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ISA International (ISA)

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Monday 03 September, 2001

ISA International

Interim Results

ISA International PLC
3 September 2001


                     ISA International plc
                    ('ISA' or 'The Group')

     INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2001


Progress has been made during the first half of this  year  in
returning the Group to an operating profit. However, servicing
the  increased  level  of  debt,  primarily  incurred  through
financing  the  losses  associated  with  the  now  terminated
outsourced  logistics contract, has held back  the  return  to
overall profitability. The UK and Scandinavia, which represent
more  than  half of the Group's turnover, have performed  very
well with significant increases in both turnover and operating
profit.  However,  following  the  exit  from  the  outsourced
logistics  contract in September 2000, Continental Europe  has
seen  the recovery of gross margins more difficult to  achieve
than the restoration of revenue volumes.


Financial results

Turnover  for  the six months ended 30 June 2001  was  £178.3m
(2000:  £145.0m)  an increase of 23% on the comparable  period
last  year and up 17% compared with the second half  of  2000.
Gross  margins have in general been under pressure but due  to
the  increased  volume have increased by £2.8m year  on  year.
Overheads,  excluding non-recurring items, have  increased  by
11%  year  on year reflecting the increase in volume.  Overall
operating  profits  of  £0.7m have been achieved  compared  to
losses of £0.6m in the prior year and £7.7m in the second half
of  2000. Prior to non recurring items, the operating loss for
the  second  half of 2000 was £1.6m. The first  half  of  2001
therefore represents a substantial improvement.

Our  associates,  Kaye Office Supplies  and  EXY  Group,  have
contributed operating profits of £0.2m, but added £0.6m to the
Group's interest charge.

The Group's overall loss before tax is £1.5m. A tax charge  of
£0.4m  has  been provided for as losses in Continental  Europe
cannot be fully relieved in this period.

Net debt at 30 June 2001 was £35.5m, an increase of £6.5m from
the  same  period last year. This reflects the losses incurred
in  the second half of 2000. Net working capital is £4.1m less
than at June 2000.

Dividend

The Board does not propose a dividend for the six months ended
30 June 2001.

Operational review
We  have been successful in growing revenue in excess  of  the
market rate and therefore have won market share. In the  first
half  of  2001  UK revenue has increased by 34% year  on  year
whilst in Continental Europe it has increased by 21%.
With  our  initial  objective  of revenue  recovery  achieved,
following the return to in-house logistics, our focus  is  now
on  the restoration of gross margins. As cash availability has
tightened  we have not been able to maximise the benefit  from
early  settlement  discounts and other  buying  opportunities,
which  has delayed the recovery in gross margins. A number  of
programs  and initiatives are now in place to accelerate  this
process, although the full impact may not be seen for a period
of time.

As  we  emerge  from  the  lengthy  period  of  disruption  we
experienced  in Europe it is pleasing to note that  overheads,
as  a  percentage of turnover, are at their lowest  level  for
five  years.  We  are  aware  that  further  efficiencies  are
required and we will be continuing our business process review
to seek further improvements.

The  return  to  operating profit has  been  achieved  by  the
continuing growth of the UK and Scandinavia and the  reduction
of  losses in Continental Europe. Operating profit in  the  UK
and  Scandinavia  grew by 24% year-on-year  to  £3.4m,  as  we
continue to build on solid foundations. In Continental  Europe
the operating losses seen in the second half of 2000 have been
reduced by 28%, but are still significant at £2.2m.

Our  e-commerce  programmes have been highly  successful  with
over  12%  of Group revenue now being generated by  electronic
means.  A  number of significant customers across all channels
now trade with us electronically. In addition, activities with
key  vendors  have  begun  to reduce the  processing  cost  of
product   procurement.  As  electronic  integration  develops,
further   benefits   are  anticipated  in   improved   product
availability and reduced stockholding costs.

