AIM: KBT
This announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and
is disclosed in accordance with the company's obligations under
Article 17 of MAR
K3 BUSINESS TECHNOLOGY GROUP
PLC
("K3"
or "the Group" or "the Company")
Provider of business-critical software solutions focused on
fashion and apparel brands.
Final results for the year
to 30 November 2023
Key Points
|
|
Restated
|
|
FY 2023
|
FY 2022
|
Revenue from continuing
operations
|
£43.8m
|
£47.2m
|
Gross profit
|
£27.1m
|
£27.9m
|
―
|
gross margin
|
62%
|
59%
|
Adjusted operating
profit/(loss)1
|
£1.3m
|
(£0.6m)
|
Loss
before tax from continuing operations
|
(£1.8m)
|
(£4.1m)
|
Net
cash1
|
£8.3m
|
£7.1m
|
Reported
loss per share
|
(5.4p)
|
(9.5p)
|
Adjusted
gain/(loss) per share for continuing operations
|
1.0p
|
(4.6p)
|
|
|
|
|
1refer to note
10
Financial
· Stronger financial position, with improved cash generation
and tighter cost discipline supporting increased net cash at
financial year end of £8.3m (30 November 2022: £7.1m).
· Total revenue decreased by 8% to £43.8m (2022: £47.2m) mainly
reflecting lower revenue from Global Accounts. Approx £0.4m (2022:
£0.3m) of income was not recognised as a result of the new revenue
recognition policy for K3 fashion and apparel products (income from
contracts is now recognised over the term of the contract, instead
of upfront).
· Total annual recurring revenue ("ARR") increased to £24.7m
(2022: £22.4m), including double-digit ARR growth from K3 fashion
and apparel products and from the NexSys business unit.
· Encouraging return to profitability with adjusted operating
profit of £1.3m (2022: loss of £0.6m)
o adjusted operating profit/loss metric has replaced adjusted
EBITDA as a key performance indicator, being a better proxy for
cash generation.
· Benefits of further cost reduction measures implemented in
the second half will be felt in FY 2024 and beyond.
Operational
· Move
to new business unit structure at financial year end establishes a
better platform for the Group as the Board focuses on driving cash
and value.
· K3
Products division - continued strong sales growth from fashion and
apparel offering ("Fashion portfolio").
o Revenue of £13.1m (2022: £12.6m); gross profit of £10.4m
(2022: £9.8m), which is after £0.4m of Fashion portfolio revenue
not booked (2022: £0.3m), in line with new revenue recognition
policy.
o Gross profit margin of 79% (2022: 78%).
o Fashion portfolio increased ARR by 28% to £5.8m at
period-end, driven by both new customer wins and existing customers
expanding their software licences.
o New dedicated management team at Retail Solutions has
delivered benefits.
o Strategic decision to integrate K3 ViJi capabilities within
Fashion portfolio's existing corporate social responsibility
functionalities rather than maintain it as stand-alone
product.
· Third-party Solutions division - results impacted by downturn
in activity at Global Accounts, which offset strong growth in the
NexSys business unit.
o Revenue of £30.7m (2022: £34.7m) and gross profit of £16.7m
(2022: £18.1m).
o Gross profit margin of 55% (2022: 52%) - reflected revenue
mix and reduced overheads.
o NexSys (formerly known as SYSPRO); performed strongly with
average deal size increased and a number of large new contracts
secured.
o Global Accounts; significant slowdown in second half;
remedial action taken to reduce cost base.
Current Trading and Prospects
· The
Board remains focused on the transition to higher quality recurring
earnings, as well as cash generation, cost discipline and
additional operational simplification, which will help to drive
further shareholder value.
· Group trading in the first quarter of the new financial year
is in line with budget, and K3 has a stronger balance sheet than in
FY22, which should continue to strengthen. While the markets that
K3 serves remain challenging, the Board believes that both
divisions have good growth opportunities.
· Overall, the Board expects cash generation to continue to
improve in FY24 and the Group to deliver a higher adjusted
operating profit result.
Tom
Crawford, Executive Chairman of K3 Business Technology Group plc,
said:
"We made good progress in a number of important areas and
achieved some significant financial and strategic milestones
against a challenging trading environment. In particular, the
Group's balance sheet has strengthened. Our Fashion portfolio
performed well and has attractive growth opportunities. Third-party
Solutions contended with a slowdown at Global Accounts, however the
NexSys operations grew strongly and continues to generate
dependable and significant cash flows from software licence and
maintenance and support renewals from its large user
base.
"The transition to a unit structure will support our drive to
generate value for shareholders and we remain disciplined in our
focus on cash generation, costs and the shift to higher quality
earnings. As we move through the new financial year, we expect K3
to generate increased cash and deliver a further improvement in
adjusted operating profit."
Enquiries:
K3 Business Technology Group
plc
www.k3btg.com
|
Tom Crawford, Executive
Chairman
Eric Dodd, Chief Financial
Officer
|
T: 020
31786378 (today)
|
|
|
T: 0161 876 4498
|
finnCap Limited
(NOMAD & Broker)
|
Julian Blunt/ Dan
Hodkinson
(Corporate Finance)
Sunila De Silva (Corporate
Broking)
|
T: 020 7220 0500
|
|
|
|
KTZ Communications
|
Katie Tzouliadis/ Robert
Morton
|
T: 020 3178 6378
|
EXECUTIVE CHAIRMAN'S
STATEMENT
Overview
We made good progress over the year
in a number of important areas and, against a challenging trading
backdrop, K3 has achieved some significant financial and strategic
milestones.
The Group has continued to
strengthen its financial position, with improved cash generation
raising net cash at the financial year-end to £8.3m from £7.1m This
was helped by tightening cost discipline across the Group, as well
as further actions to address overheads.
Operationally, we are seeing
encouraging progress with our strategic products for the fashion
and apparel market ("Fashion portfolio") in the K3 Products
division. The Fashion portfolio delivered 28% growth in annualised
recurring revenue ("ARR") to £5.8m from £4.5m in the prior year. K3
Fashion, our flagship product, which is globally endorsed by
Microsoft, performed particularly strongly and its growth potential
remains exciting. In addition a new dedicated management team at
the Retail Solutions unit has driven meaningful performance
improvements, including higher margins and customer
retention.
Within the Third-party Solutions
division, the NexSys operation, which
makes up 68% of the division's revenues and drives the division's
significant cash generation, grew
strongly. The unit increased its extensive installed customer base
with new larger customer wins, in line with strategy. Importantly,
software licence and support and
maintenance contract renewals at NexSys remained very high at 98%
(2022: 98%) and its net revenue retention was 109%. Against this,
Global Accounts, also part of the division, contended with a
slowdown in activity. The slowdown, which was apparent in the first
half, was sharper in the second half, and we responded with
steps to address the resource
base.
While overall Group revenue
decreased by 8% to £43.8m, the Group
significantly improved other key performance measures year-on-year.
Total annual recurring software revenue increased to £24.7m from
£22.4m last year, with the Fashion portfolio and NexSys both
generating double-digit ARR growth. Adjusted operating
profit1 moved from a loss of £0.6m in the prior
financial year to a profit of £1.3m. Gross profit margin increased
significantly to 62% from 59% in the prior year, and gross margin
at both K3 Products and Third-party Solutions divisions was higher
year-on-year, at 79% and 55% respectively (2022: 78% and 52%%).
Free cash flow1 is a key performance measure for the
Board, and this improved from an outflow of £1.8m in 2022 to an
inflow of £1.1m in 2023, which is a £2.9m
turnaround.
Looking ahead, we expect further
progress in the new financial year as software revenues grow and we
maintain a disciplined approach to development allocation and cost
base control. Our strategic decision to incorporate the nascent K3
ViJi product capability into our Fashion portfolio products, rather
than maintain it as a standalone offering, will help
here.
At the K3 Products division, the
Fashion portfolio, which is sold via our business partner network,
has good growth prospects. The new team at Retail Solutions is confident of lifting net revenue
retention, which is now at 103%, and has refined the account
management and sales strategy.
At the Third-party Solutions
division, we have ambitious targets for NexSys, supported by a good
new business pipeline. The slowdown in customer activity at Global
Accounts is expected to continue in the short to medium term, but
the resource base is now more appropriately sized.
Financial Results
Total revenue for the year ended 30
November 2023 decreased by 8% to £43.8m (2022: £47.2m). On a
constant currency basis, total revenue was 7%
lower year-on-year. The reduction mainly reflected lower
revenue from Global Accounts, whose customers pulled back on
expansion and project spend from the levels seen prior to summer
2023. As reported with interim results, the Group's revenue
recognition policy for the Fashion portfolio was changed in this
financial year. Revenue from fashion product contracts is now
recognised over the term of the contract rather than proportionally
upfront after the completion of software installation, and matches
revenue to cash collection. The change in policy has reduced
revenue by £0.4m (2022: £0.3m).
Gross profit was £27.1m (2022:
£27.9m), reflecting lower revenue and deferred gross profit of
£0.4m from the Fashion portfolio following the implementation of
the new revenue recognition policy.
Nonetheless, gross margin was higher at 62%
(2022: 59%), with both Divisions actively working to improve gross
margins.
A key performance measure for the
Group previously was adjusted EBITDA. As reported with interim
results, we have now replaced this measure with adjusted operating
profit/(loss)1, since the Board believes it is a better
proxy for understanding underlying profitability and cash
requirements. This has resulted in revised administration expenses,
which now include depreciation and amortisation being shown in the
comparative 2022 data.
We are pleased to report that the
Group has delivered an adjusted operating profit of £1.3m for the
financial year compared to a loss in the prior year (2022: loss of
£0.6m measured on the same basis). This £1.9m turnaround in
performance was supported by higher gross margins and lower costs.
It is also after the change in our revenue recognition policy for
fashion and apparel software sales.
