K3 sells Sage business to Pinnacle Computing for £1.68m

Chairman Tom Crawford says the reseller "is more streamlined, market-focused and strategically better positioned" after recent sales

Software and cloud solutions provider K3 has sold off another portion of its operations, with Pinnacle Computing acquiring its Sage business for £1.68m.

It comes after the AIM-listed company completed the sale of its managed services unit, Starcom Technologies, to Node4 back in February for a sum of £14.7m following a difficult 2020 which saw the company's adjusted EBITDA fall 44 per cent to £4m and losses before tax from continuing operations recorded at £20.9m compared with £700,000 in 2019.

K3 also sold its Dynamics unit to Sigma Dynamics last year after the subsidiary had been placed into administration and appointed Marco Vergani as the group's new CEO in March.

The latest sale is "in line with the board's strategy of focusing resources on key higher-margin products and markets", K3 said, and is expected to go through in early October.

Its Sage business generated revenues of £5.2m and a pre-tax loss of £1m for the year ending 30 November 2020 and has a current recurring revenue of £3.1m with gross profit of £1.5m, K3 said, adding that the sale proceeds will "further strengthen" the company's balance sheet and will generate "a profit pre-tax of approximately £1.6m".

"The sale of our Sage business is another step forward as we continue to sharpen K3's focus and simplify its operations around its higher margin core products and strategic markets," Tom Crawford, chairman of K3 Business Technology Group, said.

"Following this transaction and other disposals over the last two years, the group is more streamlined, market-focused and strategically better positioned."