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 under perform 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

http://www.kssg.com