated GBP8.4m of revenue (2020: GBP8.5m) and gross profit of GBP6.2m (2020: GBP6.3m).

- Key strategic product, K3|fashion, secured four new customer contracts worth a total of GBP1.7m (2020: GBP1.0m)

- K3|imagine technology is market-leading and continues to offer exciting promise

-- Global Accounts generated GBP9.2m of revenue (2020: GBP8.7m) and gross profit of GBP3.7m (2020: GBP3.8m), reflecting investment in service capability to support growth

-- Third-party products generated GBP5.6m of revenue (2020: GBP5.9m) and gross profit of GBP3.2m (2020: GBP3.8m). The retail and distribution customer base was most disrupted by the coronavirus pandemic.

- SYSPRO customer base performed well with average deal size increasing

- H2 will benefit from strong cash inflow from SYSPRO software licence and support and maintenance contract renewals, typically at c.98%

Marco Vergani, CEO of K3 Business Technology Group plc, said:

"Half year results are in line with management expectations. The Group delivered a resilient performance despite certain parts of the customer base being significantly disrupted by the pandemic.

"Since joining K3 in late March, my priority has been a thorough evaluation of the Group's operations and market strategy. This process is expected to be substantially completed over the coming months. It will help to set a clear strategic course.

"K3 has an exciting product offering and talented teams. This gives us a firm basis from which to move forward as we continue to build own-IP sales, which will generate long-term, high-margin recurring income. We remain very confident that there is a significant market opportunity for the Group, particularly in the fashion, apparel & design market. We expect to make good strategic progress in the second half."

Enquiries:

 
  K3 Business Technology    Marco Vergani, CEO               T: 0161 876 
   Group plc                 Rob Price, CFO                         4498 
  finnCap Limited (NOMAD    Julian Blunt/ James Thompson     T: 020 7220 
   & Broker)                 (Corporate Finance)                    0500 
                             Richard Chambers, Sunila 
                             de Silva (Corporate Broking) 
  KTZ Communications        Katie Tzouliadis/ Dan            T: 020 3178 
                             Mahoney                                6378 
 

CHIEF EXECUTIVE OFFICER'S STATEMENT

Introduction

I am pleased to present the Group's interim results report, my first since having been appointed as Chief Executive Officer on 30 March 2021.

As detailed in the Group's Annual Report for the financial year ended 30 November 2020, K3 made a number of important strategic decisions last year and has established a firm foundation from which to move forward. In particular, the recent sale in February 2021 of the non-core managed services unit, Starcom Technologies Limited ("Starcom"), has tightened our focus on core activities and significantly strengthened the Group's balance sheet.

Among my first actions since joining the Group has been starting a thorough evaluation of operations and K3's market strategy. This process is still ongoing and is expected to be substantially completed over the coming months. It will help to set a clear strategic course, crystallise the allocation of resources, and confirm our commitment to those market segments that we believe offer attractive, long-term growth opportunities, in tune with our products, skill sets and domain strengths.

We have also recently made strategic management changes. These have included the appointment of a Chief Commercial & Strategy Officer in May, and a Customer Success Officer in July. Both these roles are new and both individuals bring significant experience and successful track records of achievement in retail software sales, SaaS, and customer engagement. We intend to supplement the existing strong team at K3 with further selective hires.

K3's focus on building own-IP sales will deliver high-quality, long-term recurring revenue streams and we remain confident about the opportunities ahead. Our products offer exciting growth potential, and our expertise in the Retail sector, particularly in fashion, apparel & design, online, and direct-to-consumer brands, is a significant strength. We believe that there is a substantial opportunity to leverage our knowledge and experience to assist retailers as they seek new technology solutions that will enable them to manage more effectively the fundamental changes in consumer purchasing behaviour and priorities.

The Group's performance over the first half was in line with management expectations. Revenue from continuing operations was steady at GBP23.2m (2020: GBP23.1m). Group gross margin decreased, largely as a result of the weaker contribution from third-party products. This segment saw greatest market softness in the face of the coronavirus. K3|fashion performed well with four contract wins with new customers, worth a total of GBP1.7m, which compares with GBP1.0m in the same period last year. Global Accounts continues to grow although its gross profit contribution was lower reflecting investment in increased resource in the period to support growth.

Financial Results

Results from continuing operations

Revenue from continuing operations in the six months ended 31 May 2021 was constant at GBP23.2m (2020: GBP23.1m) with recurring or predictable revenue(2) accounting for 69% of the total (2020: 73%). The decrease in recurring revenue between the two periods mainly reflected pandemic pressures on certain customer segments, including visitor attraction and smaller retailers and distributors. Own IP products generated GBP8.4m of revenue (2020: GBP8.5m) accounting for 36% of total revenue (2020: 37%). Global Accounts (which supports Inter IKEA Systems B.V., the owner and franchisor of the IKEA concept, and the Inter IKEA Concept franchisees) generated GBP9.2m of revenue (2020: GBP8.7m), and accounted for 40% of total revenue (2020: 38%). Third-party products contributed GBP5.6m of revenue, which accounted for 24% of total revenue.

Gross profit for the period was GBP13.1m (2020: GBP13.9m), with 47% or GBP6.2m (2020: 45% or GBP6.3m) derived from own-IP products. Gross margin decreased to 56% (2020: 60%), which mainly reflected the weaker performance of third-party products, but also lower margin from Global Accounts during a period of investment in services resource.

Underlying support/administrative expenses(7) remained in line with the same period last year, at GBP12.2m (2020: GBP12.2m). Reported administrative expenses increased to GBP16.7m (2020: GBP15.4m), mainly as a result of a GBP1.5m additional amortisation charge due to a change in accounting estimate in the own-IP segment. (See note 4 below). Adjusted EBITDA(1) from continuing activities decreased to GBP0.9m (2020: GBP1.7m). This was largely driven by lower margin from third-party products.

Following depreciation, amortisation, reorganisation and other exceptional costs amounting to GBP4.5m, the loss before tax from continuing activities was GBP4.8m (2020: GBP1.4m).

The adjusted loss per share(6) was 11.9p (2020: loss of 3.5p). This figure excludes amortisation of acquired intangibles of GBP0.3m (2020: GBP0.7m), exceptional reorganisation costs of GBP0.2m (2020: GBP0.2m), and share-based charges of GBP0.2m (2020: GBPnil), and is net of the related tax charge of GBP0.1m (2020: GBP0.1m). Reported earnings per share was 11.6p (2020: loss per share of 12.2p), which includes profit from discontinued activities, specifically from Starcom.

Discontinued activities

Discontinued activities relate to Starcom Technologies Limited ("Starcom"), which was sold on 26 February 2021 for GBP14.7m, and the UK Dynamics subsidiary, which was put into administration on 21 April 2020.

Starcom results for the six months to 31 May 2020 have been restated to present Starcom as a discontinued operation. The unit generated net cash flow of GBP13.8m and a profit after tax of GBP10.8m (2020: GBP0.5m) which includes a profit on disposal of GBP10.3m. UK Dynamics generated loss after tax of GBPnil (2020: GBP3.4m).

