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ISA International (ISA)

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Monday 30 April, 2001

ISA International

Preliminary Results

ISA International PLC
30 April 2001

                                                      30 April 2001

                       ISA International plc
   'Europe's leading distributor of electronic office supplies'
      Strategic Alliance Announcement and Preliminary Results
               Financial Year ended 31 December 2000

The  Board  of  ISA  International plc ('ISA' or  the  'Group')  is
delighted to announce that Heads of Agreement have been signed with
a  strategic,  global trade partner who proposes  to  make  a  cash
investment  of  £10  million in ISA. This strategic  alliance  will
address  both the future financial needs of ISA and its requirement
to  have  strong  global partnerships with vendors and  to  service
global customers. The Board expects contracts to be exchanged and a
circular  to shareholders to be distributed in the next  few  weeks.
Subject  to  shareholders'  approval,  the  transaction   is
anticipated to complete by the end of July 2001.

2000  was  a  year  of contrasting financial performance  for  ISA:
record  profits  in the UK and Ireland were offset  by  significant
losses  incurred  in  Continental Europe. The  European  outsourced
logistics partner, who commenced operations in October 1999, failed
to  attain  customer  service  performance  or  financial  controls
satisfactory  to  ISA.  The contract was  therefore  terminated  in
September  2000  and logistics was re-established as  an  ISA  core
competence in both Germany and France. The consequential impact  of
the European logistics failure was that Group turnover only grew by
3%  to  £296.8 million (1999 continuing operations: £288.0 million)
whilst  operating losses, excluding non-recurring costs and  before
share of associates, of £0.6 million were recorded (1999 continuing
operations: £2.2 million operating profit). One-off costs  directly
attributable to the outsourced European logistics contract amounted
to £7.2 million (total non-recurring items: £7.7 million).

The  Group has returned to an operating profit in the first quarter
of 2001, with record profits in the UK and Ireland, a strong profit
performance  in  Scandinavia  and  rapidly  declining   losses   in
Continental Europe. The Hybrid distributor model fully developed in
the  UK during 2000 now provides the platform for Group-wide future


- Hybrid Distributor Model fully developed in the UK

- New Senior Management Team recruited and deployed (country and
- Record Operating Profits in the UK and Ireland

- Ecommerce Programmes successfully launched

- Total Recovery of European Logistics

Hybrid  Distributor  Model:  ISA has capitalised  upon  its  Hybrid
structure,  providing specialist distribution channels  to  service
Reseller,  Retail  and  End  User  customers  across  Europe   with
electronic  office  supplies. The Hybrid business  model  maximises
growth   opportunities  in  both  existing  and  emerging  markets;
leverages  vendor  agreements; balances  sales  volume  with  sales
margin - all within a low cost infrastructure. The diverse customer
mix and core competencies of sales, marketing and logistics allow a
total  focus  on  profitable  growth.  Value  added,  high  quality
distribution  solutions  have  an increasing  appeal  to  customers
seeking  to  reduce  transaction  costs,  particularly  during   an
economic slow-down.

Senior   Management:  The  Operational  Board   was   significantly
strengthened during 2000 to meet the strategic requirements of  the
Group  going forward. Managing Directors were hired for France  and
Norway,  together  with the appointment of Pan European  functional
heads  for:  Sales, Logistics, Marketing, Ecommerce, IT, Management
Information Systems, Purchasing and Human Resources.

UK  &  Ireland:  Record  operating profits were  achieved  in  each
quarter  and  for  the  year as a whole. The expanded  distribution
facility  at  Bradford, together with an enhanced presence  in  the
Republic of Ireland, Northern Ireland, Scotland the South  East  of
England,  facilitated sales growth in excess of the market average.
Profits  were  further  improved  by  Ecommerce,  capturing  9%  of
customer transaction volume. This is targeted to increase to 30% by
the end of 2001.
- Turnover  grew  by  21%  to £111.4 million  (1999  continuing
  operations: £91.9 million)
- Operating profits increased to £4.4 million (1999 continuing
  operations: £3.0 million)

