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Kalamazoo Comp Grp. (KLMZ)

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Tuesday 31 July, 2001

Kalamazoo Comp Grp.

Final Results

Kalamazoo Computer Group PLC
31 July 2001


For Immediate Release                                              31 July 2001


                         KALAMAZOO COMPUTER GROUP PLC


             PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2001


Kalamazoo Computer Group plc, a leading pan-European provider of specialist
computer software and solutions to the automotive retail market, announces
preliminary results for the year ended 31 March 2001.


KEY POINTS


  * Turnover from continuing operations reduced by 18% to £48.3 million
    (2000: £59.2 million), reflecting post Y2K downturn and the difficult
    trading conditions in the core dealer management systems market.

  * Loss before interest, associated undertakings, tax and exceptional
    items, on continuing operations, £2.4 million (2000: profit £0.5 million).

  * Continued improvement in software capability, with product quality
    issues largely resolved.

  * The second half result reflects improved trading, with a strong upturn
    in UK order intake, despite adverse market conditions.

  * The launch of two new major offerings, Evolution and Edge, expected to
    drive future growth.

  * Commenting on prospects:


Malcolm Roberts, Chief Executive, said:


'Dealer systems, products and services are strategically important for
Kalamazoo and will enable the business to compete effectively in Europe. We
are confident they give us the opportunity for increased market share across
different territories and manufacturers.'


For further information, please contact:


Malcolm Roberts, Chief Executive
Margaret Ashworth, Group Finance Director
Kalamazoo Computer Group                                   0121 411 2345

Richard Darby
Suzanne Dunne

Buchanan Communications                                    020 7466 5000



Chairman's Statement

Results

The past year has proved to be difficult for the Kalamazoo Group, and we have
incurred a loss before tax of £4.3 million, including exceptional costs of £
1.6 million.  There are encouraging trends within the businesses, but
nevertheless this is a disappointing result against last year's loss before
tax and before the effect of the sale of discontinued businesses of £2.6
million.

The Group reported a first half operating loss (before exceptional items) of £
1.7 million, which has been significantly reduced to a second half operating
loss of £0.7 million.  This reflects improved sales activity and the impact of
further redundancies and rationalisation, particularly in our Continental
European operations.

Turnover increased from £22.6 million in the first half to £25.7 million in
the second half, a total of £48.3 million compared with last year's turnover
on continuing operations of £59.2 million.  Total UK turnover for the year
fell by £7.3 million to £30.7 million, of which approximately half of the
reduction related to discontinued businesses, whilst turnover in our
Continental operations fell by £7.2 million to £17.6 million.

Market conditions throughout 2000 were difficult, reflecting the Y2K
investment previously made by customers, the significant concerns in the UK
over new car pricing which had a dramatic effect on automotive dealers'
financial performance, and continued consolidation in the market place.  We
are beginning to see signs of improved sales activity in our operations,
although this is, we believe, more a result of our improved product offering
rather than changing market conditions.

We have continued to restructure and streamline the operations as a result of
significantly reduced revenues in our dealer management system ('DMS')
business, incurring exceptional restructuring costs of £1.6 million in the
year.  At 31 March 2001 the Group employed 743 people, compared with an
average in the previous financial year of 959 in our continuing operations.

The decline in activity in our Continental European operations was
particularly marked, and the delay of the launch of our new DMS product '
Evolution' hampered progress.  However, Evolution is now successfully live in
Spain.

Within our UK operations, Coin, our dealer finance and insurance business, and
KSS, our desktop support business, performed well with major profit
contributions.

Our results continue to be stated after significant new product development
expenditure, of which the majority relates to Evolution.  The development
charge in the year was £4.0 million and we also spent £1.0 million on
equipment to establish the platform for implementation.

The overall loss after tax absorbed by the Group for the year was £4.3 million
(2000: £7.3 million), the loss per share was 6.9p (2000: 11.7p) and the
directors do not propose a dividend.

Net Assets and Cash

The loss for the year reduced net assets to £5.1 million as at 31 March 2001
(2000: £9.3 million).  Net cash declined from £3.0 million at 31 March 2000 to
£0.3 million at 31 March 2001, but this compares with net debt at the half
year of £1.7 million.

We significantly improved the Group's working capital management during the
year and as part of the cash management programme, the Group accelerated the
planned sale of part of the Northfield site that has now been sold for
development, with proceeds of £2.0 million.

