Focus on core profitability in uncertain times
K3’s trading update is in lieu of its now-delayed results announcement (originally scheduled for this week). While it expects results for the year to 30 November 2019 to be in line with existing guidance, it is withdrawing guidance for the FY 20 financial year. Accordingly, we also withdraw our estimates beyond the financial year to November 2019. The Coronavirus outbreak has resulted in contract delays and deferrals, making assessments of revenue difficult. Among steps that the Group is taking to reduce costs, in line with action taken by numerous other companies, the dividend in respect of the year ended 30 November 2019 is cancelled. In addition, the Board is actively reviewing options to wind-down one of the Group’s underperforming third-party solutions units in the UK. The Board is also looking at pre-emptive measures to improve K3’s liquidity and discussions on funding are ongoing.