Balance sheet and cash flows

The Group balance sheet has been strengthened. Net cash(5) at 31 May 2021 stood at GBP4.4m (31 May 2020: net debt of GBP7.4m and 30 November 2020: net debt of GBP1.9m) with the net proceeds from the sale of Starcom and the loan note conversion in March helping to underpin this result. The Group's cash flow over the financial year is seasonally weighted towards the second half, which benefits from a significant cash inflow from annual software licence and maintenance and support renewals. A large element of this is SYSPRO renewals, which typically have a renewal rate of c.98%.

Net cash used in operating activities was a GBP7.4m outflow (2020: GBP1.1m outflow), reflecting a GBP1.2m inflow from trading (2020: GBP1.1m outflow), offset by a GBP8.6m outflow in working capital (2020: GBPnil). The year-on-year change in working capital outflow is the result of a working capital adjustment of GBP5.1m for discontinued activities, and GBP3.5m repayment of tax deferrals in the UK and Netherlands.

Finance costs increased due to the interest paid on the shareholder loan raised in March 2020 and converted to equity in March 2021 and the additional lender re-finance fees. Amortisation increased to GBP3.2m (2020: GBP2.0m) following the shortening of the amortization policy of internal capitalised development to three years from five to seven years previously. (See note 4).

Development expenditure capitalised has been reduced to GBP1.3m (2020: GBP2.3m).

Operational Review

The Group's results for the six months ended 31 May 2021, together with comparatives for the same period in 2020, are summarised in the tables below. The segmental analysis provides further information on the key areas of activity; Own-IP, Global Accounts and Third-party products (including SYSPRO and Sage).

2020 comparatives have been restated following the classification of Starcom and UK Dynamics as discontinued activities.

 
 (GBPm)                    Revenue              Gross profit         Gross margin 
-----------------  -----------------------  -------------------  -------------------- 
                    2021   2020 (restated)   2021      2020       2021       2020 
                                                     (restated)            (restated) 
 Own-IP              8.4               8.5    6.2           6.3   74.0%         74.4% 
 Global Accounts     9.2               8.7    3.7           3.8   40.1%         43.9% 
 Third-party 
  products           5.6               5.9    3.2           3.8   56.3%         64.6% 
-----------------  -----  ----------------  -----  ------------  ------  ------------ 
 Total              23.2              23.1   13.1          13.9   56.2%         60.4% 
-----------------  -----  ----------------  -----  ------------  ------  ------------ 
 
 
                                         2021    2020 
-------------------------------------  ------  ------ 
 Recurring or predictable revenue(2)    68.7%   73.4% 
 Own-IP gross profit as a percentage 
  of total gross profit(4)              47.4%   45.1% 
-------------------------------------  ------  ------ 
 

Own-IP

K3's own-IP includes;

-- IP embedded within third-party solutions to add extra functionality and produce a richer overall solution for K3's target markets. These solutions include K3|fashion and K3|pebblestone;

-- K3|imagine, our cloud-native platform, which include a set of front end solutions, which can be seamlessly integrated in any technology environment through K3|Dataswitch, our real-time orchestration engine, and Application Programming Interfaces ("APIs"); and

-- other stand-alone point solutions and apps including our legacy point-of-sale ("POS") products.

Revenue generated by own-IP was constant at GBP8.4m (2020: GBP8.5m), with gross profit similarly steady at GBP6.2m (2020: GBP6.3m). The mix of revenue included a greater contribution from two core strategic products, K3|fashion and K3|Pebblestone, and a lower contribution from POS products and hardware sales. Some market sectors for own-IP product, including visitor attractions, continued to be impacted by coronavirus restrictions and underperformed. Gross profit decreased by 2% to GBP6.2m (2020: GBP6.3m), and gross margin remained largely unchanged at 74.0% (2020: 74.4%).

The fashion, apparel & design sector is a key area of investment and growth for us. The structural shifts in the marketplace and changes in consumer buying behaviour underline the need for solutions that correctly address the new commercial challenges. We believe that we are well-placed to capture this growing demand. The focus of our work is on expanding more broadly our existing differentiating features to address the emerging needs and evolving our go-to-market strategy and sales infrastructure to become the recognised provider of choice for this sector.

K3|fashion performed well with four large deals signed with new customers via channel partners, worth a total of GBP1.7m (2020: GBP1.0m). These were with a major children's fashion brand, a global outdoor-wear brand, a major European fashion retailer and a global outdoor sports clothing & equipment brand. Microsoft's endorsement of K3|fashion as its recommended 'add-on' solution for the fashion and apparel sector globally underlines the strong credentials of this product.

We also remain very excited about the potential of the K3|imagine platform and its applications. These include self-serve, point-of-sale, and companion apps, and are predominantly provided on a Software-as-a-Service ("SaaS") basis. While sales currently remain modest, customers bought from across the suite of applications. We will be refocusing our sales resource in line with our new plans over the coming months.

Global Accounts

Revenue from Global Accounts continued to grow, increasing by 6% to GBP9.2m (2020: GBP8.7m) however, gross profit decrease by 3% to GBP3.7m (2020: GBP3.8m) and gross margin reduced by 3.8 percentage points to 40.1% (2020: 43.9%) as the Group invested in new competencies and resources to expand services capability.

The investment will support the ongoing expansion of the IKEA franchisee network into new geographies, including new store openings in South and Central America, and will also support further project work in the Consumer Experience area. This should also directly benefit software licence sales as well as services income. We anticipate further growth opportunities in Global Accounts and intend to strengthen our off-shoring capability to support this growth.

Third-party products

Third-party products include our SYSPRO and Sage products, which we resell in the UK. This area of activity was the most badly affected by the coronavirus crisis, with customers in distribution and retail sectors holding back from supply chain investment and services projects and some retrenching in response to the pandemic.

Revenue decreased by 4.7% to GBP5.6m (2020: GBP5.9m) and gross profit reduced by 17.0% to GBP3.2m (2020: GBP3.8m), with gross margin contracting by 8.3 percentage points to 56.3% (2020: 64.6%). The gross margin decline was driven in particular by our retail and distribution customer base, which was more disrupted by coronavirus-related restrictions. Some existing customers chose not to renew maintenance and support contracts and new business in this area remained soft.

By contrast our manufacturing customer base, which largely comprises SYSPRO customers, was more resilient. We closed an encouraging level of new SYSPRO business and average deal size increased, benefitting software licence, maintenance and support and services income streams.

A high level of software licence and maintenance and support contract renewals from the SYSPRO customer base take place in the second half of the financial year. We expect renewals to continue to be high, in the region of historic levels at around 98%.

Administrative expenses

Underlying support/administrative costs(7) were in line with the same period last year at GBP12.2m (2020: GBP12.2m). Reported administrative expenses increased to GBP16.7m (2020: GBP15.4m) as a result of the GBP1.5m additional depreciation charge due to a change in accounting estimate in our own-IP segment (see note 4 below) offset by a lower amortisation charge as the intangible assets come to the end of their useful life.