The table below provides the
reconciliation between adjusted operating profit in the financial
year and adjusted EBITDA in the prior year.
|
|
Restated
|
|
|
FY 2023
£'000
|
FY 2022
£'000
|
Change
%
|
Adjusted EBITDA (as
previously reported for FY 2022)
|
3,497
|
5,064
|
-31%
|
-
|
depreciation and amortisation
|
(2,234)
|
(5,383)
|
-58%
|
-
|
Impact of
change in revenue recognition on FY22
|
NA
|
(280)
|
NA
|
Adjusted operating
profit/(loss)
|
1,263
|
(599)
|
+311%
|
Amortisation decreased year-on-year
due to lower capitalisation of development costs in FY23 and the
impact of impairments in FY22.
The reported loss from operations
reduced to £1.4m (2022: loss of £3.8m), an improvement of £2.4m.
The major factor driving this improvement was a significant
reduction in overheads, with £2.7m taken out of the Group's cost
base. The reported loss from operations is stated after £4.2m of
impairment and reorganisation costs, and historical acquisition
credit of £0.3m resulting from reversal of contingent
consideration, partly offset by a credit resulting from a £1.1m
reversal of share-based payment charges (2022: £2.3m of impairment,
reorganisation and acquisition costs, and share-based payment
charges of £0.9m).
Reported adjusted administrative
expenses decreased by 10% to £25.9m (2022: £28.4m), helped by our
tighter focus on costs in the second half, a discipline that
continues to yield savings.
The reported loss before tax
decreased to £1.8m (2022: loss of £4.1m), a £2.3m advancement. This
mainly reflects our actions over the cost base, as stated above.
Net finance expenses were £0.4m (2022: £0.3m).
Adjusted earnings per share shows a
significant improvement at 1.0p from the prior year (2022: loss of
4.9p). Adjusted gain/(loss) per share excludes exceptional
reorganisation costs, exceptional impairment costs, acquisition
costs/credit and share-based charges/credit and is net of the
related tax credit of £0.2m (2022: charge £1.0m). The reported loss
per share, which includes profit from
discontinued activities, also improved at
5.4p (2022: 9.5p).
Balance sheet and cash flows
The Group balance sheet remains
strong, with cash and cash equivalents of £8.3m (2022: £7.1m) and
net cash of £8.3m (2022: £7.1m). K3 has banking facilities with
Barclays, which provides for the drawdown of up to £3.0m to support
seasonal cash movements. This facility agreement was extended in
March 2024 on standard terms for a further two years until March
2026, with optional future renewals. The extension was based on a
facility maximum of £2.8m. At 30 November 2023, £nil was drawn down
(2022: £nil).
Group cash flow is weighted towards
the second half of the financial year. This reflects the
significant cash inflows that fall due in this period from annual
software licence and maintenance and support contract renewals. A
large proportion of these renewals are for NexSys software, where
renewals remained very high at 98%, which was in line with prior
years, as expected.
Cash inflow from operations
increased to £3.5m (2022: £2.4m). Net cash used in investing
activities decreased significantly at £1.4m (2022: £2.7m). This
resulted from our more disciplined approach to development
expenditure as well as actions to simplify the business. The £1.4m
included spend on property, plant and equipment of £0.6m (2022:
£0.8m), lower development expenditure capitalised at £0.7m (2022:
£1.7m) and ViJi acquisition-related outflow of £0.1m (2022:
£0.2m).
Growth Strategy
The Board's focus is on driving
cash generation and shareholder value. In practise, this means that
we are concentrating on the growth of those software products and
solutions that are differentiated in their market verticals and
provide demonstratable benefits to customers.
The K3 Products division continues
to offer the opportunity of significantly higher-margin growth.
This reflects the fact that its solutions are based on K3
intellectual property ("IP"). A key focus is the development and
growth of our core strategic fashion and apparel products
and, in particular, the K3 Fashion product.
Microsoft has endorsed K3 Fashion as its 'go to' embedded solution
for the fashion and apparel sector. We believe that its growth
opportunity is significant and our route-to-market remains our
network of business partners. We are now further enhancing our
Fashion portfolio with additional sustainability functionality from
our ViJi product and are working with Microsoft and our business
partners to move fashion brands to our specialist offering in the
cloud.
NexSys (formerly K3 SYSPRO), which
delivers and supports ERP solutions for manufacturers and
distributors in the UK, generates significant recurring revenue and
strong predictable cash flows. Our focus with NexSys is to target
larger, higher-value projects, as well as moving into attractive
adjacent verticals. The Global Accounts business, which also makes
up the Third-party Solutions division, is a long-established
partner to the overseas franchisees of the Inter IKEA Concept.
While the expansion of IKEA stores by franchisees has slowed,
leading to a significantly weaker performance, Global Accounts,
nonetheless, remains a key support and services partner to this
network.
Operational Review
The Group's segmental results for
the financial year ended 30 November 2023 and comparatives for 2022
are summarised in the tables below. Reporting is divided between
the K3 Products division and the Third-party Solutions division. K3
Products encompasses K3's own products and includes strategic
fashion and apparel products, for which the revenue recognition
change had a one-off impact in this year's results, and Retail
Solutions. The Third-party Solutions division consists of NexSys
and Global Accounts, and revenues comprise a mix of recurring
revenue (from software licence renewals, and support and
maintenance contracts), and revenues from systems integration and
professional services, as well as one-off software
licences.
Year ended 30 November
|
Revenue (£m)
|
Gross profit (£m)
|
Gross margin
|
|
2023
|
2022
restated
|
2023
|
2022
restated
|
2023
|
2022
restated
|
K3 Products
|
13.1
|
12.6
|
10.4
|
9.8
|
79%
|
78%
|
Third-party Solutions
|
30.7
|
34.7
|
16.7
|
18.1
|
55%
|
52%
|
Total
|
43.8
|
47.2
|
27.1
|
27.9
|
62%
|
59%
|
|
K3 Products - K3 Fashion
portfolio
|
2023
|
Year-on-year change
|
Annualised Recurring Revenue (ARR)
|
£5.8m
|
+28%
|
K3
Products
The division provides software
products and solutions that are powered by our own IP. They
comprise:
•
|
strategic products focused on
fashion and apparel markets (the Fashion portfolio);
|
•
|
solutions for the visitor
attraction market; and other stand-alone point-of-sale retail
solutions and apps ("Retail Solutions").
|
£m
|
2023
|
2022
restated
|
Revenue
|
13.1
|
12.6
|
Gross
profit
|
10.4
|
9.8
|
Gross
margin (%)
|
79%
|
78%
|
Adjusted
operating loss
|
(4.8)
|
(6.9)
|
|
Our Fashion portfolio, which
includes our Microsoft-endorsed flagship product, K3 Fashion,
continued to grow strongly, and its annualised recurring revenue
increased by 28% over the year to £5.8m. Total divisional revenue
increased by 4% to £13.1m (2022: £12.6m). The implementation
of the new revenue recognition policy for fashion products meant
that £0.4m of revenue was not recognised in the financial year
under review, but will be recognised in future years. Similarly,
the revenue figure for the 2022 financial year has been restated to
take account of the new policy. This resulted in £0.3m of revenue
being deferred into future years. The Division's overall
performance was also impacted by high development expenditure on K3
ViJi and K3 Imagine. We reviewed the commercial opportunity for
both these two products, and have addressed cost base accordingly.
Further commentary is below.
Gross profit for the year
increased to £10.4m (2022: £9.8m). This figure and the last year's
comparative are both stated after the effect of the new revenue
recognition policy. Gross margin improved to 79% (2022: 78%). The
rise reflected the higher margin revenue mix, together with pricing
and actions at Retail Solutions, where the new dedicated management
team addressed the cost base and implemented other
initiatives.
Sales of our K3 Fashion flagship
product were extremely encouraging and mainly drove the 28% rise in
total annualised recurring revenue in the Fashion portfolio, with a
contribution of £1.2m to incremental ARR in the financial year. A
total of five significant new customers were added, and existing
customers continued to expand their software licence estate with
us. As we previously announced, in the first half of the financial
year, the business partner network secured the largest global
deployment of K3 Fashion to date, with a major global
jewellery/watches retailer. This contract is worth c. £1.4m over
three years. Other significant signings included: a c. £1.0m,
three-year contract with a Swedish outdoor sports fashion brand; a
c. £0.5m five-year contract with a major Swiss outdoor brand; and a
five-year contract with a European golf brand. Existing
customers took up further software licences for K3 Fashion, with
these including a music mail-order and merchandising retailer and a
major wedding apparel designer. Each added an additional c. £0.2m
of annual recurring revenue to the Fashion portfolio.
As these incremental software
licence orders demonstrate, new customer wins have the potential to
grow over time. The typical pathway is for new customers to buy
software licences for centralised functions, including purchasing,
catalogue management and pricing management, and then to take up
additional software licences as they progressively roll-out our
software across their operations in distribution centres and
stores.
K3 Fashion continues to be
globally endorsed by Microsoft as its recommended embedded solution
for the fashion and apparel vertical, and our business partner
network remains the main route-to-market for the Fashion portfolio.
We continued to invest in supporting our business partner network
though our channel partner and centre of excellence
team.
The new dedicated management team
at Retail Solutions is driving improvements in adjusted operating
profit, net revenue retention and customer satisfaction.
Net revenue retention is now above 100% and the
new business unit leader has refocused account management and sales
activities.
We came to a difficult judgement
at the end of the financial year, which was to withdraw further
investment in our standalone sustainability product for fashion
retailers, K3 ViJi, acquired in January 2022. The decision was
taken after a strategic and commercial assessment. While the market
for sustainability solutions is emerging and evolving legislative
drivers will promote greater focus in this area by fashion
retailers, we concluded that, in the current, challenging retail
environment, the required return on investment within our desired
timeframe for a standalone product, was not likely to be met. We
are therefore concentrating on integrating K3 ViJi's capabilities
within K3 Fashion's existing corporate social responsibility
functionalities, and will promote our sustainability offering as
features within our existing Fashion portfolio.
