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Kalamazoo Comp Grp. (KLMZ)

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Wednesday 19 December, 2001

Kalamazoo Comp Grp.

Interim Results

Kalamazoo Computer Group PLC
19 December 2001


FOR IMMEDIATE RELEASE                                          19 December 2001



                            KALAMAZOO COMPUTER GROUP PLC


                 UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS TO
                                   30 SEPTEMBER 2001


Kalamazoo Computer Group, the West Midlands based supplier of specialist
computer solutions, announces its interim results for the half year ended 30
September 2001.


Chairman's Interim Statement


As anticipated, the first half of the current financial year has been
challenging, as market conditions remained tough.  There has been continued
consolidation in the European automotive dealer sector, the primary
marketplace for our software products.  In the UK, car sales have increased,
however, margins on car sales have been under severe pressure which has
continued to fuel reluctance on the part of dealers to invest in their IT
infrastructure.  We have seen mixed fortunes across continental Europe with
car sales increasing in France but a significant downturn in the Dutch market.



Against this background we have seen an increase in turnover of £1 million, to
£23.6 million, compared to first half sales last year of £22.6 million.  This
has resulted in a pre-exceptional operating loss of £0.7 million, some £1.0
million better than the first half of last year, when we saw an operating loss
of £1.7 million.   In addition to the positive impact of increased sales, this
reduction in operating loss reflects the impact of cost savings made across
the Group during the last financial year.



During the first half we incurred exceptional costs of £0.8 million, of which
£0.3 million relates to the severance package of Malcolm Roberts and £0.5
million relates to costs associated with aborted disposals, and a book loss of
£0.9 million on the sale of land at our Northfield site.  This resulted in a
loss on ordinary activities before taxation of £2.5 million compared to a
corresponding loss of £2.1 million in the first half of last year.  The loss
per share was 4.0 pence after exceptional items, compared with a loss per
share of 3.5 pence at the half year in 2000.



Net assets were reduced by the loss to £2.5 million at 30 September 2001,
compared to £5.1 million at 31 March 2001 and £7.0 million at 30 September
2000.  The Directors do not propose to pay an interim dividend.



At 30 September 2001, the Group had net cash of £1.7 million compared to net
cash of £0.3 million at 31 March 2001 and net borrowings of £1.7 million at 30
September 2000.  This improvement in Group cash resulted from the receipt of
proceeds from the Northfield land sale and significant improvements to the
Group's cash management process during the last twelve months.
However, of the £1.7 million cash balance at 30 September 2001, £1.0 million
was held in our continental European subsidiaries.  Their working capital
requirements meant that a minimum level of cash had to be retained within each
of these subsidiaries, putting pressure on the UK cash and bank position.



The introduction of the Minimum Funding Requirement ('MFR') by the Government in
1995 and the abolition of reclaims of advanced corporation tax credits on UK 
dividends in 1997, together with the low level of dividend growth on UK equities
and low yields on UK equities and gilts experienced in recent years, have had an
adverse effect on the funding position of the Kalamazoo Pension and Life  
Assurance Plan (the 'Pension Scheme'), the Group's UK final salary pension 
scheme.



Whilst the Pension Scheme has been closed to new members since 1993, the
burden of any funding shortfall rested with the Group.  Following a decision
by the Group to cease salary-related contributions to the Pension Scheme from
31 August 2001, the trustees of the Pension Scheme took steps to wind up the
scheme in October 2001.



In light of the financial condition of the Group and its potential inability
to settle the full MFR shortfall if the Group continued to trade
independently, the trustees of the Pension Scheme have agreed, subject to
Shareholder approval, to accept an immediate cash payment of £5.2 million in
respect of the funding of the Pension Scheme which the Board intends to fund
by way of a loan from Southwest Bank of Texas.  The settlement will be
accounted for as an exceptional charge in the second half of the current
financial year.



The Group has continued to invest heavily in product development and, in
particular, on Evolution, the pan-European dealer management system ('DMS').  
Our development function is now driven by commercial
priorities.



Since the announcement of the results for the year ended 31 March 2001,
Evolution has been selected for the endorsement process by one manufacturer in
Germany and we have made progress toward this process in France, Spain and
Switzerland.  The Edge customer relationship management programme continues to
be marketed both in the UK and in parts of continental Europe, but has not
experienced the level of sales anticipated, given the demonstrable value that
Edge can bring to motor dealers.



Coin, our dealer finance and insurance software business, and KSS, our desktop
support business, both continued to make positive profit contributions in the
first half.



Board Changes



Michael Keating, who had been a non-Executive Director since 1990, retired
from the Board at our Annual General Meeting on 31 October 2001.  We record
our thanks to Michael for his contribution during the period of his
directorship.



Prospects



Short-term growth continues to be impacted by difficult trading conditions and
is not helped by the economic climate in the automotive market in particular
and the marketplace in general.  We remain dependent upon our new and upgraded
products to return the automotive DMS business to an acceptable level of
operating performance but continue to be satisfied with the performance of
Coin and KSS.