Outlook

K3 has an exciting product offering, and we are very confident that there is a significant market opportunity to drive our existing strategy of building own-IP sales, which are higher margin and generate long-term recurring income streams. The fundamental shift that is under way in the retail sector, with customers changing the way that they shop, engage with brands, and judge brand values, is driving a requirement for new solutions, including in AI. K3 provides a channel to readily-adoptable, leading-edge solutions to these commercial issues, and is therefore well-positioned.

We are currently in the process of resetting our growth strategies for key strategic products and will be adding selectively to our existing strong teams to ensure that we have the appropriate blend of talents to support our growth plans.

We will also consider initiatives to improve cash conversion, enhance productivity and simplify the Group. We view prospects for K3 positively and look forward to providing a further update in due course.

Marco Vergani

Chief Executive Officer

Consolidated income statement

for the six months ended 31 May 2021

 
                                         Notes                  Restated^ 
                                                   Unaudited    Unaudited         Audited 
                                                    6 months     6 months       12 months 
                                                   to 31 May    to 31 May              to 
                                                        2021         2020     30 November 
                                                                                     2020 
                                                     GBP'000      GBP'000         GBP'000 
 
 Revenue                                              23,246       23,080          48,819 
 Cost of sales                                      (10,172)      (9,142)        (20,110) 
--------------------------------------  ------  ------------  -----------  -------------- 
 Gross profit                                         13,074       13,938          28,709 
 
 Administrative expenses                            (16,571)     (15,473)        (48,402) 
 Impairment (losses)/gains 
  on financial assets                                  (131)          111           (122) 
--------------------------------------  ------  ------------  -----------  -------------- 
 
 Adjusted EBITDA                                         864        1,734           3,965 
 Depreciation and amortisation             4         (3,841)      (2,265)         (4,500) 
 Amortisation of acquired intangibles                  (284)        (678)         (1,471) 
 Exceptional Impairment                                    -            -        (16,855) 
 Exceptional reorganisation 
  costs                                                (182)        (215)           (934) 
 Share-based payment charge                            (185)            -            (20) 
--------------------------------------  ------  ------------  -----------  -------------- 
 
 
 Loss from operations                                (3,628)      (1,424)        (19,815) 
 
 Finance expense                                     (1,169)         (10)         (1,124) 
--------------------------------------  ------  ------------  -----------  -------------- 
 Loss before taxation from 
  continuing operations                              (4,797)      (1,434)        (20,939) 
--------------------------------------  ------  ------------  -----------  -------------- 
 Tax expense                              11           (951)        (807)             (7) 
--------------------------------------  ------  ------------  -----------  -------------- 
 Loss after taxation from continuing 
  operations                                         (5,748)      (2,241)        (20,946) 
 
 Profit/(loss) after taxation 
  from discontinued operations               6        10,787      (2,980)           (184) 
 
 Profit/(loss) for the period/year                     5,039      (5,221)        (21,130) 
----------------------------------------------  ------------  -----------  -------------- 
 
 

^ The results for the 6 month period ended 31 May 2020 have been restated to present UK Dynamics and Starcom Technologies Limited as discontinued operations.

All the loss for the year is attributable to equity shareholders of the parent.

 
                                      Note                  Restated^ 
                                               Unaudited    Unaudited         Audited 
                                                6 months     6 months       12 months 
                                               to 31 May    to 31 May              to 
                                                    2021         2020     30 November 
                                                                                 2020 
 Profit/(loss) per share 
 Basic and diluted earnings/(loss) 
  per share                            7           11.6p      (12.2)p         (49.3)p 
 Basic and diluted loss per 
  share from continuing operations     7         (13.2)p       (5.2)p         (48.8)p 
 

Consolidated statement of comprehensive income

for the six months ended 31 May 2021

 
                                         Notes                   Restated^ 
                                                    Unaudited    Unaudited         Audited 
                                                     6 months     6 months       12 months 
                                                    to 31 May    to 31 May              to 
                                                         2021         2020     30 November 
                                                                                      2020 
                                                      GBP'000      GBP'000         GBP'000 
 
 Profit/(loss) for the period/year                      5,039      (5,221)        (21,130) 
-----------------------------------------------  ------------  -----------  -------------- 
 Other comprehensive income 
 Exchange differences on translation 
  of foreign operations                                 (842)        1,127           1,065 
-----------------------------------------------  ------------  -----------  -------------- 
 Total comprehensive income/(expense) 
  for the period/year                                   4,197      (4,094)        (20,065) 
-----------------------------------------------  ------------  -----------  -------------- 
 

All the total comprehensive income/(expense) is attributable to equity holders of the parent. All the other comprehensive income will be reclassified subsequently to profit or loss when specific conditions are met. None of the items within other comprehensive income/(expense) had a tax impact.

 
            Consolidated statement of financial 
             position 
             as at 31 May 2021                                                                   Audited 
                                                                      Unaudited   Unaudited     as at 30 
                                                                       as at 31    as at 31     November 
                                                   Notes               May 2021    May 2020         2020 
                                                                        GBP'000     GBP'000      GBP'000 
 ASSETS 
 Non-current assets 
 Property, plant and equipment                                            1,629       2,067        1,866 
 Right-of-use assets                                                      1,851       3,136        2,719 
 Goodwill                                                                25,733      41,429       26,132 
 Other intangible assets                                                  8,408      15,190       10,271 
 Deferred tax assets                                                        680         618          935 
 Total non-current assets                                                38,301      62,440       41,923 
                                                          ---------------------  ----------  ----------- 
 
 Current assets 
 Trade and other receivables                          11                 12,045      16,908       12,195 
 Cash and cash equivalents                                                6,295      12,403        9,306 
 Assets classified as held for 
  sale                                                                        -           -        6,899 
                                                          ---------------------  ----------  ----------- 
 Total current assets                                                    18,340      29,311       28,400 
                                                          ---------------------  ----------  ----------- 
 
 Total assets                                                            56,641      91,751       70,323 
                                                          ---------------------  ----------  ----------- 
 
 LIABILITIES 
 Non-current liabilities 
 Lease liabilities                                                          926       1,959        1,735 
 Borrowings                                                                   -       3,000            - 
 Provisions                                                                 472         303          416 
 Deferred tax liabilities                                                   925       1,312          889 
                                                          ---------------------  ----------  ----------- 
 Total non-current liabilities                                            2,323       6,574        3,040 
                                                          ---------------------  ----------  ----------- 
 
 Current liabilities 
 Trade and other payables                             10                 12,478      20,437       19,145 
 Current tax liabilities                                                  1,577       1,514        1,274 
 Lease liabilities                                                          943       1,125          925 
 Borrowings                                            8                  1,901      16,788       12,443 
 Provisions                                                                 122         150            9 
 Liabilities directly associated 
  with assets classified as held 
  for sale                                                                    -           -        3,572 
                                                          ---------------------  ----------  ----------- 
 Total current liabilities                                               17,021      40,014       37,368 
                                                          ---------------------  ----------  ----------- 
 
