Final Results

Notice of Results

                  K3 BUSINESS TECHNOLOGY GROUP PLC
                        ("K3" or "the group")
         IT solutions supplier to the supply chain industry

                              Announces
                         Preliminary Results
                  For the Year to 31 December 2005



  * Success of diversification strategy beginning  to show through

       * the group now has presence in retail and distribution
         software markets as well as manufacturing software sector

  * Record results reflect full impact of two acquisitions and
    partial contribution of a third acquisition made in June 2005

  * Turnover on continuing operations almost tripled to £22.03m
    (2004: £8.12m)

  * Adjusted operating profit*1 on continuing operations up over
    fourfold to £2.41m (2004: £0.59m)

  * Operating profit, after amortisation of goodwill and intangibles
    of £1.75m, increased to £0.66m (2004: loss of £0.03m)

  * Adjusted earnings per share*2 increased by 249% to 11.2p (2004:
    4.5p).  Basic loss per share 1.4p (2004: earnings per share 10.0p
    including profit on disposal of business at Crewe)

  * Very strong performances from retail and manufacturing software
    businesses

       * retail software revenues up 23% year on year
       * manufacturing software business significantly strengthened
         by acquisition of IEG

  * Sales pipelines are good and Board views prospects very
    positively


George Matthews, Chairman, commented,

"The group's results for 2005  are a most encouraging endorsement  of
the strategy  we  initiated  in  2004 to  diversify  and  extend  the
business  into  the  related  sectors  of  distribution  and   retail
software.  The group is now well positioned to benefit from  enhanced
opportunities for earnings growth.

Each of our businesses ended 2005 on a strong note.  Sales  prospects
are good and there are growth  opportunities in our key sectors.   We
continue  to  seek   appropriate  acquisitions   that  will   further
strengthen the group and  we continue to  view the group's  prospects
very positively."


Enquiries:


K3 Business Technology Andy     Makeham,      Chief T: 020 7448  1000
                       Executive                    (today)
Group plc              David Bolton, Chief Finance  Thereafter: 01282
                       Officer                      864111

Biddicks               Katie Tzouliadis             T: 020 7448 1000


_____________________________________________________________________________
*1 Calculated before amortisation of goodwill and intangibles of
£1.75m (2004: amortisation of goodwill £0.60m).
*2 Calculated before amortisation of goodwill and intangibles of
£1.75m and loss on disposal of operations of £0.14m (2004:
amortisation of goodwill of £0.64m and profit on disposal of
operations of £1.25m).


CHAIRMAN'S STATEMENT


OVERVIEW


The group's results for  2005 are a  most encouraging endorsement  of
the strategy  we  initiated  in  2004 to  diversify  and  extend  the
business  into  the  related  sectors  of  distribution  and   retail
software.  The group is now well positioned to benefit from  enhanced
opportunities for earnings growth.

Results for  the  year  ended  31 December  2005  reflect  full  year
contributions  from  the  two  acquisitions  we  made  in  2004,   K3
Landsteinar, our retail  software solutions business  and K3  Elucid,
our  distribution   software   solutions  business.      Our   latest
acquisition,  Information   Engineering  Group,   ("IEG")  which   we
purchased in June  2005, made  a contribution  for only  part of  the
year.

K3 Landsteinar,  the retail  software solutions  business,  performed
very strongly  and demonstrated  year on  year growth  of 23%.    Its
contribution accounted for 57%  of group turnover for  the year.   K3
Elucid's performance  was  mixed, with  trading  in the  second  half
stronger than the  first.  This  business accounted for  8% of  group
turnover.  The addition of IEG,  one of only two distributors in  the
UK  of  the   SYSPRO  range  of   ERP  software,  has   significantly
strengthened  our  manufacturing  software  business.    Its   SYSPRO
offering complements  our existing  activities  and we  have  already
achieved cross-selling opportunities with our existing  manufacturing
software solutions business.   Trading at both  IEG and our  existing
manufacturing  software  business   was  very   strong,  with   IEG's
performance boosted by a major contract win with Doncaster Group.



