Trading Statement

17 Jan 2006 07:01

K3 Business Technology Group PLC17 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 keydivisions of Retail and Manufacturing. Information Engineering Group Ltd("IEG"), one of two distributors in the UK of Syspro Enterprise ResourcePlanning 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 eightnew customer contracts as well as service revenues from the ongoingimplementation for its Carpetright contract. The Manufacturing Division continues to deliver double digit margins and highlevels of recurring revenue, representing approximately 50% of the division'sturnover. IEG secured 19 new customers during the year, including a majorcontract with Doncaster Group worth £2m. There was encouraging cross-selling ofthe IEG's Syspro product into the Division's existing manufacturing user base. After a slow first half, business at Elucid, which provides business solutionsto the mail order and catalogue market, has improved steadily and a total of 11new 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 This information is provided by RNS The company news service from the London Stock Exchange