Third-party Solutions
Third-party Solutions comprises
two units:
•
|
NexSys, which is a high-margin,
value-added reseller and systems integrator of SYSPRO ERP enriched
with K3 IP and partner modules. Its solutions address the needs of
manufacturers and distributors, and are typically 'on-premise'.
Revenues are generated from implementations, software licence sales
(including renewals), and maintenance and support contracts. With
over 40 years' experience in providing innovative ERP solutions for
its chosen markets, NexSys has a large installed base of UK
customers.
|
•
|
Global Accounts, which provides
specialist services and support, predominantly to the Inter IKEA
Concept overseas franchisee network.
|
£m
|
2023
|
2022
restated
|
Revenue
|
30.7
|
34.7
|
Gross
profit
|
16.7
|
18.1
|
Gross
margin %
|
55%
|
52%
|
Adjusted
operating profit
|
8.3
|
8.1
|
|
The Division's revenue and profit
performance was significantly affected by the downturn in activity
at Global Accounts, which mainly provides its specialist services
to the overseas franchisees of the Inter IKEA Concept. This offset
the strong growth at NexSys, which performed very well.
Total revenue was down by 11.5% to
£30.7m year-on-year (2022: £34.7m) and gross profit decreased by 8%
to £16.7m (2022: £18.1m). However, gross margin increased to 55%
(2022: 52.%). This improvement reflected the revenue mix, and
specifically the higher proportion of software licence and
maintenance and support income, as well as the actions taken to
adjust the Global Accounts resource base.
The beginnings of a slowdown in
activity that we reported in the first half at Global Accounts
materialised strongly in the second half of financial year. As
highlighted with interim results, we have taken remedial action to
adjust the contractor resource base in light of more subdued
activity, with limited new IKEA store openings. We continue to
assist franchisees with our specialist services, focusing on
support and developing new ways of working in response to
franchisee needs. However, we expect a lower-level of
activity in the short to medium term.
The NexSys business (the new name
for our K3 SYSPRO operations), which provides business-critical ERP
solutions for the UK manufacturing and distribution markets,
continued to perform very well. Against the difficult
backdrop of higher energy costs for the sector, which prompted some
prospects to defer decisions, NexSys secured six major new wins
over the financial year, including larger contracts, in line with
strategy. New contracts included a c. £0.6m deal with a
manufacturer of automotive plastic components, a c. £0.4m win with
a bicycle manufacturer, a c. £0.4m order with a leading metal
fabricator of trailers and towing parts, and a c.£0.3m agreement
with a manufacturer of products for the farming industry. These
order values are made up of the first year's software licence, the
first year's support, and initial services. The services back-log
remains healthy, and we are pleased with the new business
pipeline.
Central Costs
During the year, we took the
decision to devolve greater responsibility and accountability over
resource allocation to our Business Unit heads. This related in
particular to HR, IT and finance functions. The result has been a
significant reduction in overall costs, with the Business Units
prioritising sales and profitability. The full benefits of this
will be more apparent in the new financial year and
beyond.
The unallocated Central Support
costs that were not matched to revenue generation, which include
our PLC costs, were £2.2m (2022: £1.8m).
The
Board and Staff
On behalf of the Board, I would like
to thank all our staff for their hard work and efforts over the
year. It has been a challenging year in many respects and our
people have responded with great commitment and energy.
The Board's strategy to further
simplify operations, more effectively address the opportunities
within market sectors, and to drive cash generation and shareholder
value has led to some significant organisational changes during the
year. We are very grateful for everyone's contribution to
this as we continue to make progress towards achieving our
strategic goals.
On 3 April 2023, Eric Dodd joined
the Board as Chief Financial Officer, taking over from Rob Price,
the previous Chief Financial Officer. Since joining, Eric has focused
rigorously on cash, costs, and further operational simplification.
He has also implemented the new revenue recognition policy at the
Fashion portfolio.
On 30 October 2023, Marco Vergani
stepped down as Chief Executive Officer of the Company, in line
with the decentralisation strategy. Accordingly, the Group's
business unit heads now report directly to the Board, with each
head taking greater responsibility and accountability for their
respective operations. We wish Marco well in his future
endeavours.
Summary and Outlook
The new business unit structure has
established a better platform for the Group, as the Board focuses
on driving value for shareholders. It provides clear focus, greater
accountability, and further opportunity to reduce historical
overhead.
The two divisions, K3 Products and
K3 Third-party Solutions, both have growth opportunities while also
managing challenges. The growth opportunity with the Fashion
portfolio remains clear and will drive high-margin, recurring
income, while we expect NexSys to continue to generate significant
high-quality cash flows with leading margins. We have responded to
the sharp slowdown in activity at Global Accounts, and although we
expect trading at the unit to remain subdued, we continue to engage
closely with IKEA and its overseas franchisees.
K3 has started the new financial
year with a stronger balance sheet than at the same point last
year. It will also benefit from the cost reduction measures taken
in the latter part of 2023 coming through more fully over the
course of the current financial year and next year. The Board is
pleased to report that Group trading in the first quarter is in
line with budget and it remains confident that K3 will continue to
improve cash generation and deliver higher adjusted operating
profit.
Tom
Crawford
Executive Chairman
FINANCIAL
REVIEW
Overview
The Group's reported segments are
'K3 Products' and 'Third-party Solutions', with Central Support
costs stated separately, as previously. This aligns segmental
reporting with the Group's growth strategy.
Focus on value creation for shareholders
The Board's main focus is on value
creation for shareholders. Driving cash generation and growing
annual recurring revenues ("ARR") is central to this.
We completed some important steps
during the financial year in line with these goals. Late in the
second half of the year, we moved in full to a Business Unit
structure. Decentralising the business has established a better
platform from which to realise value creation for shareholders. It
has increased accountability while also driving significant
reductions in IT, HR and finance expenditure.
We further tightened our approach to
expenditure on new product development activities, which has helped
to support a meaningful improvement in cash generation.
Specifically, we have allocated expenditure according to where
market, pipelines and margins indicated the highest probability of
cash returns over the medium term, withdrawing or reducing
expenditure elsewhere. We also identified unnecessary cost burdens,
such as certain structures and financing arrangements that did not
offer tangible benefit to the Company. We are continuing to exit
these arrangements and to work on further simplifying the business
in order to establish the most appropriate cost base.
Since we believe that the closest
metric to understanding cash generation is adjusted operating
profit/(loss), we have adopted it as the key measure of the
Company's performance. It replaces earnings before interest, tax,
depreciation and amortisation ("EBITDA"), which was used
previously.
The Group's products for the fashion
and apparel market offer the highest-margin, highest growth
opportunity, and ARR in the fashion portfolio grew by over 28% in
2023.
Key
performance indicators
The Directors consider the key
performance indicators by which they measure the performance of the
Group by division to be:
o revenue;
o gross profit;
o gross profit margin;
o adjusted operating profit/(loss);
o free cashflow; and
o annual recurring revenue.
The Group's results for the year end
to 30 November 2023, together with comparatives for the same period
in 2022, are summarised in the tables below.
Continuing Activities
|
|
Revenue
|
|
2023
£m
|
2022
£m
|
Revenue
|
43.8
|
47.2
|
Gross profit
|
27.1
|
27.9
|
Gross profit margin
|
62%
|
59%
|
Adjusted operating profit/(loss)
|
1.3
|
(0.6)
|
Free cashflow
|
1.1
|
(1.8)
|
Annual recurring revenue -
Fashion
|
5.8
|
4.5
|
|
|
*restated
|
Overall Group revenue decreased by
8% or £3.5m to £43.8m (2022: £47.2m). This was mainly due to a
reduction in revenue at the Third-party Solutions division of
£3.4m.
We updated the Group's revenue
recognition policy for K3 Fashion and K3 Pebblestone contracts in
the year under review and now recognise the revenue of a K3 Fashion
and K3 Pebblestone contract evenly over its lifetime. This approach
makes it easier to manage the business and use benchmarks for
activities, including sales & marketing expenditure, customer
acquisition costs and customer churn. This will improve business
understanding and further support capital allocation and other
decision-making processes. The change has also simplified the
balance sheet by lowering accrued income and matching revenue
recognition more closely to cash collection. For the year under
review, the shift to this new revenue recognition policy has
reduced revenue and operating profit by £0.4m respectively (FY2022:
£0.3m).
ARR from the combination of K3
Fashion and K3 Pebblestone increased by 28% to £5.8m (2022: £4.5m),
driven by both new customers and existing customer
expansion.
Gross profit decreased by £0.8m or
4% to £27.1m (2022: £27.9m). However, gross profit margin increased
by three percentage points to 62%, reflecting the change in sales
mix.
Encouragingly, the Group moved to an
adjusted operating profit of £1.3m in 2023 from a loss in 2022
(2022: loss of£0.6m). This was driven by lower amortisation and
more disciplined overhead expenditure.
Following the Company's transition
to a Business Unit structure, impairments of £2.1m (2022: £1.6m)
relating to goodwill and capitalised Group-wide IT projects were
identified as no longer justifiable. A total of £2.1m in
reorganisation costs were incurred (2022: £0.6m) and related
primarily to the cost of people leaving the business. There
is a credit resulting from historical acquisitions of £0.4m due to
reversal contingent consideration obligation The departure of
several senior staff members lead to lapses of outstanding share
options, which led to a credit of £1.1m (2022: £0.9m
debit).
Earnings Per Share
The Group generated adjusted
earnings per share of 1.0p from Continuing operations (2022: loss
of 4.9p). Reported loss per share, which includes profit from
discontinued activities, was 5.4p (2022: loss of 9.5p).
