Acquisition

K3 Business Technology Group PLC 17 December 2007 KBT K3 BUSINESS TECHNOLOGY GROUP PLC ('K3' or the 'Company') Announces Acquisition of Manufacturing Software Supplier, Index Computer Systems Limited K3 Business Technology Group plc, the IT solutions provider to mid-tier retailers and manufacturers, is pleased to announce the acquisition of the entire issued share capital of Index Computer Systems Limited ('Index'), the UK-based manufacturing software provider, for a total consideration of £2.75m. This will be satisfied in a mix of cash and shares. In addition, a payment of £260,000 is being made in respect of surplus cash in the business at completion. The acquisition is a highly complementary fit to the existing K3 manufacturing software business. Based in Surrey, Index was established in 1990 and is a leading reseller of Microsoft Dynamics AX software. The software system is one of the fastest growing enterprise resource planning ('ERP') solutions worldwide and Index is a Microsoft Gold Partner. Supported by Microsoft, Index has developed its own complementary modules to extend Dynamics AX's functionality to support Food and Process Manufacturers and this intellectual property now transfers to K3. Index has a well-established presence in the mid-range manufacturing marketplace, particularly within the food sector and its average order value is in the region of £350,000. Its customers include: British Bakels, the global ingredient manufacturers; MBMG, one of the UK's leading suppliers of fresh produce; Jeyes Group, the international household and hygiene product manufacturer; and Abel and Cole, one of the UK's largest organic delivery companies. For the year ended 30 June 2007, Index generated turnover of £1.8m and profit before tax of £291,000. At 30 June 2007, the net assets of Index were £257,000. In the four months to October, unaudited like for like sales were significantly ahead of last year. Currently, K3 is one of the largest providers of manufacturing software solutions to the Discrete Manufacturing sector in the UK and this acquisition enables K3 to enter the complementary market of Process Manufacturing. It also fulfils K3's requirement for all its technology offering to be Microsoft-based. Index's key management is being retained following the acquisition to assist with the continued development of the business. The consideration is satisfied by £2.35m of cash and the issue of 257,400 ordinary shares of 25 pence each in the capital of K3 ('Ordinary Shares') at a price per Ordinary Share of 155.4p, being the average mid-market closing price for the 5 business days prior to completion of the acquisition. Admission of the Ordinary Shares to trading on AIM is expected to take place on 20 December 2007. K3's bankers, Barclays Bank plc, are providing debt funding to support the acquisition of Index. Andy Makeham, Chief Executive of K3, said 'Microsoft Dynamics AX is one of the fastest growing technologies in Microsoft's ERP software suite, with sales of Dynamics AX increasing by 75% last year alone in the UK. We believe that this acquisition represents an excellent opportunity to strengthen our portfolio of products. Index has in-depth experience of Dynamics AX, particularly in the food sector, and we are confident that our experience of the wider manufacturing arena and their proven technology solution will create a compelling proposition. We look forward to working together to grow the business going forward.' Enquiries: K3 Andy Makeham, Chief Executive T: 01282 864 111 David Bolton, Chief Finance Officer Biddicks Katie Tzouliadis/Sophie Lane T: 020 7448 1000 Daniel Stewart Paul Shackleton T: 020 7776 6550 & Company plc (NOMAD) Notes to Editors: Established in 2001, K3 supplies, installs and supports market-leading business planning and business management (ERP) software solutions to mid-tier retailers and manufacturers. All software is Microsoft-based. The business comprises two divisions, Retail Software Division and Manufacturing Software Division. Manufacturing Software Division - K3 has the largest manufacturing customer base in the UK. This has enabled the business to develop a very close relationship with Microsoft. The Division is a reseller of SYSPRO software, which is widely acknowledged as the market-leading software for mid-market manufacturers and following the acquisition of SYSPRO distributor, McGuffie Brunton, in March 2007, K3 is now the sole distribution of this software in the UK . Retail Software Division - K3 is Microsoft's leading reseller of Dynamics (formerly Navision) software in the UK. The Division has established sector specific business units to address specialist niche markets within the retail sector. These include: Food, Drinks/Breweries, Household Goods and Fashion. This 'verticalisation' strategy enables the Retail Software Division to market itself as a specialist within its chosen retail markets. By focusing exclusively on the provision of Microsoft-based software solutions, K3 has benefited from Microsoft's substantial investment in mid-market enterprise software and the company is a member of Microsoft's Inner Circle, which is reserved for its top 60 sales partners worldwide. This information is provided by RNS The company news service from the London Stock Exchange ACQTIBRTMMJBBPR
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