The continued outflow of cash from the Group, which is primarily in the UK
where the bulk of the development expenditure is incurred, is a concern.
Whilst the Group enjoys the support of its bankers, we are monitoring cash
very carefully.  The level of cash outflow in the past two years, totalling £
6.5 million, is not sustainable, and the Group continues to seek to lower its
break-even point.  More importantly, and as described further below in '
Prospects', the Group now needs to achieve a return on the substantial
investment made in Evolution.

Prospects

During the past year, the Group has invested heavily in the new Evolution
product, and to a lesser extent, our e-zoo Customer Relationship Management ('
CRM') offering, which we have branded as Edge.

Evolution is now being successfully sold into the Jaguar network of dealers in
Spain.  We are looking to obtain further automotive manufacturers'
endorsements over the next months and are confident of securing the next
year's forecast sales revenue for Evolution in Continental Europe.

The Edge programme has demonstrated in our field trials to customers that a
structured business development programme can achieve outstanding business
results.  The benefit of this to the Group is expected to be shown in Edge
sales growth, especially in the UK.

The first half of the current financial year will undoubtedly be challenging,
as market conditions remain tough, however, we are seeing some revenue growth
on a like for like basis.  With a lowering cost base, we are dependent on our
new products to return the automotive business to an acceptable level of
operating performance.  We expect Coin and KSS to continue to do well.

The past two years have been difficult for the Group, but significant progress
has been made.  We are indebted to all of the Group's employees for their
commitment, and we seek to ensure that the results of their efforts will start
to be seen in financial terms.

Robert Jordan

Chairman



CHIEF EXECUTIVE'S REVIEW


The year in review

Despite a disappointing result for the year, I am able to report that our
stated aim of transforming the Group's efficiency is largely being achieved.
Our software development capability is significantly improved, with product
quality issues resolved. Our customers regularly commend our support and
installation services and our European infrastructure is well established.



Trading conditions

At the beginning of the year we believed we could generate a positive return
to our shareholders. Unfortunately, market conditions have prevailed against
us.

Business has been difficult for our customers, particularly in the UK, and
especially in the first half of our financial year. Respected motor dealers
such as D C Cook went into receivership.  Our competitors have undoubtedly
felt the same pressure, with difficult trading in the automotive retail market
resulting in a general, reduced commitment to spend on IT infrastructure.


These extreme market conditions led to our poor first half performance.

In the second half, we implemented a number of initiatives designed to
generate new demand and, during this time, they have begun to bear fruit. The
second half result showed an improvement over the first, reflecting improved
trading, with an upturn in UK revenues.

In the main, this was driven by conversion programmes from non-strategic DMS
or outdated hardware. The UK order run rate in the second half of the year was
double that of the first six months.


Coin and KSS continue to perform well

Our Coin operation has continued the satisfactory transition toward bespoke
software development, with some successful projects for Volvo and Land Rover
dealers. The latter project was conducted against very aggressive timescales
and was completed ahead of schedule.

During the whole of the year, KSS - our desktop support subsidiary - continued
to generate a strong contribution, despite flat revenues.


Progress in Continental Europe

Outside the UK, our country organisations have largely been involved in the
continuing migration of the Ford DARTS DMS from its proprietary base to an IBM
Netfinity/NT platform.

In the second half, we reported better than expected results in Germany, Spain
and Holland. There has also been a gradual improvement in France.

In the year we have appointed new country managers for the UK, Benelux and
France, who have already established themselves as significant contributors in
our strong pan-European team.


A converging technology strategy

The migration programmes referred to above represent the first implementation
phases of the Group's revised technology strategy for DMS.

We are converging from sixteen different DMS applications across twelve
different technology platforms to a portfolio of four DMS applications, which
address 90% of the European market.  These applications run on common
platforms, either RS6000 or Netfinity, with AIX or NT operating systems using
an Oracle database engine.

This will facilitate either further cost reduction or free up organisation
capacity in development, support and installation, whilst capitalising on the
investment of IBM, Microsoft and Oracle.


Creating new CUSTOMER value

We have carried out an extensive study of the motor trade's requirements,
related to Information Technology and its use, to drive business results,
focusing on the issues that automotive dealers face across Europe.

There is overcapacity, inefficiency and excessive cost in automotive retail
networks throughout Europe.  For the consumer, car product quality is
generally excellent and price is a key decision factor.


