K3 Business Technology Group Regulatory News (KBT)

17 Dec 2007 07:00

K3 Business Technology Group PLC17 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-tierretailers and manufacturers, is pleased to announce the acquisition of theentire issued share capital of Index Computer Systems Limited ("Index"), theUK-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 manufacturingsoftware business. Based in Surrey, Index was established in 1990 and is a leading reseller ofMicrosoft Dynamics AX software. The software system is one of the fastestgrowing enterprise resource planning ("ERP") solutions worldwide and Index is aMicrosoft Gold Partner. Supported by Microsoft, Index has developed its owncomplementary modules to extend Dynamics AX's functionality to support Food andProcess Manufacturers and this intellectual property now transfers to K3. Index has a well-established presence in the mid-range manufacturingmarketplace, particularly within the food sector and its average order value isin the region of £350,000. Its customers include: British Bakels, the globalingredient manufacturers; MBMG, one of the UK's leading suppliers of freshproduce; Jeyes Group, the international household and hygiene productmanufacturer; and Abel and Cole, one of the UK's largest organic deliverycompanies. For the year ended 30 June 2007, Index generated turnover of £1.8m and profitbefore 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 significantlyahead of last year. Currently, K3 is one of the largest providers of manufacturing softwaresolutions to the Discrete Manufacturing sector in the UK and this acquisitionenables K3 to enter the complementary market of Process Manufacturing. It alsofulfils K3's requirement for all its technology offering to be Microsoft-based. Index's key management is being retained following the acquisition to assistwith the continued development of the business. The consideration is satisfied by £2.35m of cash and the issue of 257,400ordinary shares of 25 pence each in the capital of K3 ("Ordinary Shares") at aprice per Ordinary Share of 155.4p, being the average mid-market closing pricefor the 5 business days prior to completion of the acquisition. Admission of theOrdinary 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 theacquisition of Index. Andy Makeham, Chief Executive of K3, said "Microsoft Dynamics AX is one of the fastest growing technologies in Microsoft'sERP software suite, with sales of Dynamics AX increasing by 75% last year alonein the UK. We believe that this acquisition represents an excellent opportunity tostrengthen our portfolio of products. Index has in-depth experience of DynamicsAX, particularly in the food sector, and we are confident that our experience ofthe wider manufacturing arena and their proven technology solution will create acompelling 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 businessplanning and business management (ERP) software solutions to mid-tier retailersand manufacturers. All software is Microsoft-based. The business comprises two divisions, Retail Software Division and ManufacturingSoftware Division. Manufacturing Software Division - K3 has the largest manufacturing customer basein the UK. This has enabled the business to develop a very close relationshipwith Microsoft. The Division is a reseller of SYSPRO software, which is widelyacknowledged as the market-leading software for mid-market manufacturers andfollowing the acquisition of SYSPRO distributor, McGuffie Brunton, in March2007, 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 sectorspecific business units to address specialist niche markets within the retailsector. These include: Food, Drinks/Breweries, Household Goods and Fashion. This"verticalisation" strategy enables the Retail Software Division to market itselfas 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-marketenterprise 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