 Total liabilities                                                       19,344      46,588       40,408 
                                                          ---------------------  ----------  ----------- 
 EQUITY 
 Share capital                                                           11,183      10,737       10,737 
 Share premium account                                                   31,451      28,897       28,897 
 Other reserves                                                          11,151      10,448       11,151 
 Translation reserve                                                      1,781       2,685        2,623 
 Retained earnings                                                     (18,269)     (7,604)     (23,493) 
                                                          ---------------------  ----------  ----------- 
 Total equity attributable to equity 
  holders of the parent                                                  37,297      45,163       29,915 
                                                          ---------------------  ----------  ----------- 
 
 Total equity and liabilities                                            56,641      91,751       70,323 
                                                          ---------------------  ----------  ----------- 
 
 

Consolidated Cash Flow Statement

for the six months ended 31 May 2021

 
                                                                                          Restated^ 
                                                                             Unaudited    Unaudited          Audited 
                                                                              6 months     6 months     12 months to 
                                                                             to 31 May    to 31 May      30 November 
                                                                                  2021         2020             2020 
                                                                  Notes        GBP'000      GBP'000          GBP'000 
 Cash flows from operating activities 
---------------------------------------------------------------  -------  ------------  -----------  --------------- 
 Profit/(loss) for the period                                                    5,039      (5,221)         (21,130) 
------------------------------------------------------------------------  ------------  -----------  --------------- 
 Adjustments for: 
 Finance expense                                                                 1,160          467            1,137 
 Tax expense                                                                       841          526            (284) 
 Depreciation of property, plant and equipment                                     268          359              730 
 Impairment loss on property, plant and equipment                                    -            6                - 
 Depreciation of right-of-use assets                                               869          864            1,727 
 Amortisation of intangible assets and development expenditure                   3,219        2,000            4,247 
 Gain on sale of subsidiary                                                   (10,314)            -                - 
 Impairment of intangible assets                                                     -           16           16,855 
 Loss on sale of property, plant and equipment                                       -            -              254 
 Share-based payments charge                                                       185            -               20 
 Loss on disposal of discontinued operations, net of tax                             -            -              957 
 Increase in provisions                                                            169           39               71 
 Decrease in trade and other receivables                                         1,062        5,172            6,680 
 Decrease in trade and other payables                                          (9,863)      (5,243)          (2,688) 
------------------------------------------------------------------------  ------------  -----------  --------------- 
 Cash (used in)/generated from operations                                      (7,365)      (1,015)            8,596 
 Income taxes                                                                     (38)         (94)            (364) 
------------------------------------------------------------------------  ------------  -----------  --------------- 
 Net cash (used in)/generated from operating activities                        (7,403)      (1,109)            8,232 
 Cash flows from investing activities 
 Net cash flow arising on the sale of businesses                                13,795            -                - 
 Development expenditure capitalised                                           (1,330)      (2,290)          (4,516) 
 Purchase of property, plant and equipment                                           -        (255)            (713) 
------------------------------------------------------------------------  ------------  -----------  --------------- 
 Net cash from/(used in) investing activities                                   12,465      (2,545)          (5,229) 
 Cash flows from financing activities 
 Proceeds from loans and borrowings                                                  -        9,482            9,950 
 Issue of shares                                                                 3,000            -                - 
 Repayment of loans and borrowings                                             (9,254)            -          (6,468) 
 Repayment of lease liabilities                                                  (791)        (802)          (1,841) 
 Interest paid on lease liabilities                                              (131)        (168)            (308) 
 Finance expense paid                                                          (1,050)        (444)            (590) 
 Dividends paid                                                                      -            -                - 
---------------------------------------------------------------  -------  ------------  -----------  --------------- 
 Net cash (used in)/from financing activities                                  (8,226)        8,068              743 
------------------------------------------------------------------------  ------------  -----------  --------------- 
 Net change in cash and cash equivalents                                       (3,164)        4,414            3,746 
------------------------------------------------------------------------  ------------  -----------  --------------- 
 Cash and cash equivalents at start of period/year                               7,566        3,841            3,841 
 Exchange gains /(losses) on cash and cash equivalents                             (8)           36             (21) 
------------------------------------------------------------------------  ------------  -----------  --------------- 
 Cash and cash equivalents at end of period/year                                 4,394        8,291            7,566 
 
 

Consolidated statement of Changes in Equity

for the period ended 31 May 2021

 
                                                                         Translation         Retained 
                      Share capital   Share premium   Other reserves         reserve         earnings   Total equity 
                            GBP'000         GBP'000          GBP'000         GBP'000          GBP'000        GBP'000 
 At 1 December 2019          10,737          28,897           10,448           1,558          (2,383)         49,257 
-------------------  --------------  --------------  ---------------  --------------  ---------------  ------------- 
 Changes in equity 
 for the six 
 months ended 31 
 May 2020 
 Loss for the 
  period                          -               -                -               -          (5,221)        (5,221) 
 Other 
  comprehensive 
  income for the 
  period                          -               -                -           1,127                -          1,127 
-------------------  --------------  --------------  ---------------  --------------  ---------------  ------------- 
 Total 
  comprehensive 
  income/(expense)                -               -                -           1,127          (5,221)        (4,094) 
 At 31 May 2020              10,737          28,897           10,448           2,685          (7,604)         45,163 
-------------------  --------------  --------------  ---------------  --------------  ---------------  ------------- 
 Changes in equity 
 for period ended 
 30 November 2020 
 Loss for the 
  period                          -               -                -               -         (15,909)       (15,909) 
 Other 
  comprehensive 
  income for the 
  period                          -               -                -            (62)                -           (62) 
-------------------  --------------  --------------  ---------------  --------------  ---------------  ------------- 
 Total 
  comprehensive 
  income/(expense)                -               -                -            (62)         (15,909)       (15,971) 
 Share-based 
  payment expense                 -               -                -               -               20             20 
 Issue of warrants                -               -              703               -                -            703 
 At 30 November 
  2020                       10,737          28,897           11,151           2,623         (23,493)         29,915 
-------------------  --------------  --------------  ---------------  --------------  ---------------  ------------- 
 Changes in equity 
 for period ended 
 31 May 2021 
 Gain for the year                -               -                -               -            5,039          5,039 
 Other 
  comprehensive 
  income for the 
  period                          -               -                -           (842)                -          (842) 
-------------------  --------------  --------------  ---------------  --------------  ---------------  ------------- 
 Total 
  comprehensive 
  income/(expense)                -               -                -           (842)            5,039          4,197 
 Share issue                    446           2,554                -               -                -          3,000 
 Share-based 
  payment expense                 -               -                -               -              185            185 
-------------------  --------------  --------------  ---------------  --------------  ---------------  ------------- 
 At 31 May 2021              11,183          31,451           11,151           1,781         (18,269)         37,297 
-------------------  --------------  --------------  ---------------  --------------  ---------------  ------------- 
 
   1              Segment information 

For the six months ended 31 May 2021

 
 
