Retailers, manufacturers and distributors use software from K3 Business Technology (KBT) to run everything from shop tills and tablets to payroll systems and marketing campaigns. Strong demand for both proprietary and third-party offerings, combined with mounting interest in data storage and managed IT services, fuelled a 24 per cent rise in adjusted operating profits to £5.1m in the six months to 31 December.
The Aim-listed company has shifted its focus from reselling to supplying more lucrative proprietary software such as Equator Payroll and Orchard Warehouse Management. The upshot was a 5 per cent rise in intellectual property revenues to £9.6m, or about 23 per cent of turnover. It also received Microsoft's endorsement as an elite supplier of enterprise software. The growing base of blue-chip partners led to landmark contracts with major European fashion retailers Tristyle and KLiNGEL.
Elsewhere, strong hosting sales and greater efficiency largely offset order delays in the manufacturing and distribution segment. The group also acquired Starcom, strengthening its hosting and managed services capabilities.
Management expects a strong order pipeline and possibly more acquisitions to underpin further growth. Broker finnCap expects pre-tax profits of £9.3m in the year to June 2016, giving EPS of 25.2p (FY2015: £7.2m and 19.1p).
| K3 BUSINESS TECHNOLOGY (KBT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 349p | MARKET VALUE: | £ 111m | |
| TOUCH: | 345-353p | 12-MONTH HIGH: | 374p | LOW: 224p |
| DIVIDEND YIELD: | 0.4% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 176p* | NET DEBT: | 19% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 41.7 | 1.8 | 3.9 | nil |
| 2015 | 42.3 | 2.3 | 5.9 | nil |
| % change | +1 | +27 | +51 | - |
*Includes intangible assets of £64.3m, or 202p a share | ||||