Financial Results

Turnover on continuing operations almost tripled from £8.12m in  2004
to £22.03m  in  2005 reflecting  the  impact of  our  acquisitions.
Adjusted operating profit*1 on  continuing operations increased  more
than four-fold from £0.59m to £2.41m.  After amortisation of goodwill
and intangibles of £1.75m (2004: £0.64m), operating profit was £0.66m
(2004: loss of £0.03m).

The losses on disposal of operations of £0.09m (profit on disposal of
£1.25m in 2004) related to the disposal of the Crewe business.

Adjusted profit before tax*3 for  the year was £2.12m (2004:  £0.55m)
and adjusted earnings  per share*2  were 11.2p (2004:  4.5p).   After
taking into  account  amortisation  of goodwill  and  intangibles  of
£1.75m (2004:  £0.64m)  and  an exceptional  loss  of  £0.09m  (2004:
exceptional profit of  £1.25m), profit before  tax was £0.28m  (2004:
£1.16m) and  loss per  share  was 1.4p  (2004:   earnings  per  share
10.0p).

At 31 December 2005, the group had a cash balance of £0.87m  compared
with £0.40m at 31 December 2004, having negotiated a bank loan of £1m
in December 2005.


Dividend

The Directors do not propose to pay a dividend (2004: £nil).



*1  Calculated  before amortisation  of goodwill  and intangibles  of
£1.75m (2004: amortisation of goodwill of £0.60m)
*2  Calculated  before amortisation  of goodwill  and intangibles  of
£1.75m  and  loss  on  disposal   of  operations  of  £0.14m   (2004:
amortisation  of  goodwill  of  £0.64m  and  profit  on  disposal  of
operations of £1.25m)
*3  Calculated  before amortisation  of goodwill  and intangibles  of
£1.75m  and  loss  on  disposal   of  operations  of  £0.09m   (2004:
amortisation  of  goodwill  of  £0.64m  and  profit  on  disposal  of
operations of £1.25m)



CHAIRMAN'S STATEMENT

Review of Operations

Retail Software Business

K3 Landsteinar delivered a very  strong performance, securing 12  new
contracts over the year  worth a total of  £7.53m.  The most  notable
win was a  contract with Carpetright  plc agreed in  May 2005.   This
contract resulted in significant growth in consultancy services which
increased to £7.14m in 2005 and helped to lift total revenues for the
year to £12.66m (2004: £2.93m  for the three months  post-acquisition
from October  to  December).   Adjusted  operating profit*4  grew  to
£1.22m (2004:  £0.44m for  the  three months  post-acquisition,  from
October to December).

The  Carpetright  contract  will  help  to  underpin  the  business's
performance in 2006 as  we continue to  deliver further services  and
software  licences  to  support  Carpetright's  450  store   roll-out
programme.   Whilst the  trading environment  for retailers  is  more
challenging, we enter 2006  with a strong  pipeline of prospects  and
believe that the  Microsoft Navision-based retail  solution we  offer
remains one  of the  best  solutions for  mid-tier retailers  in  the
market.

Distribution Software Business

After a slower  than expected start  to 2005, trading  in the  second
half of the year regained momentum  and revenues grew from £0.81m  at
the half year stage to £1.80m at the year end  (2004: £1.30m for nine
months).  Whilst the business  recorded an adjusted operating  loss*5
of £0.08m  for  the year  as  whole  (2004: profit  for  nine  months
£0.13m),  which  was  disappointing,  this  included  one-off   costs
relating to an investment in a new warehouse management module and  a
reorganisation in the second half.


Manufacturing Software Business

The acquisition of IEG in  June 2005 transformed this business,  both
in terms of critical mass and  by the added sales opportunities  that
IEG's status as  one of only  two SYSPRO distributors  in the UK  has
created for the existing manufacturing software business.  Whilst IEG
made only  a  partial contribution  to  the year's  results  of  this
business, the combined businesses generated  sales of £7.57m with  an
adjusted operating profit*6 of £1.27m (2004: £0.02m).  For the period
since its  acquisition (23  June 2005),  IEG contributed  revenue  of
£3.61m and an adjusted operating profit*7 of £0.74m.

