Trading Statement

K3 Business Technology Group PLC
17 January 2006


                        K3 BUSINESS TECHNOLOGY GROUP PLC
                            ('K3' or the 'Company')
                                        
                                 TRADING UPDATE

K3, the IT solutions provider to the supply chain sector, is pleased to announce 
the following trading update prior to issuing its preliminary results statement 
for the year ended 31 December 2005 in mid March 2006.

The Company is pleased to report that its full year revenue and profits (before 
goodwill amortisation) are expected to be in excess of current market expectations.

Sales in the second half of 2005 have been strong in the Group's two key
divisions of Retail and Manufacturing. Information Engineering Group Ltd
('IEG'), one of two distributors in the UK of Syspro Enterprise Resource
Planning software to the manufacturing sector, which was acquired in June 2005,
has been successfully integrated and performed ahead of expectations.

The strong performance within the Group's Retail Division was helped by eight
new customer contracts as well as service revenues from the ongoing
implementation for its Carpetright contract.

The Manufacturing Division continues to deliver double digit margins and high
levels of recurring revenue, representing approximately 50% of the division's
turnover. IEG secured 19 new customers during the year, including a major
contract with Doncaster Group worth £2m. There was encouraging cross-selling of
the IEG's Syspro product into the Division's existing manufacturing user base.

After a slow first half, business at Elucid, which provides business solutions
to the mail order and catalogue market, has improved steadily and a total of 11
new customer contracts were secured over the year.

After the placing in September 2005, a subsequent re-banking exercise and the 
repayment of over £2m of shareholder and vendor loans during the second half of 
the year, cash in hand at 31 December 2005 was £0.8 million.

The Board remains encouraged by the group's growth prospects, with the current 
order pipeline standing at healthy levels.

Andy Makeham, CEO, of K3 commented:

'Our aim is to become the UK's leading provider of Microsoft based Supply Chain 
Management Solutions for small and medium sized businesses. The recent 
acquisitions have extended our footprint from manufacturing into distribution and 
retail and we now have a range of modern technology solutions servicing the supply 
chain.

This is the first full year of trading of our newly formed group and we are 
delighted with the results. Our core manufacturing software division continues 
to deliver double digit margins, with new business sales exceeding expectations. 
Our Retail Division saw continued growth on 2004 supported by strong services 
and licence income from its ongoing implementations and projects with existing 
blue chip customers. We remain encouraged by the prospects of continued growth in 
2006.'

Enquiries:

K3 Business Technology Group plc  Andy Makeham, Chief Executive         T: 01282 864111
                                  David Bolton, Chief Finance Officer

Biddicks                          Katie Tzouliadis                      T: 020 7448 1000




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