Scandinavia: The 'dot com' mania in early 2000  and the  emergence
of  short  lived,  but  highly  competitive,  computer  supplies   
websites  led  to  a  challenging  year as margins came under 
pressure.  Following the implementation of our Ecommerce platform, 
Sweden in particular enjoyed rapid success, ending  the year  with 
over 30% of customer transactions placed electronically - setting  
a benchmark for the Group. 
- Turnover decreased to £43.8 million (1999: £46.0 million) but
  declined by less than 1% at constant exchange rates
- Operating profits were £0.5 million (1999: £1.3 million)

Continental Europe: Continuous customer service problems  with  the
outsourced  logistics  operation in Belgium seriously  damaged  the
European  business. Restoring ISA's logistics required the  sourcing,
fit-out  and  commissioning of warehouses in Dusseldorf  and  Paris
within  three  months. A programme, supported by UK expertise,  was
successfully completed by the end of the third quarter. The  return
to  excellent  customer service resulted in  sales  growth  in  the
fourth  quarter.  Gross margins sacrificed during  2000  to  retain
customer loyalty have taken longer to recover.
- Turnover decreased to £141.6 million (1999: £150.1 million)
- Operating losses (before non-recurring items) were £4.3
  million (1999: £1.0 million)

Vendors:  The  support provided by Original Equipment Manufacturers
(OEMs)  during 2000 reflected the importance of ISA's long standing
relationships. The Board very much appreciated the participation of
OEMs  in  the European recovery plan. With logistics re-established
as  a  core  competence, the Group was able to develop a number  of
initiatives  launched in conjunction with OEMs  to  address  global
market  changes in customer procurement requirements for electronic
office  supplies.  During the third and fourth quarters,  Ecommerce
programmes were trialled in the UK and Sweden that focused  on  the
reduction of back room costs, whilst improving product availability
through  just-in-time supply chain solutions. Stock turn  increased
to  13.5 times for 2000 (1999: 12.7 times) and in the UK the return
on  working  capital employed increased to 35% (1999: 30%).  A  Pan
European purchasing programme was also launched in September 2000.

Customers:  Excellent customer relationships were  also  a  crucial
constituent  of  the  European recovery plan -  no  major  customer
losses  were  incurred. Elsewhere, customer development  programmes
benefited  from  an  expanded  product  offering  and  the  use  of
'customer friendly' Ecommerce tools. A number of major new customers
were acquired  on  the  strength of  ISA  Ecommerce solutions. 

Pan European sales initiatives were  successfully launched during the 
fourth quarter. A number  of existing  and  new major corporate
customers entered into  European supply  agreements,  estimated to 
have  an  incremental  annualised sales value of approximately 
£11 million.

Kingfield Heath: Our 47% associate Kingfield Heath contributed £0.2
million  to profit before tax, prior to exceptional costs  of  £1.0
million.  On  a like-for-like basis Kingfield Heath's turnover  was
broadly  unchanged at £206.4 million in the first full  year  since
its  creation. It enjoyed reasonable early success in executing its
integration  plan, but suffered service difficulties  late  in  the
year.  The service level has now been recovered and Kingfield Heath
is moving forward with the second phase of its strategic plan.

Financial Results: Losses for the year before non-recurring  items,
share  of  associates  and tax were £2.6 million  (1999  continuing
operations: profit of £0.9 million). Non-recurring items, excluding
our   share  of  associates  were  £7.7  million  (1999  continuing
operations:  £4.2  million). The Group's share of  the  associates,
including  non-recurring items and amortisation of goodwill  was  a
loss of £1.6 million (1999: £1.0 million).

The  one-off costs directly attributable to the service failure  of
the outsourced logistics contract were:
- Stock losses and customer claims £2.8 million
- Duplicated logistics costs £1.8 million
- Non recoverable debts £1.2 million
- Termination fee £1.4 million

During  the  period of disruption, a further £0.5 million  of  non-
recurring costs were incurred.