The existing Walton business saw adjusted operating profits*8 rise to
£0.53m (2004: £0.02m)  on revenues  slightly ahead  at £3.96m  (2004:
£3.88m).  The profit improvement was helped by cost savings resulting
from the synergies with IEG and the completion of the CRM investment,
together with lower central costs allocated against the business.



*4  Calculated before amortisation of goodwill and intangibles of
£0.95m (2004: £0.23m)
*5  Calculated before amortisation of goodwill and intangibles of
£0.08m (2004: £0.07m)
*6  Calculated before amortisation of goodwill and intangibles of
£0.72m (2004: £0.30m)
*7  Calculated before amortisation of goodwill and intangibles of
£0.42m
*8  Calculated before amortisation of goodwill of £0.30m (2004:
£0.30m)

CHAIRMAN'S STATEMENT


IEG traded very strongly, helped by a £2m contract win with Doncaster
Group, a leading manufacturer of precision components and  assemblies
for the aerospace, power generation, specialty automotive and medical
orthopaedic industries.   IEG  is supplying  and implementing  SYSPRO
software in 13 of Doncaster's manufacturing sites in the UK and US.
For the period under review, this contract delivered sales of  £1.36m
but it should bring additional new  sales worth £0.58m for 2006  with
the potential for further revenues later in the year.  IEG  continues
to enjoy a high  level of annual licence  billings which are made  in
the last quarter of each year.

There is  an encouraging  pipeline  for both  manufacturing  software
businesses and we expect another good performance in 2006.


Outlook

Each of our businesses ended 2005 on a strong note.  Sales  prospects
are good and there are growth  opportunities in our key sectors.   We
continue  to  seek   appropriate  acquisitions   that  will   further
strengthen the group and  we continue to  view the group's  prospects
very positively.


George Matthews
Chairman




OPERATING REVIEW

Our  goal  is  to  become   the  UK's  market  leading  supplier   of
Microsoft-based supply chain management solutions to small and medium
sized companies.   In  the last  18  months, we  have built  on  K3's
dominant position within  the SME manufacturing  sector by  acquiring
businesses that extend  our footprint across  the faster growing  and
complementary sectors of distribution and retail systems.

The resultant group  today provides a  well-balanced business  model,
delivering a  strong mix  of safe  recurring licence  income (in  the
manufacturing sector) combined  with higher  growth opportunities  in
the distribution and retail sectors.

In addition  to our  leading position  within the  SME  manufacturing
systems marketplace,  we  are  now Microsoft's  largest  reseller  of
Navision  software  and  one  of  Microsoft's  leading  UK   business
solutions (MBS) partners, with  a strong presence  in the retail  and
distribution sectors.

It is also pleasing to note that over the course of 2005 each of  our
three trading businesses secured their largest new orders to date.


Retail Software Business

K3 Landsteinar focuses  on delivering  Microsoft's Navision  business
solution to mid-tier retailers, and our success in this sector  makes
us Microsoft's  largest  Navision  reseller  in the  UK.    We  offer
retailers  a  complete   'end-to-end'  solution   through  a   single
integrated software  suite.   This means  that the  same software  is
running at  head office,  at the  store and  on the  individual  EPOS
(Electronic Point of Sale) tills.   The solution therefore  typically
delivers lower cost  of ownership than  traditional retail  solutions
and provides retailers with greater data accuracy and improved  sales
analysis.  The suite is also easier to support.

In the course  of the year,  K3 Landsteinar won  12 major new  retail
contracts worth £7.53m, including significant second half orders from
Gamestation (electronic  games), Adidas  (sportswear), James  Cropper
(papermakers) and  Housing  Units  (furniture).    These  new  orders
together with implementation and  roll out programmes at  Carpetright
and Moss  Pharmacy  (now  Alliance Pharmacy)  helped  deliver  record
results and year on year sales growth of 23% over 2004.

The Carpetright  implementation should  enter  its 'roll  out'  phase
during 2006 when it will be implemented in 450 stores throughout  the
UK.   Each  store  will require  software  licences  and  consultancy
services.   The  implementation  should therefore  help  to  underpin
revenues throughout 2006 and into 2007.