Identifying key areas

As a result of the study, we have focused on four issues , which Kalamazoo is
especially well placed to address, namely:



-        Low IT skills and poor knowledge of application software in
dealerships

-        The dealership sales process is frequently badly managed and
selling skills are variable

-        Data, in particular that relating to customers, is frequently
corrupt or inaccurate

-        IT architectures in dealerships are often not consistent with
third-party products and cannot be integrated, limiting their effectiveness


It is significant that manufacturers and dealers alike are starting to roll
out CRM programmes in the drive to increase sales. These, to be truly
effective, require both accurate data and significant end-user skills.
Kalamazoo is therefore presented with a major opportunity from a market of
50,000 franchised dealers across Europe.


New proposition for the market


We have launched a new proposition for our customers that addresses the key
dealer issues we have identified to create added business value for our
customers.

Kalamazoo has a complete, integrated portfolio of value-based offerings,
consisting of:



-        DMS and Surround Systems

-        Technology Services

-        Business Transformation and Training Services


We now have a unique and complete DMS portfolio that can address the needs of
almost any franchised dealer across Europe.  Evolution, Elite, KDMS and DARTS
are all DMS solutions, integrating people with technology, that make it
possible for the dealer to leverage the customer relationship much more fully,
to improve resource allocation and maximise profitability.


Customer recruitment and retention

DMS solutions are a vital component of the Group's offering but they are no
longer the only component.  Our 'e-zoo' organisation has continued its
transition and is now totally focused on a CRM/sales force re-engineering
program which we have branded 'Edge'.  Kalamazoo Edge is a solution that is
designed to radically improve sales performance for dealerships of all kinds.

It is a complete sales force re-engineering programme that combines technology
and business development with a structured training programme to transform
sales skills and embed highly effective sales processes and customer
relationship management within the dealership.


The training system originated in California and has been a proven success.


A UK market test with a fifteen-site dealer group has been completed, with
outstanding results.  Following programme installation at Stratford upon Avon
based Avonvale Volvo, sales showed a 46% increase over the first quarter.

Dealer systems, products and services are strategically important for
Kalamazoo and will enable the business to compete effectively in Europe. We
are confident they give us the opportunity for increased market share across
different territories and manufacturers.


Malcolm Roberts
Group Chief Executive



FINANCIAL REVIEW


As well as improved trading in the second half, we have focused on improved
cash management.  From improved management information systems we have
delivered strong working capital management against the background of a
turbulent market place.


Results for the year

The results for the year can be summarised as follows, with a significant
improvement in pre-exceptional profit in the second half of the year.



                            1st Half        2nd Half        Total         2000
                                2001            2001         2001             
                               £'000           £'000        £'000        £'000
  Sales                       22,632          25,644       48,276       62,781
  Operating                                                                   
  (loss)/profit                                                               
  before                                                                      
  Exceptional items          (1,743)           (698)      (2,441)          339
  Exceptional items            (269)         (1,303)      (1,572)      (2,877)
  Share of results                                                            
  of joint                                                                    
  ventures and                     0            (75)         (75)           13
  associates                                                                  
  Loss on disposal                 0               0            0      (4,384)
  of business                                                                 
  Interest                     (117)            (82)        (199)         (24)
  (Loss) before tax          (2,129)         (2,158)      (4,287)      (6,933)
 

In particular, the performance of software, installation and training in the
UK improved from a loss of £193K on turnover of £2,428K in the first half, to
a profit of £1,409K on turnover of £4,964K in the second half.

The Continental operations experienced a significant downturn in 2001, which
was expected after the sales resulting from Y2K had ceased.  Profit for the
year was £908K (2000: £1,959K), on a turnover of £17,638K (2000: £24,812K).

Group accounting policies and segmental analysis are unchanged from last year 
Comparisons between 2001 and 2000 were not significantly distorted by a
variation in exchange rates on translation of overseas subsidiaries' results
for accounting purposes.



Restructuring

Following the restructuring in 2000, we have continued to streamline our
operations, closing down loss-making operations, and reducing headcount on the
Continent.   These actions resulted in employee-related Exceptional Costs of £
827K.


Following the divestment of non-core operations in the prior year, the Group
incurred additional costs amounting to £457K.


