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Knowledge Support (KSS)

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Tuesday 25 June, 2002

Knowledge Support

Trading Statement

Knowledge Support Systems Group Plc
25 June 2002



               KNOWLEDGE SUPPORT SYSTEMS GROUP PLC 'The Company'

                        BOARD CHANGES AND TRADING UPDATE




BOARD CHANGES


The Company announces that David Mushin, Chief Executive Officer has been
dismissed with immediate effect.


Following the departure of David Mushin, the Board has asked Iain Cockburn,
Finance Director, to assume the role of interim Chief Executive Officer in the
light of the solid performance of the Petroleum Division that has been operating
under his leadership. Iain will assume this role with immediate effect.


TRADING UPDATE


Petroleum Division


The Petroleum division continues to make good progress, performing in line with
budget for the first half and showing strong potential to meet its full year
revenue target.


The recently released PriceNet version 3 has been successfully implemented on
two client networks, with a third underway. The product's expanded functionality
around price management, analytics and reporting has been well received by
target customers and is contributing to a higher level of interest from
potential buyers.


Following the licence deal announced with Sunoco Inc on 8 March 2002, the new
product is being evaluated with a number of potential customers in the US. The
US sales team continues to make steady progress in building interest and
awareness for PriceNet in the US market.


The Board believes that the recent implementations, together with those in
progress, will start to provide KSS with a strengthening reference base that
should help to reduce sales cycle times.


The Board believes that demand for pricing solutions in the petroleum market
continues to strengthen in response to increasing market place competition.
Competitive alternatives to PriceNet are still largely restricted to less
sophisticated and less flexible in-house solutions. As a result of these
factors, and assisted by the improving product functionality and quality,
average selling prices are robust.


The Board therefore continues to see a strong medium and long-term market
potential for the Company in this sector.


Retail Division


The Retail division continues to make slow progress in generating a revenue
pipeline. Its results will fall short of budget for the six months ended 30 June
2002 and the division is likely to underperform against its original full year
target. This is due in part to a delay in the release of PriceStrat version 3 to
accommodate market requirements for increased functionality and the growing need
for on-site solutions with higher levels of integration with client's existing
legacy systems.


The Company does, however, continue to see heightened levels of interest in
revenue management solutions, particularly from US retailers, accompanied by an
increasing level of definition of their objectives and requirements. The Board
believes that the Company is well placed in this emerging market place and
continues to view Retail as a key strategic market opportunity.


In the light of the continued shortfall in revenues, the Board is undertaking a
strategic review of the Retail Division. Management will report to the Board
with recommendations for enhancing product, marketing and sales strategies in
order to accelerate the generation of revenues. It is anticipated that the
conclusions of this review will be available by the time the Company's results
for the six months ended 30 June 2002 are released in September.


Summary


The Board is satisfied with the performance from the Petroleum division, which
is on target, but as a result of the shortfalls in revenues from the Retail
division, total revenues for the Company are likely to fall significantly below
market expectations for the year ended 31 December 2002. However, the impact of
lower Retail revenues has been offset by tight cost control and an exceptional
operating income of £1,000,000 from a key-man insurance policy in respect of
Professor Madan Singh. As a result net losses for the year ended 31 December
2002 are likely to be in line with consensus market expectations. The Company
continues to have a strong cash position and cash burn remains below the
targeted £550,000 per month.




For further information:


Knowledge Support Systems Group PLC               0161 609 4016

Iain Cockburn - Chief Executive Officer


END






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