Distribution Software Business

Following  a  disappointingly  slow   first  half,  we  undertook   a
reorganisation  and  introduced  new  management.    This  led  to  a
significantly  improved  second   half  with   seven  new   contracts
awarded.   Of particular note  was our contract with Scotts of  Stow,
one of the leading names in the catalogue and mail order space, worth
£0.30m.  This  contract, awarded  at the  beginning of  2005, is  the
business's largest order thus far.

OPERATING REVIEW

During 2005, we formed our own web development unit, specialising  in
creating integrated  web  and  back  office  solutions.    Successful
projects have  now been  implemented at  Joe Browns  (fashion  retail
www.joebrowns.co.uk),    Inverawe     (speciality    smoked     foods
www.smokedsalmon.co.uk),   and   Bright   Minds   (educational   toys
www.brightminds.co.uk).


Manufacturing Software Business

As previously reported, in June 2005  we acquired IEG for an  initial
consideration  of  £3.81m,  with  deferred  consideration  of  up  to
£2.25m.    IEG  distributes  and  implements  SYSPRO   manufacturing,
financial and distribution software throughout  the UK.  SYSPRO  (one
of  the  world's  most  successful  global  ERP  solutions  for   SME
manufacturers,  with  12,000   customers  in  60   countries)  is   a
Microsoft-based  software   suite  which   provides  customers   with
real-time information  throughout the  supply chain  process.   IEG's
other   services   include    project   management,    implementation
consultancy, training and support.

The acquisition  has  brought  us  a business  with  high  levels  of
recurring revenue.    Furthermore,  its SYSPRO  offering  provides  a
natural upgrade solution for our existing manufacturing customers.
We have already realised some cost saving benefits as a result of its
integration and we expect to make further cost savings this year.

Whilst our Walton-upon-Thames  business continued to  prove that  its
existing products, supported  by our Microsoft  CRM offering,  remain
very attractive to customers, the introduction of the SYSPRO  product
helped to  lift sales  at the  Walton business  by 5%  in the  second
half.  In the  six months of selling  the SYSPRO product, the  Walton
business delivered four  new deals worth  some £0.49m, including  two
recently  concluded  deals   to  Arcam   (£0.15m)  and   Microfiltrex
(£0.15m).  This is most encouraging.

We begin 2006  with confidence.   IEG's contract  win with  Doncaster
Group to roll  out the  SYSPRO product  across 13  sites supported  a
strong performance  in  the  six months  since  its  acquisition  and
underpins the business's  performance in  2006.   In addition,  IEG's
pipeline remains  strong and  we believe  that further  cross-selling
opportunities and realisable synergies are still available.



Andy Makeham
Chief Executive


Consolidated profit and loss account for the year ended 31 December
2005


                                          2005                                       2004

                         Continuing operations      Discont-   Total     Contin-      Discont-   Total
                     Contin-uing Acquis-itions         inued                uing         inued
                                                  operations          operations    operations
               Notes        £000          £000          £000    £000        £000          £000    £000

Turnover                  18,420         3,609             -  22,029       8,116           413   8,529
Cost of sales            (6,717)       (1,419)             - (8,136)     (1,603)         (124) (1,727)

Gross profit              11,703         2,190             -  13,893       6,513           289   6,802
Selling and              (3,512)         (610)             - (4,122)     (2,518)         (218) (2,736)
distribution
costs
Administrative           (7,852)       (1,263)             - (9,115)     (4,005)          (94) (4,099)
expenses


Operating
profit before              1,667           741             -   2,408         593            10     603
amortisation
of goodwill
and
intangibles
Amortisation
of goodwill              (1,328)         (424)             - (1,752)       (603)          (33)   (636)
and
intangibles


Operating                    339           317             -     656        (10)          (23)    (33)
profit (loss)

(Loss) profit    1             -             -          (90)    (90)           -         1,248   1,248
on disposal of
operations

Profit (loss)                339           317          (90)     566        (10)         1,225   1,215
on ordinary
activities
before finance
charges

Finance                    (243)          (44)             -   (287)        (55)             -    (55)
charges (net)

Profit (loss)                 96           273          (90)     279        (65)         1,225   1,160
on ordinary
activities
before
taxation
Tax on profit              (289)         (154)          (50)   (493)        (59)             -    (59)
(loss) on
ordinary
activities

(Loss) profit    6         (193)           119         (140)   (214)       (124)         1,225   1,101
for financial
year

                                   Contin-uing Discont-inued   Total Contin-uing Discont-inued   Total
(Loss)                              operations    operations          operations    operations
earnings per
share
Basic            2                      (0.5p)        (0.9p)  (1.4p)      (1.1p)         11.1p   10.0p
Diluted          2                      (0.5p)        (0.9p)  (1.4p)      (1.1p)         11.1p   10.0p









There were no material recognised gains or losses in either year
other than the (loss) profit for that year.

