Focus on own IP remains key
K3’s interim results confirm that the Group continues to progress well with its transformation strategy. As flagged, the full year results will be more second-half weighted than usual to meet market expectations for the financial year. We note that, as well as the usual bias towards Q4 of software licence and maintenance contract renewals, the announcement highlights that the Group closed several large contracts and commitments towards the end of H1. Additionally, there was some catch-up of previously highlighted delayed contract signings around the period end, which should feed through into increased service delivery in the second half. Aside from the delays within Dynamics, the rest of the business remained on track in H1 with Sage and Managed Services particularly pleasing. K3 | Imagine launched last year and K3 | Cloud, K3’s Infrastructure as a Service offering, launched during the period with the former a ‘cornerstone’ of K3’s growth plans and a major focus for the current financial year and beyond. We believe that K3 remains well-positioned to make further progress. We make no changes to our adjusted estimates and look forward to a good second half performance from the Group.