Revenue  for  the first half at Kaye was close  to  target  at
£106.5m  and  was  marginally ahead of the previous  year.  As
previously  reported Kaye suffered some service problems  late
in   2000.   The  short-term  additional  costs  of  restoring
acceptable service levels continued well into this year. Also,
increased  costs  have been incurred in  preparation  for  the
commissioning  of  Kaye's  new  state-of-the-art  distribution
facility.  It  is  expected that the  improvements  in  Kaye's
distribution  network  will  be  significant  following   this
investment.  The  continuing  investment  programme  in   Kaye
requires  a  refinancing of the company, likely to include  an
equity  injection by existing shareholders, which is  expected
to take place within the next few weeks.

Proposed investment & Strategic Alliance

A  circular  was  sent  to shareholders  on  10  August  2001,
detailing  the  terms of the proposed Strategic Alliance  with
Daisytek   International   Corporation,   a   Nasdaq    quoted
distributor of computer and office supplies, and investment by
Daisytek  of  up  to  £10.0m in the  Group.  An  Extraordinary
General Meeting, held earlier today, ratified the proposals by
passing the resolution set out in the circular.

In  addition  to  its investment, the board  of  Daisytek  has
indicated  that it may be willing to advance up  to  £5.0m  of
credit  facilities  to  the  Group  for  investment  purposes,
subject  to  negotiation and execution of  a  legally  binding
agreement on commercial arm's length terms. This funding would
enable the Group to participate in any equity call from Kaye.

Admission to trading on AIM

As  set  out in more detail in the circular, the terms of  the
Investment  by  Daisytek  contain  provisions  which,   whilst
required  by Daisytek as a precondition of investing  in  ISA,
would  breach or potentially breach certain provisions of  the
Listing  Rules.  The Board believes that it  is  in  the  best
interests  of shareholders for there to be a continued  market
for  their ISA shares and has therefore decided to cancel  the
Company's  Listing and to make application for  the  Company's
ordinary  shares to be admitted to trading on the  Alternative
Investment Market ('AIM'). The Listing will be cancelled on 10
September  2001  and  it is expected that  the  entire  issued
ordinary  share  capital of the Company will  be  admitted  to
trading on AIM the same day.

Prospects

The  first foundation stone for the future was laid  when  in-
house  logistics  in Continental Europe was restored  in  late
2000.  The investment by Daisytek is the second key  stage  of
this  plan, providing a sound financial base for the business.
In  those  parts  of  the Group unaffected  by  the  logistics
problems, we have been able to demonstrate that the ISA hybrid
model  is  highly successful and well adapted  to  the  market
needs.   Our  chief  goal  remains  to  return  the  Group  to
sustained profitability.


Approved by the Board
3 September 2001


Copies of the Interim Report will be mailed to shareholders  on
4 September, 2001 and will also be available from the Company's
Head Office at 66-70 Vicar Lane, Bradford BD1 5AG.
                               
Enquiries:
ISA International plc                              01274 306 787
Mike Murphy, Chief Financial Officer

KPMG Corporate Finance                             0121 232 3000
Maura Dunne

Square Mile BSMG Worldwide                         020 7601 1000
Louise Robson or Susanne Walker

ISA International plc
Group Profit and Loss Account
For the Six Months Ended 30 June 2001

                                 Unaudited     Unaudited          Unaudited
                               6 months to    6 months to       6 months to
                              30 June 2001   30 June 2000  31 December 2000
                                      £000           £000              £000
                                                      
Turnover                           178,292        144,966           151,837
Cost of sales - normal            (151,589)      (120,598)         (128,318)
Cost of sales - exceptional              -           (491)           (2,345)
------------------------------------------------------------------------------
                                                      
Gross profit                        26,703         23,877            21,174
                                                      
Overheads                          (26,023)       (23,415)          (25,070)
Non recurring items                      -         (1,103)           (3,763)
------------------------------------------------------------------------------
Operating profit (loss)                680           (641)           (7,659)
Share of associates - normal           221          1,445                13
                    - non recurring      -           (515)             (517)

Amortisation of goodwill              (398)          (391)             (408)
------------------------------------------------------------------------------
                                                      
Profit/(loss) before interest & tax    503           (102)           (8,571)

                                                      
Net interest                        (2,028)        (1,288)           (1,940)
------------------------------------------------------------------------------
                                                      