Dividends
No dividend will be declared for the
year ended 30 November 2023 (2022: nil).
Taxation
The corporation tax charge for the
financial year was £0.5 million (2022: nil charge). This comprised
a credit for current taxation of £0.1 million (2022: charge of
£0.1m), which related to the non-UK businesses, and a charge for
deferred taxation of £0.4 million (2022: credit of £0.1
million).
Balance
Sheet
Non-current assets reduced by £3.5m
to £28.9m, which reflected a more disciplined approach to the
capitalisation of development expenditure and also the impact of
impairment of intangible and tangible assets of circa
£2.1m.
Current assets decreased by £2.3m to
£16.1m (2022: £18.5m). Receivables reduced by £1.9m to £5.4m (2022:
£7.3m) due to improved collection procedures and the receivables
ageing is excellent, with little unprovided exposure over 60 days.
The change in the revenue recognition policy has led to a reduction
in 'Contract Assets' and this should remain low in the future.
Trade & other payables reduced to £15.9m (2022: £16.9m). We
expect this balance to rise as we increase sales of fashion and
apparel products, especially K3 Fashion, and we invoice annually
and quarterly in advance.
At the financial year end, cash
balances stood at £8.3m (30 November 2022: £7.2m). The Group has a
bank facility with Barclays, its long-standing bankers, which
provides for the draw down of up to £2.8m to support seasonal cash
movements. At the year-end, £nil was drawn down (2022: £nil). After
the financial year end, the facility agreement was extended for
further two years, until March 2026.
Cash Flow
The Group's cash performance
continued its improving trend. There were a number of large
movements in working capital, the two most significant being the
£3.5m reduction in receivables (including stock) and the £1.1m
reduction in payables. Net cash inflow from operating activities
increased by £1.1m to £3.5m (2022: £2.4m).
The more disciplined capital
allocation and the ongoing corporate simplification process have
begun to deliver tangible benefits. Both investing expenditure and
financing cost have almost halved to £1.4 million and
£1.0 million respectively (2022:
investing expenditure of £2.7 million and financing cost of £1.4
million). A specific illustration is the 30% reduction in lease
liability payments, which mainly related to properties and
vehicles, to £0.7 million.
The £1.1 million improvement in
operating cashflow together with the £1.3 million reduction in
development expenditure and £0.7 million reduction in financing
costs combined to deliver a £2.8 million improvement in free
cashflow. As a result, the cash outflow in 2022 of £1.7m was
converted to a cash inflow of £1.1m in 2023. The Group's closing
cash balance at 30 November 2023 was £8.3m (2022:
£7.1m).
Eric Dodd
Chief Financial Officer
K3 Business Technology Group
plc
Consolidated Income Statement
for the year ended 30 November
2023
|
|
Year ended
30
November
|
Restated
Year ended
30
November
|
|
2023
£'000
|
2022
£'000
|
Revenue
|
|
43,779
|
47,252
|
Cost of sales
|
|
(16,639)
|
(19,382)
|
Gross profit
|
|
27,140
|
27,870
|
Adjusted administrative expenses
|
|
(25,523)
|
(28,367)
|
Impairment losses on financial assets
|
|
(354)
|
(102)
|
Adjusted operating
profit/(loss)
|
|
1,263
|
(599)
|
Exceptional impairment
|
|
(2,070)
|
(1,603)
|
Exceptional reorganisation and
acquisition costs
|
|
(2,129)
|
(595)
|
Exceptional acquisition/disposal related
credit/(costs)
|
|
406
|
(98)
|
Share-based payment credit/(charge)
|
|
1,126
|
(855)
|
|
|
|
|
Loss from operations
|
|
(1,404)
|
(3,750)
|
Finance expense
|
|
(417)
|
(338)
|
Loss before
taxation from
continuing operations
|
|
(1,821)
|
(4,088)
|
Tax expense
|
|
(564)
|
(208)
|
Loss after taxation from
continuing operations
|
|
(2,385)
|
(4,296)
|
Profit after taxation from discontinued
operations
|
|
-
|
108
|
Loss for
the year
|
|
(2,385)
|
(4,188)
|
All the (loss)/profit
for the
year is
attributable to
equity shareholders of the parent.
|
|
|
|
Loss per share
|
|
|
|
|
|
Year
|
Restated
Year
|
|
|
ended
30
November
2023
£'000
|
ended
30
November
2022
£'000
|
Basic and diluted
|
|
(5.4)p
|
(9.5)p
|
Basic and undiluted from Continuing operations
|
|
(5.4)p
|
(9.8)p
|
Consolidated Statement of
Comprehensive Income
|
|
for
the year ended 30 November 2023
|
|
|
Restated
|
|
Year
|
Year
|
|
ended
|
ended
|
|
30
November
|
30
November
|
|
2023
|
2022
|
|
£'000
|
£'000
|
Loss for
the year
|
(2,385)
|
(4,188)
|
Other comprehensive
income
|
|
|
Exchange differences on translation of foreign operations
|
76
|
69
|
Other comprehensive income
|
76
|
69
|
Total comprehensive
expense for
the year
|
(2,309)
|
(4,119)
|
Total comprehensive 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 30 November 2023
|
Restated
|
Restated
|
|
|
2023
£'000
|
2022
£'000
|
2021
£'000
|
ASSETS
|
|
|
|
|
Non-current assets
|
|
|
|
|
Property, plant and equipment
|
|
1,323
|
1,766
|
1,551
|
Right-of-use assets
|
|
1,025
|
801
|
1,709
|
Goodwill
|
|
24,911
|
25,022
|
24,772
|
Other intangible assets
|
|
1,533
|
3,394
|
6,648
|
Deferred tax assets
|
|
77
|
1,551
|
1,636
|
Total non-current
assets
|
|
28,869
|
32,534
|
36,316
|
Current assets
|
|
|
|
|
Stock
|
|
276
|
484
|
467
|
Trade and other receivables
|
|
7,555
|
10,764
|
8,100
|
Forward currency contracts
|
|
-
|
110
|
-
|
Cash and short-term deposits
|
|
8,304
|
7,113
|
9,146
|
Total current
assets
|
|
16,135
|
18,471
|
17,713
|
Total assets
|
|
45,004
|
51,005
|
54,029
|
LIABILITIES
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Lease liabilities
|
|
37
|
79
|
135
|
Provisions
|
|
105
|
179
|
1,129
|
Deferred tax liabilities
|
|
91
|
1,119
|
1,288
|
Total non-current
liabilities
|
|
233
|
1,377
|
2,552
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
|
15,946
|
16,882
|
14,456
|
Current tax liabilities
|
|
285
|
372
|
509
|
Lease liabilities
|
|
947
|
802
|
1,623
|
Borrowings
|
|
12
|
50
|
113
|
Provisions
|
|
305
|
968
|
854
|
Total current
liabilities
|
|
17,495
|
19,074
|
17,555
|
Total liabilities
|
|
17,728
|
20,451
|
20,107
|
EQUITY
|
|
|
|
|
Share capital
|
|
11,183
|
11,183
|
11,183
|
Share premium account
|
|
31,451
|
31,451
|
31,451
|
Other reserves
|
|
11,151
|
11,151
|
11,151
|
Translation reserve
|
|
1,683
|
1,607
|
1,538
|
Accumulated losses
|
|
(28,192)
|
(24,838)
|
(21,401)
|
Total equity
attributable to
equity holders
of
the parent
|
|
27,276
|
30,554
|
33,922
|
Total equity
and liabilities
|
|
45,004
|
51,005
|
54,029
|
Consolidated Statement of
Cash Flows
|
|
for the year ended 30 November 2023
|
|
|
|
Year
|
Restated
Year
|
|
|
ended
30
November
2023
£'000
|
ended
30
November
2022
£'000
|
Cash flows
from operating
activities
|
|
|
|
Loss for the period
|
|
(2,385)
|
(4,188)
|
Adjustments for:
|
|
|
|
Finance expense
|
|
417
|
336
|
Tax expense
|
|
564
|
20
|
Depreciation of property, plant and equipment
|
|
552
|
636
|
Impairment of property, plant and
equipment
|
|
464
|
-
|
Depreciation of right-of-use
assets
|
|
591
|
981
|
Amortisation of intangible assets
and development expenditure
|
|
1,091
|
3,767
|
Impairment of intangible assets (including
goodwill)
|
|
1,606
|
1,603
|
(Gain)/loss on sale of property, plant and equipment
|
|
11
|
10
|
Share-based payments (credit)/charge
|
|
(969)
|
751
|
Net cash flow from provisions
|
|
(740)
|
(717)
|
Net cash flow from stock
|
|
208
|
17
|
Net cash flow from trade and other receivables
|
|
3,319
|
(2,774)
|
Net cash flow from trade and other payables
|
|
(1,104)
|
2,380
|
Cash generated
from operations
|
|
3,625
|
2,822
|
Income taxes paid
|
|
(82)
|
(395)
|
Net cash
from operating
activities
|
|
3,543
|
2,427
|
Cash flows
from investing
activities
|
|
|
|
Development expenditure capitalised
|
|
(734)
|
(1,725)
|
Acquisition of a subsidiary, net of cash acquired
|
|
(86)
|
(178)
|
Purchase of property, plant and equipment
|
|
(588)
|
(845)
|
Net cash
from investing
activities
|
|
(1,408)
|
(2,748)
|
Cash flows
from financing
activities
|
|
|
|
Proceeds from loans and borrowings
|
|
3,500
|
3,000
|
Repayment of loans and borrowings
|
|
(3,536)
|
(3,111)
|
Repayment of lease liabilities
|
|
(708)
|
(1,073)
|
Interest paid on lease liabilities
|
|
(126)
|
(132)
|
Finance expense paid
|
|
(163)
|
(150)
|
Net cash
from financing
activities
|
|
(1,033)
|
(1,466)
|
Net change
in
cash and
cash equivalents
|
|
1,102
|
(1,787)
|
Cash and cash equivalents at start of year
|
|
7,113
|
9,033
|
Exchange gain/(losses) on cash and cash equivalents
|
|
89
|
(133)
|
Cash and
cash equivalents
at
end of
year
|
|
8,304
|
7,113
|
|
|
|
|
Consolidated Statement
of
Changes in
Equity
for the year ended 30 November 2023
|
Share
capital
|
Share
premium
|
Other
reserves
|
Translation
reserve
|
Restated
Accumulated
losses
|
Restated
Total
equity
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
At 30
November 2021
|
11,183
|
31,451
|
11,151
|
1,538
|
(19,522)
|
35,801
|
Prior period
restatement
|
-
|
-
|
-
|
-
|
(1,879)
|
(1,879)
|
At 30
November 2021
-
Restated
|
11,183
|
31,451
|
11,151
|
1,538
|
(21,401)
|
33,922
|
Changes in
equity for
year ended
30 November
2022
Loss for the year
|
-
|
-
|
-
|
-
|
(4,188)
|
(4,188)
|
Other comprehensive income for the
year
|
-
|
-
|
-
|
69
|
-
|
69
|
Total comprehensive income/(expense)
|
-
|
-
|
-
|
69
|
(4,188)
|
(4,119)
|
Share-based payment
|
-
|
-
|
-
|
-
|
751
|
751
|
At 30
November 2022
-
Restated
|
11,183
|
31,451
|
11,151
|
1,607
|
(24,838)
|
30,554
|
Changes in
equity for
year ended
30 November
2023
Loss for the year
|
-
|
-
|
-
|
-
|
(2,385)
|
(2,385)
|
Other comprehensive income for the
year
|
-
|
-
|
-
|
76
|
-
|
76
|
Total comprehensive income/(expense)
|
-
|
-
|
-
|
76
|
(2,385)
|
(2,309)
|
Share-based payment
|
-
|
-
|
-
|
-
|
(969)
|
(969)
|
At 30
November 2023
|
11,183
|
31,451
|
11,151
|
1,683
|
(28,192)
|
27,276
|
Within the Share Capital reserve
there are own shares held by a wholly owned subsidiary, K3 Business
Technology Group Trustees Company
Limited, as
trustee of
the group's
employee share
ownership plan.