Balance Sheet and cash

At 31st March 2001, the Group had net assets of £5.1 million (2000: £9.3
million) and cash of £295K (2000: £3.0million).  Strong cash generation in the
second half improved the negative net cash balance of £1.7 million at the half
year.

Product development spend is a key part of the Group's outgoings, supporting
the delivery of our new product offerings, Evolution and Edge.

A cash charge of £600K (2000: £600K) relating to the Minimum Funding
Requirement of our closed Defined Benefit Pension Scheme was incurred in the
year.



Working capital

Cash flows came under great pressure during the year, with a negative position
of (£1.7million) being reached at 30th September 2000.  Tight cash management
ensured the delivery of a positive Group balance of £295K at the end of the
year.

The Continental Accounts Receivables were the focus of management attention
this year, the Group having delivered significant and sustained improvements
in the UK in the previous year.

Strong supply chain management ensured that stock levels were held at an
optimum, balancing the needs of our customers with our close management of
cash.



Taxation

There was a small tax charge in the year arising from tax due within our
Continental operations. There was no tax charge for the year in the UK and
there are tax losses carried forward of approximately £9.0 million.


Currency exposure

Foreign denominated loans are fully hedged by use of forward currency exchange
contracts and there is currently no Balance Sheet exposure.



Management Information Systems


The rollout of Enterprise Reporting and Performance Indicators, which was
under way during the last financial year, has ensured that managers have key
decision information to enable them to run their operations with greater
effectiveness against a turbulent market background.


Margaret E Ashworth
Group Finance Director



Consolidated Profit and Loss Account
For the year ended 31 March


                   Before                             Before                    

              Exceptional  Exceptional  Total    Exceptional  Exceptional  Total

                    Items        Items                 items        Items       

                     2001         2001   2001           2000         2000   2000

                     £000        £000    £000           £000         £000   £000
  
  Turnover                                                                    
  Continuing       48,276           -    48,276       59,199          -   59,199

  operations                                                                  
                                                                              
  Discontinued       -              -         -        3,752          -    3,752
  operations                                                                  
                                                                              
  Less:              -              -         -         (170)         -    (170)
  share of                                                                    
  joint                                                                       
  ventures                                                                    
                     -              -         -         3,582         -   3,582 


                
  Total                                                                       
  Group                                                                       
  turnover      48,276              -    48,276        62,781         -  62,781 
                                                             
  
  Operating                                                                   
  charges                                                                     
  
  Continuing    50,717          1,572    52,289        58,676      2,877  61,553

  operations                                                                  
                                                                              
  Discontinued                     -          -         3,766         -    3,766
  operations                                                                  
                                                                              
  Total         50,717          1,572    52,289        62,442     2,877   65,319

  Group                                                                       
  operating                                                                   
  charges                                                                     
 
  Operating                                                                   
  (loss)/profit                                                                 
                                                                        
  Continuing   (2,441)         (1,572)  (4,013)           523    (2,877) (2,354)
  operations                                                                  
                                                                              
  Discontinued      -               -        -           (184)        -    (184)
  operations                                                                  
                                                                              
               (2,441)         (1,572)  (4,013)           339    (2,877) (2,538)
                                                                               
  Share of                                                                    
  operating                                                                   
  (loss)/profit                                                                 
  in                                                                       
  - joint           -              -        -             (61)        -     (61)

  ventures -                                                                  
  discontinued                                                                
  operations      (75)             -      (75)             74         -      74 
 
  associates                                                                  
  -                                                                           
  continuing                                                                  
  operations      (75)             -      (75)             13         -      13 
   
               (2,516)        (1,572)  (4,088)            352    (2,877) (2,525)
                                                                              
  Loss on                                                                     
  sale of                                                                     
  business                                                                    
  discontinued                                                                  

  
  - surplus                                 -                             1,071 

  over net                                                                    
  assets                                                                      
  - less                                    -                            (5,455)
  goodwill                                                                     
  previously                                                                  
  written                                                                     
  off                                       -                            (4,384)
  
  Loss on                                                                     
  ordinary                                                                    
  activities                                                                    
  before                               (4,088)                          (6,909)
  interest                                                                    
  
  Net                                    (199)                             (24) 
  interest                                                                    
  payable                                                                     
  
  Loss on                              (4,287)                          (6,933)
  ordinary                                                                    
  activities                                                                  
  before                                                                      
  taxation                                                                    
  
