Published on: January 10, 2017

Short term trading pressure

K3 has this morning published a trading update; there has been weakness in December trading as customers continue to adopt subscription-driven Cloud-based models. This trend, combined with a number of contract slippages, has impacted H1, and management are not confident of making up the shortfall in H2. We downgrade our 2017E estimates by 18% at the Adj EBITDA level. We await further detail, both in terms of strategic progress and around the
near-term pressures, with the H1 results due towards the end of March. Clearly this news is a disappointment, but it should not divert the group from its ongoing strategic refocus, which is already beginning to bear fruit.

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