                                       K3 Own IP     Global Accounts   3(rd) party products   Central Costs      Total 
                                         GBP'000             GBP'000                GBP'000         GBP'000    GBP'000 
 Total segment revenue                    10,800              10,361                  5,753               -     26,914 
 Less Inter-segment revenue              (2,423)             (1,134)                  (111)               -    (3,668) 
 Software licence revenue                  2,148               1,013                    994               -      4,155 
 Services revenue                            701               6,738                  1,785               -      9,224 
 Maintenance & support                     4,951               1,476                  2,804               -      9,231 
 Hardware and other revenue                  577                   -                     59               -        636 
 External revenue                          8,377               9,227                  5,642               -     23,246 
 Cost of sales                           (2,179)             (5,526)                (2,467)               -   (10,172) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Gross profit                              6,198               3,701                  3,175               -     13,074 
 Gross margin                              74.0%               40.1%                  56.3%                      56.2% 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Administrative expenses(7)                    -                   -                      -        (12,210)   (12,210) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Adjusted EBITDA(1) from continuing 
  operations                               6,198               3,701                  3,175        (12,210)        864 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Depreciation and amortisation                 -                   -                      -         (3,841)    (3,841) 
 Amortisation of acquired 
  intangibles                                  -                   -                      -           (284)      (284) 
 Exceptional reorganisation costs              -                   -                      -           (182)      (182) 
 Share-based payment (charge)/credit           -                   -                      -           (185)      (185) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Loss from operations                      6,198               3,701                  3,175        (16,702)    (3,628) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Finance expense                               -                   -                      -         (1,169)    (1,169) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Loss before tax and discontinued 
  operations                               6,198               3,701                  3,175        (17,871)    (4,797) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Tax expense                                   -                   -                      -           (951)      (951) 
 Profit from discontinued operations           -                   -                      -          10,787     10,787 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Profit for the year                       6,198               3,701                  3,175         (8,035)      5,039 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 
 

For the six months ended 31 May 2020

 
 
                                       K3 Own IP     Global Accounts   3(rd) party products   Central Costs      Total 
                                         GBP'000             GBP'000                GBP'000         GBP'000    GBP'000 
 Total segment revenue                    12,406              10,922                  6,658             458     30,444 
 Less Inter-segment revenue              (3,951)             (2,220)                  (735)           (458)    (7,364) 
 Software licence revenue                  1,988                 319                    656               -      2,963 
 Services revenue                            551               6,947                  1,788               -      9,286 
 Maintenance & support                     5,088               1,436                  3,473               -      9,997 
 Hardware and other revenue                  828                   -                      6               -        834 
 External revenue                          8,455               8,702                  5,923               -     23,080 
 Cost of sales                           (2,163)             (4,884)                (2,095)               -    (9,142) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Gross profit                              6,292               3,818                  3,828               -     13,937 
 Gross margin                              74.4%               43.9%                  64.6%                      60.4% 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Administrative expenses(7)                    -                   -                      -        (12,204)   (12,204) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Adjusted EBITDA(1) from continuing 
  operations                               6,292               3,818                  3,828        (12,204)      1,734 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Depreciation and amortisation                 -                   -                      -         (2,265)    (2,265) 
 Amortisation of acquired 
  intangibles                                  -                   -                      -           (678)      (678) 
 Exceptional reorganisation costs              -                   -                      -           (215)      (215) 
 Loss from operations                      6,292               3,818                  3,828        (15,362)    (1,424) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Finance expense                               -                   -                      -            (10)       (10) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Loss before tax and discontinued 
  operations                               6,292               3,818                  3,828        (15,372)    (1,434) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Tax expense                                   -                   -                      -           (807)      (807) 
 Loss from discontinued operations             -                   -                      -         (2,980)    (2,980) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Loss for the year                         6,292               3,818                  3,828        (19,159)    (5,221) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 
 

For the twelve months ended 30 November 2020

 
 
                                       K3 Own IP     Global Accounts   3(rd) party products   Central Costs      Total 
                                         GBP'000             GBP'000                GBP'000         GBP'000    GBP'000 
 Total segment revenue                    20,100              19,479                 16,146             458     56,183 
 Less Inter-segment revenue              (3,951)             (2,220)                  (735)           (458)    (7,364) 
 Software licence revenue                  3,248                 718                  1,798               -      5,764 
 Services revenue                          1,169              13,472                  3,180               -     17,821 
 Maintenance & support                    10,308               3,045                 10,362               -     23,715 
 Hardware and other revenue                1,424                  24                     71               -      1,519 
 External revenue                         16,149              17,259                 15,411               -     48,819 
 Cost of sales                           (3,909)             (9,845)                (6,356)               -   (20,110) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Gross profit                             12,240               7,414                  9,055               -     28,709 
 Gross margin                              75.8%               43.0%                  58.8%               -      58.8% 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Administrative expenses(7)                    -                   -                      -        (24,744)   (24,744) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Adjusted EBITDA(1) from continuing 
  operations                              12,240               7,414                  9,055        (24,744)      3,965 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Depreciation and amortisation                 -                   -                      -         (4,500)    (4,500) 
 Amortisation of acquired 
  intangibles                                  -                   -                      -         (1,471)    (1,471) 
 Exceptional impairment                        -                   -                      -        (16,855)   (16,855) 
 Exceptional reorganisation costs              -                   -                      -           (934)      (934) 
 Exceptional customer settlement               -                   -                      -               -          - 
 provision 
 Share-based payment (charge)/credit           -                   -                      -            (20)       (20) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Loss from operations                     12,240               7,414                  9,055        (48,524)   (19,815) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Finance expense                               -                   -                      -         (1,124)    (1,124) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Loss before tax and discontinued 
  operations                              12,240               7,414                  9,055        (49,648)   (20,939) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Tax expense                                   -                   -                      -             (7)        (7) 
 Loss from discontinued operations             -                   -                      -           (184)      (184) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 Loss for the year                        12,240               7,414                  9,055        (49,839)   (21,130) 
------------------------------------  ----------  ------------------  ---------------------  --------------  --------- 
 
 
   2              General information 

K3 Business Technology Group Plc is incorporated in England and Wales under the Companies Act (listed on AIM, a market operated by the London Stock Exchange Plc) with the registered number 2641001. The address of the registered office is Baltimore House, 50 Kansas Avenue, Manchester M50 2GL.

The interim condensed consolidated financial statements comprise the company and its subsidiaries, "the Group".

   3              Basis of preparation and Going Concern 

The financial information set out in this Interim Report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 30 November 2020, prepared in accordance with the international accounting standards in conformity with the requirements of the Companies Act 2006, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The interim financial information has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards ("IFRS") and on the same basis and using the same accounting policies as used in the financial statements for the year ended 30 November 2020, subject to the introduction of any new accounting standards applicable in the period and with the exception of the change in accounting estimate as detailed in Note 4 below.

The financial information has not been prepared (and is not required to be prepared) in accordance with IAS 34. The accounting policies have been applied consistently throughout the Group for the purposes of preparation of this financial information.

