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Kalamazoo Comp Grp. (KLMZ)

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Monday 20 December, 1999

Kalamazoo Comp Grp.

Interim Results - 6 Months to 30 Sept 1999, Part 1

Kalamazoo Computer Group PLC
20 December 1999

PART 1
                               
                 KALAMAZOO COMPUTER GROUP PLC
  INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 1999
                               
Kalamazoo Computer Group plc ('Kalamazoo'), the West  Midlands
based  supplier  of  specialist computer solutions,  announces
interim  results for the six months ended 30 September,  1999,
showing continuing recovery.

KEY POINTS

* Turnover on continuing operations marginally ahead at £32.5m
  (1998: £31.4m)

* Profit  before  tax £754,000 (1998: £550,000 loss)  includes
  profit on sale of The Beeches Management Centre of £604,000

* Earnings per share 0.9p (1998: 1.1p loss)

* Increased focus on core activities of IT-based solutions for
  Automotive Retail, Enterprise Resource Planning ('ERP') systems
  and Desktop support services

* Professional services capability  increased  considerably,
  particularly   in  the  areas  of  IT  Consulting,   Project
  Management and Systems Integration.

* Significantly increased demand for IT solutions  anticipated
  in  the  automotive market as radical change is expected  in
  the next two years.

* Automotive  dealer  management system  (DMS)  product  range
  converging into single product family.  New version of Elite
  is  being  launched in the UK in the first quarter of  2000;
  small  dealership version successfully piloted and  launched
  in Continental Europe.

* Strategic   partnership  with  IBM  for   joint   marketing,
  including  migration  of  all Kalamazoo  software  onto  IBM
  platforms.   Partnership  also signed  with  Oracle  as  the
  relational database of choice, with Kalamazoo now a  reseller
  of Oracle ERP solutions.

* On prospects, Bob Jordan, Chairman said:

  'The outcome for the financial year 1999/2000 is expected to
  reflect  a  continuing improvement in operating  performance
  established in the first half. We have commenced the  second
  phase   of   Advantage  2000,  aimed  at  further  improving
  operating  efficiencies and lowering the Group's cost  base.
  This, coupled with the recently formed partnerships with IBM
  and Oracle together with an increasing professional services
  and  consulting  capability,  will  provide  a  more  robust
  platform for growth.'


For further information:

Bob  Jordan, Chairman             Tel: 0207 466 5000 up until 2.30pm
Malcolm Roberts, Chief Executive  thereafter tel 0121 411 2345
Richard Darby/Suzanne Dunne
Buchanan Communications           Tel: 0207 466 5000

                     CHAIRMANS' STATEMENT

I am pleased to be able to report continued progress in the
Group's operating performance for the first half of financial
year 1999/2000.   The first phase of our restructuring plan,
referred to as Advantage 2000, has been successfully
implemented and Kalamazoo now has a much improved operating
structure and lower cost base.  On turnover marginally ahead
for the six months ended 30 September 1999 at £32.8 million
(1998 : £32.0 million), operating profit was £0.1 million
compared to a loss of £0.6 million for the corresponding
period.  Coupled with an exceptional gain of £0.6 million on
the sale of The Beeches Management Centre, this resulted in a
pre-tax profit for the period of £0.75 million (1998 : £0.55
million loss), to give EPS of 0.9 pence (1998 : 1.1 pence
loss). No interim dividend will be paid.

At 30 September 1999 net cash was £1.55 million, compared to
£6.3 million at 31 March 1999 reflecting in part a billing
pattern weighted to the end of the six month period.  Improved
processes have been put in place to ensure increased focus on
cash management.


BOARD CHANGES

Ian Davidson, Finance Director, left on 30 November 1999 after
10 years with Kalamazoo, during which he has helped us face
the many changes and challenges which the Group has
experienced.  We are grateful for his contribution.  His
replacement will be announced in the near future.

Recent changes to the non-executive directors representing
Reynolds & Reynolds were made on 26 October 1999, with the
appointment of Michael Gapinski and Kurt Olnhausen replacing
Bob Nevin and Mark Brown.


FOCUSED STRATEGY

The Board is increasingly focussing the Group's activities on
the core businesses of Automotive, Enterprise Resource
Planning and Desk Top Services, and continues to take steps to
align the operations.

The market which currently drives the bulk of our revenues,
namely the Automotive sector, is likely to undergo significant
change in the next two years.   Kalamazoo intends to be
regarded by manufacturers, existing dealers and new entrants
alike as the source of IT solutions for survival and growth.
It is anticipated that this change will generate significantly
increased demand for information technology solutions in the
sector which will more than offset any impact of market
contraction caused by the rationalisation of both automotive
manufacturers and dealers.

We continue to rationalise the range of our Dealer Management
Systems 'DMS' and are converging on a single product family.
A new version of Elite is being launched in the UK in the
first calendar quarter of 2000 and a small dealership version
has been successfully piloted and launched in continental
Europe.  We are also successfully adding functionality to our
DARTS and  KDMS products on a commercial basis.

Our professional service capability has increased
considerably, particularly in the areas of IT Consulting,
Project Management and Systems Integration.  During the summer
we announced strategic partnerships with both IBM and Oracle.
The IBM relationship is a broad based strategic partnership
which involves migrating all of our current offerings onto IBM
platforms.  Oracle is our relational database of choice and we
are now a reseller of Oracle ERP solutions.

PROSPECTS

The outcome for the financial year 1999/2000 is expected to
reflect a continuing improvement in operating performance
established in the first half.  We have commenced the second
phase of Advantage 2000, aimed at further improving operating
efficiencies and lowering the Group's cost base, the
associated redundancy costs will be reflected in the results
for the second half of the year.  Further, the recently formed
partnerships with IBM and Oracle together with an increasing
professional services and consulting capability, will provide
a more robust platform for growth.


Bob Jordan
Chairman


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