K3 Business Technology Group Annual Report 2022

FY2022 Annual Report · K3 Business Technology Group
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K3 Business Technology 
Group PLC Annual Report 
and Financial Statements 
for the year ended  
30 November 2022

Registered number: 02641001

Contents

Overview
Highlights

K3 at a Glance 

Fashion Retail Market 

Case Studies 

Strategic Report
Chairman’s Statement 

Chief Executive Officer’s Review 

Financial Review 

ESG Scorecard 

Risk Management 

Section 172 Statement 

Governance
Board of Directors 

Directors’ Report 

Corporate Governance Statement 

Remuneration Committee Report 

Statement of Directors’ Responsibilities 

Audit Committee Report 

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Financial Statements
Independent Auditor’s Report 
to the Members of  
K3 Business Technology Group plc 

Consolidated Income Statement 

Consolidated Statement of 
Comprehensive Income 

Consolidated Statement of 
Financial Position 

Consolidated Statement of Cash Flows 

Consolidated Statement of  
Changes in Equity 

Notes forming part of the 
Financial Statements 

Company Balance Sheet 

Company Statement of 
Changes in Equity 

Notes forming part of the 
Company Financial Statements 

Other
Notice of Annual General Meeting 

Information for Shareholders 

Company Information 

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Highlights
Financial
2022 data represents 12 months to 30 November 2022 and 2021 data 12 months to 30 November 2021.

Revenue from  
continuing operations 

Recurring or  
predictable revenue1

Adjusted EBITDA1

£47.5m

2021: £45.3m

£37.6m

2021: £33.9m

£5.1m

2021: £4.4m

2022

2021

£47.5m

£45.3m

2022

2021

£37.6m

£33.9m

2022

2021

£5.1m

£4.4m

Revenue from continuing operations 
Recurring or predictable revenue1 

–  as a percentage of total revenue 

Gross margin 
Adjusted EBITDA1 

Loss before tax from continuing operations,  
including exceptionals2 
Net cash1 

Reported (loss)/gain per share 

Adjusted (loss) per share for  
continuing operations1 

12 months to 
30 November 2022  30 November 2021  Change

12 months to 

£47.5m 

£37.6m 
79% 

59.2% 

£5.1m 

£(3.8)m 

£7.1m 

(9.0)p 

£45.3m 

£33.9m 
76% 

59.3% 

£4.4m 

£(7.8)m 

£9.0m 

8.0p 

5%

11%
300bps

(0.1)%

16%

£4.0m

£(1.9)m

(17.0)p

(2.6)p 

(13.6)p 

11.0p

•  Revenue increase driven by strong growth in Third-party Solutions division and higher contribution 

from strategic products in K3 Products division

•  Recurring and predictable income now accounts for 79% of Group revenue (2021: 76%)

–  Group Annualised Recurring Contracts (“ARC”) at year-end up 11% to £22.9m (2021: £20.7m)
–  Strategic products ARC at year-end up 32% to £5.7m (2021: £4.3m), with the K3 Fashion Enterprise 

product being up 55%

•  Adjusted EBITDA1 from continuing activities up 16% to £5.1m (2021: £4.4m)

•  Healthy net cash of £7.1m (2021: £9.0m), and Group is expected to generate net cash in FY 2023

1  Refer to note 30 for definitions.
2  Exceptionals include an impairment charge of £1.6m (2021: £1.4m) and reorganisation and acquisition costs of £0.70m (2021: 

£1.5m).

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
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Operational
•  K3 Products division – encouraging underlying performance; good progress across our fashion and 

apparel offering (strategic products) masked by managed run-off of legacy products
–  Divisional revenue decreased by £1.3m to £13.5m (2021: £14.8m); Adjusted EBITDA1 at £0.7m 

(2021: £1.1m)

–  Gross profit margin up to 78.3% (2021: 75.3%)
–  Managed run-off of legacy products customer base in line with management expectations
–  Strategic products’ ARC up 32% to £5.7m, with new customer wins and existing customers 

increasing contracted software licences 

–  ViJi acquisition is integrating well and has enhanced sustainability offering
–  Largest software licence contract for flagship strategic product (K3 Fashion) signed post period

•  Third-party Solutions division – strong growth and highly cash generative 

–  Divisional revenue up 11% to £34.0m (2021: £30.5m) and Adjusted EBITDA1 up 12% to £12.8m 

(2021: £11.4m)

–  Gross profit margin constant at 51.6%
–  Aggregate ARC growth of 8.4%
–  NexSys software licence and maintenance contract renewals remained high at 98% (2021: 98%)

Prospects
•  Encouraging strong start to trading in FY 2023 with good strategic fashion product ARC growth

•  Board expects continued improvement across both divisions 

Marco Vergani,  
Chief Executive Officer of K3 Business Technology Group plc, said:

“K3 has made very encouraging progress in its first full year of executing 
its new growth plan. Against a challenging trading backdrop, we have 
delivered good growth in revenue, recurring income and profitability, and 
cash generation is on an upward trend.

“Our focus on driving the growth of our strategic fashion products is 
yielding very encouraging results and we have enhanced our sustainability 
offering. This is an increasingly important area for the fashion and apparel 
sector, with legislation also driving the adoption of sustainability solutions. 
Our Third-party Solutions division grew strongly and continues to 
generate high cash flows.

“The new financial year has started encouragingly, with our largest ever 
software licence contract for our flagship fashion product. The Board 
is confident that this progress will continue and expects the Group to 
become cash generative this year.”

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022K3 at a Glance

K3 is a leading provider of business‐critical software solutions focused on fashion and 
apparel brands and related large retail brands. The Group’s solutions comprise both 
wholly-authored products and third-party products enriched with K3 software. They 
provide customers with comprehensive, end-to-end capabilities. The Group operates 
through two divisions, K3 Products and Third-party Solutions.

The Group has approximately 2,400 customer installations across the UK, Europe, the Far East, and USA.

Customers relationships are typically long, and the Group generates a high level of recurring or predictable 
income. This arises from annual renewals of software licences and maintenance and support contracts as 
well as from framework service agreements.

K3 Products
The division’s products are outlined below. They are sold directly by K3 sales teams and indirectly via 
channel partners. 

K3 Fashion

K3 Fashion is the Group’s ‘concept-to-consumer’ solution, which is built on Microsoft Dynamics 365 
for Finance, Supply Chain and Commerce. It is designed to meet all the needs of fashion and apparel 
enterprises, and has been endorsed globally by Microsoft as its recommended ‘add-on’ for the 
fashion sector. K3 Fashion provides enterprises with the ability to gain insight and control over all their 
processes and inventory, from planning and design, sourcing raw materials and managing suppliers 
and manufacturers, to sales, including all channels-to-market, logistics, ordering and the tracking of 
financial transactions.

K3 Pebblestone

K3 Pebblestone is tailored to the fashion industry and has similar functionalities to K3 Fashion. Built 
on Microsoft Dynamics Business Central, it is specifically aimed at smaller brands and retailers, and is 
available in both as an ‘on-premises’ solution and as a cloud-based SaaS solution.

K3 ViJi

K3 ViJi is a suite of solutions that supports the traceability, certification and sustainability of the fashion 
supply chain. The suite was brought into the K3 product portfolio in January 2022 through the acquisition 
of the French-based business, ViJi SAS. It is core to K3’s vision of providing solutions that help the fashion 
and apparel industry to become more environmentally sustainable in tune with consumer concerns.

K3 Imagine

K3 Imagine is a cloud-native, unified commerce ‘headless’ (i.e. technology agnostic) platform, which 
enables brands and retailers to run their physical stores and omnichannel business in a seamless way. It 
includes K3 dataswitch, a real-time orchestration solution, which enables K3 Imagine to synchronise fully 
with any legacy application and ERP solution. This enables customers to adopt the new software within 
their pre-existing application environment and legacy systems, thereby benefiting from all the advantages 
of new technology while reducing the risks and disruption of replacing core IT systems.

K3 Legacy Solutions

The offering includes Retail POS solution, on a combination of cloud and on premise deployments, and 
some legacy ERP solutions.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
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Third-party Solutions
The Third-party Solutions division comprises two activities.

Global Accounts

Global Accounts includes the Group’s relationship with Inter IKEA Systems B.V. (the owner and franchisor 
of the IKEA concept) and the Inter IKEA Concept franchisees. K3 supports the development of the core 
IKEA solution for IKEA franchisees and assists IKEA franchisees with IT infrastructure, integrations and 
system enhancements, key to the smooth functioning of their IKEA stores and back-office solutions.

NexSys (previously referred to as SYSPRO)

NexSys provides and supports business software solutions for manufacturers and distributors. It is a 
SYSPRO elite partner in the UK and has over 40 years’ experience of delivering innovative ERP solutions. 
NexSys enables its customers to manage and control business-critical information, and take decisions 
made on accurate and reliable real-time insights. This helps customers to optimise their financial returns, 
innovate more easily, and improve their competitive edge. 

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Fashion Retail Market

The demand for digital transformation solutions is large and growing. Companies recognise the significant 
commercial and financial benefits of solutions that give them the ability to manage their processes more 
efficiently and provide an integrated, end-to-end view of their customers and sales channels, both instore 
and digitally. The replacement of old, ‘on-premise’ legacy systems with more modern, effective and 
intuitive cloud-based SaaS solutions is a trend that is growing fast. Statista, which provides market and 
consumer data, estimates that global spending on digital transformation in 2022 reached 1.6 trillion U.S. 
dollars, and this is forecast to increase to 3.4 trillion dollars by 2026.

In the Group’s target market of fashion and apparel, fashion and apparel brands recognise the constraints 
of on-premise legacy systems and the need to engage digitally with customers, manufacturers and 
suppliers. McKinsey predicts that fashion companies’ investment in technology will double by 2030 to 
between 3-3.5% of total revenues. In this context, there is a significant market opportunity for K3.

The Group’s Microsoft Dynamics-based ‘Concept to Consumer’ products provide better management 
of centralised processes and enable customers to replace ‘on-premise’ legacy systems with cloud-based 
SaaS solutions. The end result is a more agile and effective organisation, with increased business insight 
and data security, lower maintenance and operational costs, and an enhanced shopping experience for 
end-customers. In addition, customers’ sustainability ambitions can also be addressed effectively. 

K3 Market Position
The Group has a well-established track record in its chosen market segments. It has very strong domain 
knowledge and a comprehensive understanding of the challenges facing fashion and apparel retailers 
and related large retail brands. It is therefore well-positioned to help retailers adopt unified commerce 
strategies and to integrate the management and control of store sales and all forms of digital sales. 

K3’s focus is on mid-size enterprise clients who wish to be innovative and adopt the latest cloud-based 
solutions, without the risk of replacing their entire application environment or managing the complexity of 
integrating and maintaining a high number of different applications and technologies.

Its portfolio of solutions, with its fundamental cloud infrastructure and flexible ‘headless’ commercial 
architecture, backed by a strong understanding of market trends and customers’ evolving needs, is 
designed to capitalise on the growth opportunities available. 

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
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Case Studies

Samsøe Samsøe

Samsøe Samsøe, established in 1993, is an 
international clothing brand with roots in 
Scandinavian streetwear. To better support 
its mission of championing sustainability 
and CSR, the business sought a new 
solution that could trace its raw materials, 
track its products, and promote its actions 
to consumers. 

While several other solutions were 
considered, ultimately, Samsøe Samsøe 
chose K3 ViJi to drive its goals forward due 
to the solution’s seamless integration with 
its existing ERP system. Resultantly, the 
business can now collate data efficiently, 
automate processes, and better collaborate 
with its supply chain partners. 

“I sit on many forums with other 
sustainability managers across the 
industry in Denmark, and everyone 
is amazed when they hear what we 
are building here with the K3 ViJi 
team,” said Klara Lykke Redderson, 
Sustainability and CSR Manager at 
Samsøe Samsøe.

“It is going to set us apart in both 
terms of risk management but also 
delivering to the end consumer 
when it comes to our promises on 
traceability and transparency.” 

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Kitsuné

Kitsuné, a French-Japanese lifestyle brand 
founded in 2002, has a long history with 
Microsoft and K3. It had previously operated 
solely with K3 Pebblestone on Nav 2009 for 
several years, though it only used 30% of the 
solution. In line with its continued growth 
and plans to expand the business, Kitsuné 
realised it needed to upgrade its systems to 
better support its ambitions. 

As a ‘One Microsoft’ customer, using M365, 
Power BI, and Microsoft Teams, Kitsuné opted 
to implement D365 Business Central SaaS and 
adopt several other functionalities from K3 
Pebblestone, like the Manufacturing module. 

Since transitioning to Business Central 
and tapping into more of K3 Pebblestone’s 
functionalities, Kitsuné can now holistically 
manage all its activities, including the 
business’ fashion, music, and café brands. 

Össur

Össur, established in 1971, is a global leader 
in manufacturing effective, non-invasive 
mobility solutions, like prostheses, orthosis, 
and braces. Since its inception, the business 
has experienced significant growth and quickly 
outgrew its previous system. 

To modernise its operations and grow further, 
Össur needed a new, cloud-based retail 
system that was easy to use. While Össur did 
consider other solutions, K3 Imagine’s user-
friendly nature and competitive pricing meant 
that it was the right choice for the business. 

After adopting K3 Imagine, Össur is now 
benefitting from accurate reporting, with 
improved data, enabling it to have greater 
visibility over activities within its stores. 

Perhaps most importantly, not only are 
the new systems offering Kitsuné day-to-
day benefits, but they will also support the 
business’ long-term growth plans. 

“K3 has really been listening to 
our needs,” said Jacob Yngvason, 
Software Delivery Manager at Össur. 
“We have been very happy with the 
knowledge that they have and how 
they have helped us through these 
difficulties.” 

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
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Europa

Europa, established in 1974, is a major 
electrical components supplier to 
wholesalers, catalogues and other mainline 
distributors. After realising that its previous 
paper-based processes were costing it 
significant time and resources, Europa 
sought a new solution that could drastically 
improve its warehouse management.

IKEA – Chile

Falabella is a major stores and malls operator 
with 567 departments stores, supermarkets, 
regional shopping centres and home 
improvement centres across Latin America. 

Falabella took on the IKEA franchisee for Chile 
in 2022 as well as other LatAm countries, 
including Columbia and Peru.

K3 provided the core Microsoft ERP together 
with implementation services to launch 
the first site in Chile in August 2022 and the 
second site in December 2022. K3 was also 
able to take the global franchisee template, 
localise it, and work hand in glove with the 
Falabella team to open the site on time. 

The business handles approximately 
300 orders per day and is committed to 
distributing goods on the same day. As 
such, it needed a reliable ERP system that 
enabled all areas of the operation to work 
in an efficient and streamlined manner. 
While Europa considered other solutions, 
our presentation and positive customer 
feedback ultimately proved that K3’s 
solutions were best positioned to push the 
business forward. 

“In choosing SYSPRO, we were looking 
for a world-class product supplied 
through a reliable partner who could 
help develop the system to meet our 
changing needs,” said Sonia Freed, 
Managing Director at Europa. “The 
whole warehouse management system 
now works far more effectively and 
there’s less room for error.” 

“K3 was a collaborative partner 
and was able to bring their 
franchisee specific global solution 
to accelerate our store opening 
programme,” said German Pache. 

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Chairman’s Statement

Overview
In the previous financial year, the Board reviewed market opportunities for the Group and established 
a new growth plan for the business. This has sharpened our focus on our products for the fashion 
and apparel sectors. At the same time, we have identified new growth opportunities for our Third-
party Solutions business. We also restructured significantly by selling two businesses, reallocated 
investment and made organisational changes. We therefore started the financial year under review with a 
strengthened balance sheet, reduced costs and a better focus on our core strengths.

The trading backdrop continued to be challenging, nonetheless I am pleased to report that the Group 
has made encouraging progress over the year, strategically, financially, and operationally. Revenue from 
continuing operations is up by 5.0% to £47.5m (2021: £45.3m), with recurring and predictable revenue up 
9% to £37.6m (2021: £33.9m). Adjusted EBITDA1 from continuing activities has increased by 16% to £5.1m 
(2021: £4.4m). The Group’s net cash position at the year-end stood at £7.1m (2021: £9.0m), after making 
strategic investments. Underlying cash generation improved and this trend is expected to continue.

The Third-party Solutions division continues to generate high levels of recurring and predictable revenue, 
as well as strong levels of cash, from its large customer base. This includes IKEA Concept franchisees 
globally and UK manufacturers and distributors. Software licence and support and maintenance contract 
renewals generated by UK manufacturing customer base, which drive the division’s significant cash 
generation, remained very high at 98% (2021: 98%). The division’s gross margin was steady at 51.6% 
(2021: 51.5%).

The K3 Products division, which includes both our strategic and legacy products, continues to focus on 
building recurring cash flows. Recurring contracted revenue from our strategic products, which serve the 
fashion and apparel markets, grew strongly, with the annualised contract value up by 32% to £5.7m year-
on-year. This reflected increased uptake of software licences by existing customers and new customer 
wins. We expect strategic products to continue to grow strongly in the new financial year. At the same 
time, the division is managing the ongoing decline in the legacy product customer base. This managed 
run-off mainly accounted for the reduction in the division’s revenue, though gross margin increased 
significantly to 78.3% (2021: 75.3%). The improvement in gross margin reflected increased income from 
strategic products, price increases and cost reduction. The division’s Adjusted EBITDA1 continued to 
improve, moving to £0.7m (2021: £1.1m) with significantly less cash spend on capitalised development. 
The acquisition in January 2022 of ViJi, a software developer with proven sustainability software solutions 
for fashion retailers, has added valuable new IP in an important area for us. This new IP now operates 
alongside our fashion products and will be more deeply integrated in 2023.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
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Financial Results
Total revenue from continuing operations for the 12 months ended 30 November 2022 increased by 5.0% 
to £47.5m (2021: £45.3m). On a constant currency basis, revenue was up by 6%. Recurring and predictable 
revenue rose by 11% to £37.6m (2021: £33.9m), and accounted for 79.0% of Group revenue (2021: 76.0%). 
Third-party Products continued to generate a significant proportion of recurring and predictable revenue 
at £28.0m (2021: £25.4m). Recurring and predictable income from strategic products (in the K3 Products 
division) is growing fast, with annualised recurring contracts (“ARC”) up 32% to £5.7m.

The Group generated a gross profit for the financial year of £28.1m (2021: £26.8m), and Group gross 
margin was constant at 59.2% (2021: 59.3%). This reflected the balance of contributions from lower-
margin Third-party Products and higher-margin K3 products.

Support/administrative expenses rose to £23.0m (2021: £22.3m), with a further £1.7m of capitalised 
development costs, reduced by £1.1m as a result of streamlining operations. Adjusted EBITDA1 from 
continuing activities rose by 16% to £5.1m (2021: £4.4m), with the main driver being Third-party Solutions 
gross profit. The loss before tax from continuing activities reduced by £4.0m to £3.8m, (2021: loss of 
£7.8m) and adjusted loss per share from continuing operations reduced by 10.8p per share to 2.6p (2021: 
loss of 13.6p).

Net cash at 30 November 2022 stood at £7.1m (2021: £9.0m). This is after ViJi acquisition costs and 
software and systems investment. Operating cashflow from continuing operations normalised for 
Government coronavirus support and capital expenditure was £(0.5)m (2021: £(0.7)m).

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Growth Strategy
Third-party Solutions contributes significantly to the Group’s recurring income and cash flows. The 
division has a well-established track record in SYSPRO ERP solutions for manufacturers and distributors 
in the UK, and our objective is to secure higher-value projects and to address adjacent verticals. The 
Global Accounts business remains a critical partner in the support and ongoing international expansion 
of the Inter IKEA Concept via its franchisees.

The K3 Products division offers significantly higher-margin growth potential. This reflects the fact that 
its solutions are based on K3 intellectual property (“IP”). We believe that there are substantial growth 
prospects for the Group’s core strategic fashion products, which offer a powerful set of solutions for 
fashion and apparel brands. We have further enhanced these products with the introduction of ViJi 
IP for supply chain traceability, which supports customers’ sustainability objectives. Sustainability 
and environmental considerations have become greater priorities for customers, and EU and national 
legislation is also driving this trend. However, the area remains underserved, and we believe there is a 
significant opportunity for us to assist brands in addressing their sustainability issues.

Legacy solutions, which are also part of the K3 Products division, are mostly point-of-sale (“POS”) 
products. Our focus is on providing key accounts with a migration pathway to other K3 products, while 
managing the ongoing decrease in revenue from these POS solutions. 

People
Jonathan Manley, Non-executive Director, retired from the Group at the AGM in May 2022, and we take 
this opportunity to thank him again for his contribution to K3 during his six years on the Board. In July 
2022, we were delighted to appoint Pernille Fabricius, ACA, as Jonathan’s successor. She also now heads 
the Company’s Audit Committee.

Pernille has extensive board and senior-level financial and commercial experience across a number of 
sectors, including IT services. She is currently Chief Financial Officer and Executive Vice President of NNIT 
A/S, one of Denmark’s leading IT and consulting services providers, and Non-executive director of Gabriel 
Holding A/S, the fabrics manufacturer, and of Brødrene Hartmann A/S, the packaging manufacturer.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
12

Summary and Outlook
We have made encouraging progress under the new growth plan. Contracted revenue from strategic 
fashion products is growing strongly and contributing to the overall increase in recurring or predictable 
income. The new financial year has started well with strategic fashion products significantly expanding 
software licence income, which further increases ARC growth. Third-party Solutions has a solid order 
book from existing clients and is focused on margin improvement for new projects and upgrades.

The Group had net cash balances of £7.1m at the financial year-end and the first quarter of the new 
financial year shows a further material improvement in cash generation. We expects the business to 
generate net cash in the current financial year. 

The Board remains confident that the Group will make further progress over the current financial year 
and beyond.

T Crawford
Chairman
29 March 2023

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 202213

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Chief Executive Officer’s Review

Introduction
Last year’s review of Group strategy and addressable markets identified growth opportunities across 
all core activities. Our Third-party Solutions division is an important engine of recurring income and 
generates high levels of cash, and we are now focusing on enhancing margins. However, there is even 
greater scope to drive the quality of the Group’s income by leveraging the growth of K3 Products. The 
opportunities for K3’s high-margin products in fashion and apparel brands are extremely attractive, and 
their growth will drive recurring revenues, profitability and cash flows.

We have made very encouraging progress with our strategy and growth plans although the financial 
benefits are not yet fully apparent in these results. At the same time, over the course of the financial year, 
we continued to streamline operations and to invest in our central systems and software products.

Strategic Direction

K3 Products – Focus on Fashion & Apparel

K3 has a well-established track record in the delivery of Enterprise Resource Planning (“ERP”) and Point 
of Sales (“POS”) solutions for retail businesses. Our expertise extends across all the core “concept-
to-consumer” processes. This includes product design, product manufacturing, and product supply 
and returns. We also understand the challenges that our customers are contending with, including 
new regulations, changing consumer behaviour and technological innovation. The adoption of digital 
technology is driving the need for solutions that support strong supply chain collaboration and smarter, 
more integrated sales engagement with customers. New products are data-led and cloud-based 
Software-as-a-Service (“SaaS”) solutions.

Our focus is now on capitalising on our existing position and reputation in the fashion and apparel and 
related large retail markets, which includes brands that are developing their direct-to-consumer routes 
to market.

‘Transforming retail for good’ summarises the direction we are taking; that is to provide solutions that 
support innovation and transformation of core business processes, including in relation to environmental 
and ethical priorities. The growth areas we are focusing on are:

•  Sustainability – in particular supply chain traceability, which is now subject to new legislation;

•  Omni-channel and ‘unified commerce’ – which encompasses managing effectively both B2B and B2C 
channels, supporting a unified view of inventory across all channels, as well as creating a seamless 
shopping experience for consumers as they engage digitally and physically with brands, from the 
discovery stage to checkout and returns; and

•  Business Insight – enabling brands to gather actionable intelligence from data collected via our 

products to optimise inventory, maximise profitability, reduce wastage and inefficiencies, and engage 
with consumers in a more personalised way.

The addition of ViJi, the sustainability-focused software developer, has extended our existing 
sustainability offering with products that address supply chain transparency. This is a growth area, which is 
now subject to increasing regulation and consumer awareness.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
14

Third-party Solutions

NexSys (previously called SYSPRO)

Customers in manufacturing and distribution are embracing digital transformation, smart manufacturing 
and direct machine integration, and moving away from first-generation, monolithic ERPs or legacy 
applications, which are often not integrated. This shift provides us with significant growth opportunities, 
and we are targeting larger-scale projects for customers in growth sectors.

We continue to invest in our relationship with SYSPRO as well as in software development to enrich 
the SYSPRO offering with our own modules, capabilities and add-ons. We are also strongly focused on 
customer support and our end-to-end support service remains unrivalled in the marketplace. In the 
period, we rebranded this operation in order to position our capabilities more effectively.

Global Accounts

The Global Accounts unit includes our relationship with Inter IKEA Systems B.V. (the owner and 
franchisor of the IKEA concept) and the Inter IKEA Concept franchisees. The backbone of our activity 
is the development, enhancement and maintenance of the core IKEA solution for franchisees as well as 
integrations, software customisation and support. This support encompasses the core infrastructure 
behind IKEA franchisee stores and back-office solutions. We also develop and implement complementary 
new solutions such as our ‘Mobile Goods Flow’ and ‘Self-ordering Kiosk’ applications, to extend the core 
IKEA solution.

The IKEA Concept and IKEA stores continued to expand rapidly in 2022, with new store openings in Chile, 
Indonesia, Taiwan and other locations. We maintain a solid backlog of enhancement projects although 
fewer new IKEA stores are planned in 2023 than in 2022.

Organisational and Operational Changes

We continued to streamline the Group and to strengthen our sales approach. In allocating investment, we 
have prioritised our strategic partnerships. These include Microsoft and channel partners responsible for 
reselling our fashion offerings. Our relationship with Microsoft remains close, and K3’s inclusion as part 
of Microsoft Retail Cloud is testimony to the strength of our products in the fashion and apparel sector. 
Our K3 Fashion product remains Microsoft’s recommended ‘add-on’ solution for the fashion and apparel 
sector globally.

During the financial year, we invested in enhancing channel partner sales support, and in delivery and 
customer support as well as in knowledge management practices We have also developed the new sales 
team in North America, which is an important region for us, working in conjunction with Microsoft.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 202215

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Review of Performance

K3 Products

K3 Products provides software products and solutions that are powered by our own IP. They comprise:

•  strategic products focused on the fashion and apparel markets, including K3 Fashion and K3 

Pebblestone, K3 ViJi and K3 Imagine;

•  solutions for the visitor attraction market; and

•  stand-alone point solutions, which are mainly our legacy point-of-sale (“POS”) products.

Revenue 

Gross profit 

Gross margin (%) 

Adjusted EBITDA1 

2022 
£m 

13.5 

10.5 

2021*
£m 

14.8

11.1

78.3% 

75.3%

0.7 

1.1

*FY2021 restated to reflect latest segment reporting, in which Revenue and Gross profit from “mobile goods flow” and “make tax digital” 
are reclassified from K3 Products to Third-party Solutions.

Divisional revenue decreased by £1.3m to £13.5m (2021: £14.8m). Approximately £1.1m of this reduction 
reflected continued managed run-off from legacy products, which was in line with management 
expectations. However, it masks the very good progress made with strategic fashion products, especially 
K3 Fashion. By the financial year end, the annualised value of recurring revenue (or Annualised Recurring 
Contracts (“ARC”)) from strategic product software licences had increased significantly, driven both by 
new customer additions and increased software licence sales to existing customers. 

ARC is a key measure of our strategic products (including K3 Fashion and K3 Pebblestone, which are 
focused on the fashion and apparel brands). This metric does not use IFRS15’s ‘point-in-time’ revenue 
recognition approach to term contracts, but instead recognises revenue over the term of the contract. 
ARC from our strategic products increased by 32% to £5.7m, with 25% of this driven by existing 
customers taking up further software licences. Importantly, ARC from our flagship product, K3 Fashion, 
increased by 55%. 

Legacy product managed run-off impacted the division’s overall gross profit, which was down by £0.6m 
to £10.5m. However, gross margin improved significantly to 78.3%, from 75.3% in the prior year. This 
reflected the change in revenue mix, increased pricing, as well as cost reductions. 

A total of £2.1m of major new contracts were secured for K3 Fashion and K3 Pebblestone, with a strong 
close at the end of the financial year (2021: £3.1m, which included a number of multi-year contracts). The 
£2.1m of new contracts signed in 2022 were mostly one-year contracts, with typical roll-on and expand 
significantly, driving growth in ARC. As an illustration, a major new customer signed in 2020 implemented 
c. £0.02m of software in its first year. Since then, its software contract value has grown more than ten-
fold to c. £0.25m per annum. New contracts included eight major new customer wins as well as increased 
software licence sales to existing customers. The major new customers included a premium outdoor-
clothing company, a luxury Swiss watch brand, a leading French youth-fashion brand, a Spanish fashion 
brand, a large UK clothing & footwear brand and a major Nordics fashion and apparel brand. 