The Interim Report has not been audited or reviewed in accordance with the International Standard on Review Engagement 2410 issued by the Auditing Practices Board.

Although there still exists some uncertainty due to the ongoing disruption arising from COVID -- 19 the Directors have concluded this is not material. Following the sale of the Starcom subsidiary on 26 February 2021, for net proceeds of GBP13.8m, the Group also successfully agreed an extension to its Revolving Credit Facility with Barclays with a facility of GBP3.5m to March 2022 with a further option to extend to March 2023. As a result of these actions, at 31 May 2021 the Group had net cash of GBP4.4m compared to net debt of GBP1.9m at 30 November 2020 and net debt of GBP7.4m at 31 May 2020.

The Directors therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing this financial information.

   4              Critical accounting estimates, judgements and sources of estimation uncertainty 

For the accounting period beginning 1 December 2020 the Group has reviewed the depreciation method of assets in line with the requirements of IAS 38 Intangible Assets. The Group has identified that the pattern of consumption of benefits relating to the capitalised development costs for our own IP assets in our Irish subsidiary had changed. As a result the depreciation method has been changed from straight line 5-7 years to straight line 3 years.

This change has been applied prospectively from 1 December 2020 as it constitutes a change in estimate under IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. This change in accounting policy has resulted in the following adjustment to the depreciation charge:

 
                                              Unaudited    Unaudited        Audited 
                                               6 months     6 months      12 months 
                                              to 31 May    to 31 May             to 
                                                   2021         2020    30 November 
                                                                               2020 
                                                GBP'000      GBP'000        GBP'000 
 Depreciation and amortisation - previous 
  accounting policy                               2,315        2,265          4,500 
 Adjustment                                       1,526            -              - 
                                            -----------  -----------  ------------- 
 Depreciation and amortisation - new 
  accounting policy                               3,841        2,265          4,500 
                                            -----------  -----------  ------------- 
 

With the exception of the above there have been no further material revisions to the nature and amount of changes in estimates of amounts reported in the financial statements for the year ended 30 November 2020.

   5              Significant events 

On 30 March 2021 the Group reached agreement with two of its major shareholders, Kestrel Partners LLP (represented by Non-executive Director Oliver Scott) and Johan Claesson (also Non -- executive Director) via his associated company, CA Fastigheter AB to convert the full principal amount of the GBP3.0m shareholder loans into ordinary shares of 25p each in the Company at a conversion price of GBP1.68 per Ordinary Share (being the prevailing bid-price on 26 March 2021).

On 26 February 2021 the Group announced the sale of the Starcom business (see note 6).

The Group successfully agreed an extension to its Revolving Credit Facility with Barclays with a facility of GBP3.5m to March 2022 with a further option to extend to March 2023.

   6              Discontinued operations 

On 26 February 2021 the Group announced the sale of the Starcom business for consideration of GBP14.7m. As a major line of business the results of Starcom for the 6 months to 31 May 2021 have been presented as discontinued operations. The results for the six months ended 31 May 2020 have been restated to present Starcom as discontinued operations. At 30 November 2020 Starcom was classified as a disposal group held for sale as the discontinued operation represented a major line of business of the Group.

The results of the Starcom business for the periods presented were:

 
                                                                Restated^ 
                                                   Unaudited    Unaudited         Audited 
                                                    6 months     6 months       12 months 
                                                   to 31 May    to 31 May              to 
                                                        2021         2020     30 November 
                                                                                     2020 
                                                     GBP'000                      GBP'000 
 
 External revenue                                      2,309        4,470           9,519 
 Cost of sales                                         (845)      (1,639)         (3,966) 
---------------------------------------------  -------------  -----------  -------------- 
 Gross profit                                          1,464        2,831           5,553 
 
 Administrative expenses                             (1,011)      (2,126)         (4,320) 
 Impairment losses on financial 
  assets                                                   -         (73)            (25) 
 Amortisation of acquired intangibles                   (99)        (161)           (322) 
 Profit from operations                                  354          471             886 
 
 Finance income/(expense)                                  9         (26)            (73) 
 
 Profit after taxation from 
  discontinued operations                                363          445             813 
---------------------------------------------  -------------  -----------  -------------- 
 Tax credit/(expense)                                    110           11              22 
---------------------------------------------  -------------  -----------  -------------- 
 Profit for the year from discontinued 
  operations after tax                                   473          456             835 
---------------------------------------------  -------------  -----------  -------------- 
 Gain on sale of subsidiary after                     10,314   -            -               - 
  income tax (see below) 
---------------------------------------------  -------------  -----------  -------------- 
 Profit for the year from discontinued 
  operations                                          10,787          456             835 
---------------------------------------------  -------------  -----------  -------------- 
 
 
 
                                          Unaudited    Unaudited        Audited 
                                           6 months     6 months      12 months 
                                          to 31 May    to 31 May             to 
                                               2021         2020    30 November 
                                                                           2020 
                                            GBP'000                     GBP'000 
 
 Basic and diluted profit per 
  share from discontinued operations           24.8          1.1            1.9 
 

The major classes of assets and liabilities of the Starcom business classified as held for sale as at 30 November 2020 are as follows:

 
                                                    2020 
                                                 GBP'000 
 Property, plant, and equipment                      237 
 Right-of-use assets                                 332 
 Goodwill                                          2,373 
 Other intangible assets                             690 
 Deferred tax assets                                 136 
 Trade and other receivables                       1,871 
 Cash and cash equivalents                         1,260 
----------------------------------------------  -------- 
 Assets classified as held for sale                6,899 
----------------------------------------------  -------- 
 Trade and other payables                        (3,196) 
 Provisions                                         (60) 
 Lease liabilities                                 (316) 
----------------------------------------------  -------- 
 Liabilities directly associated with assets 
  classified as held for sale                    (3,572) 
----------------------------------------------  -------- 
 Net Assets directly associated with disposal 
  group                                            3,327 
----------------------------------------------  -------- 
 

The net cashflows incurred by Starcom are as follows:

 
                                Unaudited    Unaudited        Audited 
                                 6 months     6 months      12 months 
                                to 31 May    to 31 May             to 
                                     2021         2020    30 November 
                                                                 2020 
                                  GBP'000      GBP'000        GBP'000 
 
 Operating                            379        (232)          1,096 
 Investing                              -        (121)          (155) 
 Financing                         12,835         (27)          (133) 
                              -----------  -----------  ------------- 
 Net cash inflow/(outflow)         13,214        (380)            808 
                              -----------  -----------  ------------- 
 

Gain on sale

 
                                                           Unaudited 
                                                            6 months 
                                                           to 31 May 
                                                                2021 
                                                             GBP'000 
 Consideration received: 
 Cash                                                         14,747 
                                                         ----------- 
 Final consideration                                          14,747 
                                                         ----------- 
 Carrying amount of net assets sold                          (3,878) 
                                                         ----------- 
 Gain on sale before costs and income tax                     10,869 
                                                         ----------- 
 Costs incurred in connection with the agreed disposal 
  of the Starcom business                                      (555) 
 Income tax expense on gain                                        - 
                                                         ----------- 
 Gain on sale after income tax                                10,314 
                                                         ----------- 
 

Net cash flow arising on the sale of Starcom

 
                              Unaudited 
                               6 months 
                              to 31 May 
                                   2021 
                                GBP'000 
 Cash consideration              14,747 
 Cash at date of disposal         (415) 
 Disposal costs paid              (537) 
                            ----------- 
 Net cash inflow                 13,795 
                            ----------- 
 

On 21 April 2020, the UK Dynamics subsidiary was put into administration and has been classified as a discontinued operation as it represented a major line of business for the Group. No assets or liabilities relating to UK Dynamics were held by the Group at 30 November 2020.