Loss before taxation                (1,525)        (1,390)          (10,511)
Tax                                   (374)          (698)              249
------------------------------------------------------------------------------
                                                      
Loss after taxation                 (1,899)        (2,088)          (10,262)
Dividends                                -              -                 -
==============================================================================
                                                    
Transfer from reserves              (1,899)        (2,088)          (10,262)
==============================================================================
                                                     
Losses per ordinary share
Basic                                (3.2)p         (3.7)p           (17.7)p
Before non-recurring items           (3.2)p         (0.3)p            (6.0)p
Fully diluted                        (3.2)p         (3.6)p           (17.4)p



ISA International plc
Summarised Group Balance Sheet
As at 30 June 2001

                                   Unaudited      Unaudited          Audited
                                     30 June        30 June      31 December
                                        2001           2000             2000
                                        £000           £000             £000
Fixed assets                                             
      Goodwill                        14,594         15,046           14,993
      Tangible assets                  5,431          5,859            6,085
      Investments                      2,364          3,598            2,609
------------------------------------------------------------------------------
                                      22,389         24,503           23,687
------------------------------------------------------------------------------
Current assets                                           
      Stocks                          19,019         19,180           18,488
      Debtors due within one year     51,424         47,494           46,268
      Cash at bank and in hand           116            435            4,153
------------------------------------------------------------------------------
    
                                      70,559         67,109           68,909
Creditors due within one year        (81,110)       (66,993)         (79,233)
------------------------------------------------------------------------------
Net current (liabilities)/assets     (10,551)           116          (10,324)
------------------------------------------------------------------------------
                                                     
Total assets less current liabilities 11,838         24,619           13,363
                                                       
Creditors due after more than one year  (382)          (545)            (544)

Deferred Taxation                        (49)           (46)             (81)
==============================================================================
Net assets                            11,407         24,028           12,738
==============================================================================
                                                        
Capital and Reserves                                     
      Share capital and share
      premium account                  3,980          3,980            3,980
      Reserves                         7,427         20,048            8,758
==============================================================================
                                      11,407         24,028           12,738
==============================================================================


RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS           
                                                             
                                   Unaudited      Unaudited        Unaudited
                                 6 months to    6 months to      6 months to
                                     30 June        30 June      31 December
                                        2001           2000             2000
                                        £000           £000             £000
                                                         
Loss for the period                   (1,899)        (2,088)         (10,262)
New share capital issued                   -             10               (1)
Adjustment to unrealised   
gain on disposal of investments            -              -             (182)
Translation differences on foreign
currency net investments                 568             37             (845)
------------------------------------------------------------------------------
Net deduction from shareholders' funds(1,331)        (2,041)         (11,290)
Opening shareholders' funds           12,738         26,069           24,028
==============================================================================
Closing shareholders' funds           11,407         24,028           12,738
==============================================================================


ISA International plc
Summarised Group Cash Flow Statement
For the Six Months Ended 30 June 2001

                                    Unaudited     Unaudited        Unaudited
                                  6 months to   6 months to      6 months to
                                      30 June       30 June      31 December
                                         2001          2000             2000
                                         £000          £000             £000
Net cash inflow (outflow)                                
from operating activities
Operating profit (loss)                   680          (641)          (7,659)
Depreciation                            1,037           803            1,045
(Increase) decrease in working capital (9,159)       (4,341)          13,220
------------------------------------------------------------------------------
                                                  
                                       (7,442)       (4,179)           6,606
------------------------------------------------------------------------------
                                                        
Returns on investments and                               
servicing of finance                   (1,858)         (809)            (830)
------------------------------------------------------------------------------
                                                        
Taxation (paid) received                 (608)          340             (395)
------------------------------------------------------------------------------
                                                       
Capital expenditure and financial 
investment
Purchase of tangible fixed assets        (490)       (2,222)            (987)

Sale of tangible fixed assets              20           212               14
------------------------------------------------------------------------------
                                         (470)       (2,010)            (973)
------------------------------------------------------------------------------
                                                        
