K3 Business Technology Group (LON:KBT) expects to report FY16 results broadly in line with market expectations. Trading was encouraging during H216, with a good level of contract wins in the final months of the year.
Net debt has reduced over the year, although is higher than we forecast, partly due to a major retail customer going into administration close to year-end. We make no changes to estimates, pending FY16 results on 13 September.
FY16 broadly in line with market expectations
K3 has reported that FY16 trading was encouraging, particularly in its core sectors. Results for the year should therefore be broadly in line with market expectations. This is despite providing in full for a retail customer that went into administration in June.
The crucial final months of the year saw a good level of contract wins across both the Retail and Manufacturing divisions, and this combined with renewals supported significant new business for K3 hosting. Recurring revenues should show growth y-o-y, reflecting the increasing proportion of cloud-based business. Integration of DdD continues on track, and should be earnings enhancing in FY17.
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