We were pleased with the expansion in revenues from existing clients, which demonstrates the continuing 
success of our ‘land and expand’ strategy. Typically customers use our fashion products for their 
centralised functions (including purchasing, catalogue management, and pricing) and then adopt it across 
the rest of their operations (particularly with increasing use of hand-held devices in distribution centres 
and stores).

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
16

We initiated the migration of our K3 Pebblestone clients from an existing ‘on-premises’ solution to a new 
cloud-based version, which is sold on a subscription basis. This migration is underpinned by Microsoft’s 
push to move Dynamics Business Central clients to its cloud versions, and we expect the migration to 
accelerate in 2023 and beyond.

The principal route to market for K3 Fashion and K3 Pebblestone remains via selected Microsoft business 
partners. Microsoft’s global endorsement of K3 Fashion as its recommended ‘add-on’ solution for the 
fashion and apparel vertical continues to underline the quality of our solution. Our channel partner 
management team is working well with our business partners and will continue to support channel sales, 
including opportunities for our fashion products in the USA. Given the demand for our fashion solutions, 
we have further expanded the number of our business partners and created a team of experts to support 
them in initial engagements and showcase our thought leadership and best practices.

Our solutions for visitor attractions delivered an improved performance. This was driven by a 
combination of recovery in the UK visitor attractions segment after the coronavirus pandemic, but also 
the improvements we made to our offering over the last financial year. These included an enhanced 
reservation engine, improved online ticketing capability, and an upgraded user interface, all of which 
supported price increases to customers. 

In January 2022, we made a strategic purchase of intellectual property, acquiring ViJi, an innovative French 
software developer. ViJi is wholly focused on enabling fashion retailers trace and authenticate more easily 
the environmental and social credentials of their supply chains. It has been developed as a fully-scalable 
software solution, covering the collection, verification and renewal of supplier certifications. It also 
includes a consumer-facing component, which enables fashion retailers to provide consumers with ethical 
and environmental information on their products.

ViJi’s exciting new products complement our existing offering and have accelerated the development 
of our sustainability offering, in particular for supply chain transparency. We are in the process of 
integrating the IP with our fashion products to create a market-exclusive and highly valuable, end-to-end 
sustainability solution, which covers supply chain transparency, the production of automated ESG reports, 
compliance documentation and authenticated information on customers’ products. We successfully 
deployed K3 Viji into a select number of customers and are taking advantage of their input to prioritise 
new development. In parallel, we have created a substantial pipeline of opportunities, which reflects 
the increasing prioritisation of sustainability issues by customers, accelerated by a number of fast-
approaching legislative deadlines and targets in Europe and the USA. 

Third-party Solutions

Third-party Solutions comprises NexSys (previously called SYSPRO) and Global Accounts, which 
both resell Third-party Solutions. These are typically ‘on-premise’, and revenues are generated from 
implementation, software licence renewals, and ongoing maintenance and support contracts.

Revenue 

Gross profit 

Gross margin 

Adjusted EBITDA1 

2022 
£m 

34.0 

17.6 

51.6% 

12.8 

2021*
£m 

30.5

15.7

51.5%

11.4

*FY2021 restated to reflect latest segment reporting, in which Revenue and Gross profit from “mobile goods flow” and “make tax digital” 
are reclassified from K3 Products to Third-party Solutions. 

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
The division performed well, with total revenue increasing by 11% to £34.0m (2021: £30.5m) and Adjusted 
EBITDA1 11% higher at £12.8m (2021: £11.4m). Gross margin remained constant at 51.6% (2021: 51.5%).

Building on last year’s progress, NexSys, the new name for our SYSPRO operations, which is focused on 
business-critical ERP for the UK manufacturing and distribution markets, delivered a good performance, 
implementing new software installations for new customers and servicing the order book from existing 
customers. Although a number of prospects delayed their purchasing decisions, against the background of 
rising energy costs, we won several important new customers. These included, a distributor of diagnostics 
tools, a well-known brand of home furniture, a leading European manufacturer of axles and suspensions, 
and the Physics Department of a leading UK university. We therefore entered the new financial year 
with a good pipeline of projects. We have increased resource to support new business wins and to take 
advantage of the opportunities ahead.

The NexSys customer base generates strong cash flows from software licence and maintenance and 
support contract renewals. The majority of renewals takes place in the final quarter of the financial year 
and remained very high at c.98% (2021: 98%).

Global Accounts, which predominantly provides specialist software services to the Inter IKEA Concept 
franchisee network, also performed well. Our specialist services teams continued to support the roll-out 
of IKEA franchisee stores in the Far East and in Central and South America. We added delivery resource 
during the year, although the shortage of available skilled resource resulted in some cost inflation. We also 
continued to deliver K3 Product applications into IKEA franchisees, including ‘Mobile Goods Flow’. We are 
focused on gross margin improvement over 2023, which will be helped by an easing of resource pressures 
and the good backlog of projects with franchisees. Revenue from framework contracts closed the year 
strongly, up 18% on an annualised basis.

Central Costs
Central Support costs include our central IT, finance, legal, HR, insurance, marketing and PLC costs, which 
are not allocated to revenue generation. There was a £0.4m increase in Central costs to £8.5m (2021: 
£8.1m), which reflected our investments in upgrading our internal IT application landscape by adopting 
and deploying new financial, CRM and customer support systems.

Summary
Over the financial year, we made very encouraging progress in line with our new growth strategy. Our 
focus on and investment in our strategically important business areas have improved our market position, 
reinforced our thought leadership in key sectors, and enhanced our ability to drive strategic product 
growth. Our products are mission-critical and help customers unlock digital innovation thereby improving 
their ability to compete in the markets they serve. We expect to deliver further growth in the new financial 
year while also improving Group cash generation.

Marco Vergani
Chief Executive Officer
29 March 2023

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
18

Financial Review

Overview
It should be noted that the comparatives for the prior financial year consolidated income statement 
have been restated. This followed the classification of the certain Group-owned products that are sold 
exclusively into the Third-party Solutions customer bases being reclassified into the Third-party Solutions 
segment.

The Group’s reported segments are ‘K3 Products’ and ‘Third-party Solutions’, with central support costs 
reported separately, as previously. This aligns segmental reporting with the Group’s growth strategy.

The Directors consider the key performance indicators by which they measure the performance of the 
Group by division to be:

revenue;
recurring or predictable revenue1;

• 
• 
•  Group ARC1;
•  strategic products ARC1;
•  gross profit;
•  gross margin; and
•  adjusted EBITDA1.

The Group’s results for the year end to 30 November 2022, together with comparatives for the same 
period in 2021, are summarised in the tables below.

Continuing Activities 

Revenue

Revenue 

– 

recurring or predictable revenue1 

ARC – Group 

ARC – Strategic products 

Gross profit 

Gross margin percentage 

Underlying support/admin costs 

Capitalised development costs 

Adjusted EBITDA1 

2022 
£m 

47.5 

22.8 

22.9 

5.7 

28.1 

59.2% 

(24.7) 

1.7 

5.1 

2021*
£m 

45.3

20.3

20.7

4.3

26.8

59.3%

(25.2)

2.8

4.4

*restated

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
Overall Group revenue was up 5.0% to £47.5m (2021: £45.3m) being driven by Third-party Solutions. On a 
constant currency basis, underlying growth was £2.5m higher year-on-year. Third-party Solutions revenue 
increased by 11.0% to £34.0m (2021: £30.5m). K3 Products revenue was £13.5m (2021: £14.8m), down 
9% or £1.3m. This reflected legacy decline of £1.4m, which was in line with expectations. Revenue from K3 
Products’ strategic products increased by £0.1m to £4.7m, with total deal closure in line with the prior year. 

Gross profit mirrored revenue growth and increased by 4.7% to £28.1m (2021: £26.8m). Overall gross 
margin percentage was unchanged at 59.2% (2021: 59.3%) with K3 Products gross margin percentage 
increasing to 78.3% (2021: 75.3%). This was driven by an improving mix of higher-margin fashion products, 
more operational leverage in K3 Imagine and price increases. Third-party Solutions margins remained 
constant at 51.6% (2021: 51.5%).

Group annualised recurring contracts (“ARC”) grew by 11% to £22.9m from £20.6m, driven by strategic 
products growth of 32% to £5.7m (2021: £4.3m). Within strategic products, ARC for the enterprise 
product, K3 Fashion, increased by 55%, driven by both new customers and existing customer expansion.

The key metric of adjusted earnings before interest, tax, depreciation, amortisation and exceptional items 
(“Adjusted EBITDA1”) increased by 16% to £5.1m (2021: £4.4m), with lower capitalised development costs 
of £1.7m (2021: £2.8m) meaning that underlying operating margins are expanding. 

Administrative Expenses

Support/administration costs net of capitalised development costs 

Depreciation & amortisation 

Amortisation of acquired intangibles 

Exceptional costs impairment & reorganisation 

Share-based payments 

Total 

2022 
£m 

23.0 

5.4 

0.0 

2.2 

0.9 

31.5 

2021*
£m 

22.3

6.8

0.5

3.1

0.4

33.1

*restated

Support/administration costs net of capitalised development costs1 increased by £0.8m to £23.0m (2021: 
£22.3m), which reflected the investment in additional customer-facing staff.

Depreciation and amortisation costs decreased in line with the reduced level of capitalised development 
in recent years. Exceptional costs in the year related to the impairment of some Retail POS amounting 
to £1.6m, acquisitions costs and restructuring costs of £0.6m. Exceptional costs in 2021 related to 
redundancy costs and onerous contracts following the Starcom disposal.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
20

Earnings Per Share
The Group’s adjusted loss per share from Continuing operations1 reduced by 10.8p per share to 2.6p 
(2021: adjusted1 loss per share of 13.6p). Reported loss per share was 9.0p (2021: earnings of 8.0p, which 
included profit from disposals).

Dividends
No dividend will be declared for the year ended 30 November 2022 (2021: nil).

Taxation
The corporation tax charge for the financial year was £0.1m (2021: £0.8m charge). This comprised a 
charge for current taxation of £0.1m (2021: £0.6m) relating to the non-UK businesses and a charge for 
deferred taxation of £nil (2021: £0.2m).

Balance Sheet
Overall the Group balance sheet remains robust with net cash balances of £7.1m (2021: £9.0m). The 
Group has a bank facility with Barclays, its long-standing bankers, which provides for the draw down of up 
to £3.5m to support seasonal cash movements. At the year-end, £nil was drawn down (2021: £nil). After 
the financial year end, the Group’s facility agreement was extended for a further year, until March 2024.

Goodwill increased to £25.0m (2021: £24.8m) as a result of acquisitions and FX charges. Development 
costs reduced to £3.4m (2021: £6.6m), reflecting the reduction in capitalised development costs and 
the impairment of £1.6m. The development cost balance of £3.4m is now heavily weighted, 80% to the 
strategic vertical of fashion & apparel. Property, plant and equipment decreased to £2.5m (2021: £3.3m) 
with depreciation exceeding additions.

Current assets increased in Contract Assets driven by multi-year longer term deals and in Trade Debtors 
with increased Third-party Solution revenues. Trade & Other Payables increased to £16.9m (2021: 
£14.5m), which reflected deferred income and contingent acquisition consideration and higher year-end 
commissions. Current leases obligations reduced to £0.8m (2021: £1.6m) following the reduction of the 
office footprint and car fleet.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Cash Flow
Net cash balances at the year-end stood at £7.1m (2021: £9.0m). The underlying trend of cash generation 
is improving with an annualised £3.0m cash outflow1 as at 31 May 2022, reducing to £1.9m as at 30 
November 2022 and with further material reduction in Q1 2023 on K3’s path to cash generation. Cash 
outflow*1 in the financial year amounted to £1.9m, including £0.3m of costs relating to the acquisition of 
ViJi and £1.0m of investment in upgrading internal systems.

The comparison of cashflow in 2022 and 2021 is distorted by the disposals of the Sage and Starcom 
business units. The table below normalises the impact of the disposals and also the 2021 Government 
coronavirus support unwind on cash generated from operations.

Net cash from operating activities 

Total

–  Add back Sage outflows 

–  Add back Starcom inflows 

–  Add back Dynamics (inflow)/outflow 

Development expenditure capitalised 

Purchase of property, plant and equipment 

Government coronavirus tax support paid/(deferred) 

Operating cash flow from Continuing Activities normalised for  
Government coronavirus support and capital expenditures 

2022 
£m 

2.4 

– 

– 

(0.4) 

(1.7) 

(0.8) 

– 

(0.5) 

2021
£m 

(0.5)

0.2

(1.1)

1.6

(3.0)

(0.6)

2.7

(0.7)

Investing Activities included £0.3m for the consideration of the ViJi acquisition in addition to associated 
deal costs. 2021 Investing Activities included the disposal proceeds of the Starcom and Sage businesses 
of £13.3m and £1.5m respectively.

Development expenditure capitalised for products was £1.7m (2021: £2.3m) with a further £1.0m invested 
in internal systems upgrade classified across capitalised development and purchase of property, plant and 
equipment. Development expenditure capitalised on product for external commercialisation was spread 
evenly across the core strategic products of K3 Fashion, K3 Pebblestone and K3 ViJi.

Within 2021 Financing Activities, following the high level of Starcom and Sage disposal proceeds, these 
funds were used to pay down the bank facilities of £6.8m. In addition, 2021 indebtedness was further 
reduced by the non-cash debt-to-equity conversion of the £3m shareholder loan.

Finance expenses were higher in 2021 due to the charge for the conversion of shareholder loan notes into 
equity. Repayments of lease liabilities continued to decrease following the reduction of the office footprint 
and size of the car fleet.

Robert Price
Chief Financial Officer
29 March 2023

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
22

ESG Scorecard

Sustainability at K3
K3’s mission is to transform retail for good, leading the agenda so that our partners and customers 
accelerate toward their ethical priorities and responsibilities. Our products enable sustainable practices 
within retail and the Fashion and Apparel industry including ViJi, a SaaS solution that enables supply chain 
transparency that was acquired in early 2022.

As advocates who are passionate about enabling sustainable practices in the industry, we have turned this 
focus within K3 too, with an objective to promote ethical responsibility and sustainable practices across 
the Group. To reinforce our commitment, K3 will use the BCorp assessment for certification to provide a 
framework to support our transformation and to track our achievement. Our core internal focus areas for 
being a sustainable business are People, Environment and Privacy & Security.

People
A crucial priority for K3, is to create a Great Place to Work. In July 2022, K3 announced the appointment of 
its second female board member, taking our female to male representation on the board to 1/3rd. Female 
representation is now 40% at a wider leadership level, whilst across the Group we score above average as 
an employer of women in the tech sector.

When our employees began returning to corporate offices, helping our people get back to work was 
a significant priority. Recognising how flexible and hybrid working policies promote inclusivity, we 
embraced a company-wide shift to hybrid working practices by launching a Global Hybrid Working Policy 
in August 2022 (for all employees in a suitable role). Elements included manager training to ensure equity 
of experience and the equal and fair career progression of home/hybrid workers (compared to office 
workers), to prevent proximity bias. To support the home office, we now allocate GBP150 (equivalent) per 
capita for home office equipment (e.g. a desk or chair, with further available for accessibility needs); this 
was further supported by the introduction of a digital workspace risk assessment tool. Today, we have 
teams that work mostly remotely, others work a combination of remotely and in the office, and others 
work mostly in the office.

With the switch to a global hybrid work environment came the challenge of addressing a sense of 
belonging and loyalty to K3 as well as equitable and fair representation in an online environment. To 
manage this we launched global digital placemaking initiatives to engage employees. We introduced a 
global quarterly digital publication, K3 Group News (in which any employee can be featured); we increased 
live events and expanded the range participants speaking at those events; we launched a month-long 
employee knowledge-sharing event called K3 Festival of Knowledge; and increased content on societal 
issues via internal communications and ‘the Hub’ approach allowed us to provide diverse peer-to-peer 
representation. Creating opportunities that allow for broader visibility across gender, nationality, age, and 
experience is a key driver in our employee engagement strategy.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 202223

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Furthermore, with ‘Transform Retail for Good’, as our starting point, we recognise the only way for all of 
us, to remain relevant, innovative and commercial is to empower our employees by providing access to 
learning opportunities. As a result, learning is an important cornerstone of our culture and employer value 
proposition. In September 2022, we launched Learning@K3 our online Learning & Development platform, 
which focuses on our purpose and the development of our people across the world, through equal 
development opportunities and flexible access, to enrich our employees skills and knowledge, to stay up 
to date, and continue growing in their careers.

Employee wellbeing continues to be a key area of focus, as is raising awareness and providing employee 
training in support of World Mental Health Day, via an introduction to mental health awareness and 
learning modules on building better mental health.

Environment
With sustainability at the core of our business strategy we recognised the need to review our own 
practices and impacts on the environment. To mark Earth Day 2022 we committed to planting 500 trees 
per year to represent each of our employees, with partner Just One Tree. (At the end of 2022, we planted 
3,000 more to represent our customers.) We also featured a story on an independent innovative fashion 
supplier, Inland Sea, who is connecting with academic researchers to create carbon positive clothing. As 
we undertook the refurbishment of some of our offices, furniture was repurposed to support individuals 
and community groups. For example, in Nootdorp, office furniture was sent to a community centre to 
support refugees in the Netherlands. We also introduced a Laptop Recycling Policy, ensuring IT equipment 
could be repurposed for family use or to support charities. One organisation to benefit from our laptops is 
Q·Learning Nepal, which provides education to children in rural Nepal.

Energy Scorecard

The below disclosures are made in accordance with Streamlined Energy & Carbon Reporting guidelines. 
The GHG Protocol Corporate Accounting and Reporting standard and the 2019 UK Government 
Environmental Reporting Guidelines and we have used the 2021 UK Governments Conversion Factors for 
Company Reporting.

UK GHG Emissions and Energy Consumption

UK 

Netherlands 

Total 

UK 

Netherlands 

Total

2021 

2022

Consumption 
in metric tonnes CO2e

Gas (scope 1) 

Electricity (scope 2) 

Employee use of own vehicle 
(scope 3) 

Total consumption 
in metric tonnes CO2e 

45.7 

30.5 

8.9 

78.6 

54.6 

109.1 

16.2 

13.2 

8.7 

68.8 

24.9

82

14.11 

– 

14.11 

33.4 

– 

33.4

90.31 

87.5 

177.81 

62.8 

77.5 

140.3

Total energy used in kwh 

453,826 

244,274 

698,100 

291,987 

249,192 

541,179

Tonnes CO2e 
per £m of turnover 

5.8 

3.5 

3.7 

2.8 

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
24

We have measured our scope 1 and 2 emissions and included scope 3 emissions related to employee use 
of their own vehicles, where they claim mileage allowance (grey fleet). Although we are not regulated to 
include global emissions, to provide a more complete emissions statement, we have reported on our UK 
and Netherlands operations which account for 77.8 % of our headcount as a voluntary measure.

The energy consumption for serviced offices, which do not have sub-meters, has been calculated using 
the kWh/m2 of a similar sized office.

The intensity ratio chosen was tCO2e per £ million turnover. This was chosen as it was deemed to be 
the best metric which could be constantly used over time and would best reflect changes in our energy 
consumption, but also reflect changes in our operations.

The UK energy consumption reduced following the reduction in the office footprint whilst the use of own 
vehicles increased following the return to travel post pandemic. The Netherlands energy consumption 
was flat to down and expected to reduce markedly next year following the revamp and decrease of the size 
of the main Netherland office. 

The K3 real estate size has been reduced by 47% and moving to smaller managed serviced offices has 
seen an overall reduction in energy consumption of 22%, per the Emissions and Energy Consumption 
table above. The future ways of working will see a continued reduction in office space which encourages 
flexible working, hotdesking and creative meeting spaces. We anticipate a move toward hybrid working 
models which will also see further reductions in energy consumption, office consumables and services.

Future office spaces will aim to partner with sustainable building owners holding energy efficiency 
credentials such as LEED (Leadership in Energy and Environmental Design) and BREEAM (Building 
Research Establishment’s Environmental Assessment Method) working collaboratively to achieve joint 
sustainable targets.

K3 has in addition reduced the fleet size by 34%, with the number of electric/hybrid vehicles counting 
for 23% of the total fleet. The largest impact on lowering emissions for this period was the reduction 
in business mileage, primarily due to Covid and associated company wide travel restrictions. We have 
since reviewed our travel policies to focus on reducing travel emissions, both reducing the number of 
journeys our people make and also looking for less carbon-intensive ways of working. Travelling only where 
necessary, encouraging both internal and client-facing teams to make better use of technology-based 
alternatives that support collaborative working from different locations and encourage our people, once 
they’ve considered the need to travel, to use our internal systems to book travel, so we can improve our 
management information, risk management and costs.

Privacy and Security
During the year we substantially completed a major systems upgrade, the Unity Programme, and released 
critical process and tooling improvement to support people and customer interactions and introduce 
enhancements to our data management policies.

We are upgrading our customer systems access and provide GDPR training to our teams to ensure K3 is 
both knowledgeable and compliant. In response to digital security concerns, we upgraded our internal 
team and created a new role of Chief Information Officer.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Risk Management

The Board is responsible for risk management of the Group with the principal business risks which the 
Group faces categorised as follows:

FY22 Principal risks

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Probability

1.  Liquidity and banking facilities

2.  Group strategies and product management

3.  Supplier relationships

4.  Employees

5.  Credit risk

6.  Currency risk

7.  Customer relationships

8.  Cyber security

9.  Cost of maintaining legacy products

10.  Customer project management

11.  Economic conditions

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FY22 Risks and mitigation

Description

Mitigation

Change

Down

The Group ensures it has the funds to meet its 
obligations or commitments under the Facilities 
Agreement by monitoring cash flow as part 
of its day-to-day control procedures and that 
appropriate facilities are available to be drawn upon 
when the need arises.

The Group has re-financed its current Banking 
arrangements to 31 March 2024 and was net debt 
free for FY22.

Flat

The Group re-evaluates its market strategy 
annually and ensures that strategy, technology, 
pricing, product and business development is 
market led, and market informed, going forwards 
with focus on the strategically chosen fashion 
and apparel vertical. The Group assesses the 
investment needed for each product at each point 
in its natural product lifecycle with regard to ROI.

The key Group supplier and software partners 
relationships are secured by commercial 
agreements and management participate in regular 
product, service, market and strategy reviews with 
key suppliers and software partners.

Up

Relationships with alternative suppliers are 
maintained and activity can be diversified and 
moved.

Liquidity and Banking 
Facilities 

The Group has a Bank 
Facilities Agreement which 
requires it to meet certain 
covenants throughout the 
term of the agreement. The 
Group’s business model, 
operations and forecasts 
indicate that the Group 
will remain within the set 
parameters.

Group Strategies and 
Product Management 

The Group has invested a 
significant amount of funds 
in its products. The risk is 
that the Group is unable 
to commercialise that 
investment with appropriate 
market product fit, customer 
engagement, product 
stability or pricing. 

Supplier Relationships

The Group benefits from 
several close commercial 
relationships with key 
suppliers and software 
partners. Damage to or loss 
of these relationships could 
have a direct and detrimental 
effect on the Group’s results. 
The international nature of 
the Group also means the 
supplier base carries a geo-
political risk.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
Description

Mitigation

Change

Flat

The Group seeks to access global talent and 
has expanded its talent catchment area with 
the expansion of the Kuala Lumpur office. 
Competitive remuneration is offered together 
with the ability to participate in a bonus scheme. 
Long-term incentive plans are in place to retain 
key executive talent and the Group has strong 
purpose, communication and values that are 
important to staff. 

Employees

As a global software house, 
the Group is committed 
to attracting and retaining 
talent across the globe 
without which we would 
not be able to operate as 
effectively. Given increased 
retention challenges in the 
employment market more 
generally and with remote 
home working, the search 
for talent has become more 
global and competitive.

Credit Risk

The Group’s credit risk 
is primarily attributable 
to its trade receivables 
and accrued income. 
The amounts presented 
in the statement of 
financial position are net 
of allowances for doubtful 
debts, estimated by the 
Group’s management based 
on prior experience and their 
assessment of the Group’s 
leverage, relationships, 
customer financial position 
and the current economic 
environment. 

The Group operates a centralised credit 
management function and assesses credit 
risk on an individual customer basis and with 
standardised contract terms.

Up

For the Group’s SaaS based products, the annual 
access codes and partner model is considered 
to structurally reduce the risk by retaining the 
control over the right to access and use the 
software. Currently, the Group’s larger third 
party solution customers are generally financially 
stable and Group has good leverage in that it 
provides mission critical systems. However, the 
economic downturn is expected to increase 
credit risk.

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28

Description

Mitigation

Change

Down

Where possible currency and exchange risk is 
hedged by matching off amounts payable in those 
local currencies.

The Group’s banking facilities allow for a blend of 
debt in EUR or GBP. The Group has introduced 
hedging strategies that have reduced currency 
exposure.

Currency Risk

The Group’s currency risk 
is primarily attributable 
to its trade receivables 
where certain customers 
are billed in Euros, and 
other currencies, which 
are not the reporting 
currency of the Group 
company. Whilst future cash 
generation is expected to be 
predominantly in EUR, cash 
absorption is predominantly 
in GBP. There is a risk that 
changes in foreign exchange 
rates could impact reported 
results and incur foreign 
exchange costs.

Customer Relationships 

The Group has a single 
customer ecosystem 
(including franchisees) which 
accounts for circa 44% of 
revenue. Damage to this 
customer relationship, or 
loss of revenue, would have 
a significant and detrimental 
impact on the Group’s 
financial performance.

Cyber Security

There is an increasing 
growth in cyber terrorism. 
The Group may be at risk 
of a successful cyber-
attack which could impact 
the availability of internal 
systems and data and/
or customer systems and 
data. A successful cyber-
attack may also carry the 
risk of ransom demands and 
increased costs to recover 
systems or data.

Although represented by a single ecosystem, 
the customer, projects, and franchisees are 
spread across numerous territories, contracts 
and individual business orders around the world, 
mitigating the risk by this portfolio effect. 

Flat

The systems supplied by the Group are mission 
critical for the customer and franchisees.

The Group has dedicated cyber security 
resource and has a programme of training and IT 
infrastructure improvement projects. Key security 
policies and incident response protocols have 
been established. The Group also has disaster 
recovery plans and conducts key failover tests on 
an annual basis.

Flat

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Description

Mitigation

The Group has a programme to manage pricing, 
customer expectations, transition to new products, 
retention of key resource and to provide extended 
support packages as products age.

Change

Up

The Group has invested in Service Delivery 
leadership, new tooling and methods to support 
project management. Regular project management 
reporting, with action, is held and the profile of 
projects continues to reduce in risk as the Group 
moves to more standardised solutions. 

Flat

The Group has high levels of recurring revenue, 
from business critical systems such as ERP, 
which provides some resilience against the full 
effects of market deterioration. Additionally, the 
Group operates in multiple geographic regions 
and business sectors.

Flat

Cost of Maintaining Legacy 
Products

There is a risk that some 
legacy products become 
increasingly costly to 
support.

Customer Project 
Management

The Group implements 
projects which are customer 
critical and can be long 
term. The risk of project 
failure could impact the 
Group’s reputation and cash 
collection.

Economic Conditions

Demand for the Group’s 
products may be adversely 
affected if economic and 
market conditions are 
unfavourable. Adverse 
economic conditions 
worldwide can contribute 
to slowdowns in the 
Information Technology 
spending environment and 
may impact the Group’s 
business, resulting in 
reduced demand for its 
products as a result of 
decreased spending by 
clients and increased price 
competition for the Group’s 
products.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
30

Section 172 Statement

The K3 Board considers it has made decisions in a way that, in good faith, would be most likely to promote 
the success of the Group for the benefit of its members as a whole, having regard to the factors set out in 
section 172 of the Companies Act 2006.

The table below sets out some examples of how the Directors have exercised this duty:

Stakeholder

Shareholders

Continued support from shareholders 
is crucial to our success. In return for 
their support, we aim to create value by 
increasing the performance of the Group 
and providing sustainable shareholder 
returns.

The Group proactively engages in dialogue 
with shareholders. The Chief Executive 
Officer and Chief Financial Officer regularly 
meet with institutional shareholders and 
analysts, including after the announcement 
of full-year and half-year results.

This financial year

Continued shareholder consultation is 
embedded within the Board’s activities; the 
views of major shareholders are obtained 
through direct face-to-face contact and 
analysts’ or brokers’ briefings and through 
the corporate representation of Kestrel 
Partners on the Board itself. 

The Group’s executive Directors also make 
presentations to institutional shareholders 
covering interim and full year results and 
investor presentations are delivered 
to enhance investor engagement with 
management, and to elicit feedback. All 
shareholders also have the opportunity, 
formally or informally, to put questions to 
the Company’s AGM.

