Strong first half for K3

Enterprise resource software K3 Business Technology says that its underlying operating profit will be much higher in the six months to December 2010. Edison Investment Research estimates that continuing interim revenues will be flat but there will be some growth in profit. The rest of the profit improvement will come from acquisitions. AIM-quoted K3 says that there is a good pipeline of potential business and K3 expects to close new contracts in the second half. The new managed services operations are helping to grow the recurring revenue base. Net debt was £11.6m at the end of 2010. Edison forecasts a rise in profit from £7.6m to £8.2m in the year to June 2011. The shares are trading on less than nine times forecast 2010-11 earnings.