Consolidated balance sheet as at 31 December 2005


                                                         2005    2004
                                               Notes     £000    £000

Fixed assets
Development costs and intellectual property               162       -
Goodwill                                               15,682   9,919
Intangible fixed assets                                15,844   9,919
Tangible assets                                           508     570
Investments                                                 -      17
                                                       16,352  10,506

Current assets
Debtors                                                 6,596   6,268
Cash at bank and in hand                                  874     403
                                                        7,470   6,671

Creditors:   amounts  falling due  within  one
year
Convertible debt                                            -   (500)
Other creditors                                  4   (10,583) (9,345)
                                                     (10,583) (9,845)

Net current liabilities                               (3,113) (3,174)

Total assets less current liabilities                  13,239   7,332

Creditors:   amounts  falling due  after  more   5    (2,439)   (337)
than one year

Net assets                                             10,800   6,995

Capital and reserves
Called up share capital                                 4,435   3,329
Share premium account                            6      7,813   6,463
Other reserve                                    6      6,070   4,486
Treasury shares                                  6       (20)       -
Profit and loss account                          6    (7,498) (7,283)

Equity shareholders' funds                             10,800   6,995


Consolidated cash flow statement for the year ended 31 December 2005


                                                             Restated
                                                        2005     2004
                                               Notes    £000     £000
Net cash inflow from operating activities        7     4,267    1,244
Returns  on  investments   and  servicing   of         (279)     (99)
finance
Taxation                                                (80)     (76)
Capital expenditure and financial investment           (106)     (12)
Acquisitions and disposals                       8   (5,153)  (2,344)
Cash outflow before financing                        (1,351)  (1,287)
Financing                                        8     1,822      464

Increase (decrease) in cash in the year          9       471    (823)


The comparative amounts for 2004  have been restated as explained  in
note 7.



Notes

1. (Loss) profit on disposal of operations

The loss  on disposal  of operations  in 2005  of £0.09m  relates  to
further unanticipated costs incurred  regarding the disposal in  2004
of the manufacturing software operation based at Crewe to Azur  Group
Limited.  The profit on disposal of this operation recognised in 2004
was £1.25m.

2. (Loss) earnings per share

The calculations of (loss) earnings per share are based on the (loss)
profit for the financial year and the following numbers of shares.


+-------------------------------------------------------------------+
|                             |             2005 |             2004 |
|-----------------------------+------------------+------------------|
|                             | Number of shares | Number of shares |
|-----------------------------+------------------+------------------|
| Weighted average number  of |                  |                  |
| shares:                     |                  |                  |
|-----------------------------+------------------+------------------|
| For  basic   earnings   per |       14,999,027 |       10,980,489 |
| share                       |                  |                  |
|-----------------------------+------------------+------------------|
| Exercise of share options   |          154,501 |           40,264 |
|-----------------------------+------------------+------------------|
| For  diluted  earnings  per |       15,153,528 |       11,020,753 |
| share                       |                  |                  |
+-------------------------------------------------------------------+


The alternative earnings  per share calculations  have been  computed
because the directors consider that  they are useful to  shareholders
and investors.  These  were based on  the following (losses)  profits
and the above number of shares.

