K3 Business Technology boosts retail software arm with latest acquisition |
K3 Business Technology (LON:KBT), the AIM listed company has sells enterprise resource planning software, hosting and managed services to the supply chain industry, has snapped up the Retail Merchandising Division of Azurri Computer Solutions Ltd. K3 is paying an initial £1.0 million in cash for the business with a further £0.5 million payable dependent on increases in gross margin generated by Azurri Retail over the next two years. Shares in K3 were unmoved at 222.5p.
K3 said Azurri Retail was a highly complementary fit with its own retail software operations, adding further specialist skills, and would be readily integrated into the group. The deal is in line with K3’s strategy to build recurring revenues and acquire profitable user bases with significant cross-selling opportunities, in particular for its hosting and managed services offering.
Andy Makeham, the chief executive of K3, said: “I am delighted to have completed the acquisition of Azurri Retail. We continue to strengthen recurring revenues by acquiring new user bases, where we can also offer additional services and upgrades, and Azurri Retail represents an exciting opportunity to acquire a prestigious retail customer base. We look forward to working together with our new customers to ensure the continuing successful delivery of their IT requirements.”
For the year to December 2010, Azurri Retail generated sales of £1.0 million and an underlying profit of £0.4 million. Over £0.6 million of 2010 revenues were recurring. The company’s customer base comprises a number of major retailers, including Matalan, JJB Sports (LON:JJB) , Littlewoods, Holland amp; Barratt and the National Trust.
In March this year, K3 acquired Clarita Solutions Ltd, a business that sells Microsoft Dynamics NAV ERP solutions to the retail and distribution markets. It also bought Sense Enterprise Solutions Ltd, which provides Microsoft Dynamics AX ERP solutions to the manufacturing and distribution markets. Those deals followed the acquisitions of Panacea Ltd and certain assets of FD Systems Ltd last November and December respectively. In the six months to December 31, 2010, K3 reported a 5% increase in revenues to £24.67 million and an 8% rise in pre-tax profits to £4.23 million.
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