The results of the UK Dynamics business for the year up to its administration are presented below.

 
                                          Unaudited        Audited 
                                           6 months      12 months 
                                          to 31 May             to 
                                               2020    30 November 
                                                              2020 
 
 Revenue                                      3,789          3,789 
 Cost of sales                              (3,533)        (3,533) 
--------------------------------------  -----------  ------------- 
 Gross profit                                   256            256 
 
 Administrative expenses                    (1,375)        (1,375) 
 Impairment losses on financial                   -                - 
  assets 
 Loss from operations                       (1,119)        (1,119) 
 
 Finance income/(expense)                        60             60 
--------------------------------------  -----------  ------------- 
 Loss before taxation from 
  discontinued operations before 
  group costs                               (1,059)        (1,059) 
--------------------------------------  -----------  ------------- 
 
 Impairment of UK Dynamics                        -              - 
  Goodwill 
 Cost incurred with the disposal 
  of UK Dynamics                            (2,645)          (229) 
 
 Loss before taxation from 
  discontinued operations                   (3,703)        (1,288) 
--------------------------------------  -----------  ------------- 
 Tax credit/(expense)                           269            269 
--------------------------------------  -----------  ------------- 
 Loss for the year from discontinued 
  operations                                (3,434)          (1,019) 
--------------------------------------  -----------  --------------- 
 
 
                                          Unaudited        Audited 
                                           6 months      12 months 
                                          to 31 May             to 
                                               2020    30 November 
                                                              2020 
                                                           GBP'000 
 
 Basic and diluted loss per 
  share from discontinued operations          (8.0)          (2.4) 
 

The net cashflows incurred by UK Dynamics are as follows:

 
                                Unaudited        Audited 
                                 6 months      12 months 
                                to 31 May             to 
                                     2020    30 November 
                                                    2020 
                                  GBP'000        GBP'000 
 
 Operating                        (1,063)        (1,063) 
 Investing                              -              - 
 Financing                           (15)           (15) 
                              -----------  ------------- 
 Net cash inflow/(outflow)        (1,618)        (1,618) 
                              -----------  ------------- 
 
   7              Earnings/(loss) per share 

The calculations of (loss)/earnings per share (EPS) are based on the profit/(loss) for the year and the following numbers of shares:

 
                                        Unaudited    Unaudited        Audited 
                                         6 months     6 months      12 months 
                                        to 31 May    to 31 May             to 
                                             2021         2020    30 November 
                                                                         2020 
 Denominator                              GBP'000      GBP'000        GBP'000 
 
 Weighted average number of 
  shares used in basic and diluted 
  EPS                                  43,602,052   42,871,000     42,899,598 
 

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/year.

 
                                                              Restated 
                                                Unaudited    Unaudited         Audited 
                                                 6 months     6 months       12 months 
                                                to 31 May    to 31 May              to 
                                                     2021         2020     30 November 
                                                                                  2020 
                                                  GBP'000      GBP'000         GBP'000 
 
 Loss after tax from continuing operations        (5,748)      (2,241)        (20,946) 
 Profit/(loss) after tax from discontinued 
  operations                                       10,787      (2,980)           (184) 
                                             ------------  -----------  -------------- 
 Profit/(loss) attributable to ordinary 
  equity holders of the parent for 
  basic and diluted earnings per share              5,039      (5,221)        (21,130) 
                                             ------------  -----------  -------------- 
 

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.

 
                                                  Unaudited    Unaudited          Audited 
                                                   6 months     6 months        12 months 
                                                  to 31 May    to 31 May               to 
                                                       2021         2020      30 November 
                                                                                     2020 
                                                    GBP'000      GBP'000          GBP'000 
 
 Loss after tax from continuing operations          (5,748)      (2,241)         (20,946) 
 Add back Other Items 
 Amortisation of acquired intangibles                   284          678            1,471 
 Exceptional reorganisation costs                       182          215              934 
 Exceptional impairment costs                             -            -           16,855 
 Shared-based payment charge                            185            -               20 
 Tax charge related to Other Items                     (78)        (146)            (405) 
 
 Loss attributable to ordinary equity 
  holders of the parent for basic and 
  diluted earnings per share from continuing 
  operations before other items                      (5,175)         (1,495)        (2,071) 
                                               -------------  --------------  ------------- 
 
 
 
                                        Unaudited    Unaudited        Audited 
                                         6 months     6 months      12 months 
                                        to 31 May    to 31 May             to 
                                             2021         2020    30 November 
                                                                         2020 
                                          GBP'000      GBP'000        GBP'000 
------------------------------------  -----------  -----------  ------------- 
 Profit/(loss) per share 
 Basic and diluted earnings/(loss) 
  per share                                 11.6p      (12.2)p        (49.3)p 
 Basic and diluted loss per share 
  from continuing operations              (13.2)p       (5.2)p        (48.8)p 
------------------------------------  -----------  -----------  ------------- 
 Adjusted loss per share 
 Basic and diluted loss per share 
  from continuing operations before 
  other items                             (11.9)p       (3.5)p         (4.8)p 
------------------------------------  -----------  -----------  ------------- 
 
   8              Loans and borrowings 
 
                                                                       Audited 
                                             Unaudited   Unaudited    as at 30 
                                              as at 31    as at 31    November 
                                              May 2021    May 2020        2020 
                                               GBP'000     GBP'000     GBP'000 
 Non-current 
 Bank loans (secured)                                -           -           - 
 Shareholder loans (unsecured)                       -       3,000           - 
                                 ---------------------  ----------  ---------- 
                                                     -       3,000           - 
                                 ---------------------  ----------  ---------- 
 Current 
 Bank overdrafts (secured)                       1,901       4,112       3,000 
 Bank loans (secured)                                -      12,676       6,771 
 Shareholder loans (unsecured)                       -           -       2,672 
                                 ---------------------  ----------  ---------- 
                                                 1,901      16,788      12,443 
                                 ---------------------  ----------  ---------- 
                                                 1,901      19,788      12,443 
                                 ---------------------  ----------  ---------- 
 
   9              Net debt 
 
                                                              Audited 
                                    Unaudited   Unaudited    as at 30 
                                     as at 31    as at 31    November 
                                     May 2021    May 2020        2020 
                                      GBP'000     GBP'000     GBP'000 
 Loans and borrowings                 (1,901)    (19,788)    (12,443) 
 Cash                                   6,295      12,403       9,306 
 Cash - held for sale                       -           -       1,260 
 Net cash/(debt)                        4,394     (7,385)     (1,877) 
                        ---------------------  ----------  ---------- 
 