As   a  result  of  the  non-recurring  items  and  tax  losses  in
Continental Europe which cannot be relieved this year,  losses  per
share were 21.4 pence (1999: 7.3 pence). Losses per share prior  to
non-recurring items were 6.3 pence (1999: earnings of 4.1 pence).

Cash  and  Balance  Sheet:  The impact of  the  problems  with  the
outsourced  logistics  in  Continental  Europe  contributed  to  an
increase  in  the  net  debt  of the  Group  by  £3.5m  to  £25.8m.
Shareholders'  funds have reduced to £12.7m giving net  gearing  of

Net  debt  has increased further during  the early part of 2001 due
to  a significant  uplift  in  the level of business combined with 
seasonal working capital requirements.  Whilst  the Board considers  
that its banking facilities are adequate to support the Group's 
predicted cash flow, the Board believes an equity injection
will strengthen the Group's balance sheet and help ISA to grow
and to seize commercial opportunities as and when they arise. After
detailed  consideration  of  a number of  alternatives,  the  Board
intends  to put a proposal to shareholders, as referred to  in  the
introduction,  concerning  a  £10  million  convertible  redeemable
instrument  as soon as possible. This instrument can,  inter  alia,
convert  over  the  next  five years into ordinary  shares  of  ISA
representing  50%  plus one share of the company's  existing  share
capital,  reflecting a conversion price of circa 16p  per  ordinary
share. The proposal will be subject to shareholder approval.

Dividends: The Board does not propose a dividend for the year ended
31 December 2000.

Outlook:  The market growth of electronic office supplies (EOS)  in
Europe  is projected to continue at 15% per annum for at least  the
next  five  years.  The relative spend on EOS as  a  percentage  of
general  office  consumable  products  continues  to  grow  and  is
predicted  to  reach  50% in 2001. Margins  remain  under  constant
pressure,  but  ISA's  Hybrid status and  low  cost  infrastructure
provide a clear advantage in this competitive market.

In  the current year, signs from Continental Europe are encouraging
and are broadly in line with the Board's expectation of the pace of
recovery  leading to monthly profitability. Our chief goal  is  the
return to sustained profits for the Group as a whole.

ISA  has  proven through the UK business model that  an  attractive
return  on sales can be attained. Logistics has been re-established
as  a core competence and, as Continental Europe returns to profit,
the  Board believes the Group has the potential to achieve  a  3-4%
operating return on sales, in the medium term.

For further information, please contact:

ISA International plc
Bruce Robinson, Chief Executive Officer                01274 892007
Mike Murphy, Chief Financial Officer                   01274 892007

Square Mile BSMG
Louise Robson / Susanne Walker                        020 7601 1000

      Results Conference Call - Tuesday 1 May, 10:00-11:00am
              Dial in No. 0208 8394710 Pin No.598554
                      ISA INTERNATIONAL plc
                   GROUP PROFIT & LOSS ACCOUNT
               FOR THE YEAR ENDED 31 DECEMBER 2000
                                            Continuing Discontinued 
                                            Operations   Operations     Total
                                       2000       1999         1999      1999
                              Note     £000       £000         £000      £000
Turnover                         2  296,803    288,027       83,573   371,600
Cost of sales - normal             (248,916)  (239,206)     (62,215) (301,421)
Cost of sales - exceptional      3   (2,836)    (1,532)           -    (1,532)
Gross profit                         45,051     47,289       21,358    68,647
Distribution costs                  (19,814)   (18,481)     (10,225)  (28,706)
Administrative expenses             (28,671)   (28,123)      (7,534)  (35,657)
Non-recurring items              3   (4,866)    (2,701)      (1,267)   (3,968)
Operating (loss) profit              (8,300)    (2,016)       2,332       316
Share of associates 
                 - normal               239        546            -       546
                 - non-recurring     (1,032)   (1,366)            -    (1,366)
Amortisation of goodwill               (799)     (197)            -      (197)
(Loss) profit before          
 interest & taxation                 (9,892)    (3,033)        2,332     
Interest charges (net)               (2,009)   (1,291)         (912)   (2,203)
(Loss) profit before taxation       (11,901)   (4,324)        1,420    (2,904)
Taxation                        4      (449)                             (987)
                                   ==========                        =========
Loss after taxation                 (12,350)                           (3,891)
                                   ==========                        =========
(Losses) earnings per                                        
 ordinary share                 5
Basic                               (21.4)p                            (7.3)p
Fully diluted                       (21.0)p                            (6.6)p
Before non-recurring items           (6.3)p                              4.1p

