Action taken leaves K3 better positioned
K3’s delayed full year results for the 12 months to the end of November 2019 are broadly in line with previous guidance and a little ahead of our estimate of Adjusted EBITDA. Covering a period before COVID-19, the results reflect the impact of certain expected high-margin orders not coming through, in combination with weaker trading conditions. Since that year-end, much has changed in the operating environment and K3 has subsequently put its underperforming UK Dynamics business into administration and extended its loan facilities. The Group continues to focus on the development of its own-IP products and, with a more robust financial position, can look to future growth from its solid customer base. In particular, the Global Accounts business is seeing growth from its IKEA business while geographic diversity should mitigate softer current trading in the UK and Europe. Although we do not reintroduce estimates at this point, we hope to review that later in the year.