   10           Trade and other payables 
 
                                                                                Audited 
                                                      Unaudited   Unaudited    as at 30 
                                                       as at 31    as at 31    November 
                                                       May 2021    May 2020        2020 
                                                        GBP'000     GBP'000     GBP'000 
 
 Trade payables                                           2,144       2,621       2,376 
 Other payables                                           1,100       3,209       1,222 
 Accruals                                                 2,391       2,726       4,269 
                                          ---------------------  ----------  ---------- 
 Total financial Liabilities, excluding 
  loans and borrowings, classified 
  as financial liabilities measures 
  at amortised cost                                       5,635       8,556       7,867 
 Other tax and social security 
  tax                                                     2,163       4,912       4,782 
 Contract liabilities                                     4,680       6,969       6,496 
                                                         12,478      20,437      19,145 
                                          ---------------------  ----------  ---------- 
 
   11           Trade and other receivables 
 
                                                                 Audited 
                                       Unaudited   Unaudited    as at 30 
                                        as at 31    as at 31    November 
                                        May 2021    May 2020        2020 
                                         GBP'000     GBP'000     GBP'000 
 
 Trade receivables                         8,309      12,104       8,268 
 Loss allowance                          (1,089)     (1,325)     (1,329) 
                           ---------------------  ----------  ---------- 
 Trade receivables - net                   7,220      10,779       6,939 
 Other receivables                           128         507         177 
 Contract assets                           3,009       3,109       3,220 
 Prepayments and stock                     1,688       2,513       1,859 
                                          12,045      16,908      12,195 
                           ---------------------  ----------  ---------- 
 
   12           Tax 
 
                                                         Unaudited    Unaudited        Audited 
                                                          6 months     6 months      12 months 
                                                         to 31 May    to 31 May             to 
                                                              2021         2020    30 November 
                                                                                          2020 
                                                           GBP'000      GBP'000        GBP'000 
 Current tax expense 
 Income tax of overseas operations 
  on profits/(losses) for the period/year                      662          532            397 
 Adjustment in respect of prior 
  periods                                                        -         (86)           (59) 
                                            ----------------------  -----------  ------------- 
 Total current tax expense                                     662          446            338 
                                            ----------------------  -----------  ------------- 
 
 Deferred tax expense/(income) 
 Origination and reversal of temporary 
  differences                                                (272)           32          (622) 
 Adjustment in respect of prior 
  periods                                                      451           48              - 
                                            ----------------------  -----------  ------------- 
 Total deferred tax expense/(income)                           179           80          (622) 
                                            ----------------------  -----------  ------------- 
 
 Total tax expense/(credit)                                    841          526          (284) 
                                            ----------------------  -----------  ------------- 
 
 Income tax expense attributable 
  to continuing operations                                     951          806              7 
 Income tax credit attributable 
  to discontinued operations                                 (110)        (280)          (291) 
                                            ----------------------  -----------  ------------- 
                                                               841          526          (284) 
                                            ----------------------  -----------  ------------- 
 
   13           Non-statutory information 

The Group uses a variety of alternative performance measures, which are non-IFRS, to assess the performance of its operations. The Group considers these performance measures to provide useful historical financial information to help investors evaluate the underlying performance of the business.

These measures, as described below, are used to improve the comparability of information between reporting periods and geographical units, to adjust for exceptional items or to adjust for businesses identified as discontinued to provide information on the ongoing activities of the Group. This also reflects how the business is managed and measured on a day-to-day basis.

1 Adjusted EBITDA - is the loss from continuing activities adjusted to exclude depreciation and amortisation of development costs GBP3.8m (May 2020: GBP2.3m, Nov 2020 GBP4.5m), amortisation of acquired intangibles GBP0.3m (May 2020: GBP0.7m, Nov 2020 GBP1.5m), exceptional impairment costs GBPnil (May 2020 GBPnil, Nov 2020 GBP16.9m) exceptional reorganisation costs GBP0.2m (May 2020: GBP0.2m, Nov 2020 GBP0.9m), and share-based charges GBP0.2m (May 2020: GBPnil, Nov 2020 GBP0.1m).

2 Recurring or predictable revenue - Contracted support, maintenance and services revenues with a framework agreement of 2 years or more, as a percentage of total revenue

3 Own IP revenue as a percentage of total revenue - Own IP revenue (which includes initial and annual software licences), GBP8.4m (May 2020 GBP8.5m Nov 2020 GBP16.1m), as a percentage of total Group revenue, GBP23.2m (May 2020 GBP23.1m, Nov 2020 GBP48.8m).

4 Own IP gross profit as a percentage of total gross profit - Own IP gross profit, GBP6.2m (May 2020 GBP6.3m Nov 2020 GBP12.2m), as a percentage of total Group gross profit, GBP13.1m (May 2020 GBP13.9m, Nov 2020 GBP28.7m).

5 Net cash/debt comprises Bank Loans, Shareholder Loans and Overdrafts less Cash and cash equivalents, including Cash and cash equivalents held for sale.

6 Adjusted loss/earnings per share - basic loss per share from continuing operations adjusted to exclude amortisation of acquired intangibles GBP0.3m (May 2020: GBP0.7m, Nov 2020 GBP1.5m), exceptional impairment costs GBPnil (May 2020 GBPnil, Nov 2020 GBP16.9m) exceptional reorganisation costs GBP0.2m (May 2020: GBP0.2m, Nov 2020 GBP0.9m), and share-based charges GBP0.2m (May 2020: GBPnil, Nov 2020 GBP0.1).net of the related tax charge GBP0.1m (May 2020 GBP0.1m, Nov 2020 GBP0.4m).

7 Underlying support/admin costs - administrative expenses adjusted to exclude depreciation and amortisation of development costs GBP3.8m (May 2020 GBP2.3m Nov 2020 GBP4.5m), amortisation of acquired intangibles GBP0.3m (May 2020 GBP0.7m, Nov 2020 GBP1.5m), exceptional impairment costs GBPnil (May 2020 GBPnil, Nov 2020 GBP16.9m), exceptional reorganisation costs GBP0.2m (May 2020 GBP0.2m, No 2020 GBP0.9m) and share-based charges GBP0.2m (May 2020 GBPnil, Nov 2020 GBP0.1m).

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.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

IR FLFSSDAIVFIL

(END) Dow Jones Newswires

July 26, 2021 02:00 ET (06:00 GMT)

1 Year K3 Business Technology Chart

1 Year K3 Business Technology Chart

1 Month K3 Business Technology Chart

1 Month K3 Business Technology Chart
ADVFN Advertorial
Your Recent History
LSE
KBT
K3 Busines..
Register now to watch these stocks streaming on the ADVFN Monitor.

Monitor lets you view up to 110 of your favourite stocks at once and is completely free to use.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V:gb D:20210919 11:31:19