Acquisition

AIM: KBT

4 July 2011

K3 BUSINESS TECHNOLOGY GROUP PLC

("K3" or "the Group")

Acquisition of Retail Customer Base

K3, which supplies enterprise resource planning ("ERP") software, hosting and managed services to the supply chain industry, is pleased to announce the acquisition of the Retail Merchandising Division of Azurri Computer Solutions Ltd ("Azurri Retail"). The consideration for the acquisition is £1.0m, payable in cash on completion. Further consideration of up to £0.5m is payable dependent on increases in gross margin generated by Azurri Retailover the next two years.

For the year to December 2010, Azurri Retail generated sales of £1.0m and an underlying profit of £0.4m. Over £0.6m of 2010 revenues were recurring. Azurri Retail's customer base comprises a number of major retailers, including Matalan, JJB Sports, Littlewoods, Holland & Barratt and the National Trust.

Azurri Retail represents a highly complementary fit with K3's existing retail software operations, adding further specialist skills, and it will be readily integrated into the Group. Its acquisition is in line with K3's strategy to build recurring revenues and acquire profitable user bases with significant cross-selling opportunities, in particular for its hosting and managed services offering.

Andy Makeham, CEO of K3, said,

"I am delighted to have completed the acquisition of Azurri Retail. We continue to strengthen recurring revenues by acquiring new user bases, where we can also offer additional services and upgrades, and Azurri Retail represents an exciting opportunity to acquire a prestigious retail customer base.

We look forward to working together with our new customers to ensure the continuing successful delivery of their IT requirements."

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