Own shares
represent 26,809
(2022: 26,809)
shares held under
an employee
share ownership
plan which
will be
issued to
the employees
when they
choose to
withdraw them.
The market value
of these shares as at 30 November 2023 was £30,294 (2022:
£34,181).
NOTES
1
Basis of preparation
Statement of
compliance
These group financial statements
have been prepared in accordance with UK endorsed IFRS in
conformity with the requirements of the Companies Act 2006 ("IFRS")
("UK Adopted internal accounting standards"). The company financial
statements have been prepared in accordance with Financial
Reporting Standard 101, Reduced Disclosure Framework
("FRS101").
The financial statements have been
prepared on the historical cost basis. Historical cost is generally
based on the fair value of the consideration given in exchange for
goods and services.
Whilst the financial information
included in this statement of Final Results has been prepared in
accordance with the recognition and measurement criteria of IFRS,
this announcement does not itself contain sufficient information to
comply with IFRS.
The Group's statutory financial
statements for the year ended 30 November 2023, from which the
financial information presented in this announcement has been
extracted, were prepared using the accounting policies disclosed in
the principal accounting policies set out in the Group's Annual
Report. These policies have been consistently applied to all years
presented.
The preparation of financial
statements in conformity with IFRS requires the use of estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results
ultimately may differ from these estimates.
This statement of Final Results does
not constitute the Company's statutory accounts for the years ended
30 November 2023 and 30 November 2022 within the meaning of Section
435 of the Companies Act 2006 but is derived from those statutory
accounts.
The Group's statutory accounts for
the year ended 30 November 2022 have been filed with the Registrar
of Companies, and those for 2023 will be delivered following the
Company's Annual General Meeting. The Auditor has reported on the
statutory accounts for 2023 and 2022. Their report for 2023 was (i)
unqualified, (ii) did not contain any material uncertainties and
(iii) did not contain statements under Sections 498 (2) or 498 (3)
of the Companies Act 2006 in relation to the financial
statements.
Going concern
The Group closely reviews its
funding position throughout the year, including monitoring
compliance with covenants and available facilities to ensure it has
sufficient headroom to fund operations. The Group has extended its
current Banking Facilities arrangements with its long-term Bank,
Barclays, for a further two years to 31 March 2026, on a simplified
standard bank terms basis with facility level consistent with
2023.
The capital structure of the Group
has materially changed in the last three years with the disposal of
the Starcom and Sage businesses for a combined £16.2m and the
conversion of £3.0m shareholder loans to equity. The Group
therefore ended the year ended 30 November 2023 with a Net Cash
position of £8.3m (2022: £7.1m).
The Group has prepared cashflow
forecast for a period of at least 12 months from the date of
approval of the financial statements which show that the Group will
have reasonably significant headroom and be in compliance with
covenants. The forecast has undergone sensitivity analysis and
stress testing and the Directors have concluded that there is no
worst-case scenario that is likely which would mean the group would
run out of cash or breach covenants.
The Directors therefore have a
reasonable expectation that there are no material uncertainties
that cast significant doubt about the Group's ability to continue
in operation and meet its liabilities as they fall due for the
foreseeable future, being a period of at least 12 months from the
date of approval of the financial statements. For these reasons the
financial statements have been prepared on a going concern
basis
2 Key
Accounting policies for the Group financial
statements
Goodwill
Goodwill is initially recognised and
measured as set out above.
Goodwill is not amortised but is
reviewed for impairment at least annually. For impairment testing,
goodwill is allocated to each of the Group's subsidiaries or
cash-generating units (or groups of cash-generating units) expected
to benefit from the synergies of the combination. Cash-generating
units to which goodwill has been allocated are tested for
impairment annually, or more frequently when there is an indication
that the unit may be impaired. If the recoverable amount of the
cash-generating unit is less than the carrying amount of the unit,
the impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to the other
assets of the unit pro-rata based on the carrying amount of each
asset in the unit. An impairment loss recognised for goodwill is
not reversed in a subsequent period.
On disposal of a subsidiary or
cash-generating unit, the attributable net book value of goodwill
is included in the determination of the profit or loss on
disposal.
Revenue recognition
The Group contracts for products and
services in a variety of contractual forms and deployment methods
which impact IFRS 15 revenue recognition. These include:
o Reselling of 3rd party products for which following
contracting the Group has no continuing performance obligations for
software and the customer controls the software. These are usually
perpetual licences with customer on premise installations. Since
the Group is reselling these all already functional products,
services are unbundled. Customers can also choose to take
maintenance and support for these products or indeed obtain
services, support, and maintenance from different
suppliers.
o K3 bolt on own software IP (Intellectual Property) that adds
incremental vertical functionality and bolts onto Microsoft
Dynamics products and that is either sold directly to customer or
via a channel partner. There is an ongoing performance obligation
to maintain the product to ensure the functionality continues to
bolt onto Microsoft Dynamics products.
o K3 own products for which K3 controls and has ongoing
performance obligations. These products are typically SaaS
(Software as a Service) based subscription products which include a
right to access as the customer continuously consumes
functionality. The product offer is a typical bundle of software
access, maintenance, and support. The contracts typically have a
low level of services.
Software licence revenue:
Software licences for 3rd party
products are recognised at a point in time, on contract and issue
of the initial licence key which is contemporaneous.
K3 bolt on own software IP is
recognised over time. See note 11 for more details.
K3 own products which is SaaS based
is recognised over time and not in software but rather in
maintenance and support for the purposes of revenue disaggregation
disclosures. Revenue is recognised over time as K3 controls the
product, the licence is not distinct, and the customer continually
receives benefits.
Services revenues:
Services are linked to
implementation and set up of K3 own and 3rd party
products, rather than product functionality build. Services are
contracted for on a time and materials basis, the customer takes
ownership of the work delivered and revenue is recognized as it is
performed.
Hardware:
Hardware is peripheral to a number
of contract implementations; the revenue is recognized when the
customer takes control of the asset on delivery.
Maintenance and Support:
Maintenance refers to the
maintenance of the products and ensuring a right to upgrade whilst
Support refers to ongoing customer support including for example
help desk access.
3rd party products maintenance is
provided by the product's author K3 has no performance obligation
and this is sold through K3 for a margin. Revenue is recognised for
the term of the contract at a point in time when the contract is
signed. Support of 3rd party products is provided by K3 over time
over the term of the contract.
K3 bolt on own software IP is
typically re-sold via channel partners who provide support. K3 has
an ongoing performance obligation for the maintenance of the
product and recognises a portion of revenue associated with that
over time.
K3 own SaaS/subscription products
and usually hosted by K3 and typically a bundled offer of
maintenance and support is provided to customers which are both
performance obligations for K3 and revenue is recognised over
time.
Allocation of transaction price:
Transaction price is measured based
on the consideration specified in a contract with a customer and,
where applicable, the best estimate of any consideration related to
modifications to the contract which has yet to be agreed. Any
amounts expected to be paid to the customer, such as penalties for
late delivery, are deducted from the consideration. Where a
transaction price must be allocated between multiple performance
obligations, this is generally achieved through allocating a
proportion of total price against each using either standard list
sales prices or an estimated cost methodology.
Critical accounting estimates and
judgements
In applying the Group's accounting
policies above the directors are required to make judgements (other
than those involving estimations) that have a significant impact on
the amounts recognised and to make estimates and assumptions about
the carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision
affects both current and future periods.