In 2022 the Group has focussed with clear 
purpose on its strategy of ‘transforming 
retail for good’; bolstered by the acquisition 
of ViJi SAS which has also complemented 
the Group’s refocused growth strategy and 
international customer base. The addition 
of ViJi’s solutions through integration into 
the existing product line is aligned with 
the Group’s core target markets where 
traceability, transparency, and certification 
of supply chains are increasingly important 
priorities – in part driven by emerging 
legislation like Germany’s Supply Chain Act.

The Group re-evaluates its market 
strategy annually and ensures that 
strategy, technology, product and business 
development is market led and market 
informed with focus on the strategically 
chosen fashion and apparel vertical. The 
Group assesses the investment needed 
for each product at each point in its natural 
product lifecycle with regard to ROI and 
protection of shareholder value.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Stakeholder

Employees

K3 recognises the importance of our 
talented and important teams across the 
organisation and several initiatives have 
been put in place throughout the last 
financial year to improve the employee 
experience.

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This financial year

As a global software house, the 
Group is committed to attracting 
and retaining talent across the globe 
through competitive renumeration 
together with the ability to participate 
in a bonus scheme, long-term incentive 
plans (for executive talent) as well as a 
quarterly peer-recognition process. In 
addition, the Group has strong purpose, 
communication channels and values that 
are important to staff.

The annual K3 People Survey aims to 
understand how our people feel about 
the organisation and identify areas of 
improvement. 2022 saw the introduction 
of a number of initiatives arising from 
the feedback in the 2021 survey aimed 
at providing a unified employee platform 
for improving communication and 
engagement in a global, hybrid-working 
environment. The initiatives included new 
senior leadership webinar events, a Group 
Festival of Knowledge and a quarterly 
employee magazine. Results of the 2022 
People Survey show overwhelmingly the 
success of these initiatives.

2022 also saw the introduction of a new 
employee personal development platform 
and the creation of a dedicated Head 
of Talent and Learning. The Group also 
delivered on its largest internal systems 
refresh under its current leadership 
team (Project Unity). Our employees are 
already seeing the benefits of the project 
which has been focussed on empowering 
our people through the right tools, 
automations and processes.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
32

Stakeholder

This financial year

Customers and Business Partners

Customer satisfaction is of critical 
importance to K3.

As well as allocating dedicated K3 account 
managers for the larger relationships, 
sizeable or complex customer projects also 
have executive sponsors within the group, 
where senior managers are appointed to 
oversee key customer projects; to ensure 
sufficient customer engagement at the 
correct level within the K3 Group.

The Group also runs customer forums to 
feedback on, and in to, product roadmap; to 
ensure strategic product management and 
development to meet long term customer 
needs, market trends and requirements. 

The Group also supplies and deploys 
its own software solutions through its 
international network of reselling and 
implementation partners, which forms an 
important element of the Group’s route-
to-market strategy. 

The Group carries mindfully the 
responsibility that comes with the delivery 
and support of business critical software 
solutions for its customers.

The Group has a dedicated Customer 
Success team whose focus this financial 
year has been on listening to the customer 
base and refinement of useability, 
enablement, customer configurations for 
new use cases and development priorities 
to support customer ROI.

The team also commenced a bi-annual 
NPS survey process to gauge customer 
temperature across the existing customer 
base and establish where quick changes 
and improvements need to be made.

In response to customer feedback, 
the Group is also running a focussed 
campaign to establish where there are 
segments of the existing customer base 
that are suitable candidates for migration 
from legacy software to the Group’s 
new offerings, for example in migration 
from K3 Pebblestone on-premise to K3 
Pebblestone cloud.

In addition, and following customer 
and market consultation, the Group 
continues to focus on of the roll out of its 
sustainability and supply chain traceability 
solution to supplement its existing 
powerful set of solutions for the fashion 
and apparel sectors; helping customers 
meet new regulatory requirements around 
sustainability and traceability in supply 
chains.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Stakeholder

Suppliers

With part of the Group a reseller of 
software, including Microsoft and Syspro, 
K3’s relationships with strategic software 
partners are important to the success of 
the business.

This financial year

The Group benefits from several close 
commercial relationships with key suppliers 
and software partners with which the 
management team participate in regular 
product, service, market and strategy 
reviews.

The Group’s Syspro division (now 
rebranded as NexSys) has been appointed 
as Syspro’s Global Partner of the Year 
reflecting its extraordinary dedication to 
the partnership and is regularly involved in 
acclaimed industry events.

The Group’s Fashion and Pebblestone 
division has maintained its position 
as a member of the Microsoft Inner 
Circle, which recognises K3 as a leading 
Microsoft partner. The Group’s strategy is 
complimented by Microsoft Cloud for Retail 
and Sustainability, embracing the D365 and 
Power Platform while working to transform 
the fashion and apparel industry through 
improvements in supply chain efficiency, 
agility and sustainability.

The Global Accounts division was also 
awarded Diamond Partner status by 
LS Retail (the highest grade reflecting 
extraordinary dedication to the 
relationship).

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
34

Board of Directors

Tom Crawford   Non-executive Chairman (age 54)

Tom was appointed Non-executive Chairman on 28 October 2020. He has over 20 years of 
main market listed small cap software business experience and a successful track record of 
developing and growing international product-based software businesses. Until January 2020, 
Tom was Chief Executive Officer of London based Aptitude Software Group Plc, the global 
financial management software company, having previously led the expansion of the business 
into North America and Asia Pacific with a dominant position in new market verticals. He is a 
member of the following committees: (A) Audit Committee (R) Remuneration Committee and 
(N) Nominations Committee.

Gabrielle Hase   Non-executive Director (age 55)

Gabrielle is a senior level specialist in global ecommerce with significant experience in advising 
on omnichannel growth strategies and digital transformation, in particular for fashion retailers. 
She is founder director of Soleberry Advisory Limited, which provides digital commerce 
advisory services to fashion and other consumer retailers, and has worked with leading 
brands, advising on all aspects of ecommerce, mobile commerce, direct marketing strategy 
and strategic brand management. Clients have included Sweaty Betty, Browns Fashion, The 
Fragrance Shop, Moonpig.com, Hobbs, and TK Maxx. She also mentors start-up companies 
and is a featured speaker at conferences such as Retail Week Live, eCommerce Futures, and 
eCommerce UK.

Gabrielle is currently a Non-executive Director of: UltraCommerce, a business-to-business 
ecommerce platform; Tate Enterprises, the commercial division of Tate Galleries; and Planks 
Clothing, the global skiwear apparel brand. Gabrielle holds an MBA from The Wharton School 
at The University of Pennsylvania and a BSc in Information Systems from Boston College. She 
is a member of the following committees: (A) Audit Committee (R) Remuneration Committee 
and (N) Nominations Committee (chair).

Robert David Price   Chief Financial Officer (age 55)

Robert was appointed to the Board on 5 July 2017 having joined the Group as CFO in October 
2016. He has more than 20 years’ experience in senior finance roles in technology and supply 
chain and has worked extensively in international markets. He was previously CFO of a pan 
European fintech start up and prior to that CFO/COO of the private equity backed distributor 
Enotria Wine Group. Between 2002 and 2008 he was at Carlsberg Breweries, latterly as 
CFO and Change Management Director of Carlsberg Italy. Robert qualified as a chartered 
accountant with Ernst & Young and holds an MBA from IMD, Lausanne.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 202235

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Oliver Scott   Non-executive Director (age 55)

Oliver joined the board as a Non-executive Director in February 2020. Oliver is a partner of 
Kestrel Partners LLP, a business he co-founded in 2009 and which specialises in investing in 
smaller quoted technology companies. Prior to this, he spent over 20 years advising smaller 
quoted and unquoted companies, latterly as a Director of KBC Peel Hunt Corporate Finance. 
Oliver has acted as Kestrel’s representative on the Boards of various of its investee companies. 
He is currently a non-executive Director of ULS Technology PLC and was previously a non-
executive Director of IQGeo Group plc, IDOX PLC and KBC Advanced Technologies plc prior to 
its takeover by Yokogawa. He is a member of the following committees: (A) Audit Committee 
(R) Remuneration Committee (chair) and (N) Nominations Committee.

Marco Vergani   Chief Executive Officer (age 59)

Marco was appointed CEO and elected to the Board on 30 March 2021. Marco has over 30 
years’ experience in technology, principally in commercial sales, including in the UK, Europe, 
the Far East, and USA. He has wide sector experience, which includes retail, consumer, and 
e-commerce. A major part of his career was spent at IBM, the multi-national technology 
company, where he ran the Retail Store Solutions Division in Europe, Middle East, and Africa 
prior to joining the IBM Business Process Outsourcing division where he was promoted 
to Vice President of Sales for Europe. In 2014, he joined Digital River, the US-based global 
e-commerce, payments, and marketing services company becoming their Senior Vice 
President, Global Sales and Account Management. More recently, he was Chief Operating 
Officer at Qubit, the venture capitalist-backed personalisation technology company.

Pernille Fabricius   Non-executive Director (age 56)

Pernille was appointed to the board as a non-executive director and chair of the audit 
committee in July 2022. Pernille has extensive board and senior level financial and commercial 
experience across a number of sectors, including IT services, and in both internationally listed 
and private equity backed businesses. She is currently Chief Financial Officer and Executive 
Vice-president of NNIT A/S, one of Denmark’s leading IT and consulting services providers, 
and a non-executive director of Gabriel Holding A/S, the fabrics manufacturer, and Brødrene 
Hartmann A/S, a leading packaging manufacturer.

Pernille was previously Managing Director of John Guest Group, a multinational industrial 
engineering group, which was acquired by Reliance Worldwide Corporation for c£700m, and 
Group Chief Financial Officer and Chief Operating Officer of TMF Group, the private equity 
backed, multi-national professional services company, where she oversaw significant M&A 
and international expansion. Pernille began her career as an accountant at Arthur Andersen 
in 1988, and holds an MSc. in accounting and an MBA from Copenhagen Business School. 
She is a member of the following committees: (A) Audit Committee (chair) (R) Remuneration 
Committee and (N) Nominations Committee. 

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
36

Directors’ Report

The Directors present their report together with the audited financial statements for the year ended 
30 November 2022. The corporate governance statement on pages 39 to 43 also forms part of the 
Directors’ report.

Review of Business
The Chairman and Chief Executive’s statements on pages 9 to 17 provides a review of the business, the 
growth strategies, the Group’s trading for the year ended 30 November 2022 and an indication of future 
developments.

Research and Development
During the year, the Group carried out development work of which £1.7m (2021: £2.3m) was capitalised. 
Development expenditure capitalised on product for external commercialisation was spread evenly across 
the core strategic products of K3 Fashion, K3 Pebblestone and K3 ViJi.

Result and Dividend
The Group has reported its Consolidated financial statements in accordance with International Financial 
Reporting Standards as adopted by the United Kingdom.

The Group’s results for the year are set out in the Consolidated Income Statement on page 62. The 
Company has applied FRS 101: Reduced Disclosure Framework to the financial statements for the year 
ended 30 November 2022.

The directors do not propose a dividend (2021: 0p per share). No interim dividend was paid during either 
period.

Directors
The directors who served during the year were as follows:

T Crawford
RD Price
O Scott
JP Manley 
M Vergani
G Hase
P Fabricius 

(resigned 19 May 2022)

(from 25 July 2022)

In accordance with the Company’s current Articles of Association, P Fabricius will resign and offer herself 
for re-election at the AGM, and T Crawford retires by rotation and offers himself for re-election. 

Also, R Price resigned from the Board with effect from 3 April 2023 and Eric Dodd was appointed to the 
Board as CFO as from that date. In accordance with the Company’s current Articles of Association, Eric 
Dodd will resign at the next AGM and offer himself for re-election.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
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Financial Instruments Risks
Details of financial instruments risks are included in note 21 to the financial statements.

Directors’ Interest
Directors (who served during the financial year) interests in the company’s shares:

T Crawford 

M Vergani 

RD Price 

JP Manley 

O Scott 

G Hase 

P Fabricius 

As at 30 November 2022 
Number of shares 

As at 30 November 2021
Number of shares

28,112 

5,000 

60,154 

47,940 

28,112

5,000

60,154

47,940

11,683,904 

11,143,729

2,500 

nil 

2,500

nil

Mr O Scott’s interest in shares is by virtue of his position as a partner in Kestrel Partners LLP. Mr JP Manley 
resigned as a director of the Company on 19 May 2022.

Clients of Kestrel Partners LLP (in which Mr O Scott is a partner) have interests in 600,000 warrants for 
25p ordinary shares, exercisable at a price of £0.25 per ordinary share. These warrants were granted in 
connection with the April 2020 shareholder loans. These shareholder loans were subsequently converted 
to ordinary shares in the Company in March 2021.

Disabled Employees
Applications for employment by disabled persons are always fully considered, bearing in mind the 
aptitudes of the applicant concerned. In the event of members of staff becoming disabled every effort 
is made to ensure that their employment with the Group continues and that appropriate training and 
facilities are arranged. It is the policy of the group that the training, career development and promotion of 
disabled persons should, as far as possible, be identical with that of other employees.

Employee Consultation
The Group places considerable value on the involvement of its employees and has continued to keep them 
informed on matters affecting them as employees and on the various factors affecting the performance 
of the Group. This is achieved through regular web presentations by and newsletters from the Chief 
Executive Officer and informal discussions between management and other employees at a local level.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
38

Directors’ Indemnity Cover
All directors benefit from qualifying third-party indemnity provisions in place during the financial period 
and at the date of this report.

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 three 
years to 31 March 2024.

The capital structure of the Group has materially changed in the last two years with the disposal of the 
Starcom and Sage businesses for a combined £16.2m and the conversion of a £3.0m shareholder loans to 
equity. The Group therefore ended the year ended 30 November 2022 with a Net Cash position of £7.1m.

The Group has prepared a 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 reasonably 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.

Events After The Reporting Date
These are detailed in note 28 to the consolidated financial statements.

Auditors
All the current directors have taken all the steps that they ought to have taken to make themselves aware 
of any information needed by the company’s auditors for the purposes of their audit and to establish that 
the auditors are aware of the information. The directors are not aware of any relevant audit information of 
which the auditors are unaware.

The Notice of Annual General Meeting contains a resolution to re-appoint BDO LLP as auditors for the 
ensuing year.

By order of the Board 

T Crawford 
Director 
29 March 2023

Baltimore House
50 Kansas Avenue
Manchester M50 2GL

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
Corporate Governance Statement

K3 adopts the Quoted Companies Alliance’s (QCA) Corporate Governance Code (“the Code”) being, in the 
view of the Board, the most appropriate recognised corporate governance code having regard to the size 
and nature of the K3 Group. 

As Chairman of the Board, I am responsible for implementing corporate governance at the K3 Group, 
working with the other members of the Board and the Company Secretary. I chair meetings of the Board 
and am responsible for ensuring the Board agenda appropriately focuses on the Group’s potential, strategy, 
business model and delivery against its strategic objectives. I am also a member of each Board committee. 

We have reviewed and considered where and how we apply each of the ten (10) principles of the Code, and 
we set out an explanation of this on our website at https://www.k3btg.com/investor-centre/corporate-
governance/, and below.

QCA Code Principle

K3 Application

1.  Establish a strategy 
and business model 
which promote 
long-term value for 
shareholders

The Board is responsible for determining the potential and main 
aims of the Company and agreeing a strategy to achieve those aims. 
The Board is also responsible for monitoring progress against the 
Company’s strategic and financial goals and for allocating investment 
or initiating any corrective measures. The strategic report on pages 
9 to 33 sets out the Board’s strategy and business model to promote 
long-term value for shareholders.

2.  Seek to understand 

and meet shareholder 
needs and 
expectations

Continued shareholder consultation is embedded within the 
Board’s activities; the views of major shareholders are obtained 
through direct face-to-face contact and analysts’ or brokers’ 
briefings and through the corporate representation of Kestrel 
Partners on the Board itself. 

The Group’s executive Directors also make presentations to 
institutional shareholders covering interim and full year results 
and investor presentations are delivered to enhance investor 
engagement with management, and to elicit feedback. All 
shareholders also have the opportunity, formally or informally, to 
put questions to the Company’s AGM. 

The Group re-evaluates its market strategy annually and ensures 
that strategy, technology, product and business development is 
market led and market informed with focus on the strategically 
chosen fashion and apparel vertical. The Group assesses the 
investment needed for each product at each point in its natural 
product lifecycle with regard to ROI and protection of shareholder 
value.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
40

QCA Code Principle

K3 Application

3.  Take into account 

See Section 172 statement on pages 30 to 33.

wider stakeholder and 
social responsibilities 
and their implications 
for long-term success

4.  Embed effective 

risk management, 
considering both 
opportunities and 
threats, throughout 
the organisation

The Board recognises the importance of maintaining an effective 
system of internal control which is appropriate in relation to the 
scope, size, nature and risk of the Group’s activities. 

The responsibility for managing risks on a day-to-day basis lies with 
the CEO and Senior Leadership Team. The principal business risks 
and the actions to mitigate the risks are included on pages 25 to 29. 

The key elements which enable the Board to review the effectiveness 
of the system of internal controls are:

•  establishment of a formal management structure, including the 

specification of matters reserved for decision by the Board;
•  setting and reviewing the strategic objectives of the Group;
•  Board involvement in the setting and review of the annual business 

plan;

•  the regular review of the Group’s performance compared with plan 

and forecasts;

•  pre and post investment appraisal of K3 product development 

investment; and

•  group reporting instructions and procedures including delegation 
of authority and authorisation levels, segregation of duties and 
other control procedures, and standardised accounting policies.

5.  Maintain the board 

as a well-functioning, 
balanced team led by 
the chair

The Board comprises the non-executive Chairman, two executive 
directors and three non-executive Directors. Biographical details of 
the Board are included on pages 34 to 35. The roles of the Chairman 
and Chief Executive are distinct. 

All non-executive directors have written terms of appointment 
and are paid a fixed fee for their office which is not performance 
or incentive based. The only exception to this is the Chairman’s 
participation in the K3 LTIP, details of which are set out at page 47, but 
this is not regarded as compromising his independence.

The Company currently has three independent non-executive 
directors (T Crawford, G Hase and P Fabricius), as recommended by 
the QCA Code. 

Mr O Scott is a founding partner of another significant shareholder, 
Kestrel Partners LLP, and, accordingly, Mr O Scott would likely not be 
regarded as independent in accordance with the Code.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 202241

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QCA Code Principle

K3 Application

Notwithstanding this, the Board believes that the interests of each 
non-executive director are aligned with those of shareholders and 
that the Board composition is appropriate for the circumstances of 
the Company.

All directors are subject to election by shareholders at the first 
opportunity after their appointment. The Articles of Association 
of the Company require that no fewer than one-third of directors 
should be subject to re-election at each AGM. Any non-executive 
director serving over 9 years since first appointment is also subject 
to re-election at each AGM in accordance with the Company’s 
articles.

Board Meetings and Effectiveness

The Board is supplied with information to enable it to discharge 
its duties, which includes a regular monthly Board pack including 
updates from the executive management team and detailed 
financial information measured against plan or forecast.

The Board is also provided with ad-hoc operational updates, and 
non-executive directors regularly communicate with executive 
directors between formal board meetings.

Board Meetings 

The Board met on 15 occasions during the financial period. 
Directors are expected to attend all meetings, and to dedicate 
sufficient time to the Group’s business and affairs to enable them to 
discharge their duties. Board (and committee) meeting attendance 
during the financial period was as set out below.

Director 

Board 
(15) 

Remuneration 
(4) 

Audit 
(4) 

Nomination
(1)

T Crawford 

JP Manley 

O Scott 

RD Price 

M Vergani 

G Hase 

P Fabricius 

14 

6 

12 

15 

15 

13 

6 

4 

4 

4 

n/a 

n/a 

4 

0 

4 

2 

3 

n/a 

n/a 

4 

2 

1

1

1

n/a

n/a

1

0

Board Committees 

The Board has established three standing sub-committees to 
assist in the discharge of corporate governance responsibilities. 
They are the nominations committee, remuneration committee 
and audit committee. The roles of the committees and their 
activities are available at https://www.k3btg.com/investor-centre/
corporate-governance/.

All four non-executive directors are members of each committee.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
42

QCA Code Principle

K3 Application

6.  Ensure that 

between them the 
directors have the 
necessary up-to-
date experience, 
skills, and 
capabilities

The composition of the Board is designed to provide an appropriate 
balance of Group, industry and general commercial experience and 
is reviewed as required to ensure that it remains appropriate to the 
nature of the Group’s activities. 

Biographical details of the Board (including relevant skills and 
experience) are included on pages 34 to 35.

Recommendations for appointments to the Board are the 
responsibility of the Nominations Committee.

The Directors also have access to the Company’s Nominated Adviser 
and Company Secretary, for support in the furtherance of their 
duties.

7.  Evaluate board 
performance 
based on clear and 
relevant objectives, 
seeking continuous 
improvement

The Board has established an annual process of Board performance 
review, once per calendar year, the most recent of which was carried 
out in April and May 2022 when Board changes were initiated. 
The review process assists the board in identifying any structural, 
procedural and/or individual development needs by reference to 
clear objectives and the results will inform improvement activities.

8.  Promote a corporate 
culture that is based 
on ethical values and 
behaviours

The Group seeks to carry out its business with the highest standards 
of integrity, based on sound ethical values, and its corporate culture 
seeks to reflect this premise. 

The Board maintains oversight of this through engagement and 
management reporting, which would, where appropriate, include any 
material issues relating to corporate culture and integrity and ethics, 
including any updates to or non-compliance with key internal ethics 
policies.

The Group maintains written policies and procedures concerning a 
number of areas that impact on its ethical values, and these policies, 
which are shared with all the Group’s staff, underpin some of the 
ethical elements of the Group’s culture. These include detailed 
policies addressing health and safety, anti-bribery and corruption, 
whistleblowing, equal opportunities, and anti-harassment.

The Group has recently commenced a review of its environmental, 
social and governance standards and policies, with a view to making 
improvements where possible. Further updates will be available 
following completion of this review. 

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022QCA Code Principle

K3 Application

9.  Maintain governance 

structures and 
processes that 
are fit for purpose 
and support good 
decision-making by 
the board

The Board has responsibility for promoting the success of the 
Company and for the strategic leadership of the Group, with day-
to-day management of the business of the Group the responsibility 
of the executive directors and Senior Leadership Team.

The Chairman of the Board is responsible for running the Board, and 
has overall responsibility for corporate governance, but with the 
support of the other Directors and the Company Secretary. 

Shareholder relations are primarily managed by the CEO and CFO.

The Board has determined those matters which are retained for 
Board sanction and those matters which are delegated to the 
executive management of the business. Day-to-day management 
of the business is dealt with by the Chief Executive Officer who has 
a Senior Leadership Team reporting to him. The types of decisions 
which are to be taken by the Board are:

•  approval of the financial statements and plans for the Group;
•  approval of all shareholders’ circulars and announcements;
•  the purchase or sale of any business or subsidiary;
•  any new borrowings, facilities, and related guarantees; and
•  any asset purchase or lease hire purchase facility or rental 

agreement over prescribed authority limits.

10. Communicate how the 
company is governed 
and is performing by 
maintaining a dialogue 
with shareholders 
and other relevant 
stakeholders

The Company communicates regularly with shareholders, as 
further described in relation to Code Principle 2 above.

The Company maintains RNS details on its website at: http://www.
k3btg.com/investor-centre/regulatory-news/.

These include notices, as well as results, of the most recent AGM, 
together with prior years’ annual reports.

T Crawford
Chairman 
29 March 2023

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
44

Remuneration Committee Report

Remuneration Committee Report

Oliver Scott was appointed as Chair of the Remuneration Committee on his appointment as a Director on 
14 February 2020. The other members of the committee are Tom Crawford, Gabrielle Hase and Pernille 
Fabricius. The Committee formally met twice during the financial year. 

The Group’s remuneration policies and the application of these policies to the Board during the financial 
year are set out in the sections below.

Remuneration Policy

The policy of the Group is to set levels of remuneration to attract, retain and motivate Executive 
Directors and other key senior staff. The packages are designed to be competitive in value to those 
offered at similar sized public companies in related sectors. It is the Board’s policy to align the long-term 
interests of Executive Directors with those of our shareholders in the granting of options and other 
equity awards. The components of the Executive Directors’ remuneration packages are currently a 
basic salary, bonus, money purchase pension contributions and benefits in kind. The bonus elements 
are dependent on the Executive Directors achieving performance criteria set out by the Remuneration 
Committee. In addition, the Group operates a Long-Term Incentive Plan for Executive Directors and 
other key senior staff.

The key matters considered and actioned by the Remuneration Committee during the financial period were:

• 

the award of options under the existing Long-Term Incentive Plan; 

•  employee bonus pot;

•  executive director and senior leadership bonus awards; and

• 

review and consideration of senior leadership team remuneration.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Directors’ Remuneration

Set out below is a summary of the total gross remuneration of directors who served during the financial 
period to 30 November 2022.

Fees/ 
basic 
salary 
£ 

Fees/
basic 
salary 
waived 
£ 

Taxable 
benefits 
£ 

Bonuses 
£ 

Pension 
contribution 
£ 

Year ended
30 November
2021
£

Total 
£ 

Chairman 
T Crawford 
Executive 
A Valdimarsson 
M Vergani 
RD Price 
Non-Executive
PJ Claesson 
G Hase 
JP Manley* 
O Scott 
P Fabricius** 

Total 
emoluments 

125,000 

– 
286,250 
177,500 

– 
39,167 
25,917 
32,500 
14,086 

700,420 

– 

– 
– 
– 

– 
– 
– 
– 
– 

– 

– 

– 

– 

125,000 

125,000

– 
1,494 
9,000 

– 
103,219 
52,020 

– 
14,312 
17,750 

– 
405,275 
256,270 

84,750
216,562
227,429

– 
– 
– 
– 
– 

– 
– 
– 
– 
– 

– 
– 
– 
– 
– 

– 
39,167 
25,917 
32,500 
14,086 

19,129
16,835
51,583
30,000
–

10,494 

155,239 

32,062 

898,215 

771,288

*JP Manley retired from the Board with effect from 19 May 2022.
**P Fabricius was appointed with effect from 25 July 2022.

Included within the fees/basic salary amount for G Hase was £nil (2021: £9,676) in relation to consultancy 
services to evaluate the K3 digital strategy.

Included within the fees/basic salary amount for Mr JP Manley was £14,250 (2021: £13,250) in relation to 
consultancy on the K3 product positioning and development and for management of internal systems.

The executive directors have service contracts providing 6 months’ notice. 

Directors’ Pension Entitlements

The Company makes contributions to defined contribution schemes for Mr RD Price and Mr M Vergani. 
Pension contributions are capped at 10% of basic salary.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
46

Directors’ Share Options

The Group’s Long-Term Incentive Plan consists of two types of option award; Market Priced Options and 
Nominal Priced Options.

Market Priced Options

Market Priced Options may be granted annually subject to the achievement of performance targets set by 
the Remuneration Committee. The value of any awards granted are intended to be between 50% – 100% 
of an individual’s basic salary. The exercise price of Market Priced Options is determined by the prevailing 
price of the Company’s shares on the day before the date of grant and any vesting conditions are set by 
the Remuneration Committee at the time of the annual award.

During the financial year, the Remuneration Committee awarded 135,000 Market Priced Options to Mr 
Vergani and 85,000 Market Priced Options to Mr RD Price (as well as awards to other senior employees). 
These Market Price Options have an exercise price of 150p. Vesting of the Market Price Options is 
based on the achievement of certain prescribed levels of annual recurring revenue growth in respect of 
the Group’s strategic product suites ( K3 Imagine, K3 Fashion, K3 Pebblestone and K3 ViJi) (“Strategic 
Products”) measured as at 30 November 2024.

In addition, and to ensure consistency between the Group’s strategic aims and its incentives, the 
Remuneration Committee also amended the performance condition for the 240,000 existing Market Price 
Options issued to broaden the performance metric to cover all of the Group’s Strategic Products, and to 
adjust the testing date to 30 November 2023, from 30 November 2024 (to align with the Group’s current 
remuneration policy for Market Priced Options, having a three year test period). 

Nominal Priced Options

Nominal Priced Options are not granted annually, but are granted on an occasional basis at the 
determination of the Remuneration Committee. The exercise price of Nominal Priced Options is 25p, 
being nominal value of the Company’s shares.

All current Nominal Priced Options granted to date are subject to performance conditions based on the 
achievement of certain 60 day Volume Weighted Average Price (‘VWAP’) thresholds of the Company’s 
shares, measured between the third and fourth anniversary of the date of option grant. The 60 day VWAP 
measurement will be applied to any consecutive 60 trading days during the 12 month testing period.

The performance targets and associated vesting of the Nominal Priced Options are:

•  25% vest at VWAP of 200p;

•  50% vest at VWAP of 225p; and

•  100% vest at VWAP of 250p,

with a straight line vesting between these thresholds.