  Tax on                                  (34)                            (400) 
  loss on                                                                     
  ordinary                                                                    
  activities                                                                  
  
  Loss on                             (4,321)                          (7,333)
  ordinary                                                                    
  activities                                                                  
  after                                                                       
  taxation                                                                    
  
  Equity                                   -                                -   
  minority                                                                    
  interest                                                                    
  
  Loss for                                                                    
  the period                                                                  
  attributable                                                                 
  to                                                                        
  shareholders                        (4,321)                          (7,333)  
  
  Loss per                             (6.9p)                           (11.7p)
  share                                                                       
  
  Diluted                              (6.9p)                           (11.7p)
  loss per                                                                    
  share                                                                       
  
  Loss per                             (4.4p)                           (0.1p) 
  share                                                                       
  excluding                                                                   
  exceptional                                                                 
  items                                                                       


Consolidated Balance Sheet
At 31 March                                                                     
                                      
                                                                              
                                                                    Restated  
                                   2001        2001     2000            2000 
                                   £000        £000     £000            £000  
                                                                              
  Fixed assets                                                                
  Tangible assets                             7,866                    7,655  
  Investments                                                                 
  Investments in associates                      81                      146  
                                                                              
                                              7,947                    7,801  
  Current assets                                                              
  Stocks                                      3,511                    3,872  
  Debtors                                    12,410                   13,898  
  Cash at bank and in hand                      295                    2,997  
                                             16,216                   20,767  
  Current Liabilities                                                         
  Creditors: amounts                        (17,821)                 (18,191) 
  falling due within one                                                      
  year                                                                        
  Net current                                (1,605)                   2,576  
  (liabilities)/assets                                                        
  Total assets less current                   6,342                   10,377  
  liabilities                                                                 
  Provisions for                             (1,278)                  (1,126) 
  liabilities and charges                                                     
  Net assets employed                         5,064                    9,251  
  Financed by:                                                                
  Capital and reserves                                                        
  Called up share capital                     6,271                    6,271  
  Share premium account                      22,942                   22,942  
  Revaluation reserve                         4,965                    5,036  
  Profit and loss account                   (29,114)                 (24,998) 
  Total Equity                                5,064                    9,251  
  Shareholders' funds                    

                                     
  Reconciliation of movements in Shareholders' funds                            
  Year ended 31 March                          2001                     2000  
                                               £000                     £000  

  Loss on ordinary                           (4,321)                  (7,333) 
  activities after taxation                                                   
  Dividends                                       -                        -  
  Loss for the year                          (4,321)                  (7,333) 
  Share issues                                    -                       17  
  Reinstate goodwill on                           -                    5,455  
  disposal                                                                    
  Foreign exchange                              134                     (452) 
  translations                                                                
  Net reduction in                           (4,187)                  (2,313) 
  Shareholders' funds                                                         
  Opening Shareholders'                       9,251                   11,564  
  funds                                                                       
  Closing Shareholders'                       5,064                    9,251  
  funds                                                                       


Consolidated Cash Flow Statement  
For the year ended 31 March 

                                                                              
                                   2001       2001       2000           2000  
                                   £000       £000       £000           £000  

  Cash flow from operating                  (2,034)                   (5,735) 
  activities                                                                  
  Returns on investment and                   (199)                      (24) 
  servicing of finance                                                        
  Taxation                                     213                       932  
  Capital expenditure and                   (1,040)                     (804) 
  financial investment                                                        
  Acquisitions and disposals                   300                     2,619  
  Cash outflow before                       (2,760)                   (3,012) 
  financing                                                                   

  Financing                                                                   
  - issue of shares                   -                    17                 
  - reduction in debt                 -                  (188)                
                                                 -                      (171) 
  Decrease in cash in the                   (2,760)                   (3,183) 
  year                                                                        


  Reconciliation of net cash flow to movement in net funds                      
                                                
  Decrease in cash in the        (2,760)               (3,183)                
  year                                                                        
  Cash outflow from decrease          -                   188                 
  in debt and lease financing                                                 
                                                                              
  Change in net debt                        (2,760)                   (2,995) 
  resulting from cash flows                                                   
  Translation difference                        58                      (334) 
  Movement in net funds in                  (2,702)                   (3,329) 
  the year                                                                    
  Net funds at 1 April                       2,997                     6,765  
  Net funds at 31 March                        295                     2,997  


Notes


1.  Offsetting the loss for the year is a foreign exchange translation gain of
£134K (2000:  loss   of £452,000), which is included in the total recognised
gains and losses for the year.