Notes

2.  (Loss) earnings per share



                              2005                     2004
                     Earnings    Per     Per  Earnings    Per     Per
                     (losses)  share   share  (losses)  share   share
                              amount  amount           amount  amount
                               Basic Diluted            Basic Diluted
                         £000      p       p      £000      p       p
(Loss)      earnings    (214)  (1.4)   (1.4)     1,101   10.0    10.0
(loss)   per   share
(eps)
Effect  of  goodwill    1,752   11.7    11.6       636    5.8     5.8
amortisation     and
intangibles
Eps           before    1,538   10.3    10.2     1,737   15.8    15.8
amortisation      of
goodwill         and
intangibles
Exceptional    items    *+140    0.9     0.9 *+(1,248) (11.3)  (11.4)
(net of tax)
Eps           before
amortisation      of    1,678   11.2    11.1       489    4.5     4.4
goodwill         and
intangibles      and
exceptional items



*+         Relates  to loss  on  disposal of  manufacturing  software
operation based in Crewe of £0.09m (2004: profit of £1.25m) on  which
the tax charge was only £50,000 (2004: £nil) due to the  availability
of capital losses.


The basic and diluted loss  per share are the  same as the effect  of
share options is anti-dilutive.

Although the convertible 6% loan notes issued in connection with  the
Landsteinar acquisition were in-the-money at 31 December 2004,  there
was no intention to allow the  notes to convert and, therefore,  they
were excluded from the  calculation of diluted  earnings per share.
The loan notes were repaid in full on 23 December 2005.


3.  Acquisition of subsidiary undertaking

On 23 June 2005 the company acquired the entire issued share  capital
of Information Engineering Group Limited ("IEG").  The total  initial
consideration was £3.81m of which £1.66m  was in cash with £2.15m  in
shares.  £1.66m of cash was paid on completion with a further  £0.55m
paid on 30  November 2005 and  £0.10m payable on  30 November 2006.
Further consideration  of  up to  £1.6m  is payable  based  on  IEG's
profits during the two years ending  31 May 2007, of which £1.08m  is
the fair value  of the current  estimated amount payable.   The  fair
value of the total consideration is estimated to be £5.54m.

Notes

3.  Acquisition of subsidiary

The following  table sets  out the  book values  of the  identifiable
assets and liabilities acquired and their fair value to the group:

                  Book value  Fair value    Provisional fair value to
                             adjustments                    the group
                        £000        £000                         £000
Fixed assets
Intangible               190           -                          190
Tangible                 169        (52)                          117
Current assets
Debtors                1,632         302                        1,934
Cash                      74           -                           74
Total assets           2,065         250                        2,315
Creditors
Bank overdrafts      (1,090)           -                      (1,090)
Trade                  (328)           -                        (328)
Other                  (532)           -                        (532)
Accruals      and    (1,637)           -                      (1,637)
deferred income
Total liabilities    (3,587)           -                      (3,587)
Net liabilities      (1,522)         250                      (1,272)



Goodwill                                7,463
Costs of acquisition                    (651)
Consideration                           5,540
Satisfied by
Cash consideration                      1,663
Shares issued                           2,150
Deferred cash consideration               650
Further deferred cash consideration     1,077
                                        5,540


4.  Creditors: amounts falling due within one year


                                                           2005  2004
                                                           £000  £000
Convertible debt
6% convertible loan notes                                     -   500
Other creditors
Bank loans and overdrafts                                   311     -
Obligations  under  finance  leases  and  hire  purchase    249   330
contracts
Other loans due to related parties                          229 1,303
Trade creditors                                           1,221 1,071
Corporation tax                                             223     -
Taxation and social security                              1,536 1,032
Other creditors                                             262   103
Deferred consideration                                       70   696
Accruals                                                  2,308 1,826
Deferred income                                           4,174 2,984
                                                         10,583 9,345

Notes


5.  Creditors: amounts falling due after more than one year


                                                            2005 2004
                                                            £000 £000
Bank loan and overdrafts                                     689    -
Obligations  under  finance   leases  and  hire   purchase   130  337
contracts
Other loans due to related parties                           513    -
Deferred consideration                                     1,107    -
                                                           2,439  337



6.  Reserves


                                    Share   Other Treasury Profit and
                                  premium reserve   shares       loss
                                  account                     account
                                     £000    £000     £000       £000
At 1 January 2005                   6,463   4,486        -    (7,283)
Retained loss for the year              -       -        -      (214)
Currency translation difference         -       -        -        (1)
on foreign currency net
investments
Treasury shares acquired                -       -     (20)          -
Share capital issued                1,400   1,584        -          -
Expenses of equity share issue       (50)       -        -          -
At 31 December 2005                 7,813   6,070     (20)    (7,498)