Subject to meeting the above performance targets, all Nominal Priced Options granted to date may be 
exercised as follows:

•  50% on or after the fourth anniversary of the date of grant

•  50% on or after the fifth anniversary of the date of grant.

Nominal Priced Options granted to date will remain exercisable until the seventh anniversary of the original 
date of grant, at which point they will lapse.

During the financial year, no Nominal Priced Options were granted to members of the Board.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Details of All Options Held by the Directors

Details of the options are as follows:

Name of 
Director 

RD Price 

T Crawford 

M Vergani 

1 December 
2021 

Granted 

Exercised 

Lapsed 

340,000 

85,000 

350,000 

– 

500,000 

135,000 

– 

– 

– 

– 

– 

– 

30 November
2022

425,000

350,000

635,000

Aggregate emoluments do not include any amounts for the value of options to acquire ordinary shares in 
the company granted to or held by the directors. 

All options are exercisable at a price of 25p, other than the 220,000 Market Priced Options which were (in 
aggregate) granted to Mr RD Price and Mr Vergani during the financial year, which are exercisable at 150p. 

The market price of the ordinary shares at 30 November 2022 was 127.5p and the range during the year 
was 179.0p to 115.5p.

There are no options outstanding or held by any of the directors, other than as set out above.

Directors’ Warrants

Clients of Kestrel Partners LLP (in which Mr O Scott is a partner) have interests in 600,000 warrants for 
25p ordinary shares, exercisable at a price of £0.25 per ordinary share.

Warrants exercisable at 25p held by clients of Kestrel Partners LLP were granted in connection with the 
April 2020 shareholder loans. These shareholder loans were subsequently converted to ordinary shares 
in the Company in April 2021.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
48

Statement of Directors’ 
Responsibilities

The directors are responsible for preparing the strategic report, the annual report, and financial 
statements in accordance with applicable law and regulations. 

Company law requires the directors to prepare financial statements for each financial year. The financial 
reporting framework that has been applied in the preparation of the group financial statements 
is applicable law and in accordance with international accounting standard in conformity with the 
requirements of the Companies Act 2006. The financial reporting framework that has been applied in the 
preparation of the parent company financial statements is applicable law and United Kingdom Accounting 
Standards (United Kingdom Generally Accepted Accounting Practice) including Financial Reporting 
Standard 101 “Reduced Disclosure Framework”. Under company law the directors must not approve the 
financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the 
group and company and of the profit or loss for the group for that period.

In preparing these financial statements, the directors are required to:

•  select suitable accounting policies and then apply them consistently

•  make judgements and accounting estimates that are reasonable and prudent

•  state whether they have been prepared in accordance with international accounting standard in 

conformity with the requirements of the Companies Act 2006, subject to any material departures 
disclosed and explained in the financial statements 

•  state whether applicable UK Accounting Standards have been followed, subject to any material 

departures disclosed and explained in the financial statements; and

•  prepare the financial statements on a going concern basis unless it is inappropriate to presume that 

the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and 
explain the company’s transactions and disclose with reasonable accuracy at any time the financial position 
of the company and enable them to ensure that the financial statements comply with the requirements of 
the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence 
for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Website Publication

The directors are responsible for ensuring the annual report and the financial statements are made 
available on a website. Financial statements are published on the company’s website in accordance with 
legislation in the United Kingdom governing the preparation and dissemination of financial statements, 
which may vary from legislation in other jurisdictions. The maintenance and integrity of the company’s 
website is the responsibility of the directors. The directors’ responsibility also extends to the ongoing 
integrity of the financial statements contained therein. 

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Audit Committee Report

Audit Committee Composition

During the financial period, the Audit Committee was chaired by Mr O Scott until the appointment of 
Mrs P Fabricius on 25 July 2022. Membership included all the non-executive directors. The CEO, CFO and 
external auditors attend meetings of the Audit Committee by invitation.

Audit Committee Role and Duties

The role of the Audit Committee is to consider the appointment of the auditors, audit fees, scope of audit 
work and any resultant findings. It reviews external audit activities, monitors compliance with statutory 
requirements for financial reporting and reviews the interim and full year financial statements before they 
are presented to the Board for approval. The committee is also required to review the effectiveness of the 
group’s internal control systems. 

The Audit Committee considers and determines relevant action in respect of any control issues raised 
by the auditors. Given the size of the Group and the close day to day control exercised by the Senior 
Management Team, no formal internal audit department is considered necessary.

The key matters considered and actioned by the Audit Committee during the financial period were:

• 

• 

• 

review of audit plan and consideration of key audit matters

review of Annual Report and financial statements

review and consideration of external audit report and management representation letter

•  going concern review

• 

internal control systems review; and

•  audit meeting with external auditor, without management.

External Auditor and Audit Process

The external auditor, BDO LLP, sets out the scope of its audit in an audit plan, which is reviewed and 
approved in advance by the Committee. Following the audit, the auditor presented its findings to the Audit 
Committee, and no major areas of concern were highlighted.

The Audit Committee regularly reviews auditor independence, including the provision of any non-audit 
services by the auditor. The Audit Committee has confirmed its recommendation to re-appoint BDO LLP 
at the next AGM.

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Auditors’ Remuneration

Fees for services provided by the auditors have been as follows:

Audit services

•  Statutory audit of the company 
•  Statutory audit of the subsidiaries 

Further assurance services:
Other services 

Year ended 
30 November 
2022 
£000 

Year ended
30 November
2021
£000

20 
210 

56 

286 

17
155

56

228

During the period, the auditors’ overseas member firms provided non-audit services in relation to tax 
advice and company secretarial support to certain overseas subsidiaries. The UK audit firm did not provide 
any non-audit services. The Board considered the proposed non-audit services in advance to ensure that 
it was satisfied that neither the nature nor the scale of the non-audit services would impair the auditors’ 
objectivity and independence.

Risk Management and Compliance

The Audit Committee has reviewed both the Company’s risk management and internal controls (reference 
on pages 25 to 29), and the Company’s policies on key compliance matters, such as anti-bribery and 
whistleblowing, and is satisfied that current control systems and policies are operating effectively.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Independent Auditor’s Report 
to the Members of  
K3 Business Technology Group plc
Opinion on the financial statements

In our opinion:

• 

• 

• 

• 

the financial statements give a true and fair view of the state of the Group’s and of the Parent 
Company’s affairs as at 30 November 2022 and of the Group’s loss for the year then ended;

the Group financial statements have been properly prepared in accordance with UK adopted 
international accounting standards;

the Parent Company financial statements have been properly prepared in accordance with United 
Kingdom Generally Accepted Accounting Practice; and

the financial statements have been prepared in accordance with the requirements of the Companies 
Act 2006.

We have audited the financial statements of K3 Business Technology Group Plc (the ‘Parent Company’) 
and its subsidiaries (the ‘Group’) for the year ended 30 November 2022 which comprise the consolidated 
income statement, the consolidated statement of comprehensive income, the consolidated statement 
of financial position, the consolidated statement of cash flows, the consolidated statement of changes in 
equity, the parent company balance sheet, the parent company statement of changes in equity and notes 
to the financial statements, including a summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the Group financial 
statements is applicable law and UK adopted international accounting standards. The financial reporting 
framework that has been applied in the preparation of the Parent Company financial statements is 
applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 
Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and 
applicable law. Our responsibilities under those standards are further described in the Auditor’s 
responsibilities for the audit of the financial statements section of our report. We believe that the audit 
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remain independent of the Group and the Parent Company in accordance with the ethical 
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s 
Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in 
accordance with these requirements.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
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Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors’ use of the going concern 
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the 
Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going 
concern basis of accounting included:

•  Reviewed and challenged the going concern paper prepared by the Directors by verifying the numerical 
inputs, accuracy of the calculations and obtaining evidence to support the Directors’ decisions. We 
performed procedures to check the reasonableness of the forecasts. These procedures included 
performing inquiries with the management, analytical review of the forecasted numbers, and 
comparison of actual results vs forecasts where applicable;

•  Evaluated the appropriateness of the assumptions utilised by management in assessing the Group 
and company’s ability to continue as a going concern by comparing to previous periods and actual 
results achieved to date. The key assumptions included assessing the timings of future cash receipts 
from customers, assessing expected sales growth, headroom of available cash and compliance with 
covenants;

•  We checked compliance with financial covenants, by recalculating the financial figures required to be 
met as per the terms in the financing agreement, and checking these are in line with the specified 
covenants; and

•  Reviewed the forecasts prepared to 31 March 2024 and stress tests to understand the available 

headroom. We have challenged the assumptions within the stress test scenarios to understand the 
headroom impact of reductions in revenue, EBITDA and profit/loss, and any delays in receipts of cash 
from customers.

Based on the work we have performed, we have not identified any material uncertainties relating to events 
or conditions that, individually or collectively, may cast significant doubt on the Group and the Parent 
Company’s ability to continue as a going concern for a period of at least twelve months from when the 
financial statements are authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described 
in the relevant sections of this report.

Overview

Coverage

Key audit matters

72% (2021: 73%) of Group profit before tax
83% (2021: 83%) of Group revenue
86% (2021: 72%) of Group total assets

Revenue recognition 
Development costs* 
Carrying value of Intangibles and Goodwill 

2022 
✓ 
x 
✓ 

2021
✓
✓
✓

Materiality

Group financial statements as a whole

£474,000 (2021: £386,000) based on 1% (2021: 0.85%) of revenue 
rounded down to the nearest thousand.

*We have reconsidered development cost capitalisation in the current year and the time, effort and complexity spent on auditing this 
area does not represent a Key Audit Matter, given the lower level of development costs capitalised in the year.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
An overview of the scope of our audit

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including 
the Group’s system of internal control, and assessing the risks of material misstatement in the financial 
statements. We also addressed the risk of management override of internal controls, including assessing 
whether there was evidence of bias by the Directors that may have represented a risk of material 
misstatement.

Our Group audit scope focused on the Group’s significant components. In assessing the risk of 
material misstatement to the Group consolidated financial statements, and to ensure we had adequate 
quantitative coverage of significant accounts and transactions in the financial statements, we considered 
the Parent Company, K3 Business Solutions BV, K3 Syspro Limited and K3 Business Technologies Ireland 
Limited as the significant components of the Group. The Group audit team performed full scope audit on 
these significant components.

Other than this, we brought in scope two other non-significant components, K3 Software Solutions BV 
and K3 Software UK Limited, in order to achieve a higher audit coverage. For K3 Software Solutions BV and 
K3 Software UK Limited, specified audit procedures were performed by the Group audit team.

The remaining components of the Group were considered insignificant and these components were 
principally subject to analytical review procedures by the Group audit team.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our 
audit of the financial statements of the current period and include the most significant assessed risks of 
material misstatement (whether or not due to fraud) that we identified, including those which had the 
greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the 
efforts of the engagement team. These matters were addressed in the context of our audit of the financial 
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on 
these matters.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
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Key Audit Matter

How the scope of our audit 
addressed the key audit matter

Revenue recognition

Note 1, 2 and 5

•  In order to address the 

complexity of the application of 
the accounting standards, we 
considered and discussed the 
management prepared memo on 
how the business has continued 
to implement IFRS 15 in the year 
including application to new 
contracts and revenue streams. 
We considered the recognition 
criteria for hardware, software and 
services components of customer 
contracts and we considered 
whether the accounting treatment 
and recognition timing was in 
accordance with IFRS 15 for each 
revenue stream, in order to check 
the timing and accuracy of the 
revenue recorded.

•  We tested a sample of revenue 

contracts, including all significant 
new contracts across the Group, 
to assess whether the revenue 
had been correctly recognised in 
line with IFRS 15 and the Group’s 
revenue recognition policy. For 
each significant new contract 
in our sample we examined 
the agreement to understand 
the contractual obligations, to 
understand the distinct deliverables 
within the contract and whether 
the entities have fulfilled the 
requirements of the contract and 
earned the right to consideration. 
This procedure was performed, in 
order to check that the revenue 
from any new contracts has been 
recorded in line with the agreed 
treatment as per IFRS 15.

The Group has a number 
of different revenue 
streams, each of which 
has a different revenue 
recognition policy which 
increases the complexity 
of the application of the 
accounting standards.

We focused on this area 
because the recognition 
of revenue for each 
component of a sale, 
when hardware and 
software and services are 
sold together under one 
contract with a customer, 
requires the application 
of judgement in the 
recognition of revenue 
between the components 
of the contract, including 
the appropriate accrual or 
deferral of revenue when 
being recognised over 
time.

There is also a risk 
that cut-off of revenue 
recognition (and 
associated cost of 
sale) towards the year 
end is incorrect and 
the appropriate goods 
or services were not 
delivered/installed as at 
30 November 2022.

In view of the judgements 
required to be made by 
management in this area 
we have determined that 
revenue recognition is 
a significant risk in the 
audit and also a key audit 
matter.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Key Audit Matter

How the scope of our audit 
addressed the key audit matter

•  We tested a sample of revenue 
transactions around the year 
end by agreeing to supporting 
documentation to assess whether 
revenue has been recognised in the 
appropriate accounting period.

•  We tested a sample of cost of sales 
balances to assess whether the 
related revenue has been correctly 
recognised in the period.

•  We agreed a sample of deferred 
and accrued income balances to 
supporting documentation such 
as licence delivery, employee 
timecards and maintenance 
purchase invoice, to check 
that these amounts have been 
recognised in the appropriate 
period.

•  We agreed a sample of debtors 
and accrued income balances to 
post year end cash, invoice and to 
evidence of the services having 
been delivered to check their 
occurrence.

•  We tested a sample of revenue 
recognised in the year across 
all streams to supporting 
documentation, being licence 
delivery details, timecard, as well 
as cash receipt for services such as 
support to check their occurrence.

•  We reviewed revenue streams 

analytically to understand changes 
in volume/mix and to target our 
work in this area further. 

Key observations:

We consider the judgements 
that management have made are 
appropriate in respect of revenue 
recognition.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
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Key Audit Matter

How the scope of our audit 
addressed the key audit matter

Carrying value of 
Intangibles and 
Goodwill

Note 1, 15 and 16

Management are required 
to review the carrying 
value of goodwill and test 
it annually for impairment.

Management exercise 
significant judgement 
in determining the 
underlying assumptions 
used in the impairment 
review; the assumptions 
include the discount rate 
used, the allocation of 
assets to cash generating 
units (CGU) and the future 
cash flows attributed to 
each CGU.

We considered this to be 
a key audit matter due to 
the significant element 
of judgement involved in 
this assessment and the 
changes in the strategic 
focus of the business 
going forward have 
resulted in substantial 
impairment charges, in 
recent periods, against 
goodwill and intangibles.

•  We challenged the calculations 
prepared by management in the 
impairment review, by checking the 
reasonableness and accuracy of 
key inputs used in the impairment 
model, including reasonableness of 
future cashflows, appropriateness 
of discount rate etc. We considered 
the consistency of this forecast 
data with other forecast data 
used including for Going Concern 
assessments.

•  We assessed the triggers for the 

required impairments and reviewed 
the strategic decisions made by 
management during the year in 
particular arising from the decision 
in the forecast period to cease 
investing in certain legacy products.

•  We consulted with our internal 

valuation specialists to review the 
appropriateness of the discount 
rate applied.

•  We have assessed the 

reasonableness of the assumptions 
underlying management’s 
assessment of goodwill, including 
the pipeline and cashflow forecasts 
for each CGU.

•  We considered whether 

management’s CGUs were 
appropriate based on the planned 
future operation of the business.

•  We compared actual results for 
year ended 30 November 2022 
to the forecast results for FY 
2023 and beyond to assess the 
reasonableness of management’s 
prepared forecasts.

•  We have performed sensitivity 

analysis for all CGUs on the discount 
rate and cashflow forecast.

Key observations: 

We consider the assumptions made 
by management in assessing the 
carrying value of intangibles and 
goodwill to be appropriate.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 202257

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Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the 
effect of misstatements. We consider materiality to be the magnitude by which misstatements, including 
omissions, could influence the economic decisions of reasonable users that are taken on the basis of the 
financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, 
we use a lower materiality level, performance materiality, to determine the extent of testing needed. 
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we 
also take account of the nature of identified misstatements, and the particular circumstances of their 
occurrence, when evaluating their effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole 
and performance materiality as follows:

Group Financial Statements 
2021 
£ 

2022 
£ 

Parent Company Financial Statements

2022 
£ 

2021
£

Materiality 

474,000 

386,000 

63,000 

200,000

Basis for determining materiality 

1% of revenue. 

0.85% of revenue.  13% of Group 

52% of Group 

Increase reflects 

Small increase 

materiality. 

materiality. 

the reduced risk 

reflects the  

profile of the 

reduced risk 

business following  profile of the 

changes in both  

business following 

the prior and  

changes in the 

current year. 

year.

Rationale for the benchmark 

Revenue is the 

Revenue is the 

Calculated as a 

Calculated as a 

applied 

most stable and 

most stable and 

percentage of 

percentage of 

relevant measure 

relevant measure  Group materiality  Group materiality 

for the users of 

for the users of 

for Group 

the financial 

statements. 

the financial 

statements. 

Performance materiality 

331,000 

270,000 

reporting 

for Group 

reporting 

purposes given 

purposes given 

the assessment 

the assessment 

of aggregation 

of aggregation 

risk. 

44,000 

risk.

140,000

Basis for determining 

Performance 

Performance 

Performance 

Performance 

performance materiality 

materiality 

materiality 

materiality 

materiality 

was set at 70%. 

was set at 70%. 

was set at 70% 

was set at 70%. 

This has been 

This has been 

This has been 

This has been 

based on 

based on 

based on 

based on 

management’s 

management’s 

management’s 

management’s 

attitude to post 

attitude to post 

attitude to post 

attitude to post 

adjustments in 

adjustments in 

adjustments in 

adjustments in 

prior years and 

prior years and 

prior years and 

prior years and 

low level of 

low level of 

low level of 

low level of 

adjustments 

adjustments 

adjustments 

adjustments 

raised in prior 

raised in prior 

raised in prior 

raised in prior 

years. 

years. 

years. 

years.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
58

Component materiality

We set materiality for each significant component of the Group based on a percentage of between 9% and 
58% of Group materiality dependent on the size and our assessment of the risk of material misstatement 
of that component. Significant component materiality ranged from £43,000 to £275,000. In the audit of 
each significant component, we further applied performance materiality levels of 70% of the component 
materiality to our testing to ensure that the risk of errors exceeding component materiality was 
appropriately mitigated.

Reporting threshold

We agreed with the Audit Committee that we would report to them all individual audit differences in excess 
of £14,200 (2021: £11,500). We also agreed to report differences below this threshold that, in our view, 
warranted reporting on qualitative grounds.

Other information

The Directors are responsible for the other information. The other information comprises the information 
included in the annual report other than the financial statements and our auditor’s report thereon. Our 
opinion on the financial statements does not cover the other information and, except to the extent 
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our 
responsibility is to read the other information and, in doing so, consider whether the other information is 
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, 
or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent 
material misstatements, we are required to determine whether this gives rise to a material misstatement 
in the financial statements themselves. If, based on the work we have performed, we conclude that there is 
a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit, 
we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as 
described below.

Strategic report and 
Directors’ report

In our opinion, based on the work undertaken in the course of the 
audit:

•  the information given in the Strategic report and the Directors’ 

report for the financial year for which the financial statements are 
prepared is consistent with the financial statements; and

•  the Strategic report and the Directors’ report have been prepared 

in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Group and 
Parent Company and its environment obtained in the course of 
the audit, we have not identified material misstatements in the 
Strategic report or the Directors’ report.

Matters on which we are 
required to report by 
exception

We have nothing to report in respect of the following matters in 
relation to which the Companies Act 2006 requires us to report to 
you if, in our opinion:

•  adequate accounting records have not been kept by the Parent 

Company, or returns adequate for our audit have not been 
received from branches not visited by us; or

•  the Parent Company financial statements are not in agreement 

with the accounting records and returns; or

•  certain disclosures of Directors’ remuneration specified by law 

are not made; or

•  we have not received all the information and explanations we 

require for our audit.

Responsibilities of Directors

As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for 
the preparation of the financial statements and for being satisfied that they give a true and fair view, and 
for such internal control as the Directors determine is necessary to enable the preparation of financial 
statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the 
Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going 
concern and using the going concern basis of accounting unless the Directors either intend to liquidate the 
Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

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Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole 
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that 
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an 
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. 
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, 
they could reasonably be expected to influence the economic decisions of users taken on the basis of 
these financial statements.

Extent to which the audit was capable of detecting irregularities, 
including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design 
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of 
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, 
including fraud is detailed below:

We obtained an understanding of the legal and regulatory framework applicable to the Group and Parent 
Company and the sector in which it operates. We considered the significant laws and regulations to be the 
applicable accounting framework, the UK Companies Act 2006, Value Added Tax Act 1994, Income Tax Act 
2007 and those that relate to the payment of employees.

We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial 
statements (including the risk of override of controls), and determined that the principal risks were related 
to posting inappropriate journal entries, management bias in accounting estimates and inappropriate 
revenue recognition. Our audit procedures included, but were not limited to:

•  Agreement of the financial statement disclosures to underlying supporting documentation;

•  Testing the reasonableness of assumptions and judgements made by management in their significant 

accounting estimates, such as depreciation, trade receivables impairment provisioning and impairment 
of assets including goodwill and intangibles (KAM);

• 

• 

Identifying and testing journal entries, in particular any journal entries posted with specific keywords 
and least used accounts;

Inquiries with management and Directors, including consideration of known or suspected instances of 
non-compliance with laws and regulation and fraud;

•  Review of Board and Committee minutes; and

•  Obtaining an understanding of the control environment in monitoring compliance with laws and 

regulations.

We communicated relevant identified laws and regulations and potential fraud risks to all engagement 
team members and remained alert to any indications of fraud or non-compliance with laws and regulations 
throughout the audit.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Our audit procedures were designed to respond to risks of material misstatement in the financial 
statements, recognising that the risk of not detecting a material misstatement due to fraud is higher 
than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, 
for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit 
procedures performed and the further removed non-compliance with laws and regulations is from the 
events and transactions reflected in the financial statements, the less likely we are to become aware of it.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: 
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of 
Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the 
Parent Company’s members those matters we are required to state to them in an auditor’s report and for 
no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to 
anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, 
for this report, or for the opinions we have formed.

Mark Langford (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Leeds, UK
29 March 2023

BDO LLP is a limited liability partnership registered in England and Wales (with registered number 
OC305127).

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Consolidated Income Statement

for the year ended 30 November 2022

Revenue 
Cost of sales 
Gross profit 

Administrative expenses 

Impairment losses on financial assets 

Adjusted EBITDA 

Depreciation and amortisation 

Amortisation of acquired intangibles 

Exceptional impairment 

Exceptional reorganisation and acquisition costs 

Share-based payment charge 

Loss from operations  

Finance expense 

Loss before taxation from continuing operations 

Tax expense  

Loss after taxation from continuing operations 

Profit after taxation from discontinued operations 

(Loss)/profit for the year 

All the (loss)/profit for the year is attributable to equity shareholders of the parent.

Gain/(loss) per share

Basic and diluted 

Basic and undiluted from Continuing operations 

The notes on pages 67 to 122 form part of these financial statements.

Notes 

2 

3 

30 

13/14/15 

15 

15 

3 

10 

3 

6 

7 

Year 
ended 
30 November 
2022 
£’000 

Year
ended
30 November
2021
£’000

47,532 

(19,382) 

28,150 

45,267

(18,432)

26,835

(31,518) 

(33,106)

(102) 

(118)

5,064 

(5,383) 

– 

(1,603) 

(693) 

(855) 

4,357

(6,797)

(518)

(1,421)

(1,570)

(440)

(3,470) 

(6,389)

(338) 

(1,433)

(3,808) 

(7,822)

(278) 

(939)

(4,086) 

(8,761)

108 

12,292

(3,978) 

3,531

Year 
ended 
30 November 
2022 

Year
ended
30 November
2021

(9.0)p 

8.0p

(9.3)p 

(19.9)p

Notes 

9 

9 

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Statement of 
Comprehensive Income

for the year ended 30 November 2022

(Loss)/profit for the year 

Other comprehensive income/(expense)

Exchange differences on translation of foreign operations 

Other comprehensive income/(loss) 

Total comprehensive (expense)/income for the year 

Year 
ended 
30 November 
2022 
£’000 

Year
ended
30 November
2021
£’000

(3,978) 

3,531

69 

69 

(3,909) 

(1,085)

(1,085)

2,446

Total comprehensive (expense)/income 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.

The notes on pages 67 to 122 form part of these financial statements.

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64

Consolidated Statement of 
Financial Position

as at 30 November 2022 

ASSETS

Non-current assets

Property, plant and equipment 

Right-of-use assets 

Goodwill 

Other intangible assets 

Deferred tax assets 

Total non-current assets 

Current assets

Stock 

Trade and other receivables  

Forward currency contracts 

Cash and short-term deposits 

Total current assets 

Total assets 

LIABILITIES

Non-current liabilities

Lease liabilities 

Provisions 

Deferred tax liabilities 

Total non-current liabilities 

Current liabilities

Trade and other payables 

Current tax liabilities 

Lease liabilities 

Borrowings 

Provisions 

Total current liabilities 

Total liabilities 

EQUITY

Share capital 

Share premium account 

Other reserves 

Translation reserve 

Accumulated losses 

Total equity attributable to equity holders of the parent 

Total equity and liabilities 

Registered number: 02641001

Notes 

2022 
£’000 

2021
£’000

13 

14 

15 

15 

23 

17 

18 

24 

22 

23 

19 

24 

20 

22 

25 

1,766 

801 

25,022 

3,394 

855 

31,838 

484 

13,549 

110 

7,113 

21,256 

53,094 

79 

179 

1,119 

1,377 

16,882 

372 

802 

50 

968 

19,074 

20,451 

11,183 

31,451 

11,151 

1,607 

1,551

1,709

24,772

6,648

1,010

35,690

467

10,605

–

9,146

20,218

55,908

135

1,129

1,288

2,552

14,456

509

1,623

113

854

17,555

20,107

11,183

31,451

11,151

1,538

(22,749) 

(19,522)

32,643 

53,094 

35,801

55,908

The financial statements on pages 62 to 122 were approved and authorised for issue by the Board of Directors on 29 March 2023 and 

were signed on its behalf by:

RD Price
Director

The notes on pages 67 to 122 form part of these financial statements.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Statement of 
Cash Flows

for the year ended 30 November 2022

Cash flows from operating activities

(Loss)/profit for the period 

Adjustments for:

Finance expense 

Tax expense 

Depreciation of property, plant and equipment 

Depreciation of right-of-use assets 

Amortisation of intangible assets and development expenditure 

Impairment of intangible assets 

Loss on sale of property, plant and equipment 

Share-based payments charge 

(Profit) on disposal of discontinued operations 

Net cash flow from provisions 

Net cash flow from trade and other receivables 

Net cash flow from trade and other payables 

Cash generated from operations 

Income taxes paid 

Net cash from operating activities 

Cash flows from investing activities

Development expenditure capitalised 

Acquisition of a subsidiary, net of cash acquired 

Proceeds from disposal of operations net of cash balances in disposal unit 

Purchase of property, plant and equipment  

Net cash from investing activities 

Cash flows from financing activities

Proceeds from loans and borrowings 

Repayment of loans and borrowings 

Repayment of lease liabilities 

Interest paid on lease liabilities 

Finance expense paid 

Net cash from financing activities 

Net change in cash and cash equivalents 

Cash and cash equivalents at start of year 

Exchange losses on cash and cash equivalents 

Cash and cash equivalents at end of year 

The notes on pages 67 to 122 form part of these financial statements.

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ended 
30 November 
2022 
£’000 

Year
ended
30 November
2021
£’000

Notes 

(3,978) 

3,531

7 

13 

14 

15 

15 

10 

12 

15 

11 

13 

29 

29 

336 

90 

636 

981 

3,767 

1,603 

10 

751 

– 

(717) 

(3,037) 

2,380 

2,822 

(395) 

2,427 

(1,725) 

(178) 

– 

(845) 

(2,748) 

– 

(111) 

(1,073) 

(132) 

(150) 

(1,466) 

(1,787) 

9,033 

(133) 

7,113 

1,448

829

591

963

5,639

1,421

466

440

(11,893)

1,558

(242)

(3,896)

855

(1,362)

(507)

(3,024)

–

14,763

(623)

11,116

4,800

(11,571)

(1,187)

(202)

(673)

(8,833)

1,776

7,566

(309)

9,033

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
66

Consolidated Statement of  
Changes in Equity

for the year ended 30 November 2022

Share 
capital 
£’000 

Share 
premium 
£’000 

Other 
reserves 
£’000 

Translation 
reserve 
£’000 

Accumulated 
losses 
£’000 

Total
equity
£’000

At 30 November 2020 

10,737 

28,897 

11,151 

2,623 

(23,493) 

29,915

Changes in equity for year ended 

30 November 2021

Profit for the year 

Other comprehensive loss for the year 

Total comprehensive income/(expense) 

Share-based payment  

Issue of shares 

At 30 November 2021 

Changes in equity for year ended 

30 November 2022

Loss for the year 

Other comprehensive income for the year 

Total comprehensive income/(expense) 

Share-based payment 

At 30 November 2022 

– 

– 

– 

– 

– 

– 

– 

– 

446 

11,183 

2,554 

31,451 

– 

– 

– 

– 

– 

– 

(1,085) 

(1,085) 

– 

– 

3,531 

– 

3,531 

440 

– 

3,531

(1,085)

2,446

440

3,000

11,151 

1,538 

(19,522) 

35,801

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

69 

69 

– 

(3,978) 

(3,978)

– 

(3,978) 

751 

69

(3,909)

751

32,643

11,183 

31,451 

11,151 

1,607 

(22,749) 

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 (2021: 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 2022 was £34,181 (2021: £47,050). 