The directors are of the opinion
that there are no significant judgements to be disclosed. The key
sources of estimation that have a significant impact on the
carrying value of assets and liabilities are discussed
below:
Impairment of goodwill and other
intangibles
Determining whether goodwill is
impaired requires an estimation of the value in use of the cash
generating units to which goodwill has been allocated. The value in
use calculation requires an entity to estimate the future cash
flows expected to arise from the cash generating unit. It also
requires judgement as to a suitable discount rate in order to
calculate present value, i.e., the directors' current best estimate
of the weighted average cost of capital ("WACC"). Other intangibles
are assessed annually for impairment as well as when triggers of
impairment arise. An impairment review has been performed at the
reporting date. More details including carrying values are included
in note 6.
Capitalised development expenditure and subsequent
amortization
Where such expenditure meets the
relevant criteria, the group is required to capitalise development
expenditure. In order to assess whether the criteria are met the
Board is required to make estimates in relation to likely income
generation and financial and technical viability of the relevant
development projects and the period over which the group is likely
to benefit from such expenditure. Development projects are subject
to an investment appraisal process with the product managers to
assess the status of the development and the expected commercial
opportunities. Development costs are assessed for impairment which
requires an estimation of the future expected revenues to be
generated from each product. This methodology, which is similar to
that used to assess any impairment of goodwill, is discussed
further in note 6. Expenditure is only capitalised when the
investment appraisal process has assessed that the product is
likely to benefit the Group in the future. More details including
carrying values are included in note 6.
3
Segment information
The group operates a streamlined
organisation with management resource and central services focused
on working across the group in a more unified manner to increase
the strategic focus on the level of our own product
sales.
Reporting is based on product split
between K3 own products ('K3 Products') and Third-party reseller
activities ('Third-party Solutions') across revenue and gross
margin. Global Accounts and Third Party Products continue to be
merged into Third-party Solutions. Overheads and administrative
expenses are included as a central cost given resource works across
these three segments. The activities and products and services of
the operating segments are detailed in the Strategic Report on
pages 10 to 14.
Transactions between operating
segments are on an arms-length basis. The CODM (Chief Operating
Decision Maker, the Board) primarily assesses the performance of
the operating segments based on product revenue, gross margin and
group adjusted operating profit/(loss). The segment results for the
year ended 30 November 2023 and for the year ended 30 November
2022, reconciled to loss for the year.
|
Year ended 30 November 2023
|
|
|
|
|
|
|
|
K3
Products
|
Third-party
Solutions
|
Central
Costs
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
External revenue
|
|
13,085
|
30,694
|
-
|
43,779
|
Cost of sales
|
|
(2,728)
|
(13,911)
|
-
|
(16,639)
|
Gross profit
|
|
10,357
|
16,783
|
-
|
27,140
|
Gross margin
|
|
79.15%
|
54.68%
|
-
|
61.99%
|
Adjusted administrative expenses
|
|
(15,187)
|
(8,475)
|
(2,215)
|
(25,877)
|
Adjusted operating
profit/(loss)
|
|
(4,830)
|
8,308
|
(2,215)
|
1,263
|
Exceptional impairment
|
|
-
|
-
|
(2,070)
|
(2,070)
|
Exceptional reorganisation costs
|
|
-
|
-
|
(2,129)
|
(2,129)
|
Acquisition/disposal
credit/(costs)
|
|
-
|
-
|
406
|
406
|
Share-based payment credit/(charge)
|
|
-
|
-
|
1,126
|
1,126
|
(Loss)/profit from
operations
|
|
(4,830)
|
8,308
|
(4,882)
|
(1,404)
|
Finance expense
|
|
-
|
-
|
(417)
|
(417)
|
(Loss)/profit before
tax and
discontinued operations
|
|
(4,830)
|
8,308
|
(5,299)
|
(1,821)
|
Tax expense
Profit/(loss) from discontinued
operations
|
|
-
-
|
-
-
|
(564)
-
|
(564)
-
|
(Loss)/profit for
the year
|
|
(4,830)
|
8,308
|
(5,863)
|
(2,385)
|
|
Year ended 30 November 2022 (restated)
|
|
|
|
|
|
|
|
K3 Products
|
Third-party Solutions
|
Central
Costs
|
Total
|
|
|
£'000
|
£'000
|
£'000
|
£'000
|
External revenue
|
|
12,588
|
34,664
|
-
|
47,252
|
Cost of sales
|
|
(2,792)
|
(16,590)
|
-
|
(19,382)
|
Gross profit
|
|
9,796
|
18,074
|
-
|
27,870
|
Gross margin
|
|
77.81%
|
52.14%
|
-
|
58.98%
|
Adjusted administrative expenses
|
|
(16,705)
|
(10,004)
|
(1,760)
|
(28,469)
|
Adjusted operating
profit/(loss)
|
|
(6,909)
|
8,070
|
(1,760)
|
(599)
|
Exceptional impairment
|
|
-
|
-
|
(1,603)
|
(1,603)
|
Exceptional reorganisation costs
|
|
-
|
-
|
(595)
|
(595)
|
Acquisition/disposal
credit/(costs)
|
|
-
|
-
|
(98)
|
(98)
|
Share-based payment credit/(charge)
|
|
-
|
-
|
(855)
|
(855)
|
(Loss)/profit from
operations
|
|
(6,909)
|
8,070
|
(4,911)
|
(3,750)
|
Finance expense
|
|
-
|
-
|
(338)
|
(338)
|
(Loss)/profit before
tax and
discontinued operations
|
|
(6,909)
|
8,070
|
(5,249)
|
(4,088)
|
Tax expense
|
|
-
|
-
|
(208)
|
(208)
|
Profit/(loss) from discontinued
operations
|
|
-
|
-
|
108
|
108
|
(Loss)/profit for
the year
|
|
(6,909)
|
8,070
|
(5,349)
|
(4,188)
|
*FY2022 restated.
|
|
|
|
|
|
Segment assets and segment liabilities
are reviewed
by the
CODM in
a consolidated
statement of
financial position. Accordingly,
this information is
replicated in the Group consolidated statement of financial
position on page 51. As no measure of assets or liabilities for
individual segments is reviewed regularly by the CODM, no
disclosure of total assets or liabilities has been made, in
accordance with the amendment to paragraph 23 of IFRS 8.
The accounting policies
of the
operating segments are the same as those described in the summary of significant accounting policies. Transactions
between segments are accounted for at cost.
The Group has one customer relationship which
accounts for 42%
(2022: 46%)
of external
Group revenue.
Analysis of the group's external revenues (by customer geography)
and non-current
assets by
geographical location are detailed below:
External revenue
by
end customer
geography
|
|
|
|
|
|
External
revenue
Restated
|
Non-current
assets
|
|
Year ended
30
November
2023
|
Year ended
30
November
2022
|
2023
|
2022
|
|
£'000
|
£'000
|
£'000
|
£'000
|
United Kingdom
|
16,279
|
16,323
|
21,911
|
22,461
|
Netherlands
|
5,762
|
6,203
|
5,913
|
5,749
|
Ireland
|
110
|
631
|
-
|
1,650
|
Rest of Europe
|
8,223
|
7,166
|
974
|
2,323
|
Middle East
|
2,142
|
1,807
|
-
|
-
|
Asia
|
6,200
|
8,882
|
68
|
181
|
USA
|
221
|
820
|
3
|
3
|
Rest of World
|
4,842
|
5,420
|
-
|
-
|
|
43,779
|
47,252
|
28,869
|
32,367
|
%
of non-UK revenue
|
63%
|
65%
|
|
|
External revenue
by
business unit
geography
|
|
|
|
|
External revenue
Restated
|
|
Year ended
30
November
2023
|
Year ended
30 November
2022
|
|
£'000
|
£'000
|
United Kingdom
|
16,820
|
16,883
|
Netherlands
|
23,657
|
27,255
|
Ireland
|
727
|
316
|
Rest of Europe
|
2,575
|
2,770
|
Rest of World
|
-
|
28
|
|
43,779
|
47,252
|
%
of non-UK revenue
|
62%
|
65%
|
|
|
Revenue recognised
and included
within contract
assets can
be
reconciled as
follows:
|
|
2023
£'000
|
At 1 December
2022 - as
previously stated
|
5,512
|
Amount restated due to change in accounting policy
|
(2,785)
|
At 1 December
2022 - restated
|
2,727
|
Transfers in the period from
contract assets to trade receivables
|
(2,727)
|
Excess of revenue recognised over cash (or rights to cash) being recognised during
the period
|
1,286
|
At 30
November 2023
|
1,286
|
Revenue recognised
and included
within contract
liabilities can
be
reconciled as
follows:
|
|
|
2023
£'000
|
At 1 December 2022
|
5,312
|
Amounts included in contract liabilities
that was
recognised as
revenue during
the period
|
(5,312)
|
Cash received in advance of performance and not recognised as revenue during the period
|
7,454
|
At 30
November 2023
|
7,454
|
|
|
|
|
|
|
4 Tax
expense/(charge)
|
|
|
|
|
Restated
|
|
2023
|
2022
|
|
£'000
|
£'000
|
Current tax
expense/(credit)
|
|
|
Income tax of overseas operations on
profits/(losses) for the period
|
597
|
203
|
Adjustment in respect of prior
periods
|
(479)
|
(100)
|
Total current tax expense
|
118
|
103
|
Deferred tax
(credit)/expense
|
|
|
Origination and reversal of
temporary differences
|
180
|
(61)
|
Effect of changes in tax
rate
|
-
|
10
|
Adjustments in respect of prior
periods
|
266
|
(32)
|
Total deferred tax
expense/(credit)
|
446
|
(83)
|
Total tax expense in the current
year
|
564
|
20
|
Income tax expense attributable to
continuing operations
|
564
|
208
|
Income tax (credit) attributable to
discontinued operations
|
-
|
(188)
|
|
564
|
20
|
Deferred tax balances as at 30
November 2023 have been measured at 25% (FY2022: 25%).