                     ISA INTERNATIONAL plc
                      AT 31 DECEMBER 2000
                                                         2000           1999
                                                         £000           £000
Fixed assets                                           
     Goodwill                                          14,993         15,437
     Tangible assets                                    6,085          4,706
     Investments                                        2,609          3,262
                                                     ----------     ----------
                                                       23,687         23,405
                                                     ----------     ----------
Current assets                                                 
     Stocks                                            18,488         18,873
     Debtors due within one year                       46,268         45,968
     Cash at bank and in hand                           4,153          1,860
                                                     ----------     ----------
                                                       68,909         66,701
     Creditors due with in one year                   (79,233)       (63,382)
                                                     ----------     ----------
Net current (liabilities) assets                      (10,324)         3,319
                                                     ----------     ----------
Total assets less current liabilities                  13,363         26,724
                                                     ----------     ----------
Creditors due after more than one year                   (544)          (618)

Deferred taxation                                         (81)           (37)
                                                     ==========     ==========
Net assets                                             12,738         26,069
                                                     ==========     ==========
Capital and reserves                                                 
     Share capital and share premium account            3,980          3,694
     Shares to be issued                                    -          3,976
     Reserves                                           8,758         18,399
                                                     ==========     ==========
                                                       12,738         26,069
                                                     ==========     ==========
                                                         2000           1999
                                                         £000           £000
Loss after taxation for the year                      (12,350)        (3,891)
New share capital issued                                    9              -
Unrealised gain on disposal of investments               (182)           815
Translation differences on foreign currency
 net investments                                         (808)           120
                                                     ----------     ----------
Net deduction from shareholders' funds                (13,331)        (2,956)
Opening  shareholders' funds                          l26,069         29,025
                                                     ==========     ==========
Closing shareholders' funds                            12,738         26,069
                                                     ==========     ==========

                     ISA INTERNATIONAL plc
              FOR THE YEAR ENDED 31 DECEMBER 2000

                                                        2000            1999
                                                        £000            £000
Net cash inflow (outflow) from operating activities                      
Operating (loss) profit                               (8,300)            316
Depreciation                                           1,848           3,701
Decrease (increase) in working capital                 8,879          (1,845)

                                                    ----------      ----------
                                                       2,427           2,172
                                                    ----------      ----------
Returns on investments and servicing of finance       (1,639)         (2,645)
                                                    ----------      ----------
Taxation paid                                            (55)         (1,349)
                                                    ----------      ----------
Capital expenditure and financial investment                    
Purchase of tangible fixed assets                     (3,209)         (2,245)
Sale of tangible fixed assets                            226           1,716
                                                    ----------      ----------
                                                      (2,983)           (529)
                                                    ----------      ----------

Acquisitions and disposals                           
Purchase of subsidiary undertakings                        -             (99)
Net cash transferred with subsidiary undertakings          -          (2,142)
Pre-sale dividend received                                 -           2,500
Repayment of acquired debt                                 -          16,500
Investment in associates                                (161)           (648)
                                                    ----------      ----------
                                                        (161)         16,111
                                                    ----------      ----------
Net cash (outflow) inflow before financing            (2,411)         13,760
                                                    ----------      ----------
Issue of ordinary share capital                            9               -
Repayment of amounts borrowed                              -         (16,500)
Capital element of hire purchase payments               (443)           (489)
                                                    ----------      ----------
                                                        (434)        (16,989)
                                                    ----------      ----------
                                                    ==========      ==========
Decrease in cash in the year                          (2,845)         (3,229)
                                                    ==========      ==========

