K3 Business Technology Group Regulatory News (KBT)

 AIM: KBT

K3 Business Technology Group plc

("K3" or "the Group")

Announces

Acquisition of certain assets of FD Systems Ltd

K3, which supplies and supports Enterprise Resource Planning ("ERP") software to the supply chain industry, is pleased to announce that it has acquired certain assets of FD Systems Ltd, specifically its Sage 200 business unit, for a total consideration of £1.25 million. £0.95m of the total consideration is payable on completion and the balance of £0.3 million is payable on 28 February 2011.

The Sage 200 business unit delivers the Sage Line 200 suite of business management software, which provides small/medium-sized companies with a complete ERP solution. The solution is one of the leading ERP products for its marketplace. The business unit currently generates annual revenues of £2.35 million and a profit contribution of £0.5 million. Over 40% of the business unit's annual income is contracted recurring revenue, generated by licence renewals and support. The customer base totals approximately 330.

K3 intends to integrate the acquisition with its existing Sage operations, which were acquired in November 2010 with the purchase of Panacea Ltd, the provider of managed services and IT solutions to Microsoft and Sage users. K3 also sees a significant opportunity to provide its hosting and managed services offering to the customer base being acquired.

Andy Makeham Chief Executive of K3, commented,

"The acquisition of FD Systems' Sage 200 business unit is a very good one for us and will be easily combined with our existing Sage business, which it complements. Importantly, the acquisition brings us additional annual recurring income and very good cross-selling opportunities.

The acquisition materially increases the number of Sage customers we have under maintenance and as we seek to unroll K3's hosting and managed services offering across our existing 1,500 strong customer base, the addition of this new customer base increases our readily addressable audience.

With the development of our hosting and managed services business a major focus of our growth strategy, the addition of a new customer base is valuable and should help to increase our contracted recurring income, which currently stands at some 40% of the Group's annual income."

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