Acquisitions and disposals                               
Investment in associates                   (1)          (24)            (137)
------------------------------------------------------------------------------
                                           (1)          (24)            (137)
------------------------------------------------------------------------------
                                                         
Equity dividends paid                       -             -                -
------------------------------------------------------------------------------
                                                        
Net cash (outflow) inflow     
before financing                      (10,379)       (6,682)           4,271
------------------------------------------------------------------------------
                                                        
Financing                                                
Issue of ordinary share capital             -            10               (1)
Capital element of hire purchase 
payments                                 (183)         (163)            (280)
------------------------------------------------------------------------------
                                         (183)         (153)            (281)
------------------------------------------------------------------------------
==============================================================================
                                                       
(Decrease) increase in cash in 
the period                            (10,562)       (6,835)           3,990
==============================================================================
                                                                              
                                
Analysis of movement in net debt
Balance at beginning of period        (25,834)      (22,351)         (29,026)
(Decrease) increase in cash   
in the period                          (10,562)      (6,835)           3,990
Cash  outflow from movement in debt        183          163              280
New hire purchase contracts                  -            -             (261)
Effect of foreign exchange rate changes    668           (3)            (817)
==============================================================================
Balance at end of period               (35,545)     (29,026)         (25,834)
==============================================================================


ISA International plc
Notes to the Financial Information
For the Six Months Ended 30 June 2001

1. The  interim  financial  information  has  been  prepared
   on  the  basis  of  the  accounting policies  set  out  in  the
   2000 statutory accounts.

2. The   segmental  analysis  of  turnover  and   operating
   profit (loss) by origin is as follows:

                        Turnover          Operating profit (loss)
                                         before non-recurring items
                                                                   
               6 months   6 months   6 months    6 months  6 months  6 months
                     to         to         to          to        to        to
              30th June  30th June   31st Dec   30th June 30th June  31st Dec 
                   £000       £000       £000        £000      £000      £000
                                                             
United Kingdom   69,687     51,971     59,450       2,830     2,232     2,198
Scandinavia      23,067     22,210     21,587         587       531       (27)
Continental     
Europe           85,538     70,785     70,800      (2,209)   (1,291)   (3,057)
Unallocated           
Central Costs         -          -          -        (528)     (519)     (665)
==============================================================================
                178,292    144,966    151,837         680       953    (1,551)
==============================================================================

3. The  taxation  charge  is  calculated  by  applying  the
   Directors'  best  estimate  of the annual  effective  tax  rate
   to  the  loss  for  the  period.   The  net  charge  arises  as
   losses  incurred  in  Continental Europe can  not  be  relieved
   in this period.

4. The  calculation  of  loss per ordinary  share  is  based
   on    the    loss   after   taxation   of   £1,899,000   (2000:
   £2,088,000)   and   on  58.7  million  (2000:   56.7   million)
   ordinary   shares   being  the  weighted  average   number   of
   shares   in  issue  during  the  period.  The  calculation   of
   fully   diluted  earnings  per  ordinary  share  includes   the
   impact   of  5.54  million  shares  issued  on  9  March   2000
   under   the   terms   of   the  acquisition   of   John   Heath
   (Holdings)   Ltd   in  1998,  in  addition  to   the   dilutive
   effect of outstanding share options.

5. A  statement  of  total recognised gains  and  losses  is
   not   included  as  there  have  been  no  material   movements
   other  than  those  reported  in  the  Profit  &  Loss  Account
   and   the  translation  differences  on  foreign  currency  net
   investments  shown  in  the  Reconciliation  of  Movements   in
   Shareholders' Funds.

6. There  have  been  no  discontinued  activities  in  the
   period.

7. The   preceding   financial   information   does    not
   constitute  statutory  accounts  as  defined  in  Section   240
   of   the  Companies  Act  1985.  Statutory  accounts  for   the
   previous   year,  ended  31  December  2000,  upon  which   the
   auditors  issued  an unqualified opinion,  and  which  did  not
   contain   any   statement  under   237(2)   or   (3)   of   the
   Companies  Act  1985,  have  been delivered  to  the  Registrar
   of Companies.





                                                                                
                                                                                
                                                       

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