|
|
|
The reasons for the difference
between the actual tax charge for the period and the standard rate
of corporation tax in the UK applied to profits/(losses) for the
year are as follows:
|
2023
£'000
|
%
|
2022
£'000
|
%
|
Loss before taxation from continuing
operations
|
(1,821)
|
|
(4,088)
|
|
Loss before taxation from
discontinued operations
|
-
|
|
(80)
|
|
Loss before tax
|
(1,821)
|
|
(4,168)
|
|
Expected tax charge/(credit) based
on the standard rate of corporation tax
|
(419)
|
23.0
|
(792)
|
19.0
|
Effects of:
Items not deductible for tax
purposes
|
(64)
|
|
439
|
|
Income not taxable
|
(369)
|
|
(496)
|
|
Adjustment to tax charge in respect
of prior periods
|
647
|
|
(132)
|
|
Movements in deferred tax not
recognised
|
531
|
|
1,149
|
|
Differences between overseas tax
rates
|
125
|
|
(136)
|
|
Effect of deferred tax rate
difference
|
83
|
|
(12)
|
|
Total tax expense in current
period
|
564
|
34.6
|
20
|
48.7
|
Deferred tax recognised directly
in equity for FY2023 was £nil (2022: £nil). Current tax recognised
in equity for FY2023 was £nil (2022: £nil). None of the items
within other comprehensive income in the Consolidated Statement of
Comprehensive Income have resulted in a tax expense or tax
income.
5
(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:
|
2023
Number of
shares
|
2022
Number of
shares
|
Denominator
|
|
|
Weighted average number of shares used in basic and diluted EPS
|
44,090,074
|
44,090,074
|
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
year.
|
Basic and
diluted
|
|
2023
£'000
|
2022
£'000
|
Loss after tax from continuing
operations
|
(2,385)
|
(4,296)
|
Profit after taxation from discontinued
operations
|
-
|
108
|
(Loss)/profit attributable to ordinary equity holders of the parent for basic and diluted
earnings per share
|
(2,385)
|
(4,188)
|
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.
Basic
and diluted before other items
|
|
2023
|
2022
|
|
£'000
|
£'000
|
Loss after tax from continuing
operations
|
(2,385)
|
(4,296)
|
Add back other items:
|
|
|
Exceptional reorganisation costs
|
2,129
|
595
|
Exceptional impairment costs
|
2,070
|
1,603
|
Share-based payment (credit)/charge
|
(1,126)
|
855
|
Acquisition/disposal
related (credit)/costs
|
(406)
|
98
|
Tax credit/ (charge) related
to other
items
|
175
|
(1,015)
|
Profit/(loss) attributable to ordinary equity holders of the parent for basic and diluted
|
|
|
earnings from continuing
operations before other items
|
457
|
(2,177)
|
|
2023
Pence
|
2022
Pence
|
Profit/(loss) per
share
|
|
|
Basic and diluted earnings/(loss) per
share
|
(5.4)
|
(9.5)
|
Basic and diluted earnings/(loss) per
share from
continuing operations
|
(5.4)
|
(9.8)
|
Basic and diluted earnings/(loss) per
share from
discontinued operations
|
-
|
(0.2)
|
Adjusted earnings
per share
|
|
|
Basic and diluted earnings/(loss) per
share from
continuing operations before
other items
|
1.0
|
(4.9)
|
6
Goodwill and impairment
Goodwill acquired in business
combinations is allocated at acquisition to the cash generating
units ("CGUs") that are expected to benefit from that business
combination.
During the year, IBS CGU was
merged with that of NexSys CGU as IBS entity merged with NexSys
entity to drive operational efficiency.
The carrying value of goodwill in
respect of all CGUs is set out below. These are fully supported by
either value in use calculations in the year or the fair value less
cost to sell for CGUs held for sale.
Goodwill
carrying amount
2023
£'000
NexSys and Integrated Business
Solutions (IBS)
|
14,448
|
Global Accounts
|
9,366
|
Walton
|
1,097
|
ViJi
|
-
|
|
24,911
|
|
Goodwill
carrying amount
2022
£'000
|
NexSys (previously
"Syspro")
|
13,677
|
Global Accounts
|
9,371
|
Walton & IBS
|
1,868
|
ViJi
|
106
|
|
25,022
|
The Group tests goodwill and the
associated intangible assets and property, plant, and equipment of
CGUs annually for impairment, or more frequently if there are
indications that an impairment may be required.
The recoverable amounts of the
remaining CGUs are determined from value in use calculations. The
key assumptions for these calculations are discount rates, sales
growth, gross margin, and admin expense growth rates. The
assumptions for these calculations reflect the current economic
environment. The discount rate represents the current market
assessment of the risks specific
to the Group, taking into
consideration the time value of money and individual risks of the
underlying assets that have not been incorporated in the cash flow
estimates. The discount rate calculation is based on the specific
circumstances of the Group and its operating segments and is
derived from the weighted average cost of capital (WACC). Other
assumptions used are based on external data and management's best
estimates.
For all the CGUs where the
recoverable amount is determined from value in use, the Group
performs impairment reviews by forecasting cash flows based upon
the Annual Budget starting in the 2024, which anticipates sales,
gross margin and admin cost growth based on management's best
estimates. A projection of sales and cash flows based upon a
blended inflation rate (2.1%) is then made for a further four
years.
The rate used to discount the
forecast pre-tax cash flows is 14.0% (2022: 17.4%) and represents
the Directors' current best estimates of the weighted average cost
of capital ("WACC"). The Directors consider that there are no
material differences in the WACC for different CGUs.
7
Deferred tax
|
|
The net deferred tax
asset/liability at the end of the year is analysed as
follows:
|
|
2023
£'000
|
Restated
2022
£'000
|
Deferred tax assets
|
|
|
Continuing operations
|
77
|
1,551
|
Deferred tax
liabilities
|
|
|
Continuing operations
|
(91)
|
(1,119)
|
|
(14)
|
432
|
Recognised deferred tax assets and
liabilities and attributable to the following:
|
|
|
Net
|
|
2023
|
2023
|
2022
|
2023
|
Restated
2022
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
|
Plant and equipment
|
-
|
-
|
(1)
|
-
|
110
|
|
Other temporary
differences
|
-
|
(91)
|
(1,118)
|
(91)
|
241
|
|
Losses
|
77
|
-
|
-
|
77
|
23
|
|
Business combinations
|
-
|
-
|
-
|
-
|
58
|
|
Deferred tax
assets/(liabilities)
|
77
|
(91)
|
(1,119)
|
(14)
|
432
|
|
|
|
|
|
|
|
|
|
|
Restated
1 December
|
Recognised in
|
|
30 November
|
|
|
2022
£'000
|
income
£'000
|
Disposal
£'000
|
2023
£'000
|
Plant and equipment
|
|
110
|
(110)
|
-
|
-
|
Other temporary
differences
|
|
241
|
(332)
|
-
|
(91)
|
Losses
|
|
23
|
54
|
-
|
77
|
Business combinations
|
|
58
|
(58)
|
-
|
-
|
Deferred tax
assets/(liabilities)
|
|
432
|
(446)
|
-
|
(14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group have not recognised a
deferred tax asset on £3.6m (2022: £1.8m) of tax losses and
intangible fixed asset timing differences carried forward due to
uncertainties over recovery.
No deferred tax liability is
recognised on temporary differences of £31k (2022: £23k) relating
to the unremitted earnings of overseas subsidiaries as the Group
can control the timing of the reversal of these temporary
differences and it is probable that they will not reverse in the
foreseeable future.
8 Notes
to the cash flow statement
|
|
Cash and cash
equivalents
|
|
2023
£'000
|
2022
£'000
|
Cash and bank balances available
on demand
|
8,304
|
7,113
|
Bank overdrafts
|
-
|
-
|
|
8,304
|
7,113
|
Cash and cash equivalents comprise
cash and bank balances available on demand. The carrying amount of
these assets is approximately equal to their fair value. Cash and
cash equivalents at the end of the reporting period as shown in the
consolidated statement of cash flows can be reconciled to the
related items in the consolidated reporting position as shown
above.
Non-cash transactions
Additions to buildings, motor
vehicles and equipment during the year amounting to £610k (2022:
£233k) were financed by new leases.
9 Share
capital
|
Issued
and fully paid
|
|
2023
|
2022
|
|
Number
|
£'000
|
Number
|
£'000
|
Ordinary shares of 25p each
|
|
|
|
|
At beginning and end of the
year
|
44,732,379
|
11,183
|
44,732,379
|
11,183
|
All shares have equal voting rights and there are no restrictions on the distribution of dividends or repayment of capital.
No shares were allocated under the employee share option schemes during the year.
|
2023
Number
|
2022
Number
|
Own shares held
|
26,809
|
26,809
|
Own shares are held by a wholly owned subsidiary, K3 Business Technology Group Trustees Company Limited, as trustee of the group's employee share ownership
plan.
1,200,000 warrants for ordinary shares of 25p were issued on 31 March 2020 following the receipt by the Group of £3,000,000 in shareholders loans. The warrants
are split as follows:
-
|
CA Fastigheter AB
|
300,000
|
-
|
Johannes Plan Fastigheter AB
|
300,000
|
-
|
Kestrel Partners LLP discretionary
clients
|
600,000
|
The warrants are over ordinary shares of 25p, are transferrable with
a strike
price of
25p and
expire on
31 March
2030. At
30 November
2023 none
of these
warrants had
been exercised.
On 7 April 2021 the £3,000,000 Shareholder Loan was converted to equity with the issue of 1,785,714
nominal shares.
