Published on: June 26, 2013

Verging on vindication?

K3 has published an ostensibly disappointing trading update, with FY13 results (to June) likely to be “below current market forecasts”. We make appropriate changes to our estimates as detailed in the body of our note. There are, however, some material positives; a strong win-rate has been experienced in UK Retail in particular over the final quarter, mainly as customers begin to spend on new solutions following the Gemstone initiative. As we highlighted in March, the pain of this investment is being felt before the positives associated with software licences and (later) managed services. Although the group has not converted enough of these deals in time for the year-end, K3 could be on the brink of a major rebound in fortunes.