The notes on pages 67 to 122 form part of these financial statements.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
Notes forming part of the 
Financial Statements

for the year ended 30 November 2022

1.  Accounting policies for the group financial statements

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”). The company financial statements have been prepared in accordance with Financial Reporting 

Standard 101, Reduced Disclosure Framework (“FRS101”); these are presented on pages 123 to 132.

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.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market 

participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation 

technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability 

if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair 

value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except 

for share-based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IFRS 16, 

and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in 

IAS 36.

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been 

consistently applied to all the periods presented unless the Group has exercised any exemptions arising following the adoption of 

new or revised IFRSs allowing the Group to not restate the comparative information.

The financial statements are presented in Sterling and in round thousands.

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 year to 31 March 2024.

The capital structure of the Group has materially changed in the last two years with the disposal of the Starcom and Sage 

businesses for a combined £16.2m and the conversion of a £3.0m shareholder loans to equity. The Group therefore ended the year 

ended 30 November 2022 with a Net Cash position of £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.

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Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

1.  Accounting policies for the group financial statements continued

Adoption of new and revised standards

New accounting standards, interpretations and amendments have been adopted by the Group

The following amendments are effective for the period beginning 1 January 2022:

•  Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);

•  Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);

•  Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and

•  References to Conceptual Framework (Amendments to IFRS 3).

New accounting standards, interpretations and amendments not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are 

effective in future accounting periods that the Group has decided not to adopt early.

The following amendments are effective for the period beginning 1 January 2023:

•  Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

•  Definition of Accounting Estimates (Amendments to IAS 8); and

•  Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).

The following amendments are effective for the period beginning 1 January 2024:

• 

• 

• 

IFRS 16 Leases (Amendment – Liability in a Sale and Leaseback)

IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities as Current or Non-current)

IAS 1 Presentation of Financial Statements (Amendment – Non-current Liabilities with Covenants)

The directors do not expect that the adoption of the Standards listed above will have a material impact on the financial statements of 

the Group in future periods.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the 

Company (its subsidiaries) made up to 30 November each year. The company controls an investee if all three of the following 

elements are present:

• 

• 

• 

power over the investee

exposure, or has rights, to variable returns from the investee; and

the ability of the investor to use its power to affect those returns.

Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses 

control of the subsidiary.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line 

with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses, and cash flows relating to transactions between the members of the 

Group are eliminated on consolidation.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 20221.  Accounting policies for the group financial statements continued

Business combinations

All business combinations are accounted for by applying the acquisition method. The consideration transferred in a business 

combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of assets transferred by the 

Group, liabilities incurred by the Group to the former owners of the acquiree, and the equity interest issued by the Group in exchange 

for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

At the acquisition date, the identifiable assets acquired, and the liabilities assumed are recognised at their fair value at the acquisition 

date, except that:

• 

deferred tax assets or liabilities and assets or liabilities related to employee benefit arrangements are recognised and measured 

in accordance with IAS 12 and IAS 19 respectively

• 

liabilities or equity instruments related to share-based payment arrangements of the acquiree, or share-based payment 

arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in 

accordance with IFRS 2 at the acquisition date (see below); and

• 

assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 are measured in accordance with that 

Standard.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the 

acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-

date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date 

amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount 

of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the 

excess is recognised immediately in profit or loss as a bargain purchase gain.

When the consideration transferred by the Group in a business combination includes a contingent consideration arrangement, the 

contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a 

business combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are 

adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that 

arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition 

date) about facts and circumstances that existed at the acquisition date.

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70

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

1.  Accounting policies for the group financial statements continued

Business combinations continued

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period 

adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is 

not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Other contingent 

consideration is remeasured to fair value at subsequent reporting dates with changes in fair value recognised in profit or loss.

When a business combination is achieved in stages, the Group’s previously held interests (including joint operations) in the acquired 

entity are remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognised in profit or loss. Amounts 

arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive 

income are reclassified to profit or loss, where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, 

the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted 

during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained 

about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as 

of that date.

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.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 20221.  Accounting policies for the group financial statements continued

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:

•  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.

•  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. K3 does not control the software after the contract 

and issue of access code, which is contemporaneous. There is an ongoing performance obligation to maintain the product to 

ensure the functionality continues to bolt onto Microsoft Dynamics products.

•  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 at a point in time, on contract and issue of the licence key which is contemporaneous.

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 recognised as it 

is performed.

Hardware: 

Hardware is peripheral to a number of contract implementations; the revenue is recognised when the customer takes control of the 

asset on delivery. 

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Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

1.  Accounting policies for the group financial statements continued

Revenue recognition continued
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.

Leases

The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use 

asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases 

(defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, 

small items of office furniture and telephones). For these leases, the Group recognises the lease payments as an operating expense 

on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which 

economic benefits from the leased assets are consumed.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, 

discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the lessee uses its incremental 

borrowing rate.

Lease payments included in the measurement of the lease liability comprise:

• 

Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable

•  Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date

•  The amount expected to be payable by the lessee under residual value guarantees

•  The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and

•  Payments of penalties for terminating the lease if the lease term reflects the exercise of an option to terminate the lease.

The lease liability is presented as a separate line in the consolidated statement of financial position.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 20221.  Accounting policies for the group financial statements continued

Leases continued

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the 

effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:

•  The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of 

exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a 

revised discount rate.

•  The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual 

value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount 

rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).

•  A lease contract is modified, and the lease modification is not accounted for as a separate lease, in which case the lease liability 

is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount 

rate at the effective date of the modification.

The Group did not make any such adjustments during the periods presented.

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before 

the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less 

accumulated depreciation and impairment losses.

Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located 

or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and 

measured under IAS 37. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use 

asset, unless those costs are incurred to produce inventories.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers 

ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase 

option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the 

commencement date of the lease.

The right-of-use assets are presented as a separate line in the consolidated statement of financial position.

The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as 

described in the ‘Property, Plant and Equipment’ policy.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
74

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

1.  Accounting policies for the group financial statements continued

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income 

statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes 

items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or 

substantively enacted by the reporting date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities 

in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the 

balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred 

tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary 

differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from 

the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the 

tax profit nor the accounting profit. Deferred tax liabilities are recognised on intangible assets and other temporary differences 

recognised in business combinations.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except 

where the group can control the reversal of the temporary difference and it is probable that the temporary difference will not reverse 

in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable 

that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax 

rates that are expected to apply in the period when the liability is settled, or the asset is realised. Deferred tax is charged or credited 

in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also 

dealt with in equity.

Deferred tax assets and liabilities are offset when the group has a legally enforceable right to offset current tax assets and liabilities 

and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

• 

• 

the same taxable group company; or

different group entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and 

settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are 

expected to be settled or recovered.

Dividends

Dividends are recognised when paid.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 202275

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1.  Accounting policies for the group financial statements continued

Property, plant and equipment

Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment loss.

The cost of items of property, plant and equipment is its purchase cost, together with any incidental costs of acquisition. As well as 

the purchase price, cost includes directly attributable costs of bringing the asset into use.

Depreciation is recognised so as to write off, on a straight-line basis over the expected useful economic lives of the asset concerned, 

the cost of property, plant and equipment, less estimated residual values, which are adjusted, if appropriate, at each reporting date. 

The principal economic lives used for this purpose are:

• 

• 

Long leasehold buildings 

Leasehold improvements 

Period of lease

Period of lease

•  Plant, fixtures and equipment 

Three to five years

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect 

of any changes in estimate accounted for on a prospective basis.

Right-of-use assets are depreciated over the shorter period of the lease term and the useful life of the underlying asset. If a lease 

transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a 

purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset.

Provision is made against the carrying value of items of property, plant, and equipment where impairment in value is deemed to 

have occurred.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise 

from the continued use of the asset. The gain or loss arising on the disposal or retirement of an asset is determined as the difference 

between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

Externally acquired intangible assets

Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their 

useful economic lives. The amortisation expense is included within administrative expenses in the consolidated income statement. 

Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other 

contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see 

section related to critical estimates and judgements below). The significant intangibles recognised by the group, their estimated 

useful economic lives and the methods used to determine the cost of intangibles acquired in business combinations are as follows:

Intangible asset 

Estimated useful economic life 

Valuation method

Software distribution agreements 

5-9 years 

Estimated royalty stream if the rights were 

to be licensed

Contractual and non-contractual 

5-15 years 

Estimated discounted cash flow 

customer relationships

Intellectual property rights 

6-10 years 

Estimated royalty stream if the rights were 

to be licensed

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
76

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

1.  Accounting policies for the group financial statements continued

Internally generated intangible assets (research and development costs)

Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally generated intangible 

asset arising from the group’s software development is recognised only if all the following conditions are met:

• 

• 

• 

• 

• 

• 

it is technically feasible to develop the product for it to be sold

adequate resources are available to complete the development

there is an intention to complete and sell the product

the group is able to sell the product

sale of the product will generate future economic benefits; and

expenditure on the project can be measured reliably.

The expenditure capitalised represents the cost of direct labour and third-party costs incurred in developing the software product.

Capitalised development costs are amortised on a straight-line basis over their useful lives commencing from the date the asset 

is available for use. During the year given the speed of change in the technology space, the amortisation useful economic life 

was revised down from 5 to 7 years to 2 to 3 years. The amortisation expense is included within administrative expenses in the 

consolidated income statement. Where no internally generated intangible asset can be recognised, development expenditure is 

recognised as an expense in the period in which it is incurred.

Impairment of property, plant and equipment and intangible assets excluding goodwill

At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to 

determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the 

recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not 

generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating 

unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also 

allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for 

which a reasonable and consistent allocation basis can be identified.

Intangible assets with an indefinite useful life are tested for impairment at least annually and whenever there is an indication at the 

end of a reporting period that the asset may be impaired.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future 

cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time 

value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying 

amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately 

in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the 

revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that 

would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal 

of an impairment loss is recognised immediately in profit or loss to the extent that it eliminates the impairment loss which has been 

recognised for the asset in prior years.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 202277

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1.  Accounting policies for the group financial statements continued

Financial instruments

Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group becomes a party 

to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to 

the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value 

through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on 

initial recognition.

Financial assets

All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the 

classification of the financial assets.

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income 

over the relevant period.

For financial assets other than purchased or originated credit-impaired financial assets (i.e. assets that are credit-impaired on 

initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and 

points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) 

excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the 

gross carrying amount of the debt instrument on initial recognition.

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal 

repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount 

and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a 

financial asset before adjusting for any loss allowance.

Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost 

and at FVTOCI. For financial assets, other than purchased or originated credit-impaired financial assets, interest income is calculated 

by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have 

subsequently become credit-impaired (see below). For financial assets that have subsequently become credit-impaired, interest 

income is recognised by applying the effective interest rate to the amortised cost of the financial asset. If, in subsequent reporting 

periods, the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, 

interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset.

The Group recognises a loss allowance for expected credit losses on trade receivables and contract assets. The amount of 

expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective 

financial instrument.

The Group always recognises lifetime ECL for trade receivables and contract assets. The expected credit losses on these financial 

assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are 

specific to the debtors, general economic conditions, and an assessment of both the current as well as the forecast direction of 

conditions at the reporting date, including time value of money where appropriate.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a 

financial instrument.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
78

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

1.  Accounting policies for the group financial statements continued

Financial assets continued

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group compares 

the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial 

instrument at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative 

information that is reasonable and supportable, including historical experience and forward-looking information that is available 

without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the 

Group’s debtors operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and 

other similar organisations, as well as consideration of various external sources of actual and forecast economic information that 

relate to the Group’s core operations.

In particular, the following information is considered when assessing whether credit risk has increased significantly since initial 

recognition:

• 

existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant 

• 

• 

• 

decrease in the debtor’s ability to meet its debt obligations

an actual or expected significant deterioration in the operating results of the debtor

significant increases in credit risk on other financial instruments of the same debtor

an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that 

results in a significant decrease in the debtor’s ability to meet its debt obligations.

Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a financial asset has increased 

significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable 

and supportable information that demonstrates otherwise.

Despite the foregoing, the Group assumes that the credit risk on a financial instrument has not increased significantly since initial 

recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined 

to have low credit risk if:

(1)  The financial instrument has a low risk of default,

(2)  The debtor has a strong capacity to meet its contractual cash flow obligations in the near term, and

(3)  Adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the 

borrower to fulfil its contractual cash flow obligations.

The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is 

no realistic prospect of recovery, e.g., when the debtor has been placed under liquidation or has entered bankruptcy proceedings, or 

in the case of trade receivables, when the amounts are over two years past due, whichever occurs sooner. Financial assets written 

off may still be subject to enforcement activities under the Group’s recovery procedures, considering legal advice where appropriate. 

Any recoveries made are recognised in profit or loss.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 202279

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1.  Accounting policies for the group financial statements continued

Financial liabilities

All financial liabilities are measured initially at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense 

over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including 

all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums 

or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a 

financial liability.

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or have expired. 

The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is 

recognised in profit or loss.

When the Group exchanges with the existing lender one debt instrument into another one with the substantially different terms, 

such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. 

Similarly, the Group accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the 

original financial liability and the recognition of a new liability.

Equity instruments

Equity instruments issued by the group are recorded at the proceeds received, net of direct issue costs.

Provisions 

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable 

that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the 

reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the 

cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of 

the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable 

is recognised as an asset if it is virtually certain that reimbursement will be received, and the amount of the receivable can be 

measured reliably.

Restructuring

A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a 

valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main 

features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the 

restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing 

activities of the entity.

Onerous contracts 

Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered 

to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the 

economic benefits expected to be received under it. 

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
80

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

1.  Accounting policies for the group financial statements continued

Provisions continued
Restoration provisions 

Provisions for the costs to restore leased assets to their original condition, as required by the terms and conditions of the lease, are 

recognised when the obligation is incurred, either at the commencement date or as a consequence of having used the underlying 

asset during a particular period of the lease, at the directors’ best estimate of the expenditure that would be required to restore the 

assets. Estimates are regularly reviewed and adjusted as appropriate for new circumstances.

Employee share ownership plans

As the company is deemed to have control of its ESOP trust, it is treated as a subsidiary and consolidated for the purposes of 

the group accounts. The material assets, liabilities, income, and costs of the K3 Business Technology Group plc Share Incentive 

Plan are included in the financial statements. Until such time as the group’s own shares vest unconditionally with employees, the 

consideration paid for the shares is deducted in equity shareholders’ funds.

Share-based payments

The group issues equity-settled share-based payments to certain employees (i.e., share options). Equity-settled share-based 

payments are measured at fair value at the date of grant. Fair value is measured by use of a trinomial lattice model. The expected life 

used in the model has been adjusted, based on the group’s best estimate for the effects of non-transferability, exercise restrictions 

and behavioural considerations.

The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the group’s 

estimate of the number of shares that will eventually vest. Non-market vesting conditions are considered by adjusting the number 

of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the 

vesting period is based on the amount that eventually vest. Market vesting conditions are factored into the fair value of the options 

and warrants granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market 

vesting conditions are satisfied. Where group no longer feels that the conditions will be met for the options to vest any charge is 

subsequently reversed.

Warrants

Warrants issued which will be settled by the Group’s own equity, and not by cash or another financial asset, are classified as equity 

instruments. The warrants are measured at fair value at the date of grant and initially recognised in equity. The fair value determined 

at the grant date is expensed as a finance costs on a straight-line basis over the term of the loan.

Pension contributions

Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as 

incurred. The group has no defined benefit arrangements in place.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits. The group considers all highly liquid investments with original 

maturity dates of three months or less to be cash equivalents. Bank overdrafts that are repayable on demand and form an integral 

part of the group’s cash management system are included as a component of cash and cash equivalents for the purpose of the 

statement of cash flows.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 202281

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1.  Accounting policies for the group financial statements continued

Foreign currency translation

The presentational currency is sterling.

Transactions entered into by group entities in a currency other than the currency of the primary economic environment in which 

they operate (the “functional currency”) are translated at the rates ruling at the dates of transactions. Monetary assets and liabilities 

denominated in foreign currencies at the reporting date are translated at the rates ruling at that date. Exchange differences arising 

on the retranslation of unsettled monetary assets and liabilities are similarly recognised immediately in the income statement. 

On consolidation, results of overseas subsidiaries are translated using the average exchange rate for the period. The balance sheets 

of overseas subsidiaries are translated using the closing period end rate. Exchange differences arising, if any, are taken to a separate 

component in equity (the translation reserve). Such translation differences are recognised as income or as expenses in the period in 

which the operation is disposed of. 

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign 

entity and translated at the closing rate. The group has elected to treat goodwill and fair value adjustments arising on acquisitions 

before the date of transition to IFRS as sterling denominated assets and liabilities.

Exchange differences recognised in the income statement of group entities’ separate financial statements on the translation of 

long-term monetary items forming part of the group’s net investment in the overseas operation concerned are reclassified to the 

translation reserve on consolidation.

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 except those over going concern which are 

disclosed in detail in the basis of preparation accounting policy in note 1. 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 16.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
82

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

1.  Accounting policies for the group financial statements continued

Critical accounting estimates and judgements continued
Capitalised development expenditure and subsequent amortisation

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 16. 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 16.

Calculation of loss allowance 

When measuring expected credit losses, the Group uses reasonable and supportable forward-looking information, which is based on 

assumptions for the future movement of different economic drivers and how these drivers will affect each other.

Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due 

and those that the lender would expect to receive, taking into account cash flows from collateral and integral credit enhancements.

Probability of default constitutes a key input in measuring Expected Credit Losses (ECL). Probability of default is an estimate of the 

likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions and expectations of 

future conditions.

If the rates on trade receivables more than 90 days past due had been 50 per cent higher as of November 2022, the loss allowance on 

trade receivables would have been £9k (2021: £16k) higher.

If the ECL rates on trade receivables between 61 and 90 days past due had been 50 per cent higher as of November 2022, the loss 

allowance on trade receivables would have been £7k (2021: £4k) higher.

Calculation of incremental borrowing rate and lease term in respect of IFRS 16

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the 

discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, 

in which case the group’s incremental borrowing rate on commencement of the lease is used. The group’s incremental borrowing 

rate is calculated by reference to borrowing rates applicable to the group’s other borrowings/financial liabilities and then adjusted 

for the specifics of the lease and asset. For every 0.5% increase in the incremental borrowing rate the right-of-use asset and lease 

liability recognised would increase by approximately £4k, conversely an equivalent reduction in the incremental borrowing rate would 

decrease the right-of-use asset and liability by approximately £4k.

Lease term is ordinarily calculated by reference to the contractual terms of the group’s leases. Management may change their 

estimates in respect of the term of any lease if the probability of an extension or termination option, within the lease contract, being 

exercised changes. As a result of any change in estimate of the lease term the group adjusts the carrying amount of the lease liability 

to reflect the payments to make over the revised term, which are discounted using a revised discount rate. An equivalent adjustment 

is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining 

(revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in profit 

or loss. Further details are provided in note 14.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 20221.  Accounting policies for the group financial statements continued

Government grants

Government grants are recognised in profit or loss on a systematic basis over the periods in which the entity recognises expenses for 

the related costs for which the grants are intended to compensate.

2.  Revenue

The group’s revenue comprises:
Software licence revenue 
Services revenue* 
Maintenance & support** 
Hardware and other revenue 

Revenue 

2022 
£’000 

2021
£’000

5,642 
18,115 

22,816 

959 

47,532 

6,642

17,325

19,867

1,433

45,267

*from installation, integration and software development services.
**from software maintenance renewals, annual term contracts, support contracts and software as a service (“SaaS”).

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
84

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

3.  Loss from operations

This has been arrived at after charging/(crediting):

Staff costs 

Depreciation of property, plant and equipment 

Loss on disposal of fixed assets 

Depreciation of right-of-use assets 

Amortisation of acquired intangible assets 

Amortisation of development costs  
Exceptional impairment of goodwill and intangibles* 
Exceptional reorganisation costs** 
Acquisition costs 

Impairment losses on financial assets 

Audit fees:

–  Audit services 

–  Non-audit services 

Notes 

2022 
£’000 

2021
£’000

4 

13 

13 

14 

15 

16 

15 

23,673 

25,667

636 

10 

981 

– 

3,830 

1,603 

595 

98 

102 

230 

56 

591

466

963

577

5,062

1,421

1,570

–

118

172

56

*  The exceptional impairments arise from the value in use assessment as set out in notes 15 and 16.

**  During the year the Group continued to achieve operating efficiencies following on from the reorganisation programme of 

previous years. The total reorganisation costs, predominantly redundancy, were £0.6 million (2021: £1.6 million).

4.  Staff costs

Staff costs (including directors) comprise:

Wages and salaries 

Short-term non-monetary benefits 

Defined contribution pension cost 

Employers’ national insurance contributions and similar taxes 

2022 
£’000 

2021
£’000

20,039 

21,791

81 

1,174 

2,379 

64

1,315

2,497

23,673 

25,667

In addition share-based payments were charged of £749k (2021: £440k).

Of the above staff costs £1.7 million (2021: £2.3 million) has been capitalised within development costs (see note 15).

The average number of employees in continuing operations during the year was:

Consultants and programmers 

Sales and distribution 

Administration 

2022 
Number 

2021
Number

255 

41 

51 

347 

300

48

60

408

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
4.  Staff costs continued

Directors and key management personnel remuneration

Key management personnel are those persons having authority and responsibility for planning, directing, and controlling the 

activities of the group, including the Directors of the company listed on pages 34 to 35 and the divisional directors.

Key management personnel remuneration consists of:

Remuneration 

Company contributions to defined contribution pension schemes 

Share-based payment expense 

Employers’ national insurance contributions and similar taxes 

Included in the totals above is directors’ remuneration:

Directors’ remuneration consists of:

Emoluments 

Contributions to personal pension schemes 

Total per remuneration report (page 45) 

Share-based payment expense 

Employers’ national insurance contributions and similar taxes 

Remuneration in respect of the highest paid director:

Aggregate emoluments 

Pension contributions 

2022 
£’000 

2021
£’000

1,248 

1,150

48 

674 

165 

53

423

128

2,135 

1,754

2022 
£’000 

2021
£’000

866 

32 

898 

529 

113 

736

35

771

302

75

1,540 

1,148

2022 
£’000 

391 

14 

405 

2021
£’000

210

17

227

There were 3 directors in defined contribution pension schemes (2021: 3). Note that the directors’ emoluments include amounts 

attributed to benefits-in-kind on which directors are assessed for tax purposes. This may differ to the cost to the group of providing 

those benefits included in this note.

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86

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

5.  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 13 to 17.

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 EBITDA. 

The segment results for the year ended 30 November 2022 and for the year ended 30 November 2021, reconciled to loss for the year.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 20225.  Segment information continued

Year ended 30 November 2022

K3 
Products 
£’000 

Third-party 
Solutions 
£’000 

Central
Costs 
£’000 

Notes 

Software licence revenue 

Services revenue 

Maintenance & support 

Hardware and other revenue 

External revenue 

Cost of sales 

Gross profit 

Gross margin 
Underlying administrative expenses1 
EBITDA before capitalised development costs 

Capitalised development costs 
Adjusted EBITDA1 from continuing operations 
Depreciation and amortisation 

Amortisation of acquired intangibles 

Exceptional impairment 

Exceptional reorganisation costs 

Acquisition costs 

Share-based payment charge 

(Loss)/profit from operations 

Finance expense 

(Loss)/profit before tax and discontinued operations 

Tax expense 

Profit from discontinued operations 

(Loss)/profit for the year 

12 

2,174 

738 

9,620 

925 

13,457 

(2,920) 

10,537 

78.3% 

(11,243) 

(706) 

1,420 

714 

– 

– 

– 

– 

– 

– 

714 

– 

714 

– 

– 

3,468 

17,377 

13,196 

34 

34,075 

(16,462) 

17,613 

51.7% 

(4,820) 

12,793 

47 

12,840 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

(8,722) 

(8,722) 

232 

(8,490) 

(5,383) 

– 

(595) 

(98) 

(855) 

(1,603) 

(1,603)

12,840 

(17,024) 

– 

(338) 

12,840 

(17,362) 

– 

– 

(278) 

108 

714 

12,840 

(17,532) 

(3,978)

Total
£’000

5,642

18,115

22,816

959

47,532

(19,382)

28,150

59.2%

(24,785)

3,365

1,699

5,064

(5,383)

–

(595)

(98)

(855)

(3,470)

(338)

(3,808)

(278)

108

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88

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

5.  Segment information continued

Software licence revenue 

Services revenue 

Maintenance & support 

Hardware and other revenue 

External revenue 

Cost of sales 

Gross profit 

Gross margin 
Underlying administrative expenses1 
EBITDA before capitalised development costs 

Capitalised development costs 
Adjusted EBITDA1 from continuing operations 
Depreciation and amortisation 

Amortisation of acquired intangibles 

Exceptional impairment 

Exceptional reorganisation costs 

Acquisition gain 

Share-based payment charge/(credit) 

Profit/(loss) from operations 

Finance expense 

Profit/(loss) before tax and discontinued operations 

Tax expense 

Profit from discontinued operations 

Profit/(loss) for the year 

Year ended 30 November 2021 (restated*)

K3 
Products 
£’000 

Third-party 
Solutions 
£’000 

Central
Costs 
£’000 

Total
£’000

3,309 

1,048 

9,091 

1,331 

14,779 

(3,660) 

11,119 

75.2% 

(12,807) 

(1,688) 

2,747 

1,059 

– 

– 

– 

– 

– 

– 

1,059 

– 

1,059 

– 

– 

2,898 

16,283 

11,204 

103 

30,488 

(14,772) 

15,716 

51.5% 

(4,344) 

11,372 

45 

11,417 

– 

– 

– 

– 

– 

– 

11,417 

– 

11,417 

– 

– 

1,059 

11,417 

– 

– 

– 

– 

– 

– 

– 

– 

(8,166) 

(8,166) 

47 

(8,119) 

(6,797) 

(518) 

(1,421) 

(1,605) 

35 

(440) 

(18,865) 

(1,433) 

(20,298) 

(939) 

12,292 

(8,945) 

6,207

17,331

20,295

1,434

45,267

(18,432)

26,835

59.3%

(25,317)

1,518

2,839

4,357

(6,797)

(518)

(1,421)

(1,605)

35

(440)

(6,389)

(1,433)

(7,822)

(939)

12,292

3,531

*FY2021 restated to reflect latest segment reporting, in which Revenue and Gross profit from “mobile goods flow” and “make tax digital” are 
reclassified from K3 Products to Third-party Solutions. 