At 30 November 2023 (and 30 November 2022) all SAYE options have lapsed.
LTIP
K3 Business Technology Group plc
operates an equity-settled share-based remuneration scheme for
employees: the K3 Long Term Incentive Plan ("LTIP") for certain
senior management including executive directors.
As at 30 November 2023, an aggregate of 437,500 (2022: 1,675,000) LTIP options over ordinary shares in the Company remained in issue.
10 Notes to
the strategic report
*1 Adjusted operating
profit/(loss) - is the profit/(loss) from continuing activities
adjusted to exclude exceptional impairment costs, exceptional
re-organisation cost and exceptional acquisition costs/(income) and
share-based payment charges/(credit).
*2 Recurring revenue - contracted
support, maintenance and annual licence, as % of total
revenue.
*3 K3 Products revenue as a
percentage of total Group revenue.
*4 K3 Products gross profit as a
percentage of total gross profit.
*5 Net debt comprises Bank Loans,
Shareholder Loans and Overdrafts less Cash and cash equivalents,
including Cash and cash equivalents held for sale. It excludes
lease liabilities associated with Right-of-use assets under
IFRS16.
*6 Adjusted loss/earnings per
share - basic profit /(loss) per share from continuing operations
adjusted to exclude exceptional impairment costs, exceptional
re-organisation cost and exceptional acquisition costs/(income) and
share-based payment charges/ (credit), net of the related tax
charge.
*7 Adjusted administrative expense
- administrative expenses adjusted to exclude exceptional
impairment costs, exceptional re-organisation cost and exceptional
acquisition costs/(income) and share-based payment
charges/(credit).
*8 Free cash flow -Calculated as
delta between cash and cash equivalents balances between two
periods, excluding exchange gain/(loss) on cash and cash
equivalents.
*9 Net cash -Calculated as cash
and cash equivalents balances less bank borrowings.
11 Prior
period adjustment
During the year the Company's Directors reviewed the application of IFRS 15 in respect of the Company's Fashion and Pebblestone revenue contracts. As a
result of this review the Directors determined that IFRS 15 had
been incorrectly applied when accounting for the Company's
contracts with customers. The historical application had determined
that there were multiple performance obligations within the
contracts and revenue were recognised at specified
milestones.
However, upon reassessment, it was determined that the contracts should not be segmented and represents single performance obligation. The Directors determined that licences provided
under these contracts are dependent on updates for ongoing
functionality, therefore determined to recognise revenue based on
time elapsed and thus rateably over the term of the
contract.
The misapplication of IFRS 15 in prior periods led to early revenue and cost recognition. The correction of this error affects the financial statements
for the
years 2020
through 2022.
The impact
of these
adjustments for
these periods
are detailed
below.
The Group has corrected this error
from 1 December 2020 which has resulted in adjustments to the
amounts recognised in the Consolidated Financial Statements. In
accordance with IAS 8, the Group has restated FY2022. The overall
net impact of adjustments was a debit to retained earnings of £1.9
million as at 1 November 2022.
For comparability purposes,
the following
table gives
the impact
of the revised accounting policy on the Consolidated Balance Sheet and Consolidated Income Statement for the year ended 30
November 2022 by showing what the results would have been had they
been prepared under the previous accounting policies.
11 Prior
period adjustment (continued)
|
|
Consolidated Income
Statement
|
|
As
reported
Year
ended
30
November
2022
|
Adjust-
ment
|
Restated
Year
ended
30
November
2022
|
|
£'000
|
£'000
|
£'000
|
Revenue
|
47,532
|
(280)
|
47,252
|
Cost of sales
|
(19,382)
|
-
|
(19,382)
|
Gross profit
|
28,150
|
(280)
|
27,870
|
Administrative expenses
|
(28,367)
|
-
|
(28,367)
|
Impairment losses on financial assets
|
(102)
|
-
|
(102)
|
Adjusted operating
profit/(loss)
|
(319)
|
(280)
|
(599)
|
Exceptional impairment
|
(1,603)
|
-
|
(1,603)
|
Exceptional reorganisation and
acquisition costs
|
(693)
|
-
|
(693)
|
Share-based payment charge
|
(855)
|
-
|
(855)
|
|
|
|
|
Loss from operations
|
(3,470)
|
(280)
|
(3,750)
|
Finance expense
|
(338)
|
-
|
(338)
|
Loss before
taxation from
continuing operations
|
(3,808)
|
(280)
|
(4,088)
|
Tax expense
|
(278)
|
70
|
(208)
|
Loss after taxation from continuing
operations
|
(4,086)
|
(210)
|
(4,296)
|
Profit after taxation from discontinued
operations
|
108
|
-
|
108
|
Loss for
the year
|
(3,978)
|
(210)
|
(4,188)
|
The adjustment of £0.3
million to revenue is due to change in revenue recognition in
FY2023 (see note 11). FY2022 revenue would have been £0.3m lower if
the change in accounting policy was applied in FY2022. The tax
impact of this adjustment is £0.1 million.
11 Prior period adjustment
(continued)
|
|
|
|
Consolidated Financial
Position
|
|
|
|
|
As
reported
2022
|
Adjustment
2022
|
Restated
2022
|
|
£'000
|
£'000
|
£'000
|
ASSETS
|
|
|
|
Non-current assets
|
|
|
|
Property, plant and equipment
|
1,766
|
-
|
1,766
|
Right-of-use assets
|
801
|
-
|
801
|
Goodwill
|
25,022
|
-
|
25,022
|
Other intangible assets
|
3,394
|
-
|
3,394
|
Deferred tax assets
|
855
|
696
|
1,551
|
Total non-current
assets
|
31,838
|
696
|
32,534
|
Current assets
|
|
|
|
Stock
|
484
|
-
|
484
|
Trade and other receivables
|
13,549
|
(2,785)
|
10,764
|
Forward currency contracts
|
110
|
-
|
110
|
Cash and short-term deposits
|
7,113
|
-
|
7,113
|
Total current
assets
|
21,256
|
(2,785)
|
18,471
|
Total assets
|
53,094
|
(2,089)
|
51,005
|
LIABILITIES
|
|
|
|
Non-current liabilities
|
|
|
|
Lease liabilities
|
79
|
-
|
79
|
Provisions
|
179
|
-
|
179
|
Deferred tax liabilities
|
1,119
|
-
|
1,119
|
Total non-current
liabilities
|
1,377
|
-
|
1,377
|
Current liabilities
|
|
|
|
Trade and other payables
|
16,882
|
-
|
16,882
|
Current tax liabilities
|
372
|
-
|
372
|
Lease liabilities
|
802
|
-
|
802
|
Borrowings
|
50
|
-
|
50
|
Provisions
|
968
|
-
|
968
|
Total current
liabilities
|
19,074
|
-
|
19,074
|
Total liabilities
|
20,451
|
-
|
20,451
|
EQUITY
|
|
|
|
Share capital
|
11,183
|
-
|
11,183
|
Share premium account
|
31,451
|
-
|
31,451
|
Other reserves
|
11,151
|
-
|
11,151
|
Translation reserve
|
1,607
|
-
|
1,607
|
Accumulated losses
|
(22,749)
|
(2,089)
|
(24,838)
|
Total equity
attributable to
equity holders
of
the parent
|
32,643
|
(2,089)
|
30,554
|
Total equity
and liabilities
|
53,094
|
(2,089)
|
51,005
|
11 Prior
period adjustment (continued)
|
|
|
|
Consolidated Financial
Position
|
|
|
|
|
As
reported
2021
|
Adjustment
2021
|
Restated
2021
|
|
£'000
|
£'000
|
£'000
|
ASSETS
|
|
|
|
Non-current assets
|
|
|
|
Property, plant and equipment
|
1,551
|
-
|
1,551
|
Right-of-use assets
|
1,709
|
-
|
1,709
|
Goodwill
|
24,772
|
-
|
24,772
|
Other intangible assets
|
6,648
|
-
|
6,648
|
Deferred tax assets
|
1,010
|
626
|
1,636
|
Total non-current
assets
|
35,690
|
626
|
36,316
|
Current assets
|
|
|
|
Stock
|
467
|
-
|
467
|
Trade and other receivables
|
10,605
|
(2,505)
|
8,100
|
Forward currency contracts
|
-
|
-
|
-
|
Cash and short-term deposits
|
9,146
|
-
|
9,146
|
Total current
assets
|
20,218
|
(2,505)
|
17,713
|
Total assets
|
55,908
|
(1,879)
|
54,029
|
LIABILITIES
|
|
|
|
Non-current liabilities
|
|
|
|
Lease liabilities
|
135
|
-
|
135
|
Provisions
|
1,129
|
-
|
1,129
|
Deferred tax liabilities
|
1,288
|
-
|
1,288
|
Total non-current
liabilities
|
2,552
|
-
|
2,552
|
Current liabilities
|
|
|
|
Trade and other payables
|
14,456
|
-
|
14,456
|
Current tax liabilities
|
509
|
-
|
509
|
Lease liabilities
|
1,623
|
-
|
1,623
|
Borrowings
|
113
|
-
|
113
|
Provisions
|
854
|
-
|
854
|
Total current
liabilities
|
17,555
|
-
|
17,555
|
Total liabilities
|
20,107
|
-
|
20,107
|
EQUITY
|
|
|
|
Share capital
|
11,183
|
-
|
11,183
|
Share premium account
|
31,451
|
-
|
31,451
|
Other reserves
|
11,151
|
-
|
11,151
|
Translation reserve
|
1,538
|
-
|
1,538
|
Accumulated losses
|
(19,522)
|
(1,879)
|
(21,401)
|
Total equity
attributable to
equity holders
of
the parent
|
35,801
|
(1,879)
|
33,922
|
Total equity
and liabilities
|
55,908
|
(1,879)
|
54,029
|