2.      The financial statements are prepared under the historical cost
convention and in accordance with applicable UK accounting standards.   The
financial information set out above does not constitute the Group's statutory
financial statements for the years ended 31st March 2000 and 31st March 2001
but is derived from those statements.    The auditors have reported on those
statements.   Their report is unqualified and did not contain statements under
section 237(2) or (3) of the Companies Act 1985.   The accounts for the year
ended 31st March 2000 have been filed with the Registrar of Companies and the
accounts for the year ended 31st March 2001 will be filed in due course.


3.      The loss per share of 6.9p (2000: loss 11.7p) is calculated on the
loss on ordinary activities after taxation and minority interest of £4,321,000
(2000: loss £7,333,000) and the average number of shares in issue is
62,705,749 (2000: 62,614,731).


The diluted loss per share of 6.9p (2000: loss 11.7p) is calculated on the
loss on ordinary activities after taxation and minority interest of £4,321,000
(2000: loss £7,333,000) and the average number of shares in issue, 62,705,749
(2000: 62,614,731) plus the number of shares that would have been issued on
the conversion of all the dilutive potential shares into ordinary shares, nil
(2000: 267,142).


The earnings per share of the Group, excluding exceptional items and the loss
on disposal of discontinued business, are as follows:

                                                                              
                                                                2001      2000
  Loss per share                                              (6.9p)   (11.7p)
  Exceptional items - no tax effect due to tax losses           2.5p      4.6p
  carried forward                                                             
  Loss on disposal of discontinued business net of                 -      7.0p
  goodwill previously written off                                             
  Loss per share excluding exceptional items and loss on      (4.4p)    (0.1p)
  disposal of                                                                 
  discontinued business                                                       
     

The adjusted earnings per share has been calculated to eliminate the
distortion caused by including exceptional items in 2001 and 2000.


4.      Exceptional items consist of rationalisation costs of £1,572,000
(2000: £2,443,000) and nil potential acquisition costs (2000: £434,000).


5.   Reconciliation of operating profits to operating cash flows:
  
                          2001                            2000 
                Continuing Discontinued          Continuing Discontinued
                operations   operations  Total   operations   operations   Total
                      £000         £000   £000         £000         £000    £000
 
                                                                          
  Operating         (4,013)        -    (4,013)   (2,354)        (184)   (2,538)
  (loss)/profit                                                          
  Depreciation        931          -     931        996           259     1,255
  charge                                                                      
  Decrease in         361          -     361        211            48       259 

  stocks                                                                      
  Decrease/(increase)1,006         -    1,006      (411)        1,315       904 

  in debtors                                                              
  (Decrease) in       (319)        -     (319)    (2,756)      (2,859)   (5,615)
  creditors                                                                
  Net cash                                                                    
  outflow from                                                                
  operating         (2,304)        -    (2,304)   (4,314)      (1,421)   (5,735)


6.   Net cash inflow/(outflow) from operating activities


                                                              2001      2000  
                                                              £000      £000  
  a) Returns on investments and servicing of finance                          
  Interest received                                             61        127 
  Interest paid                                               (260)     (151) 
  Net cash outflow for returns on investments and             (199)      (24) 
  servicing of finance                                                        
  b) Capital expenditure and financial investment                             
  Purchase of tangible fixed assets                         (1,040)     (804) 
  Sale of tangible fixed assets                                  -         -  
  Net cash outflows for capital expenditure and             (1,040)     (804) 
  financial investment                                                        
  c) Acquisitions and disposals                                               
  Deferred consideration from prior years                      300         -  
  Sale of business                                               -     2,619  
  Net cash inflow for acquisitions and disposals               300     2,619  
  d) Financing                                                                
  Issue of share capital                                         -        17  
  Debt due within one year:                                                   
  Repayment of secured loan                                      -      (185) 
  Capital element of finance lease payments                      -        (3) 
                                                                  -     (188) 
  Net cash outflow from financing                                -      (171) 


7.      Copies of the Annual Report are being mailed to Shareholders shortly
and will be available to the  public by application to the Company at: Legal
and Secretarial Department, Kalamazoo Computer Group plc, Northfield,
Birmingham, B31 2RW.



                                                                                
                                    

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