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 64. 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 46% (2021: 43%) of external Group revenue.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5.  Segment information continued

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 

Non-current assets

Year 
ended 
30 November 
2022 
£’000 

Year
ended
30 November
2021 
£’000 

2022 
£’000 

2021
£’000

16,323 

15,648 

21,932 

United Kingdom 

Netherlands 

Ireland 

Rest of Europe 

Middle East 

Asia 

USA 

Rest of World 

% of non-UK revenue 

External revenue by market

2022 

Software licence revenue 

Services revenue 

Maintenance & support revenue 

Hardware and other revenue 

Total 

External revenue by business unit geography

2022 

United Kingdom 

Netherlands 

Ireland 

Rest of Europe 

Rest of World 

Total 

6,434 

631 

7,166 

1,807 

8,882 

820 

5,469 

47,532 

66% 

7,978 

1,157 

7,575 

1,887 

7,494 

506 

3,022 

45,267 

65%

UK 
£’000 

1,236 

2,679 

11,929 

467 

16,311 

31,838 

35,480

5,479 

1,650 

2,323 

– 

181 

3 

– 

Non-UK 
£’000 

4,438 

15,429 

10,862 

492 

31,221 

454 

124 

13 

367 

1 

959 

30,606

180

5,941

(1,570)

–

304

19

–

Total
£’000

5,674

18,108

22,791

959

47,532

Total
£’000

16,883

27,535

316

2,770

28

47,532

Maintenance &
Hardware &
Support 
Revenue  Other Revenue 
£’000 

£’000 

Software 
Licensing 
£’000 

1,082 

4,574 

(153) 

171 

– 

Services 
Revenue 
£’000 

2,983 

14,984 

26 

88 

27 

12,364 

7,853 

430 

2,144 

– 

5,674 

18,108 

22,791 

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
90

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

5.  Segment information continued

External revenue by revenue recognition category

2022 

Goods transferred at a point in time 

Services transferred at a point in time 

Services transferred over time 

Total 

Software 
Licensing 
£’000 

4,390 

988 

296 

5,674 

Services 
Revenue 
£’000 

10 

17,606 

492 

18,108 

Maintenance &
Hardware &
Support 
Revenue  Other Revenue 
£’000 

£’000 

95 

6,130 

16,566 

22,791 

923 

– 

36 

959 

Total
£’000

5,418

24,724

17,390

47,532

Revenue to be recognised in the future, related to agreed performance obligations that are unsatisfied or partially satisfied as at 

30 November 2022, was as follows:

Software licence revenue 

Services revenue 

Maintenance & support revenue 

Hardware and other revenue 

Total 

External revenue by market

2021 

Software licence revenue 

Services revenue 

Maintenance & support revenue 

Hardware and other revenue 

Total 

External revenue by business unit geography

2021 

United Kingdom 

Netherlands 

Ireland 

Rest of Europe 

Total 

Software 
Licensing 
£’000 

1,596 

4,389 

107 

550 

6,642 

2023 
£’000 

– 

15 

3,159 

18 

3,192 

Services 
Revenue 
£’000 

2,783 

14,149 

176 

216 

2024 
£’000 

38 

40 

2,981 

220 

3,279 

UK 
£’000 

1,734 

2,648 

10,664 

628 

15,674 

Later 
£’000 

– 

– 

1,978 

– 

1,978 

Non-UK 
£’000 

4,908 

14,676 

9,203 

806 

29,593 

Maintenance &
Hardware &
Support 
Revenue  Other Revenue 
£’000 

£’000 

10,623 

6,069 

569 

2,606 

627 

57 

50 

700 

1,434 

17,324 

19,867 

Total
£’000

38

55

8,118

238

8,449

Total
£’000

6,642

17,324

19,867

1,434

45,267

Total
£’000

15,629

24,664

902

4,072

45,267

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
5.  Segment information continued

External revenue by revenue recognition category

2021 

Goods transferred at a point in time 

Services transferred at a point in time 

Services transferred over time 

Total 

Software 
Licensing 
£’000 

6,642 

– 

– 

Services 
Revenue 
£’000 

– 

17,324 

– 

6,642 

17,324 

Maintenance &
Hardware &
Support 
Revenue  Other Revenue 
£’000 

£’000 

– 

1,432 

9,880 

9,987 

19,867 

2 

– 

1,434 

Total
£’000

8,074

27,206

9,987

45,267

Revenue to be recognised in the future, related to agreed performance obligations that are unsatisfied or partially satisfied as at 

30 November 2021, was as follows:

Software licence revenue 

Services revenue 

Maintenance & support revenue 

Hardware and other revenue 

Total 

2022 
£’000 

328 

93 

4,073 

5 

4,499 

2023 
£’000 

Later 
£’000 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

Revenue recognised and included within contract assets can be reconciled as follows:

At 1 December 2021 

Transfers in the period from contract assets to trade receivables 

Excess of revenue recognised over cash (or rights to cash) being recognised during the period 

At 30 November 2022 

Revenue recognised and included within contract liabilities can be reconciled as follows:

At 1 December 2021 

Amounts included in contract liabilities that was recognised as revenue during the period 

Cash received in advance of performance and not recognised as revenue during the period 

At 30 November 2022 

Total
£’000

328

93

4,073

5

4,499

2022
£’000

3,077

(3,077)

5,512

5,512

2022
£’000

3,364

(3,364)

5,312

5,312

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
92

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

6.  Finance income and expense

Finance expense

Bank borrowings 

Interest expense on lease liabilities 

Finance charges for warrants 

Other finance costs 

Net finance expense 

7.  Tax expense/(charge)

Current tax expense/(credit)

Income tax of overseas operations on profits/(losses) for the period 

Adjustment in respect of prior periods 

Total current tax expense 

Deferred tax (credit)/expense

Origination and reversal of temporary differences  

Effect of changes in tax rate 

Adjustments in respect of prior periods 

Total deferred tax expense/(credit) 

Total tax expense in the current year 

Income tax expense attributable to continuing operations 

Income tax (credit) attributable to discontinued operations 

2022 
£’000 

2021
£’000 

82 

132 

– 

124 

338 

105

3

328

997

1,433

2022 
£’000 

2021
£’000 

203 

(100) 

103 

9 

10 

(32) 

(13) 

90 

278 

(188) 

90 

676

(80)

596

233

–

–

233

829

939

(110)

829

The March 2021 Budget announced an increase to the main rate of corporation tax to 25% from April 2023 and this rate was enacted 

on 10 June 2021. Deferred tax balances as at 30 November 2022 have been measured at 25%.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
7.  Tax expense/(charge) continued

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:

% 

2021
£’000 

%

Loss before taxation from continuing operations 

(Loss)/profit before taxation from discontinued operations (note 12) 

(Loss)/profit before tax 

2022 
£’000 

(3,807) 

(80) 

(3,887) 

Expected tax charge/(credit) based on the standard rate of corporation tax 

(739) 

19.0 

Effects of:

Items not deductible for tax purposes 

Non-taxable gain on disposal of shares 

Income not taxable 

Adjustment to tax charge in respect of prior periods 

Movements in deferred tax not recognised 

Differences between overseas tax rates 

Group relief not paid for 

Super-deduction 

Movements in temporary differences not recognised 

Effect of deferred tax rate difference 

Total tax expense in current period  

439 

– 

(496) 

(132) 

1,149 

(136) 

– 

– 

– 

5 

90 

2.3 

(7,822)

12,182

4,360

828 

504

(2,274)

–

(180)

–

571

154

(11)

1,184

53

829 

19.0

39.4

Deferred tax recognised directly in equity for FY2022 was £nil (2021: £nil). Current tax recognised in equity for FY2022 was £nil (2021: 

£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.

8.  Dividends

No dividend in respect of the year ended 30 November 2022 will be proposed (2021: nil).

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94

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

9. 

(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:

2022 
Number of 
shares 

2021
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. 

Loss after tax from continuing operations 

Profit after taxation from discontinued operations 

(Loss)/profit attributable to ordinary equity holders of the parent for basic and diluted 

earnings per share 

Basic and diluted

2022 
£’000 

(4,086) 

108 

2021
£’000

(8,761)

12,292

(3,978) 

3,531

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.

Loss after tax from continuing operations 

Add back other items:

Amortisation of acquired intangibles 

Exceptional reorganisation costs 

Exceptional impairment costs 

Share-based payment charge 

Acquisition costs 

Tax charge related to other items 

Loss attributable to ordinary equity holders of the parent for basic and diluted 

earnings from continuing operations before other items 

Profit/(loss) per share

Basic and diluted earnings/(loss) per share 

Basic and diluted earnings/(loss) per share from continuing operations 

Basic and diluted earnings/(loss) per share from discontinued operations 

Adjusted earnings per share

Basic and diluted
before other items

2022 
£’000 

2021
£’000

(4,086) 

(8,761)

– 

595 

1,603 

855 

98 

(202) 

518

1,605

1,421

440

–

(1,207)

(1,137) 

(5,984)

2022 
Pence 

2021
Pence

(9.0) 

(9.3) 

(0.2) 

8.0

(19.9)

27.9

Basic and diluted earnings/(loss) per share from continuing operations before other items 

(2.6) 

(13.6)

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
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10. Share-based payments

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.

Market Priced Options

Market Priced Options may be granted annually subject to the achievement of performance targets set by the Remuneration 

Committee. The value of any awards granted are intended to be between 50% – 100% of an individual’s basic salary. The exercise 

price of Market Priced Options is determined by the prevailing price of the Company’s shares on the day before the date of grant and 

any vesting conditions are set by the Remuneration Committee at the time of the annual award.

During the financial year, the Remuneration Committee awarded 500,000 Market Priced Options with an exercise price of 150p and 

80,000 Market Priced Options with an exercise price of 204p to certain Persons Discharging Managerial Responsibilities (“PDMRs”) 

and employees of the Group. Also, 120,000 Market Priced Options lapsed without being exercised, leaving an aggregate of 660,000 

(2021: 200,000) Market Priced Options in issue at the end of the financial year.

The vesting of these 2022 Market Priced Options is subject to the achievement of certain prescribed levels of incremental annual 

recurring revenue between 1 December 2021 and 30 November 2025 with vesting occurring proportionately as between 25% and 

100% of the award. No vesting will be permitted unless the lowest threshold (corresponding to 25% vesting) is achieved.

Subject to meeting the above performance targets, the 2022 Market Priced Options may be exercised following vesting and until the 

seventh anniversary of the original date of grant, at which point they will lapse.

Nominal Priced Options/LTIP Options

Nominal Priced Options are not granted annually, but are granted on an occasional basis at the determination of the Remuneration 

Committee. The exercise price of Nominal Priced Options is 25p, being nominal value of the Company’s shares.

All current Nominal Priced Options granted to date are subject to performance conditions based on the achievement of certain 

60 day Volume Weighted Average Price (‘VWAP’) thresholds of the Company’s shares, measured between the third and fourth 

anniversary of the date of option grant. The 60 day VWAP measurement will be applied to any consecutive 60 trading days during the 

12 month testing period.

The performance targets and associated vesting of the Nominal Priced Options are:

• 

• 

• 

25% vest at VWAP of 200p;

50% vest at VWAP of 225p; and

100% vest at VWAP of 250p,

with a straight line vesting between these thresholds.

Subject to meeting the above performance targets, all Nominal Priced Options granted to date may be exercised as follows:

• 

• 

50% on or after the fourth anniversary of the date of grant

50% on or after the fifth anniversary of the date of grant.

Nominal Priced Options granted to date will remain exercisable until the seventh anniversary of the original date of grant, at which 

point they will lapse.

During the financial year, 350,000 Nominal Priced Options were granted and 850,000 lapsed without being exercised, leaving an 

aggregate of 1,675,000 (2021: 2,175,000) Nominal Priced Options in issue at the end of the financial year.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
96

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

10. Share-based payments continued

SAYE

As at 30 November 2022, all options granted under the Group’s Save As You Earn (“SAYE”) scheme for employees had lapsed without 

being exercised.

Outstanding at beginning of the year 

Granted during the year 

Lapsed during the year 

Outstanding at the end of the year 

2022 

2021

Weighted 
average 
exercise 
price 
Pence 

Weighted
average
exercise
price 
Pence 

Options 
Number 

Options
Number

40.1 

2,375,000 

107.6 

930,000 

47.1 

64.0 

(970,000) 

2,335,000 

25.0 

72.7 

57.7 

40.1 

1,829,539

750,000

(204,539)

2,375,000

Of the above share options outstanding at the end of the year nil (2021: nil) are exercisable at 30 November 2022. No options had 

vested or were exercisable at the end of either period. The options outstanding at 30 November 2022 had a weighted average price 

of LTIP: 25p, Market Priced Options: 204p, Market Priced Options: 150p, (2021: LTIP: 25p, Market Priced Options: 204p) and their 

weighted average contractual life was 6.64 years (2021: 6.64 years). 

The share-based remuneration expense (note 4) comprises:

Equity-settled schemes 

2022 
£’000 

855 

2021
£’000

440

The Group did not enter into any share-based payment transactions with parties, other than employees, during the current or 

previous period other than warrants issued as part of the shareholder loans received (see note 25).

The fair value per option is:

9 February 2022 LTIP award 

9 February 2022 Market Priced award 

18 May 2022 LTIP award 

18 May 2022 Market Priced award 

Fair value per option

167p 

156p

150p

146p 

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
97

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G
O
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N
A
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10. Share-based payments continued

The assumptions used in the models used to calculate the fair value of the LTIP options granted in the year are as follows:

Share price (on date of official grant) 

Exercise price 

Expected volatility 

Actual life 

Risk free rate 

Dividend yield 

Model used 

Expected percentage options exercised versus granted at date of grants 

Share price (on date of official grant) 

Exercise price 

Expected volatility 

Actual life 

Risk free rate 

Dividend yield 

Model used 

Expected percentage options exercised versus granted at date of grants 

Share price (on date of official grant) 

Exercise price 

Expected volatility 

Actual life 

Risk free rate 

Dividend yield 

Model used 

Expected percentage options exercised versus granted at date of grants 

Share price (on date of official grant) 

Exercise price 

Expected volatility 

Actual life 

Risk free rate 

Dividend yield 

Model used 

Expected percentage options exercised versus granted at date of grants 

2022 LTIP award
(9 February 2022)

172p

25p

2.39%

3 years

4.17%

0.00%

Black Scholes

100%

2022 LTIP award
(18 May 2022)

153p

25p

2.38%

3 years

6.22%

0.00%

Black Scholes

100%

2022 Market Priced award

(9 February 2022)

172p

204p

2.39%

3 years

4.17%

0.00%

Black Scholes

100%

2022 Market Priced award

(18 May 2022)

153p

150p

2.38%

3 years

6.22%

0.00%

Black Scholes

100%

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
98

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

11. Acquisition of a subsidiary – ViJi

On 27 January 2022, the Group acquired 100 per cent of the voting shares of ViJi, an innovative software developer with an exciting 

suite of products focused on sustainability, for an initial consideration of €0.25 million and agreed to an undiscounted deferred 

consideration of €0.1 million, due to be paid a year after date of acquisition. There is also contingent consideration of €0.7 million, 

dependent upon the achievement of agreed performance criteria over the next two years from the date of acquisition. The 

acquisition-related costs amounted to £0.1 million and are included in the Consolidated Income Statement.

The acquisition has been accounted for using the purchase method of accounting.

The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition:

Other intangible assets 

Property, plant and equipment 

Borrowings 

Trade and other receivables 

Cash and cash equivalents 

Trade and other payables 

Net assets acquired 

Goodwill arising on acquisition 

Discharged by:

Cash paid on acquisition 

Deferred consideration 

Contingent consideration 

Cash outflow on acquisition:

Cash paid on acquisition 

Cash and cash equivalents acquired 

Provisional 
 fair value 
to the Group
£’000

376

2

(136)

35

30

(34)

273

102

375

208

75

92

375

208

30

178

The initial accounting for the acquisition of ViJi has only been provisionally determined at the date of finalisation of these 

Consolidated Financial Statements based on Management’s best estimates. 

From the date of acquisition to 30 November 2022, ViJi contributed £19 thousands to the Group’s revenue and a profit of £0.1 million 

to the Group’s loss after tax. 

If the acquisition of ViJi were completed on 1 December 2021, the Group’s revenue for the year would have been £47,506k and the 

Group’s loss after tax would have been £5,078k.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
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G
O
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N
A
N
C
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I

F
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A
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12. Discontinued operations

On 26 February 2021 the Group announced that a sale of the Starcom business for consideration of £14.7m had been approved 

and completed. Starcom had already been classified as a discontinued operation in the prior year as it represented a major line of 

business for the Group. 

The post tax gain on disposal of the Starcom business was determined as follows:

Cash consideration received 

Total consideration received 

Cash disposed of 

Net cash inflow on disposal of discontinued operations 

Net assets disposed (other than cash)

Property, plant and equipment 

Intangibles 

Right-of-use asset 

Trade and other receivables 

Trade and other payables 

Pre-tax gain on disposal of discontinued operations 

Gain on disposal of discontinued operations 

2022 
£’000 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

2021
£’000

14,474

14,747

(1,375)

13,372

(199)

(3,015)

(454)

(2,404)

1,958

(4,114)

9,258

9,258

Trade and other payables includes an onerous contract provision of £1,125k relating to higher than market pricing on the 3 year post 

completion service agreement with the buyer.

The results of the Starcom business for the year are presented below:

Total revenue 

Less inter-segment revenue 

External revenue 

Cost of sales 

Gross profit 

Administrative expenses 

Impairment losses on financial assets 

Amortisation of acquired intangibles 

Profit from operations 

Profit on disposal 

Finance credit/(expense) 

Profit before taxation from discontinued operations 

Tax credit including on gain on asset held for sale 

Profit for the year from discontinued operations 

2022 
£’000 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

2021
£’000

2,309

–

2,309

(845)

1,464

(1,011)

–

(107)

346

9,258

9

9,613

110

9,723

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
100

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

12. Discontinued operations continued

Basic and diluted profit per share from discontinued operations 

2022 
Pence 

nil 

2021
Pence

22.0

The major classes of assets and liabilities of the Starcom business classified as held for sale as at 30 November 2022 are as follows:

Property, plant and equipment 

Right-of-use assets 

Goodwill 

Other intangible assets 

Deferred tax assets 

Trade and other receivables 

Cash and cash equivalents 

Assets classified as held for sale 

Trade and other payables 

Provisions 

Lease liabilities 

Liabilities directly associated with assets classified as held for sale 

Net assets directly associated with disposal group 

The net cashflows incurred by Starcom are as follows:

Operating 

Investing 

Financing 

Net cash inflow 

2022 
£’000 

2021
£’000

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

2022 
£’000 

– 

– 

– 

– 

237

332

2,373

690

136

1,871

1,260

6,899

(3,196)

(60)

(316)

(3,572)

3,327

2021
£’000

628

(129)

(157)

342

On the 20 September 2021, the Group disposed of the customers and employees of its Sage business to Pinnacle Computing 

(Support) Ltd for £1.68m.

Formal completion occurred in early October 2021, following a TUPE consultation process in respect of the transfer to Pinnacle of 

the employees, and the disposal consideration was subject to a downward adjustment of £0.2m in respect of restructuring costs that 

Pinnacle undertook immediately following completion. The Group maintained ownership of the sales ledger at Completion which 

was £0.1m at 30 November 2021.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
  
 
 
 
 
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G
O
V
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N
A
N
C
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I

F
I
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A
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C
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E
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12. Discontinued operations continued

The post tax gain on disposal of the Sage business was determined as follows:

Cash consideration received 

Total consideration received 

Cash disposed of 

Net cash inflow on disposal of discontinued operations 

Net assets disposed (other than cash)

Trade and other receivables 

Trade and other payables 

Pre-tax gain on disposal of discontinued operations 

Gain on disposal of discontinued operations 

2022 
£’000 

– 

– 

– 

– 

– 

– 

– 

– 

– 

2021
£’000

1,475

1,475

–

1,475

682

478

1,160

2,635

2,635

Trade and other payables includes the release of working capital accruals no longer payable following the disposal of the business.

The results of the Sage business for the year are presented below:

External revenue 

Cost of sales 

Gross profit 

Administrative expenses 

Impairment losses on financial assets 

Profit from operations 

Profit on disposal 

Finance (expense)/credit 

Profit before taxation from discontinued operations 

Tax credit/(charge) 

(Loss)/profit for the year from discontinued operations 

Basic and diluted profit per share from discontinued operations 

The amounts included in the consolidated cashflows related to the Sage business are as follows:

Operating 

Investing 

Financing 

Net cash inflow/(outflow) 

2022 
£’000 

(50) 

(1) 

(51) 

(31) 

– 

(82) 

– 

2 

(80) 

(188) 

(108) 

2022 
Pence 

0.2 

2022 
£’000 

(67) 

– 

2 

(65) 

2021
£’000

4,011

(2,437)

1,574

(1,641)

31

(36)

2,629

(24)

2,569

–

2,569

2021
Pence

5.8

2021
£’000

(230)

1,475

(24)

1,221

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
102

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

13. Property, plant and equipment

Long
leasehold 
land and 
buildings 
£’000 

Leasehold 
improvements 
£’000 

Plant,
fixtures and
equipment 
£’000 

Cost

At 30 November 2020 

Additions 

Disposals 

Effect of movements in foreign exchange rate 

At 30 November 2021 

Additions 

Disposals 

Effect of movements in foreign exchange rate 

At 30 November 2022 

Accumulated depreciation

At 30 November 2020 

Depreciation charge 

Disposals 

Effect of movements in foreign exchange rate 

At 30 November 2021 

Depreciation charge 

Disposals 

Effect of movements in foreign exchange rate 

At 30 November 2022 

Net book value

At 30 November 2020 

At 30 November 2021 

At 30 November 2022 

750 

– 

– 

– 

750 

– 

– 

– 

750 

137 

10 

– 

– 

147 

10 

– 

– 

157 

613 

603 

593 

47 

– 

– 

– 

47 

– 

– 

– 

47 

47 

– 

– 

– 

47 

– 

– 

– 

47 

– 

– 

– 

Total
£’000

6,296

305

(98)

(107)

6,396

845

(139)

49

7,151

5,499 

305 

(98) 

(107) 

5,599 

845 

(139) 

49 

6,354 

4,246 

4,430

581 

(95) 

(81) 

4,651 

626 

(130) 

34 

5,181 

1,253 

948 

1,173 

591

(95)

(81)

4,845

636

(130)

34

5,385

1,866

1,551

1,766

Bank borrowings are secured on certain assets of the group including property, plant, and equipment. There is a fixed charge over the 

long leasehold property.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
Buildings 
£’000 

Equipment
and motor
vehicles 
£’000 

14  Right-of-use assets

Cost

At 1 December 2020 

Additions 

Disposals 

Effect of movements in foreign exchange rate 

At 30 November 2021 

Additions 

Disposals 

Effect of movements in foreign exchange rate 

At 30 November 2022 

Accumulated depreciation

At 1 December 2020 

Depreciation charge 

Disposals 

Effect of movements in foreign exchange rate 

At 30 November 2021 

Depreciation charge 

Disposals 

Effect of movements in foreign exchange rate 

At 30 November 2022 

Net book value

At 30 November 2021 

At 30 November 2022 

The Group leases several assets including buildings, motor vehicles and equipment.

The Group’s obligations are secured by the lessors’ title to the leased assets for such leases.

Amounts recognised in profit and loss

Depreciation expense on right-of-use assets 

Interest expense on lease liabilities 

3,832 

22 

(669) 

65 

3,250 

103 

(636) 

2 

2,719 

1,932 

566 

(233) 

(34) 

2,231 

634 

(465) 

– 

2,400 

1,019 

319 

Total
£’000

5,612

319

(707)

64

5,288

233

(657)

11

4,875

2,893

963

(244)

(33)

3,579

981

(486)

–

4,074

1,780 

297 

(38) 

(1) 

2,038 

130 

(21) 

9 

2,156 

962 

397 

(11) 

– 

1,348 

347 

(21) 

– 

1,674 

690 

482 

1,709

801

2022 
£’000 

981 

132 

2021
£’000

963

202

103

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A
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G
C
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E
P
O
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G
O
V
E
R
N
A
N
C
E

I

F
I
N
A
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A
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E
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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
104

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

15. Intangible assets

Cost or valuation

At 30 November 2020 

Additions 

Disposals 

Effect of movements in 

foreign exchange rate 

At 30 November 2021 

Additions 

Relating to an acquisition of subsidiary 

Effect of movements in 

foreign exchange rate 

At 30 November 2022 

Accumulated amortisation

At 30 November 2020 

Amortisation charge 

Disposals 

Impairment 

Effect of movements in  

foreign exchange rate 

At 30 November 2021 

Amortisation charge 

Impairment 

Effect of movements in 

foreign exchange rate 

At 30 November 2022 

Net book value

At 30 November 2020 

At 30 November 2021 

At 30 November 2022 

Goodwill 
£’000 

Development 
costs 
£’000 

Contractual
and non-
contractual 
customer 
relationships 
£’000 

Distribution 
agreements 
£’000 

Intellectual
property
rights 
£’000 

Total
£’000

38,891 

– 

(4,690) 

(503) 

33,698 

– 

102 

248 

34,048 

12,759 

– 

(4,690) 

857 

– 

8,926 

– 

– 

100 

9,026 

26,132 

24,772 

25,022 

31,950 

3,024 

(8,808) 

(1,170) 

24,996 

1,729 

376 

347 

27,448 

22,845 

5,062 

(8,808) 

– 

(751) 

18,348 

3,767 

1,603 

336 

24,054 

9,105 

6,648 

3,394 

22,433 

10,759 

– 

– 

4,335 

– 

108,368

3,024

(384) 

(17,165)

– 

(3,283) 

(110) 

19,040 

– 

– 

– 

(113) 

10,646 

– 

3,951 

– 

– 

– 

– 

– 

– 

19,040 

10,646 

3,951 

21,300 

545 

(3,283) 

564 

(86) 

19,040 

– 

– 

– 

10,759 

– 

– 

– 

(113) 

10,646 

– 

– 

– 

4,303 

32 

(384) 

– 

– 

3,951 

– 

– 

– 

19,040 

10,646 

3,951 

(1,896)

92,331

1,729

478

595

95,133

71,966

5,639

(17,165)

1,421

(950)

60,911

3,767

1,603

436

66,717

1,132 

– 

– 

– 

– 

– 

33 

– 

– 

36,403

31,420

28,416

All intangible assets, other than goodwill which has an indefinite life, have a useful economic life of between 3 and 10 years. The 

useful life of development costs is between 2 and 3 years, for contractual and non-contractual customer relationships is between 

0 and 8 years and for intellectual property rights is between 0 and 4 years. 

In 2022, an impairment of development costs of £1.6 million was recorded due to older technology assets held by our Growth IP 

CGU (2021: £nil).

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
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16. 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. 

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.

Syspro 

Global Accounts 

Walton & Integrated Business Solutions (IBS) 

ViJi 

Goodwill carrying amount
2021
£’000

2022 
£’000 

13,677 

9,371 

1,868 

106 

13,677

9,227

1,868

–

25,022 

24,772

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 Board 3-year plan starting in the 2023, 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 two years.

The pre-tax cash flow forecasts used the following key assumptions:

•  Syspro – growth rates of 23.7% to 5.5% over the next three years;

•  Global Accounts – revenue growing by 26.2% over the 5-year forecast period with gross margin maintained at current 

performance;

• 

IBS and Walton – these CGUs relate to older products and the forecasts. A decision was made last year to cease investing in these 

products with a plan to transitioning customers, wherever possible, to Viji’s platform. From FY27 we are assuming no revenue 

from these legacy products; and

•  Viji – FY2023 will be second full year since acquisition. Growth rates of 30% from FY2024 over the next three years.

The rate used to discount the forecast pre-tax cash flows is 17.4% (2021: 13.4%) 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.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
106

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

17. Trade and other receivables

Trade receivables 

Loss allowance 

Trade receivables – net 

Other receivables 

Contract assets 

Prepayments 

2022 
£’000 

8,079 

(784) 

7,295 

138 

5,512 

604 

2021
£’000

7,407

(852)

6,555

122

3,077

851

13,549 

10,605

The fair value of trade and other receivables approximates to book value at 30 November 2022 and 30 November 2021.

Of the above, trade receivables of £nil (2021: £nil) and contract assets of £nil (2021: £0.8m) are due after more than one year.

The Group is exposed to credit risk with respect to trade receivables due and accrued income which will become due from its 

customers. The group has approximately 2,700 (2021: 2,700) customers at the period end spread across various industries, although 

predominantly in the retail, manufacturing, and distribution sectors. The Group has one customer relationship that accounts for over 

47% (2021: 45%) of total Group revenue but the relationship is spread across different territories and markets. The group assesses 

the credit rating for new customers to minimise the credit risk.

The average credit period on sales is 30 days. No interest is charged on outstanding trade receivables.

The Group measures the loss allowance for trade receivables at an amount equal to the lifetime ECL. The expected credit losses 

on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis 

of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the 

industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the 

reporting date.

The group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is 

no realistic prospect of recovery, e.g., when the debtor has been placed under liquidation or has entered bankruptcy proceedings, or 

when the trade receivables are over two years past due, whichever occurs earlier.

The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies:

Pound sterling 

Euro 

Other 

2022 
£’000 

2,383 

10,636 

530 

13,549 

2021
£’000

1,696

8,107

802

10,605

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
107

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17. Trade and other receivables continued

The following table details the risk profile of trade receivables and contract assets based on the Group’s provision matrix. As the 

Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the 

provision for loss allowance based on past due status is not further distinguished between the Group’s different customer segments. 

