I first started watching KBT in March 2007 at 125p, price now is 147p after a peak of 195p. It's come down with rest of the sector, KBT has been very busy with earning enhancing acquisitions, and healthy contract wins. I wasn't planing on buying growth shares at this time, but I dipped in this morning and brought a modest amount with a view of topping up if markets worsen. See some fundies below.

Finals to report 12 March 2008.

Trading update. 21 January 2008 = Operating profit before amortisation expected to be upper end of market expectations. Reflecting increased importance of online sales for retailers. Look forward to 2008 with confidence.

2007 EPS forecast 15.3p , PER 9.8 , PEG 0.15
2008 EPS forecast 22.0p , PER 6.7 , PEG 0.18

Debt is expected to rise to 13 or 14m due to acquisitions, but with strong cash flow and no more acquisition they would be debt free within 3 to 4 years. Market cap is 29m.

Good to see positve write up today in Share Mag, in conclusion says - see below.


Fears of a retail slowdown have mashed the stock, which looks very cheap. BUY

Good set of Finals result in this morning, which confirms expectations. Have just topped up my holdings in K3. See the highlights below.

K3 BUSINESS TECHNOLOGY GROUP PLC

('K3' or 'the Group')

IT solutions supplier to the supply chain industry

Announces
Preliminary Results for the Year to 31 December 2007

Highlights

* Excellent results reflecting strong organic growth and partial benefits of
earnings enhancing acquisitions

* Revenue increased by 25% to 34.15m (2006: 27.35m)

* Adjusted profit before tax*1 rose by 78% to 4.72m (2006: 2.66m)
Profit before tax rose by 43% to 3.68m (2006: 2.57m)

* Cash generated from operations increased by 182% to 6.23m (2006: 2.21m)

* Adjusted earnings per share*2 rose by 60% to 16.8p (2006: 10.5p)
Earnings per share rose by 41% to 13.4p (2006: 9.5p)

* Dividend of 0.5p proposed (2006: nil)

* Recurring revenues from licence and maintenance fees now totals 13.8m on
annualised basis

* Three highly complementary acquisitions completed:

- two manufacturing software businesses (MBL and Index) and a retailer
software provider (Landsteinar)
- full benefits to be evident in 2008

* Disposal of non-core business, Elucid, in February 2007

* Board views the prospects for 2008 positively - sales pipeline at record
levels


*1 Calculated before amortisation of acquired intangibles of 0.90m (2006:
nil) and share-based payment costs of 0.15m (2006: 0.09m).

*2 Calculated before amortisation of acquired intangibles of 0.90m (2006:
nil), share-based payment costs and related tax charge of 0.11m (2006:
0.06m) and loss on disposal of operations including the related tax
charge of 0.14m (2006: 0.11m).


Tom Milne, Chairman, commented,

'K3 made excellent progress over the year as results demonstrate. The three
acquisitions we made during the year have added critical mass to the business
and significantly enhanced recurring income streams and operating cash flow. We
have yet to exploit the full benefits of all our acquisitions and see
significant potential to come from them in future.

We continue to look for complementary acquisition opportunities that will
enhance our existing product range and skills or bring additional routes to
market. Our product range is now also sufficiently broad to consider the
acquisition of 'feeder' businesses, with established customer bases in our
chosen sectors. These will provide predictable, recurring income streams but
also deliver opportunities for cross-selling as customers upgrade their existing
software solutions with newer Microsoft products.

We continue to view the Group's prospects for 2008 positively.

Pleased sp has remained in positive area on a weak day in the markets, would hope we may have some positive comments in tomorrows press. Worth noting that due to 3 acquisitions last year the debt level is now 16m, but K3 have very high cash flow which could pay these off in 3 to 4 years.

Look at the balance sheet goodwill and other intangibles exceed the tangible net worth of the company. Perhaps the market is saying they paid too much for their recent acquisitions.

I was expecting 14m in debts, they are 2m over this at 16m. I will look at the balance sheet again.

Interims due Wednesday.

Not in these at present, but will study the statement with interest.

Look for debt reduction to under 9.0m, and 1.7m adjusted PBIT, and 6p adjusted EPS to confirm we are inline for full year estimates.

Not a easy one to calculate so I may be out a bit with figures, but I believe that debt reduction is the key here.

Interims today still downbeat.

Adjusted PBIT = 1.54m,
Adjusted EPS = 3.1p
Still looking for Net Debt reduction too 9.0m to year end.

Expect price weakness and broker revisions downwards for full year, will look again at full year results.