Trading Update

AIM: KBT

K3 BUSINESS TECHNOLOGY GROUP PLC

("K3" or "the Group" or "the Company")

Trading Update

K3, which provides mission‐critical business software, cloud solutions and managed services to the retail, manufacturing and distribution sectors, is pleased to provide an update on trading for the financial year to 30 November 2018.

The benefits of the changes made to reposition the Group for a return to profitable growth continue to flow through. Trading in the second half of the financial year has been encouraging and the Board expects to report full year results that are slightly ahead of market expectations. This includes a reduction in the Group's net debt position at the year end to approximately £0.7m (30 November 2017: net debt of £4.3m). This improvement reflects the reduced cost base and better working capital management.

K3 is focused on increasing sales of its own IP, and new business wins for K3 fashion (formerly "ax l is fashion") continue to be at encouraging levels. These included major agreements with Oberalp Group, the European sports clothing and equipment manufacturer and retailer, and Columbia Sportswear, the US-based manufacturer and distributor of outdoor apparel and products.

We are excited about the future for K3 Imagine, the class-leading cloud native product that offers customers a scalable platform and easy-to-integrate point solutions. K3 Imagine is a cornerstone in K3's strategic transition to an IP-led organisation and has continued to gain traction, with several projects now underway both with existing and new customers.

The Board continues to view prospects for progress positively and will provide a further update on trading with final results, which are expected to be issued in mid-March 2019

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