K3 Business Technology Group Regulatory News (KBT)

AIM: KBT

K3 BUSINESS TECHNOLOGY GROUP PLC

("K3" or "the Group")

Trading Update

K3, which provides and supports Enterprise Resource Planning software, hosting and managed services to the supply chain industry, is providing the following update on trading for the financial year ending 30 June 2013.

Against continuing weak market conditions in the retail sector, order intake within our Microsoft UK business has improved significantly since January, with some major new retail order wins, which are expected to total over £10m when fully delivered. These new wins include a number of high profile retail names and are for both the Microsoft AX and NAV solutions. However continuing order deferrals combined with the phasing of the software element of these new wins mean that K3 will report revenue and pre-tax profits below current market forecasts. Outside this major Division, the performance of SYSPRO and Sage Division is encouraging and the International Division is seeing an improvement. The Managed Services Division continues to offer good growth potential.

Project 'Gemstone', K3's major new global retail and wholesale solution, supported by Microsoft, is progressing well with the majority of the new orders signed in the period utilising early modules of the enhanced Gemstone functionality that is being released in coming weeks. Investment in the development of Gemstone will continue into the new financial year.

The Group continues to deliver high levels of recurring income and good cash flows.

Full year results for the year ending 30 June 2013 are expected to be published in mid September when the Directors will comment further on current trading.

Andy Makeham, Chief Executive, commented,

 "Whilst clearly disappointed by the order slippage, we are nevertheless pleased in the step change in order wins for both our AX and NAV solutions in what remains a difficult market. It is also very encouraging that some major retail names are selecting our new Gemstone solution. K3 delivers good levels of profits, and the underlying cash generation and strong levels of recurring revenues help to underpin the business."

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