Danka Announces Fourth Quarter Outlook and Decision to Remain With Its Current Credit Facility.

Business Editors

ST. PETERSBURG, Fla.--(BUSINESS WIRE)--March 13, 2000

Danka Business Systems PLC (NASDAQ: DANKY) announced today that based upon January results and preliminary information for February, the Company is experiencing lower than expected gross margins in its U.S. operations. As a result, the Company expects its results for the quarter ending March 31, 2000 to be significantly below analysts' estimates.

The Company stated that the remainder of its worldwide operations is performing up to expectations.

The Company has experienced lower margins on its U.S. equipment sales this quarter primarily as a result of its decision to sell off end of life analog equipment inventory at significantly reduced margins and because digital equipment pricing increases from manufacturers were not fully recovered in the Company's pricing actions. Service margins in the U.S. were affected by higher labor and parts costs primarily related to increases in the cost of parts used in the servicing of the Company's Kodak analog installed base.

The Company is taking actions to address its gross margin decline including selective price adjustments on equipment and parts and cost reductions in the Service Operations. Further, there will be increased focus on cost controls in the Selling, General and Administrative areas. The Company believes these actions will result in increased operating efficiencies and satisfactorily address the margin declines it is experiencing in this quarter. As a result of the actions being taken, the Company believes, at this time, that its outlook for earnings for fiscal year 2001 will not be affected.

Final results for the quarter and year-end are expected to be announced in early May 2000.

The Company also announced that it would remain in its current bank facility that provides the Company with $730 million of financing through March 31, 2002, rather than proceed with the previously announced commitment for a new credit facility from Bank of America. The Company currently has approximately $650 million in debt under the credit facility and is continuing to evaluate the timing and form of the refinancing of this debt.

Forward Looking Statements

Certain statements contained in this release, or otherwise made by officers of the Company, including statements related to the Company's future performance and the Company's outlook for its business and respective markets, projections, statements of management's plans or objectives, forecasts of market trends and other matters, are forward-looking statements and contain information relating to the Company that is based on the beliefs of management as well as assumptions, made by, and information currently available to, management. The words "goal", "expects", "believes", "satisfactorily" and similar expressions as they relate to the Company or the Company's management, are intended to identify forward-looking statements. No assurance can be given that the results in any forward-looking statement will be achieved. For the forward-looking statements, the Company claims the protection of the safe harbor for forward-looking statements provided for in the Private Securities Litigation Reform Act of 1995. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such actual results to differ materially from those reflected in any forward-looking statements include, but are not limited to, (i) any inability to achieve the cost savings and effectively implement other actions described in this release and (ii) other risks including those risks identified in any of the Company's other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date they are made. The Company undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances that arise after the date such statements are made. Furthermore, as a matter of policy, the Company does not generally make any specific projections as to future earnings nor does it endorse any projections regarding future performance, which may be made by others outside the Company.

Danka Business Systems PLC, headquartered in London, England, and St. Petersburg, Florida, is one of the world's largest independent suppliers of office imaging equipment and related services parts and supplies. Danka provides office products and services from 30 countries around the world. For additional information about copier, printer and other office imaging products from Danka, visit the web site at: www.danka.com.