K3 Capital Group PLC – K3C – Half-year Report

K3 Capital Group PLC – K3C – Half-year Report

K3 Capital Group plc, a multi-disciplinary professional services firm providing advisory services to SMEs, today announces its interim results for the six months ended 30 November 2020.

Financial highlights

·      Group revenue £17.8m (H1 2020: £8.0m), with first-time contribution from acquisitions randd and Quantuma (limited to 4 months of trading)

·      All group companies trading strongly despite COVID impact and national lockdowns:

o  KBS: Revenue £5.9 million

o  randd: Revenue £2.6 million

o  Quantuma: £9.3 million

·      Adjusted* EBITDA £5.6m (H1 2020: £3.5m)

·      Net cash £10.1m (H1 2020: £6.8m)

·      Headline earnings per share** 6.9p (H1 2020: 6.3p)

·      Dividend per share*** 3.0p (H1 2020: 3.7p)

* Adjusted EBITDA is stated before acquisition related costs and share based payment (as set out in the Financial Statements below)

** Headline EPS calculated at an average of 61.7m shares vs 42.5m shares H1 FY20. Adjusted to exclude exceptional items

*** DPS calculated at 68.5m shares vs 42.5m shares H1 FY20

Operational highlights

·     Completion of two transformational and earnings enhancing acquisitions provides diversified revenues and cyclical balance

·     Creation of a high margin, cash generative, and debt free professional services Group

·     Successful 'integration' including Marketing, Accounting, and HR functions

·     Significant traction in cross selling across the Group, KBS being the third largest referrer to Quantuma during the period and 13% of randd's new client mandates directly attributable to Group referrals

·     Roll out of randd direct marketing strategy commenced with recruitment of dedicated sales team

·     Roll out of Quantuma direct marketing strategy during H2 will see new One80 brand created

·     'K3 Hub' accountant referral network launched with recruitment of national BDM team

·     Additional bolt-on acquisitions and lateral hires continue


·       KBS continues to see strong levels of performance, with January producing the highest profit month so far in FY21 and the pipeline remains strong, giving us confidence for the remainder of H2 and beyond

·      Randd continues to produce steady growth given the contracted and recurring nature of its revenues and management are excited about the opportunities presented by the roll-out of the volume direct marketing and sales function

·      Quantuma continues to grow its market share against a backdrop of significantly reduced insolvency statistics across the UK due to Government support to SMEs

·      We remain confident in our outlook for the current and future years


Commenting on the results, Chief Executive of K3 Capital Group plc, John Rigby, said:

"I am delighted to report that both myself and the Board are extremely satisfied with a strong financial performance during the first half of FY21. As stated at the time of the trading update, trading was ahead of management's expectations which is particularly impressive considering it was achieved against a backdrop of unprecedented challenges presented by the global pandemic, not least the multiple national and regional lockdowns. We also repaid all monies claimed under the Government's Covid-19 Job Retention Scheme in the financial period.

"We made excellent strategic progress in the period, particularly through the acquisitions of randd and Quantuma, with cross referrals of clients across the Group companies already starting to add real value. It is also very pleasing to see that we have not 'sat back' following the two acquisitions and within the period we have added further strength and depth through lateral hires, a joint venture and three bolt-on acquisitions for c£1m of cash and a modest earn out structure. These acquisitions include an Essex-based insolvency practice, an overseas insolvency foothold with an opportunity to win high profile mandates, and today we have completed the acquisition of a specialist tax investigations business.

"With the benefit of our strong financial position and platform, we intend to continue to build a significant group of complementary professional services businesses servicing UK SME's, both organically and through acquisition. We remain confident in our outlook for the current and future years."

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