Analysis of movement in net debt                     
Balance at beginning of year                         (22,351)        (36,432)
Decrease in cash in the year                          (2,845)         (3,229)
Cash outflow from movement in debt                       443          16,989
Loans/hire purchase contracts                             
 disposed of with subsidiaries                             -              10
New hire purchase contracts                             (261)            (36)
Effect of foreign exchange rate changes                 (820)            347
                                                    ==========      ==========
Balance at end of year                               (25,834)        (22,351)
                                                    ==========      ==========

                      ISA INTERNATIONAL plc
1.  There has been no change to any of the accounting policies set out in
    the 1999 statutory accounts. 
2.  The segmental analysis of turnover and operating (loss) profit by origin  
    is as follows:
                                       Turnover       Operating (loss) profit
                                                   before non-recurring items
                                   2000       1999          2000        1999  
                                   £000       £000          £000        £000  
    United Kingdom                              
             - continuing       111,421     91,939         4,430       3,026  
             - discontinued           -     83,573             -       3,599  
    Scandinavia                  43,798     45,989           504       1,303  
    Continental Europe          141,584    150,099        (4,348)       (961) 
    Unallocated central costs         -          -        (1,184)     (1,151) 

                                296,803    371,600          (598)      5,816  
3.  The non-recurring items consist of the following:  
                                           Continuing  Discontinued          
                                    Total  Operations    Operations    Total
                                     2000        1999          1999     1999  
                                     £000        £000          £000     £000  
    Cost of sales                                                      
    Stock losses and 
     customer claims                2,836       1,532             -    1,532
     Distribution costs                                                       
    Duplicated costs during 
     logistics transfer             1,745           -             -        -  
    Contract termination costs      1,420           -             -        -  
                                    3,165           -             -        - 
    Administrative expenses                                                   
    Board and senior management 
     settlements                      513       1,305           120    1,425  
    Property and location 
     rationalisation                  270         838           151      989 
    Non-recoverable debts           1,197           -             -        -  
    Exceptional bad debts            (279)          -           996      996  
    Accelerated IT depreciation         -         558             -      558
                                    1,701       2,701         1,267    3,968  
    Total before share of                      
     associates                     7,702       4,233         1,267    5,500
    Share of associates             1,032       1,366             -    1,366  
                                    8,734       5,599         1,267    6,866  
4.  The taxation charge comprises UK corporation tax £736,000 (1999:£373,000),
    overseas tax credit £(5,000)(1999:charge of £605,000), deferred tax charge
    of £52,000 (1999: credit of £(31,000)) and share of associates tax credit 
    £(334,000) (1999: charge of £40,000)

5.  The calculation of loss per ordinary share is based on the loss after     
    taxation of £12,350,000 (1999: £3,891,000) and on 57.8 million (1999: 53.2
    million) ordinary shares, being the weighted average number of shares in  
    issue during the year. The calculation of fully diluted loss per ordinary 
    share is based on 58.9 million (1999: 58.9 million) ordinary shares which 
    includes 5.5 million shares issued on 9 March 2000 under the terms of the 
    acquisition of John Heath (Holdings) Ltd in 1998, as well as the dilutive 
    effect of outstanding share options.

6.  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 unrealised gain on disposal of subsidiaries and      
    translation differences on foreign currency net investments which are both
    shown in the Reconcilliation of Movements in Shareholders' Funds.

7.  The preceding financial information does not constitute statutory accounts
    as defined in Section 240 of the Companies Act 1985.  The financial       
    information for the year to 31 December 1999 is based on the satutory     
    accounts for that year.  These accounts, 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 

    This preliminary announcement was approved by the Board on 29 April 2001. 
    The auditors have not yet reported on the full statutory accounts for the 
    year ended 31 December 2000, which will be posted to shareholders in May. 
    After that time they will also be availible at the Company's registered   
    office: 66/70 Vicar Lane, Bradford, West Yorkshire, BD1 5AG.


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