7.  Reconciliation of operating profit (loss) to operating cash flow


                                                      Restated
                                                 2005     2004
                                                 £000     £000
Operating profit (loss)                           656     (33)
Depreciation charges and fixed asset impairment   341      215
Loss on sale of tangible fixed assets              33       24
Amortisation of goodwill and intangibles        1,752      636
Write down of investments                          17        -
Decrease (increase) in debtors                  1,372    (445)
Increase in creditors                              96      847
Net cash inflow from operating activities       4,267    1,244


The comparative amounts for 2004 have been restated to reflect  loans
due to  related  parties as  financing  cash flows,  and  loan  notes
payable under acquisitions as cash flows in relation to acquisitions,
not as movements in operating cash flows.
Notes

8.  Analysis of cash flows

Acquisitions and disposals

                                                             Restated
                                                        2005     2004
                                                        £000     £000
Acquisition of subsidiary undertakings               (1,663)  (3,653)
Costs of acquisition of subsidiary undertakings        (696)    (160)
Net  bank   overdrafts  acquired   with   subsidiary (1,016)    (144)
undertakings
Deferred consideration                               (1,688)     (13)
Sale of business (net of costs)                         (90)    1,721
Acquisition of investment                                  -     (95)
                                                     (5,153)  (2,344)


Financing

Issue of ordinary share capital                    1,350     -
Treasury shares purchased                           (20)     -
New bank loan                                      1,000     -
New related party loan                             1,000   750
Repayment of related party loans                 (1,040) (225)
Capital element of finance lease rental payments   (468)  (61)
                                                   1,822   464



9.  Analysis and reconciliation of net debt


             Restated
           1 Jan 2005  Cash         Acquisitions and    Other  31 Dec
                       flow                disposals non-cash    2005
                                                      changes
                 £000  £000                     £000     £000    £000
Cash in           403   471                        -        -     874
hand, at
bank
Debt   due          - (689)                        -    (513) (1,202)
after  one
year
Debt   due    (1,303) (271)                        -    1,034   (540)
within one
year
Finance         (667)   468                     (92)     (88)   (379)
leases
Net debt      (1,567)  (21)                     (92)      433 (1,247)




                                                             Restated
                                                        2005     2004
                                                        £000     £000
Increase (decrease) in cash in the year                  471    (823)
Cash (inflow) outflow from increase/decrease in debt   (492)    (464)
and lease financing
Change in net debt resulting from cash flows            (21)  (1,287)
Finance leases acquired with subsidiaries               (92)    (571)
Loan converted to equity                                 521        -
New finance leases                                      (88)    (106)
Movement in net debt in year                             320  (1,964)
(Net  debt)  cash  resources   at  1  January   2005 (1,567)      397
(restated)
Net debt at 31 December 2005                         (1,247)  (1,567)




10. The directors do  not recommend the payment  of a final  dividend
and the dividend for the year is therefore £nil (2004: £nil).

11.  The  results  have  been  prepared  under  the  historical  cost
convention  and  in   accordance  with   applicable  United   Kingdom
accounting standards.   The  accounting  policies have  been  applied
consistently with those stated in the previous accounts.

12. The financial  information set  out above does  not comprise  the
Company's statutory accounts.   Statutory accounts  for the  previous
financial year  ended 31  December 2004  have been  delivered to  the
Registrar of Companies.  The  auditors' report on those accounts  was
unqualified and did not contain any statement under section 237(2) or
(3) of the Companies Act 1985. The auditors have given an unqualified
opinion on the accounts  for the year ended  31 December 2005 and  it
did not contain  any statement  under section  237(2) or  (3) of  the
Companies Act 1985.   These  will be  delivered to  the Registrar  of
Companies following the annual general meeting.

13. This  preliminary  announcement  was approved  by  the  Board  of
directors on 28 March 2006.

14. The full financial statements  will be posted to shareholders  on
or around 25 April 2006.  Further copies will also be available  from
the Company's  registered office  at Linden  Business Centre,  Linden
Road, Colne, Lancashire, BB8 9BA from that date.




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