K3 Business Technology Group Regulatory News (KBT)

14 July 2016

AIM: KBT

K3 Business Technology Group

("K3" or "the Group")

Pre-close Trading Update

K3, which provides and supports software, hosting and managed services to the retail, manufacturing and distribution sectors, provides the following update on trading for the financial year to 30 June 2016.

The Group's overall trading performance remains encouraging, particularly in core sectors, and results for the full year are expected to be broadly in line with market expectations, notwithstanding the impact of a major customer entering administration in June. The seasonally important final months of the period saw a pleasing level of contract wins and the new business pipeline continues to provide significant opportunities for the new financial year. Contracts wins and renewals also supported significant new business for K3 hosting. Recurring income (from software licence renewals, support contracts and hosting) remains high and is expected to show a year-on-year increase as the Group continues to transition to a product/cloud-centred business.

The integration of the DdD business, acquired in April, which provides proprietary cloud-based software for retailers, is progressing well and is expected to be earnings enhancing in the next financial year.

The Group's net debt at the year end is expected to show a reduction to £8.9m, representing a year-on-year decrease of £3.2m (30 June 2015: £12.10m; decrease of £1.55m).

The Board looks forward to providing further information on trading with the publication of K3's full year results in mid-September.

This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

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