30 November 2022 

Trade receivables and contract assets receivables – days past due

Not past
due 
£’000 

<30 
£’000 

31-60 
£’000 

61-90 
£’000 

>90 days 
£’000 

Total
£’000

Expected credit loss rate 

2.5% 

1.5% 

2.7% 

4.5% 

2.9% 

2.4%

Estimated total gross carrying amount

at default 

Specific provision 

Lifetime expected credit loss 

9,254 

– 

(230) 

2,011 

1,386 

– 

(31) 

– 

(37) 

245 

– 

(11) 

695 

(455) 

(20) 

Trade receivables – net 

Contract assets 

Total 

13,591

(455)

(329)

12,807

7,295

5,512

12,807

Trade receivables and contract assets receivables – days past due

30 November 2021 

Not past
due 
£’000 

<30 
£’000 

Expected credit loss rate 

0.9% 

0.6% 

Estimated total gross carrying amount

at default 

Specific provision 

Lifetime expected credit loss 

6,208 

1,268 

– 

(69) 

– 

(7) 

31-60 
£’000 

1.3% 

931 

– 

(12) 

61-90 
£’000 

1.9% 

481 

– 

(9) 

>90 days 
£’000 

Total
£’000

2.1% 

1.2%

1,596 

(723) 

(32) 

Trade receivables – net 

Contract assets 

Movements on the group provision for impairment of trade receivables and contract assets are as follows:

At beginning of year 

Provided during the period 

Utilised during the period 

At end of year 

Total 

2022 
£’000 

852 

102 

(170) 

784 

The movement on the provision for impaired receivables and contract assets has been included in administrative expenses in the 

consolidated income statement.

Other classes of financial assets included within trade and other receivables do not contain impaired assets.

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable set out above.

10,484

(723)

(129)

9,632

6,555

3,077

9,632

2021
£’000

1,329

87

(564)

852

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
108

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

18. Forward currency contracts

Financial instruments at fair value through profit and loss

Forward currency contracts 

2022 
£’000 

110 

110 

2021
£’000

–

–

The Group enters into foreign exchange forward contracts with the intention to reduce the foreign exchange risk of expected sales 

and purchases. These contracts are measured at fair value through profit and loss within administrative expenses. The foreign 

exchange forward contract balances vary with the level of expected foreign currency costs and changes in the foreign exchange 

forward rates.

The exchange contracts are being used to reduce the exposure to foreign exchange risk. The terms of these contracts are detailed 

below:

30 November 2022

Buy currency 

Sterling 

Sterling 

Sterling 

Sterling 

Sterling 

Sterling 

Sterling 

Sterling 

Sterling 

Sterling 

Sterling 

Sterling 

Sell currency 

Nominal value of contract 
’000

Maturity date 

Contract rate

Euro 

Euro 

Euro 

Euro 

Euro 

Euro 

Euro 

Euro 

Euro 

Euro 

Euro 

Euro 

£296 

£297 

£297 

£298 

£299 

£300 

£300 

£301 

£302 

£303 

£303 

£308 

29.12.22 

30.01.23 

28.02.23 

29.03.23 

28.04.23 

30.05.23 

29.06.23 

31.07.23 

31.08.23 

29.09.23 

30.10.23 

29.11.23 

1.1258

1.1226

1.1199

1.1171

1.1143

1.1113

1.1084

1.1056

1.1029

1.1003

1.098

1.0957

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
19. Trade and other payables

Trade payables 

Other payables 

Accruals 

Total financial liabilities, excluding loans and borrowings, 

classified as financial liabilities measured at amortised cost 

Other tax and social security taxes 

Contract liabilities 

2022 
£’000 

2,823 

2,202 

4,041 

9,066 

2,504 

5,312 

2021
£’000

2,330

704

5,354

8,388

2,704

3,364

16,882 

14,456

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit 

period taken for trade purchases is 60 days. The Group has financial risk management policies in place to ensure that all payables are 

paid within the pre-agreed credit terms.

To the extent trade and other payables are not carried at fair value in the consolidated balance sheet, book value approximates to fair 

value at 30 November 2022 and 30 November 2021.

20. Borrowings

Current

Bank overdrafts (secured)  

Bank loans 

Total borrowings 

2022 
£’000 

2021 
£’000

– 

50 

50 

113

–

113

The Group’s bank overdrafts are secured by cross guarantees and debentures (fixed and floating charges over the assets of all 

the Group companies). The Group’s bankers have a formal right to set-off and provide a net overdraft facility across the Group of 

£250,000 (2021: £250,000).

109

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
110

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

20. Borrowings continued

Principal terms and the debt repayment schedule of the group’s loans and borrowings are as follows:

Currency 

Nominal rate % 

Year of
maturity 

Security

Secured bank loan 

GBP 

3.65% over SONIA 

2022 

See below

Bank borrowings of £50 thousands are included in short term liabilities (2021: £nil). The Facilities include a monthly draw down and a 

multi-currency overdraft facility.

Maturity analysis of borrowings:

In less than one year 

In more than one year but not more than two years 

Bank borrowings

2022 
£’000 

50 

– 

50 

2021
£’000

113

–

113

The bank loans are secured by a fixed charge over the Group’s long leasehold property and floating charges over the remaining assets 

of the Group.

The Group has undrawn committed banking facilities available at 30 November 2022 of £3.5 million (2021: £3.5 million) for which all 

conditions have been met. It is a revolving loan facility on which interest is charged at a floating rate linked to SONIA (2021: SONIA). 

For the purposes of reporting, fair value is equivalent to the carrying value of the borrowings. Post year end, the banking facility 

agreement has been extended until 31 March 2024.

The currency profile of the group’s loans and borrowings is as follows:

Pound sterling 

Euro 

21. Financial instruments

Risk management

2022 
£’000 

– 

50 

50 

2021
£’000

42

71

113

The group is exposed through its operations to one or more of the following financial risks:

•  Market (and currency) risk

• 

Liquidity risk

•  Credit risk

Policy for managing these risks is set by the Board following recommendations from the Chief Financial Officer. Certain risks are 

managed centrally, while others are managed locally following guidelines communicated from the centre. The policy for each of the 

above risks is described in more detail below. Further quantitative information in respect of these risks is presented throughout 

these financial statements.

There have been no substantive changes from previous periods in the group’s exposure to financial instrument risks, its objectives, 

policies and processes for managing those risks or methods used to measure them.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
111

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21. Financial instruments continued

Principal financial instruments

The principal financial instruments used by the group, from which financial risk arises, are as follows:

•  Trade receivables;

•  Cash at bank;

• 

Forward currency contracts;

•  Trade and other payables; and

• 

Floating-rate bank loans and overdrafts.

Market (and currency) risk

Market risk arises from the group’s use of interest bearing, tradable and foreign currency financial instruments. It is the risk that the 

fair value of future cash flows of a financial instrument will fluctuate because of changes in interest rates (interest rate risk), foreign 

exchange rates (currency risk) or other market factors (other price risk).

Fair value and cash flow interest rate risk

The group has fixed interest loans in respect of leases with a net book value of £0.9 million (2021: £4.06m). The fixed rate 

applicable on lease liabilities is 6% (2021: 6%).

Bank debt is £0.1 million (2021: £nil) and held under floating rates linked to quarterly SONIA (2021: SONIA). Shareholder loans 

totalling £nil (2021: £3.0m) were converted to shares during the period.

Foreign currency risk

Foreign exchange risk arises because the group has operations located overseas whose functional currency is not the same as the 

group’s primary functional currency (sterling). The net assets from overseas operations are exposed to currency risk giving rise to 

gains or losses on retranslation into sterling.

Foreign exchange risk also arises when individual group operations enter into transactions denominated in a currency other than 

their functional currency. It is group policy that such transactions should be hedged by entering into forward contracts where it is 

considered the risk to the group is significant. This policy is managed centrally by group treasury entering into a matching forward 

contract with a reputable bank.

It is group policy that transactions between group entities are always denominated in the selling entity’s functional currency thereby 

giving rise to foreign exchange risk in the income statement of both the purchasing group entity and the group. No external hedge is 

entered into as there is no exposure to consolidated net assets from intra-group transactions.

Liquidity risk

The liquidity risk of each group entity is managed centrally by the group treasury function comparing to budgets and quarterly forecasts. 

The group maintains a syndicated revolving loan facility with Barclays to manage any unexpected short-term cash shortfalls. The 

facilities from the Group’s bankers require the Group to meet certain covenants throughout the term of the loans with which the Group 

was compliant during the year and the Group’s forecasts indicate that it will remain within the set parameters.

The principal terms of the group’s borrowings are set out in note 20.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
112

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

21. Financial instruments continued

Credit risk

Credit risk is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the group. The 

group is mainly exposed to credit risk from credit sales. It is group policy, implemented locally, to assess the credit risk of new 

customers before entering contracts. Such credit ratings, taking into account local business practices, are then factored into any 

contractual arrangements.

The group does not have any significant credit risk exposure to any single customer. The carrying amount of financial assets 

recorded in the financial statements, which is net of impairment losses, represents the group’s maximum exposure to credit risk.

Further details, including quantitative information, are included in note 17.

Capital disclosures

The group monitors “adjusted capital” which comprises all components of equity (i.e., share capital, share premium, retained 

earnings and other reserves) other than amounts in the translation reserve. Other reserves comprise a merger relief reserve.

Total equity 

Less: amounts in translation reserve 

2022 
£’000 

32,643 

(1,607) 

31,036 

2021
£’000

35,801

(1,538)

34,263

The group’s objective when maintaining capital is to safeguard the company’s ability to continue as a going concern so that it can 

continue to provide returns to shareholders and benefits for other stakeholders. In order to maintain the capital structure, the 

group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to 

reduce debt.

Sensitivity analysis

Whilst the group takes steps to minimise its exposure to cash flow interest rate risk and foreign exchange risk as described above, 

changes in interest and foreign exchange rates will have an impact on profit.

The directors consider that interest rates are likely to remain low and unlikely to increase. A small increase of 0.1% movement in the 

interest rate could be reasonably possible as at the reporting date and would cause additional annual interest charges of £35k (2021: 

£35k), assuming the Banking Facility is fully drawn for an entire year.

The group’s foreign exchange risk is dependent on the movement in the Euro to sterling exchange rate. The directors consider a 

3 cent movement in the Euro GBP rate to be reasonably possible as at the reporting date. The effect of a 3 cent strengthening or 

weakening in the Euro against sterling at the balance sheet date on the Euro denominated £1m overdraft would be c£25k (2021: 

c£21k).

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
21. Financial instruments continued

Financial instruments by category

The carrying value of the Group’s financial instruments are analysed as follows:

As at 30 November 2022 

Assets

Trade and other receivables:

Trade receivables 

  Other non-derivative financial assets 

Contract assets 

Forward currency contracts 

Cash and cash equivalents 

Total assets 

Liabilities

Borrowings and lease liabilities:

Current 

Non-current 

Trade and other payables:

Trade payables 

  Other non-derivative financial liabilities 

Contract liabilities 

Total liabilities 

Net 

Amortised 
cost 
£’000 

At
FVTPL 
£’000 

Notes 

Total
£’000

17 

17 

17 

7,295 

138 

5,512 

– 

7,113 

20,058 

20/24 

20/24 

(852) 

(79) 

19 

19 

19 

(2,823) 

(6,243) 

(5,312) 

(15,309) 

4,749 

– 

– 

– 

110 

– 

110 

– 

– 

– 

– 

– 

– 

110 

7,295

138

5,512

110

7,113

20,168

(852)

(79)

(2,823)

(6,243) 

(5,312)

(15,309)

4,859

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
114

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

21. Financial instruments continued

Financial instruments by category continued

As at 30 November 2021 

Assets

Trade and other receivables:

Trade receivables 

  Other non-derivative financial assets 

Contract assets 

Cash and cash equivalents 

Total assets 

Liabilities

Borrowings and lease liabilities:

Current 

Non-current 

Trade and other payables:

Trade payables 

  Other non-derivative financial liabilities 

Contract liabilities 

Total liabilities 

Net 

Financial instruments measured at fair value

Amortised 
cost 
£’000 

At
FVTPL 
£’000 

Notes 

Total
£’000

17 

17 

17 

6,555 

122 

3,077 

9,146 

18,900 

20/24 

20/24 

(1,736) 

(135) 

19 

19 

19 

(2,330) 

(6,058) 

(3,364) 

(13,623) 

5,277 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

6,555

122

3,077

9,146

18,900

(1,736)

(135)

(2,330)

(6,058)

(3,364)

(13,623)

5,277

Except for forward currency contracts, there were no financial instruments measured subsequent to initial recognition at fair value at 

the end of either period.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22. Provision

At 30 November 2021 

Additions 

Paid in the year 

Interest 

Disposed 

At 30 November 2022 

Split as:

Current 

Non-Current 

At 30 November 2022 

Dilapidations 
£’000 

Onerous 
contracts 
£’000 

Deferred
consideration 
£’000 

370 

– 

– 

26 

(145) 

251 

251 

– 

251 

769 

– 

(342) 

– 

– 

427 

342 

85 

427 

844 

– 

(375) 

– 

– 

469 

375 

94 

469 

Total
£’000

1,983

–

(717)

26

(145)

1,147

968

179

1,147

The Onerous contract provision relates to commitments undertaken for the post completion services agreement with the Buyer of 

Starcom for activity no longer in the Group. The deferred consideration provision relates to above market pricing included in the post 

completion services agreement with the Buyer of Starcom. The non-current element of these provisions will be utilised evenly until 

the end of February 2024.

23. Deferred tax

The net deferred tax asset/liability at the end of the year is analysed as follows:

Deferred tax assets

Continuing operations 

Deferred tax liabilities

Continuing operations 

2022 
£’000 

2021
£’000

855 

1,010

(1,119) 

(264) 

(1,288)

(278)

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
116

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

23. Deferred tax continued

Recognised deferred tax assets and liabilities and attributable to the following:

Plant and equipment 

Other temporary differences 

Losses 

Business combinations 

Deferred tax assets/(liabilities) 

Movement in deferred tax during the year

Plant and equipment 

Other temporary differences 

Losses 

Business combinations 

Deferred tax assets/(liabilities) 

Assets 

Liabilities 

Net

2022 
£’000 

111 

663 

23 

58 

855 

2021 
£’000 

148 

806 

– 

56 

2022 
£’000 

(1) 

2021 
£’000 

(3) 

(1,118) 

(1,285) 

– 

– 

– 

– 

2022 
£’000 

110 

(455) 

23 

58 

1,010 

(1,119) 

(1,288) 

(264) 

2021
£’000

145

(479)

–

56

(278)

1 December 
2021 
£’000 

Recognised in 
income 
£’000 

Disposal 
£’000 

30 November
2022
£’000

145 

(478) 

– 

56 

(277) 

(35) 

23 

23 

2 

13 

– 

– 

– 

– 

– 

110

(455)

23

58

(264)

The Group has not recognised a deferred tax asset on £1.8m (2021: £2.8m) 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 £20k (2021: £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.

24. Lease liabilities

Analysed as:

Non-current 

Current 

Maturity analysis

Year 1 

Years 2 to 5 

2022 
£’000 

79 

802 

881 

2022 
£’000 

802 

79 

881 

2021
£’000

135

1,623

1,758

2021
£’000

1,623

135

1,758

The Group does not face a significant liquidity risk with regard to its lease liabilities. Lease liabilities are monitored within the Group’s 

treasury function. Lease obligations are denominated in Sterling, Euros, Singapore Dollars.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
117

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25. Share capital

Ordinary shares of 25p each

At beginning of the year 

Issued during the year 

At end of the year 

Issued and fully paid

2022 

2021

Number 

£’000 

Number 

£’000

44,732,379 

11,183 

42,946,665 

– 

– 

1,785,714 

44,732,379 

11,183 

44,732,379 

10,737

446

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.

Own shares held 

2022 
Number 

2021
Number

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. 

500,000 warrants for ordinary shares of 25p each were issued to CA Fastigheter AB during 2007 in recognition of the reduction in its 

security following the increase in borrowings from the bank to fund the acquisition of McGuffie Brunton Limited. The warrants were 

exercisable at 123.5p and until the date on which the loan to CA Fastigheter AB was repaid upon meeting the following conditions: 

300,000 of the warrants were exercisable when the company’s share price stands at £2.50; 100,000 were exercisable when it stands 

at £3.25; 100,000 had no conditions attached to them. The 100,000 warrants with no conditions attached to them were exercised 

on 4 July 2017. The remaining warrants were outstanding at the same exercise price and upon the same company share prices but 

following conversion of the loan due to CA Fastigheter AB into equity, the terms were amended such that the warrants were then 

exercisable until 5 July 2022. No warrants were exercised in FY2022 and therefore have expired. This has had no impact on the diluted 

earnings per share. 

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 2022 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. Prior to conversion of Shareholder Loan to equity, under IFRS2 the warrants 

generated a finance expense of £328k in 2021, however nil expense in 2022.

At 30 November 2022 (and 30 November 2021) all SAYE options have lapsed.

LTIP

As set out in note 10, 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 2022, an aggregate of 1,675,000 (2021: 2,375,000) LTIP options over ordinary shares in the Company remained 

in issue.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
118

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

26. Retirement benefits

The Group operates a defined contribution scheme and also makes contributions to personal pension schemes of certain senior 

employees and directors.

Pension costs for defined contribution schemes in the year to 30 November 2022 are £1.17m (2021: £1.32 million) of which £nil 

(2021: £0.25 million) has been recognised within discontinued operations.

27. Related party transactions

Details of directors and key management compensation are given in the Remuneration Report on pages 44 to 47. 

Non-Executive Director fees due to Mr O Scott are paid to Kestrel Partners, where O Scott is a founding partner. Fees paid to Kestrel 

in the year were £50k (2021: £46.7k) and the balance owed to Kestrel at 30 November 2022 was £nil (2021: £nil). 

Other than their remuneration and participation in the Group’s share option schemes, there are no transactions with key 

management personnel. Other related party transactions are as follows:

500,000 warrants for ordinary shares of 25p each were issued to CA Fastigheter AB during 2007 in recognition of the reduction in its 

security following the increase in borrowings from the bank to fund the acquisition of McGuffie Brunton Limited. The warrants were 

exercisable at £1.235 and until the loan was repaid upon meeting the following conditions: 300,000 of the warrants were exercisable 

when the company’s share price stands at £2.50, 100,000 are exercisable when it stands at £3.25; 100,000 had no conditions 

attached to them. The 100,000 warrants with no conditions attached to them were exercised on 4 July 2017. The remaining warrants 

remained outstanding at the same exercise price and upon the same company share prices but, following conversion of the loan into 

equity last year (2021), the terms were amended such that the warrants were then exercisable until 5 July 2022. No warrants were 

exercised in FY2022 and therefore have lapsed. 

1,200,000 warrants for ordinary shares of 25p were issued on 31 March 2020 following the receipt by the Group of the £3,000,000 in 

shareholders loans. The warrants were split as follows:

•  CA Fastigheter AB 600,000

•  Kestrel Partners LLP discretionary clients 600,000

All 1,200,000 warrants remain outstanding and are exercisable until 31 March 2030. On 9 June 2021, 300,000 of the CA Fastigheter 

AB warrants were transferred to Johannes Plan Fastigheter AB (a company also controlled by Mr Claesson).

On 30 March 2021, as part of the process of extending the Group’s bank facilities, K3 agreed to fully convert the £3.0m of Shareholder 

Loans into ordinary shares of 25p each (“Ordinary Shares”). 

The main terms of the conversion of the Shareholder Loans were as follows:

•  conversion at a price of £1.68 per Ordinary Share (being the prevailing bid-price on 26 March 2021)

•  upon conversion of the Shareholder Loans CA Fastigheter AB and discretionary clients of Kestrel received 892,857 Ordinary 

Shares each (1,785,714 Ordinary Shares in aggregate) 

•  payment of accrued interest and conversion costs amounting to an aggregate amount of £552,064 paid by the Company to the 

Lenders in cash on or around the date of conversion; and

• 

the warrants over 1.2m Ordinary Shares granted to the Lenders at the date of the Shareholder Loans were not exercised and will 

remain in place.

The Loan Conversion increased the Company’s issued share capital by 1,785,714 new Ordinary Shares, representing 4.16% of the 

Company’s issued share capital.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 202228. Events after the reporting date

On the 24 February 2023 the Group agreed an extension to its Current Revolving Credit Facility with Barclays for £3.5m until  

31 March 2024.

29. Notes to the cash flow statement

Cash and cash equivalents

Cash and bank balances available on demand  

Bank overdrafts 

2022 
£’000 

7,113 

– 

7,113 

2021
£’000

9,146

(113)

9,033

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 £233k (2021: £319k) were financed by new 

leases. During FY2022, £nil (2021: £3 million) shareholders loan converted to equity.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
120

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

30. Notes to the strategic report

*1  Adjusted EBITDA – is the loss from continuing activities adjusted to exclude depreciation and amortisation of development 

costs, amortisation of acquired intangibles, exceptional impairment costs, exceptional reorganisation and acquisition costs, 

exceptional customer settlement provisions and share-based payment charges.

*2  Recurring or predictable revenue – Contracted support, maintenance and services revenues with a frame agreement of 2 years or 

more, as % of total revenue.

*3  K3 Product revenue as a percentage of total Group revenue.

*4  K3 Product 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 loss per share from continuing operations adjusted to exclude amortisation of acquired 

intangibles, exceptional impairment costs, exceptional reorganisation costs, and share-based charges net of the related tax charge.

*7  Underlying support/admin costs – administrative expenses adjusted to exclude depreciation and amortisation of 

development costs, amortisation of acquired intangibles, exceptional impairment costs, exceptional reorganisation and 

acquisition costs and share-based payment charges.

*8  ARC (Annualised Recurring Contracts) – The annual contracted income from support, maintenance, SaaS and term contract 

software spread over the term of the contract.

*9  Cash outflow – speed at which business spends the money that is available to it. Calculated as delta between cash and cash 

equivalents balances between two periods.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022121

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31. Subsidiaries

The trading subsidiaries of K3 Business Technology Group plc, all of which have been included in these consolidated financial 

statements are as follows:

Name 

K3 BTG Limited 

K3 Business Technology Group Trustees Company Limited 

K3 FDS Limited 

K3 Syspro Limited  

K3 Systems Support Limited  

Retail Systems Group Limited 

FDS Technology Systems Limited 

Integrated Manufacturing Software Limited 

K3 Business Technologies Ireland Limited 

K3 Business Solutions BV 

K3 Software Solutions BV 

K3 Solutions BV 

K3 Business Solutions Pte Limited 

K3 Business Solutions SDN BHD 

K3 Business Solutions ehf  

K3 Software Solutions LLC 

DdD Retail A/S 

DdD Retail Norway A/S 

DdD Retail Germany GmbH 

Detalj Data i Sverige AB 

Viji SAS 

Country of 
incorporation 

Proportion of
ownership interest and
ordinary share capital
held

UK 

UK 

UK 

UK 

UK 

UK 

Ireland 

Ireland 

Ireland 

Netherlands 

Netherlands 

Netherlands 

Singapore 

Malaysia 

Iceland 

USA 

Denmark 

Norway 

Germany 

Sweden 

France 

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

The principal activity of all the above subsidiary undertakings is the supply of computer software and consultancy except for 

the following: K3 Business Technology Group Trustees Company Limited which is the trustee for the group’s employee share 

ownership plan.

Details of movements in investments are recorded in note 6 of the company financial statements.

The registered office for all the UK companies is Baltimore House, 50 Kansas Avenue, Manchester, M50 2GL. The registered office 

for all the Irish companies is Beaux Lane House, Mercer Street Lower, Dublin 2, Ireland. The registered office for all the Dutch 

companies is Gildeweg 9b, 2632 BD Nootdorp, The Netherlands. The registered offices for the other overseas subsidiaries are:

K3 Business Solutions Pte Limited 

133 New Bridge Road, #10-09 Chinatown Point, Singapore 059413

K3 Business Solutions SDN BHD 

No. 256b, Jalan Bandar 12, taman Melawati, 53100 Kuala Lumpur, 

Wilayah Persekutuan, Malaysia.

K3 Business Solutions ehf 

Austurstræt 12, 101 Reykjavik, Iceland

K3 Software Solutions LLC 

33S 6th St., Suite 4200, Minneapolis MN 55402, USA

DdD Retail A/S 

Theilgaards Allé 2, 4600 Køge, Denmark

DdD Retail Norway A/S 

Stensarmen 4, 3112 Tonsberg, Norway 

DdD Retail Germany GmbH 

Weilstrasse 41, 89143 Balubeuren, Germany

Detalj Data i Sverige AB 

Postbox 1088, 262 21 Angelholm, Sweden

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
122

Notes forming part of the 
Financial Statements continued

for the year ended 30 November 2022

31. Subsidiaries continued

In addition, the company has the following subsidiaries which are non-trading or intermediate holding companies and all of which 

have been included in these consolidated financial statements:

Name 

Colne Investments Limited 

Fashion Cloud Software.com, LLC 

FDS Holdco Limited 

Fifth Dimension Systems Limited 

Intelligent Solutions Consultancy Limited 

K3 AX Limited  

K3 Business Systems Holdco Limited 

K3 FD Systems Limited 

K3 Global Products Limited 

K3 Information Engineering Limited 

K3 Information Services Limited 

K3 International Support Services Limited 

K3 Landsteinar Limited 

K3 Managed Services Holdco Limited 

K3 Partner Network (International) Limited 

K3 Retail and Business Solutions Holdco Limited 

Retail Technology Limited  

Sense Enterprise Solutions Limited 

K3 Holdings BV 

Retail Support International ApS 

Country of 
incorporation 

Proportion of
ownership interest and
ordinary share capital
held

UK 

USA 

UK 

UK 

UK 

UK 

UK 

UK 

UK 

UK 

UK 

Ireland 

UK 

UK 

Ireland 

UK 

UK 

UK 

Netherlands 

Denmark 

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
Company Balance Sheet

as at 30 November 2022 

Registered number: 02641001

Fixed assets

Tangible assets 

Intangible assets 

Investments 

Current assets

Debtors  

Forward currency contracts 

Cash at bank and in hand 

Deferred tax 

Creditors: Amounts falling due within one year 

Provisions – current 

Net current assets 

Provisions – non-current 

Net assets 

Capital and reserves

Called-up share capital 

Share premium account 

Other reserve 

Profit and loss account 

Equity shareholders’ funds 

Notes 

2022 
£’000 

2021
£’000

5 

6 

7 

9 

8 

11 

11 

12 

838 

303 

32,436 

33,577 

514

195

30,042

30,751

24,913 

20,174

110 

1,726 

12 

26,761 

(6,461) 

(717) 

19,583 

(179) 

52,981 

11,183 

31,450 

11,027 

(679) 

52,981 

–

3,784

33

23,991

(6,937)

(717)

16,337 

(896) 

46,192

11,183

31,450

11,027

(7,468)

46,192

As permitted under section 408 of the Companies Act 2006, no separate profit and loss account is presented in respect of the 

parent company.

The profit for the year dealt with in the financial statements of the parent company was £6,038,000 (2021: £15,054,000).

The financial statements on pages 123 to 132 were approved and authorised for issue by the board of directors on 29 March 2023 

and signed on its behalf by:

RD Price
Director

The notes on pages 125 to 132 form part of these financial statements. 

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
124

Company Statement of  
Changes in Equity

as at 30 November 2022

At 30 November 2020 

Changes in equity for year ended 

30 November 2021

Profit for the year 

Total comprehensive expense 

Share-based payment  

Issue of shares 

At 30 November 2021 

Changes in equity for year ended 

30 November 2022

Profit for the year 

Total comprehensive income 

Share-based payment 

At 30 November 2022 

Share 
capital 
£’000 

Share 
premium 
£’000 

Other 
reserve 
£’000 

Profit
and loss 
account 
£’000 

Total
equity
£’000

10,737 

28,897 

11,027 

(22,962) 

27,699

– 

– 

– 

(1) 

(1) 

– 

446 

11,183 

2,554 

31,450 

– 

– 

– 

– 

15,054 

15,054 

440 

– 

11,027 

(7,468) 

– 

– 

– 

– 

– 

– 

– 

– 

– 

11,183 

31,450 

11,027 

6,038 

6,038 

751 

(679) 

15,053

15,053

440

3,000

46,192

6,038

6,038

751

52,981

Of the above reserves, the directors only consider the profit and loss account to be distributable. 

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 (2021: 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 2022 was £34,181 (2021: £47,050).

The notes on pages 125 to 132 form part of these financial statements. 

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
Notes forming part of the Company 
Financial Statements

for the year ended 30 November 2022

1.  Accounting policies for the company financial statements

The principal accounting policies are summarised below where they differ from those in the consolidated financial statements on 

pages 62 to 122. They have all been applied consistently throughout the current year and the preceding period.

Basis of accounting

The financial statements have been prepared in accordance with Financial Reporting Standard 101, Reduced Disclosure Framework 

(“FRS 101”). 

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted by the 

company are set out below.

In preparing these financial statements, the company has taken advantage of certain exemptions permitted by FRS 101, as the 

equivalent disclosures are made in the group accounts. Exemptions have been applied in respect of the following disclosures:

•  The cash flow statement and related notes

•  Capital management disclosures

•  The effects of new IFRSs

•  The disclosure of the remuneration of key management personnel 

•  Disclosure of related party transactions with other wholly owned members of the K3 Business Technology Group plc group  

of companies

• 

Financial instrument disclosures

Investments

Fixed asset investments are shown at cost less provision for impairment. Loans due from subsidiary companies which are of a 

long-term nature are regarded as permanent equity and included in investments. For investments in subsidiaries acquired for 

consideration including the issue of shares qualifying for merger relief, cost is measured either by reference to the nominal value or 

the fair value of the shares where appropriate. Any premium is ignored when the nominal value is used.

Financial instruments 

Financial assets and financial liabilities are recognised in the company’s statement of financial position when the company 
becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to 
the acquisition or issue of financial assets and financial liabilities are added to or deducted from the fair value of the financial 
assets or financial liabilities, as appropriate, on initial recognition.

Intercompany loans are subsequently measured at amortised cost. Interest income is recognised using the effective 
interest method.

The carrying amount of financial assets and liabilities that are denominated in a foreign currency is determined in that foreign 
currency and translated at the spot rate at the end of each reporting period. For financial assets and liabilities measured at 
amortised cost that are not part of a designated hedging relationship, exchange differences are recognised in profit or loss.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
126

Notes forming part of the Company 
Financial Statements continued

for the year ended 30 November 2022

2.  Profit/(loss) from operations

This has been arrived at after charging/(crediting):

Staff costs 

Depreciation of property, plant and equipment 

Exceptional impairment of intercompany receivables 

Gain on disposal of Starcom business 

Exceptional reorganisation costs 

Foreign exchange (income)/costs 

3.  Staff numbers

The average monthly number of employees (including executive directors) was:

Consultants and programmers 

Sales and distribution 

Administration 

Their aggregate remuneration comprised:

Wages and salaries 

Social security costs 

Other pension costs (note 14) 

Short term non-monetary benefits 

In addition Share-based payments were charged of £751k (2021: £440k).

4.  Directors’ remuneration, interests and transactions

Directors’ remuneration is disclosed in note 4 to the consolidated financial statements.

Directors’ share options are disclosed in the Remuneration Report on pages 44 to 47. 

Notes 

2022 
£’000 

2021
£’000

3 

5 

3,326 

381 

– 

– 

– 

(273) 

4,737

236

5,408

(12,250)

2,533

500

2022 
Number 

2021
Number

– 

– 

28 

28 

33

15

36

84

2022 
£’000 

2021
£’000

2,677 

3,931

363 

211 

75 

424

275

107

3,326 

4,737

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
 
 
 
 
5.  Tangible fixed assets

Cost

At 1 December 2020 

Additions 

At 30 November 2021 

Additions 

Disposals 

At 30 November 2022 

Depreciation

At 1 December 2020 

Depreciation charge 

At 1 December 2021 

Depreciation charge 

Disposals 

At 30 November 2022 

Net book value

At 30 November 2022 

At 30 November 2021 

At 30 November 2020 

Plant, office
equipment
and fixtures
£’000

1,000

187

1,187

725

(30)

1,882

437

236

673

381

(10)

1,044

838

514

563

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
128

Notes forming part of the Company 
Financial Statements continued

for the year ended 30 November 2022

6.  Fixed asset investments

Subsidiary undertakings 

2022 
£’000 

2021
£’000

32,436 

30,042

The trading subsidiaries of K3 Business Technology Group plc are disclosed in note 31 to the consolidated financial statements. All 

subsidiary undertakings are wholly owned, and all shares consist of ordinary shares only.

Cost

At 30 November 2020 

Sale of subsidiary 

Investment in subsidiary 

At 30 November 2021 

Investment in subsidiaries 

At 30 November 2022 

Net book value

At 30 November 2022 

At 30 November 2021 

At 30 November 2020 

Cost of
investment 
£’000 

29,348 

(1,906) 

2,600 

30,042 

2,394 

32,436 

32,436 

30,042 

29,348 

Total
£’000

29,348

(1,906)

2,600

30,042

2,394

32,436

32,436

30,042

29,348

During the year, dividend in-specie was received from a subsidiary of £2.1 million. Also, the Company paid £0.3 million to acquire a 

subsidiary called Viji SAS. 

Under section 479A of the Companies Act 2006 the Group’s subsidiaries, listed below, are claiming exemption from audit. The parent 

undertaking, K3 Business Technology Group plc, registered number 02641001, guarantees all outstanding liabilities to which each 

subsidiary is subject at the end of the financial year (being the year ended 30 November 2021 for each company listed below). The 

guarantee is enforceable against the parent undertaking by any person to whom the subsidiary undertaking is liable in respect of 

those liabilities.

Colne Investments Limited 

K3 BTG Limited 

K3 Systems Support Limited 

Retail Systems Group Limited 

03563989

06338304

08497112

01763900

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
7.  Debtors

Amounts falling due within one year:

Amounts owed by subsidiary undertakings 

Trade debtors 

Corporation tax receivable 

Prepayments 

Taxation and social security 

2022 
£’000 

2021
£’000

24,529 

19,839

17 

13 

281 

73 

15

–

320

–

24,913 

20,174

Interest is charged on amount owed by subsidiary undertakings at 4.55% (2021: 3.65%) which is deemed to be a market rate. The 

Company impaired £nil (2021: £5,408k) on the intercompany receivables.

8.  Creditors: Amounts falling due within one year

Trade creditors 

Amounts owed to subsidiary undertakings 

Taxation and social security 

Other creditors 

Accruals 

2022 
£’000 

583 

4,350 

– 

181 

1,347 

6,461 

2021
£’000

840

4,226

72

190

1,609

6,937

The bank loans and overdrafts are secured by a fixed and floating charge over the assets of the group.

Interest is charged on amount owed to subsidiary undertakings at 4.55% (2021: 3.65%) which is deemed to be a market rate.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
130

Notes forming part of the Company 
Financial Statements continued

for the year ended 30 November 2022

9.  Deferred taxation

Accelerated capital allowances 

Other timing differences 

Deferred tax asset 

The movements in deferred tax assets (liabilities) during the year are:

At 1 December 2021 

Charged to profit and loss 

At 30 November 2022 

2022 
£’000 

6 

6 

12 

Accelerated 
capital 
allowances 
£’000 

Other
timing
differences 
£’000 

25 

(19) 

6 

8 

(2) 

6 

2021
£’000

25

8

33

Total
£’000

33

(21)

12

The Company has not recognised £nil of deferred tax on losses of £nil (2021: £356k on losses of £1,873k). The deferred tax assets 

have been recognised to the extent as they are expected to be recoverable against future taxable profits.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
10. Discontinued operations

On 26 February 2021 the Company disposed of the Starcom business for consideration of £14.7m. 

The post tax gain on disposal of the Starcom business was determined as follows:

Cash consideration received 

Total consideration received 

Cash disposed of 

Net cash inflow on disposal of discontinued operations 

Net assets disposed (other than cash)

Trade and other receivables 

Pre-tax gain on disposal of discontinued operations 

Related tax expense 

Gain on disposal of discontinued operations 

Trade and other receivables includes the disposal of the investment in the Starcom business.

11. Provisions

At 30 November 2021 

Paid in the year 

At 30 November 2022 

Split as:

Current 

Non-Current 

At 30 November 2022 

2022 
£’000 

– 

– 

– 

– 

– 

– 

– 

– 

– 

Onerous 
contracts 
£’000 

Deferred
consideration 
£’000 

769 

(342) 

427 

342 

85 

427 

844 

(375) 

469 

375 

94 

469 

2021
£’000

14,474

14,747

(1,375)

13,372

(1,122)

(1,122)

12,250

–

12,250

Total
£’000

1,613

(717)

896

717

179

896

The Onerous contract provision relates to commitments undertaken for the post completion services agreement with the Buyer of 

Starcom for activity no longer in the Company. The deferred consideration provision relates to above market pricing included in the 

post completion services agreement with the Buyer of Starcom. The non-current element of these provisions will be utilised evenly 

until the end of February 2024.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
 
 
 
 
 
 
132

Notes forming part of the Company 
Financial Statements continued

for the year ended 30 November 2022

12. Called-up share capital

2022 
£’000 

2021
£’000

Allotted, called-up and fully-paid

44,732,379 ordinary shares of 25p each (2021: 44,732,379) 

11,183 

11,183

See note 25 to the consolidated financial statements for details of the movements in called-up share capital and of outstanding 

warrants.

13. Share-based payment

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. See note 10 to the consolidated financial 

statements for details regarding share-based payments.

14. Pension arrangements

The Company operates a defined contribution scheme and makes contributions to personal pension schemes of certain senior 

employees and directors for which the total pension cost charge for the year amounted to £211,000 (2021: 275,000).

15. Related party transactions

Related party transactions are disclosed in note 27 to the consolidated financial statements. There were no other transactions with 

related parties during the year.

16. Contingent liability

The Company has entered into a cross-guarantee with fellow group undertakings in relation to liabilities with Barclays Bank plc. 

At the period end the liabilities covered by the guarantee totalled £nil (2021: £nil) of which £nil (2021: £nil) is included within the 

Company’s accounts.

17. Events after the reporting date

See note 28 in the Group notes to the accounts.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
Notice of Annual General Meeting

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt as to what action you should take, you are recommended to seek your own financial advice from your 

stockbroker or other independent adviser authorised under the Financial Services and Markets Act 2000.

If you have sold or transferred all of your shares in K3 Business Technology Group plc (the “Company”), please forward this 

document, together with the accompanying documents, as soon as possible either to the purchaser or transferee or to the person 

who arranged the sale or transfer so they can pass these documents to the person who now holds the shares.

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the annual general meeting of the Company will be held at the Company’s offices at finnCap Group, 

One Bartholomew Close, London, EC1A 7BL on Tuesday 23 May 2023 at 10:00 am at which the following business will be 

transacted.

You will be asked to consider and vote on the resolutions below. Resolutions 1 to 7 will be proposed as ordinary resolutions and 

resolutions 8 to 9 will be proposed as special resolutions.

Ordinary resolutions

To consider and, if thought fit, pass the following resolutions which will be proposed as ordinary resolutions:

1.  To receive, consider and adopt the annual accounts for the period ended 30 November 2022, together with the directors’ and 

auditors’ reports on those accounts.

2.  To re-elect T Crawford as a director of the Company in accordance with Articles 22.5 and 22.6 of the articles of association.

3.  To elect E Dodd as a director of the Company (in accordance with Articles 22.5 and 22.6 of the articles of association) who was 

appointed by the Board since the last annual general meeting.

4.  To elect P Fabricius as a director of the Company (in accordance with Articles 22.5 and 22.6 of the articles of association) who was 

appointed by the Board since the last annual general meeting.

5.  To re-appoint BDO LLP as auditors of the Company to hold office from the conclusion of this meeting until the conclusion of the 

next general meeting at which financial statements are laid before the Company.

6.  To authorise the directors of the Company to determine the auditor’s remuneration.

7.  That the directors of the Company be and they are generally and unconditionally authorised in accordance with section 551 of 

the Companies Act 2006 (the “Act”), to exercise all powers of the Company to allot shares in the Company or grant rights to 

subscribe for or to convert any security into shares in the Company (“Rights”) up to an aggregate nominal amount of £3,727,698 

provided that this authority shall unless previously revoked, renewed or varied by the Company in general meeting expire five 

years from the date of this resolution or if earlier, the date of the next annual general meeting of the Company, save that the 

Company may before such expiry make an offer or agreement which would or might require shares to be allotted or Rights to 

be granted after such expiry and the directors of the Company may allot shares or grant Rights in pursuance of such an offer 

or agreement as if the authority conferred hereby had not expired. This authority is in substitution for all previous unexercised 

authorities conferred upon the directors pursuant to section 551 of the Act, but without prejudice to the allotment of any shares 

or the grant of any Rights already made or to be made pursuant to such authorities.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
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Notice of Annual General Meeting 
continued

Special resolutions

To consider and, if thought fit, pass the following resolutions, which will be proposed as special resolutions:

Disapplication of pre-emption rights

8.  That subject to and conditional on the passing of resolution 7 above, the directors of the Company be and they are empowered 

pursuant to section 570 and 573 of the Act to allot equity securities (as defined in section 560(1) of the Act) for cash pursuant to 

the authority conferred by resolution 7 above and/or to sell ordinary shares held by the Company as treasury shares as if section 

561(1) of the Act did not apply to such allotment, provided that this power shall be limited to:

8.1. the allotment of equity securities in connection with an offer of such securities by way of rights to holders of ordinary shares in 

proportion (as nearly as may be practicable) to their respective holdings of such shares and to holders of other equity securities 

as required by the rights of those securities or as the directors otherwise consider necessary, but subject to such exclusions or 

other arrangements as the directors of the Company may deem necessary or expedient in relation to fractional entitlements or 

any legal or practical problems under the laws of any territory, or the requirements of any regulatory body or stock exchange; and

8.2. the allotment of equity securities or sale of treasury shares (otherwise than pursuant to sub-paragraph 8.1 above) up to an 

aggregate nominal amount of £1,118,309.00; 

and, unless previously renewed, revoked or varied by the Company in general meeting, the authority granted by this resolution 

shall expire on 18 August 2024, or if earlier the date of the next annual general meeting of the Company, save that the Company 

may before such expiry make an offer or agreement which would or might require equity securities to be allotted or equity 

securities held as treasury shares to be sold after such expiry and the directors of the Company may allot equity securities and/

or sell equity securities held as treasury shares in pursuance of any such offer or agreement notwithstanding that the power 

conferred by this resolution has expired.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022Authority to repurchase ordinary shares

9.  That the Company be and is hereby generally and unconditionally authorised in accordance with section 701 of the Act to make 

one or more market purchases (within the meaning of section 693(4) of the Act) of ordinary shares of 25 pence each in the capital 

of the Company (“Shares”), provided that:

(a)  the maximum aggregate number of Shares authorised to be purchased is 4,473,238;

(b)  the minimum price (exclusive of expenses) which may be paid for a Share is 25 pence;

(c)  the maximum price (exclusive of expenses) which may be paid for a Share is an amount equal to the greater of (i) 105% of the 

average of the middle market quotations for a Share for the five business days immediately preceding the day on which that 

Share is purchased and (ii) the higher of the price of the last independent trade and the highest then current independent bid 

for any number of the Shares on the Alternative Investment Market of the London Stock Exchange;

(d)  the authority hereby conferred shall expire at the conclusion of the annual general meeting of the Company to be held in 

2024 or, if earlier, on the expiry of 15 months from the date of passing of this resolution unless such authority is renewed 

prior to such time; and

(e)  the Company may make one or more contracts to purchase Shares under this authority before the expiry of such authority 

which will or may be executed wholly or partly after the expiration of such authority, and may make a purchase of Shares in 

pursuance of any such contract.

Registered Office 

K3 Business Technology Group plc 
Baltimore House
50 Kansas Avenue 
Manchester M50 2GL 

26 April 2023

By order of the Board

E Dodd
Company Secretary

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
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Notice of Annual General Meeting 
continued

Explanatory Notes to the Resolutions proposed in the Notice of Annual General Meeting

Please refer to notes 1 to 4 relating to entitlement to attend and vote at the meeting and the appointment of proxies.

1.  Resolution 1 – The Directors are required to present to shareholders at the annual general meeting the Annual Report and 

Accounts for the financial year ended 30 November 2022 together with the Director’s and Auditor’s reports on such accounts.

2.  Resolution 2 – Under Article 22.5 of the Company’s current articles of association, one third of the total number of directors 

(rounded down to the nearest whole) shall retire at each annual general meeting. For the purposes of this calculation, the total 

number of directors does not include those directors tabled for re-election due to being appointed since the previous annual 

general meeting or due to being appointed for a period of nine years or more. Accordingly, T Crawford shall also retire at the 

2023 annual general meeting and offers himself for re-election. His re-election is recommended by the Board. T Crawford was 

originally appointed as a director of the Company in October 2020 and his biographical details are available on the Company’s 

website at https://www.k3btg.com/aim-rule-26/the-board/.

3.  Resolutions 3 and 4 – In compliance with Article 22.5 of the Company’s current articles of association any director appointed by 

the board since the previous annual general meeting shall retire at the annual general meeting of the Company next following 

the appointment. E Dodd and P Fabricius were appointed by the Board as directors of the Company in April 2023 and July 2022 

respectively and accordingly will each retire and offer themself for re-election as a director at the 2023 annual general meeting. 

E Dodd and P Fabricius are both recommended by the Board for re-election. Biographical details of E Dodd and P Fabricius are 

available on the Company’s website at https://www.k3btg.com/aim-rule-26/the-board/.

4.  Resolutions 5 and 6 – The Company is required at each general meeting at which accounts are presented to appoint auditors to 

hold office until the next such meeting. BDO LLP have indicated their willingness to continue in office. Accordingly, Resolution 5 

reappoints BDO LLP as the Auditor of the Company and Resolution 6 authorises the Directors to fix their remuneration.

5. 

 Resolution 7 would empower the directors to allot shares for any reason in accordance with Section 551 of the Act up to an 

aggregate nominal amount of £3,727,698 representing approximately one-third of the issued share capital of the Company 

at the date of the notice of annual general meeting. This resolution complies with the Investment Association Share Capital 

Management Guidelines issued in July 2016. As at close of business on the date of the notice of annual general meeting the 

Company did not hold any treasury shares. The authority granted by this resolution will expire five years from the date of the 

resolution or if earlier, on the conclusion of next year’s annual general meeting. 

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 20226.  Resolution 8 (proposed as a special resolution) would empower the directors pursuant to the authority to allot granted by 

resolution 7 to allot equity securities (as defined by section 560 of the Act) for cash or sell treasury shares other than to existing 

shareholders pro rata to their existing holdings. Such power would be limited to the situations referred to in sub-paragraphs 8.1 

and 8.2 of that resolution. Sub-paragraph 8.1 refers to rights issues and similar issues, where difficulties arise in offering relevant 

securities to certain overseas shareholders or where fractional entitlements arise. Sub-paragraph 8.2 permits allotments for 

cash (other than rights issues or similar) of ordinary shares or sale of treasury shares up to an aggregate nominal amount of 

£1,118,309 representing approximately one-tenth of the issued ordinary share capital of the Company at the date of the notice 

of annual general meeting. The resolution is proposed so as to give the directors greater flexibility to take advantage of business 

opportunities as they arise. The directors have no present intention of exercising the authority. The power granted by this 

resolution will expire on 18 August 2024, or if earlier on the conclusion of next year’s annual general meeting.

7.  Resolution 9 seeks authority for the Company to make market purchases of its own ordinary shares and is proposed as a 

special resolution. If passed, the resolution gives authority for the Company to purchase up to 4,473,238 of its ordinary shares, 

representing approximately 10 per cent of the Company’s issued ordinary share capital (excluding treasury shares) as at the date 

of the notice of annual general meeting. The resolution specifies the minimum and maximum prices which may be paid for any 

ordinary shares purchased under this authority. The authority will expire on the earlier of the Company’s 2024 annual general 

meeting and the date 15 months after the resolution. 

The directors will only exercise the authority to purchase ordinary shares where they consider that such purchases will be in the 

best interests of shareholders generally and will result in an increase in earnings per ordinary share.

The Company may either cancel any shares it purchases under this authority or transfer them into treasury (and subsequently 

sell or transfer them out of treasury or cancel them).

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
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Notice of Annual General Meeting 
continued

Notes to the Notice of Annual General Meeting

Entitlement to attend and vote

1.  On a show of hands every shareholder present in person has one vote and on a poll every shareholder has one vote for each share 

held by him. The necessary quorum at this meeting is two members present in person or by proxy and entitled to vote upon the 

business to be transacted.

2.  The Company specifies that only those members registered on the Company’s register of members at:

• 

• 

close of business on 19 May 2023; or,

if this Meeting is adjourned, at close of business on the day two days prior to the adjourned meeting (excluding non-business 

days),

shall be entitled to attend and vote at the Meeting. Changes to the register of members after the relevant deadline shall be 

disregarded in determining the rights of any person to attend and vote at the meeting.

Issued shares and total voting rights

3.  As at close of business on the date of the notice of annual general meeting, the Company’s issued share capital comprised 

44,732,379 ordinary shares of 25 pence each. Each ordinary share carries the right to one vote at a general meeting of the 

Company and, therefore, the total number of voting rights in the Company as at close of business on the date of the notice of 

annual general meeting is 44,732,379.

Documents on display

4.  The following documents will be available for inspection at finnCap Group, One Bartholomew Close, London, EC1A 7BL from the 

date of the notice of the annual general meeting until the time of the Meeting and for at least 15 minutes prior to the Meeting and 

during the Meeting:

•  Copies of the service contracts of executive directors of the Company; and

•  Copies of the letters of appointment of the non-executive directors of the Company.

Appointment of proxies

5. 

If you are a member of the Company at the time set out in note 2 above, you are entitled to appoint a proxy to exercise all or any 

of your rights to attend, speak and vote at the Meeting. You can only appoint a proxy using the procedures set out in these notes 

and the notes to the proxy form.

6.  A proxy does not need to be a member of the Company but must attend the Meeting to represent you. Details of how to appoint 

the Chair of the Meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form. If you 

wish your proxy to speak on your behalf at the Meeting you will need to appoint your own choice of proxy (not the Chair) and give 

your instructions directly to them.

7.  You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may 

not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy please complete 

new proxy forms for each proxy appointed and list the details of each proxy on a separate form. Please indicate in the box next 

to the proxy’s name the number of shares in relation to which he/she is authorised to act as your proxy. Failure to specify the 

number of shares to which a proxy appointment relates or specifying a number in excess of those held by the Member will 

result in the proxy appointment being invalid. Please also indicate by selecting the box provided if the proxy instruction is one of 

multiple instructions being given.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 20228.  A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the 

resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote 

(or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting.
Members can

•  Register their proxy appointment electronically (see note 9).

• 

If a CREST member, register their proxy appointment by utilising the CREST electronic proxy appointment service (see note 

11).

• 

If an institutional investor, you may be able to appoint a proxy electronically via the Proxymity platform (see note 12).

•  Request a hard copy form of proxy directly from the registrars, Link Group on Tel: 0371 664 0300 (see note 13).

Proxy voting using the Registrar’s share portal

9.  You may also submit your proxy vote electronically using the Share Portal service at www.signalshares.com. If not already 

registered for the Share Portal, you will need your Investor Code as shown on a recent dividend tax voucher or recent share 

certificate. For an electronic proxy vote to be valid, your appointment must be received by no later than 10:00 am on 19 May 

2023.

Proxy voting via the LinkVote+ app

10.  Link Group, the company’s registrar, has launched a shareholder app: LinkVote+. It’s free to download and use and gives 

shareholders the ability to access their shareholding record at any time and allows users to submit a proxy appointment quickly 

and easily online rather than through the post. The app is available to download on both the Apple App Store and Google Play or 

by scanning the relevant QR code below.

Apple App Store 

GooglePlay

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Notice of Annual General Meeting 
continued

CREST proxy voting (uncertificated shareholders)

11.  (a) 

 CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do 

so by using the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members 

and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting 

service provider(s) who will be able to take the appropriate action on their behalf.

(b)  In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a 

“CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & InternationalLimited (formerly 

CRESTCo’s) specifications and must contain the information required for such instructions, as described in the CREST 

Manual. The message, regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction 

given to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the issuers’ agent (ID 

RA10) by the latest time for receipt of proxy appointments specified in this notice or, in the event of an adjourned meeting, 

48 hours before the adjourned meeting. For this purpose, the time of receipt will be taken to be the time (as determined by 

the timestamp applied to the message by the CREST Applications Host) from which the registrars are able to retrieve the 

message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies 

appointed through CREST should be communicated to the appointee through other means. CREST members and, where 

applicable, their CREST sponsors or voting service provider(s) should note that Euroclear UK & International Limited does not 

make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore 

apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take 

(or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), 

to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a 

message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, 

where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST 

Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy 

Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

12.  If you are an institutional investor, you may be able to appoint a proxy electronically via the Proxymity platform, a process which 

has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to 

www.proxymity.io. Your proxy must be lodged by 10:00 am on 19 May 2023 in order to be considered valid or, if the meeting 

is adjourned, by the time which is 48 hours before the time of the adjourned meeting. Before you can appoint a proxy via this 

process you will need to have agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully 

as you will be bound by them and they will govern the electronic appointment of your proxy.

Appointment of proxy using hard copy proxy form

13.  The notes to the proxy form explain how to direct your proxy to vote on each resolution or withhold their vote. 

To appoint a proxy using the proxy form, the form must be:

• 

• 

completed and signed;

sent to Link Group, PXS 1, Link Group, Central Square, 29 Wellington Street, Leeds, LS1 4DL or delivered to Link Group, 10th 

Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL (multiple forms should be returned in the same envelope); and

• 

received by Link Group no later than 10:00 am on 19 May 2023.

In the case of a member which is a company, the proxy form must be executed under its common seal or signed on its behalf by 

an officer of the company or an attorney for the company.

Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or 

authority) must be included with the proxy form.

Calls to Link Group are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be 

charged at the applicable international rate. Lines are open between 09:00 – 17:30, Monday to Friday excluding public holidays in 

England and Wales.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
Appointment of proxy by joint members

14.  In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment 

submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders 

appear in the Company’s register of members in respect of the joint holding (the first-named being the most senior).

Changing proxy instructions

15.  To change your proxy instructions simply submit a new proxy appointment using the method set out above. Note that the 

cut-off time for receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended proxy 

appointment received after the relevant cut-off time will be disregarded.

Where you have appointed a proxy using the hard-copy proxy form and would like to change the instructions using another 

hard-copy proxy form, please contact Link Group on 0371 664 0300. Calls to Link Group are charged at the standard geographic 

rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open 

between 09:00 – 17:30, Monday to Friday excluding public holidays in England and Wales.

If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt 

of proxies will take precedence. If the Company is unable to determine which of more than one valid proxy appointment was 

deposited or delivered last in time, none of them shall be treated as valid in respect of the share(s) to which they relate.

Temination of proxy appointments

16.  In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard copy notice clearly stating 

your intention to revoke your proxy appointment to Link Group, PXS 1, Link Group, Central Square, 29 Wellington Street, 

Leeds, LS1 4DL. In the case of a member which is a company, the revocation notice must be executed under its common 

seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other 

authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included 

with the revocation notice.

The revocation notice must be received by Link Group, PXS 1, Link Group, Central Square, 29 Wellington Street, Leeds, LS1 4DL 

no later than 10:00 am on 19 May 2023.

Appointment of a proxy does not preclude you from attending the Meeting and voting in person. If you have appointed a proxy 

and attend the Meeting in person, your proxy appointment will automatically be terminated.

Corporate representatives

17.  A corporation which is a shareholder can appoint one or more representatives who may exercise, on its behalf, all its powers as a 

shareholder provided that no more than one corporate representative exercises power over the same share.

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K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
 
 
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Information for Shareholders

Enquiring about your shareholding

If you want to ask, or need information, about your shareholding, please contact our registrar, Link Group, on 0371 664 0300. Calls 

to Link Group are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged 

at the applicable international rate. Lines are open between 09:00 – 17:30, Monday to Friday excluding public holidays in England and 

Wales. Alternatively, if you have internet access, you can access the shareholder portal at www.signalshares.com where you can, 

amongst other things, view details of your shareholding, set up or amend a dividend mandate and update your address details.

Electronic communications

You can elect to receive shareholder communications electronically by writing to our registrar, Link Group, Central Square, 29 

Wellington Street, Leeds, LS1 4DL. Alternatively, if you have internet access, you can access the shareholder portal at www.

signalshares.com where you can elect to receive shareholder communications electronically. This will save on printing and 

distribution costs, creating environmental benefits. When you register, you will be sent a notification to say when shareholder 

communications are available on our website and you will be provided with a link to that information. You may not use any electronic 

address (within the meaning of Section 333(4) of the Companies Act 2006) provided in either this Notice or any related documents 

(including the form of proxy) to communicate with the Company for any purposes other than those expressly stated.

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022 
Company Information

Registered Office

Baltimore House

50 Kansas Avenue

Manchester M50 2GL

Company Website

www.k3btg.com

Directors

T Crawford (Chairman)

M Vergani

E Dodd

G Hase (non-executive)

P Fabricius (non-executive)

O Scott (non-executive)

Company Secretary

E Dodd

Country of Incorporation of Parent Company

England and Wales

Company Number

02641001

Legal Form

Public limited company

Advisers

Legal advisers to the Group

Squire Patton Boggs LLP 

No1 Spinningfields  

1 Hardman Square  

Manchester M3 3EB 

Nominated Adviser

finnCap Limited

One Bartholomew Close

London EC21A 7BL

DWF LLP

1 Scott Place

2 Hardman Street

Manchester M3 3AA

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Company Information continued

Auditors

BDO LLP

3 Hardman Street 

Spinningfields

Manchester M3 3AT

Bankers

Barclays Bank plc
1st Floor
3 Hardman Street

Spinningfields

Manchester M3 3HF

Registrars

Link Group

Unit 10

Central Square

29 Wellington Street

Leeds LS1 4DL

Financial PR

KTZ Communications

No.1 Cornhill

London EC3V 3ND

K3 Business Technology Group plc Annual Report and Financial Statements for the year ended 30 November 2022K3 Business Technology Group plc
Baltimore House, 50 Kansas Avenue, Manchester M50 2GL
www.k3btg.com