We have announced today a conditional pension scheme settlement agreement and
proposals to dispose of all of the trading activities of the Group following
which it is proposed that Kalamazoo will be placed into members' voluntary 
liquidation and the listing of Kalamazoo's Ordinary Shares on the Official List 
will be cancelled. We have irrevocable undertakings from 57.64 per cent. of the 
shareholders to vote in favour of resolutions to approve the Pension Scheme 
settlement, the disposal of the trading activities of the Group and the placing 
of Kalamazoo into members' voluntary liquidation. Following the disposal there 
will be no trading entities within the Group and the principal asset will be 
cash held on deposit, which the proposed Liquidators would intend to distribute 
to shareholders as expeditiously as possible.


Robert Jordan
Chairman
19 December 2001


Enquiries:


Kalamazoo Computer Group                      +44 (0) 121 411 3216
Bob Jordan, Chairman

Buchanan Communications                       +44 (0) 20 7466 5000
Richard Darby/Suzanne Dunne



Consolidated profit and loss account
                                   6 months to                       6 months to
                                  30 September                      30 September
                     Pre                  2001         Pre                  2000
             Exceptional Exceptional     Total Exceptional Exceptional     Total
                   Items       Items                 Items       Items
                    £000        £000      £000        £000        £000      £000
Turnover

Continuing        23,619           -    23,619      22,632           -    22,632
operations


Total Group       23,619           -    23,619      22,632           -    22,632
turnover

Operating
charges
Continuing        24,308         780    25,088      24,411         269    24,680
operations

Total Group
operating         24,308         780    25,088      24,411         269    24,680
charges

Operating
loss
Continuing         (689)       (780)   (1,469)     (1,779)       (269)   (2,048)
operations

                   (689)       (780)   (1,469)     (1,779)       (269)   (2,048)
Share of
operating
loss in
associates -        (30)           -      (30)          36           -        36
continuing
                    (30)           -      (30)          36           -        36

Total Group
operating          (719)       (780)   (1,499)     (1,743)       (269)   (2,012)
loss

Disposal of
land:
Net sale                                 1,736
proceeds
Less                                   (2,676)
carrying
value

                                         (940)                                 -

Loss on
ordinary
activities                             (2,439)                           (2,012)
before
interest

Net interest                              (78)                             (117)
payable

Loss on
ordinary
activities                             (2,517)                           (2,129)
before
taxation

Tax on loss
on
ordinary                                     -                              (73)
activities

Loss for the
period
attributable
to                                     (2,517)                           (2,202)
shareholders

Loss per                                (4.0p)                            (3.5p)
share

Diluted loss                            (4.0p)                            (3.5p)
per share

Loss per
share
excluding
exceptional                             (1.3p)                            (3.1p)
items



Consolidated profit and loss account - CONTINUED


                                                                   12 months to
                                                                       31 March
                                         Pre                               2001
                                 Exceptional      Exceptional             Total
                                       Items            Items
                                        £000             £000              £000
Turnover
Continuing operations                 48,276                -            48,276

Total Group turnover                  48,276                -            48,276

Operating charges
Continuing operations                 50,717            1,572            52,289

Total Group
operating charges                     50,717            1,572            52,289

Operating loss
Continuing operations                (2,441)          (1,572)           (4,013)
                                     (2,441)          (1,572)           (4,013)

Share of operating loss in
associates -continuing                  (75)                -              (75)

                                        (75)                -              (75)

Total Group operating loss           (2,516)          (1,572)           (4,088)

Disposal of land:
Net sale proceeds
Less carrying value
                                                                              -


Loss on ordinary
activities before interest                                              (4,088)

Net interest payable                                                      (199)


Loss on ordinary
activities before taxation                                              (4,287)

Tax on loss on
ordinary activities                                                        (34)


Loss for the period
attributable to shareholders                                            (4,321)


Loss per share                                                           (6.9p)


Diluted loss per share                                                   (6.9p)

Loss per share excluding
exceptional items                                                        (4.4p)



Consolidated balance sheet

                                  30 September     30 September     31 March  
                                          2001             2000         2001  
                                          £000             £000         £000  
  Fixed assets                                                                
  Tangible assets                        4,781            8,203        7,866  
  Investments in associates                 31              182           81  
                                         4,812            8,385        7,947  

  Current assets                                                              
  Stocks                                 3,314            3,595        3,511  
  Debtors                                8,178           13,610       12,410  
  Cash at bank and in hand               1,686               46          295  
  (see Note 5)                                                                
                                        13,178           17,251       16,216  

  Current liabilities                                                         
  Creditors: amounts falling           (14,132)         (17,510)     (17,821) 
  due within one year                                                         

  Net current liabilities                 (954)            (259)      (1,605) 

  Total assets less current              3,858            8,126        6,342  
  liabilities                                                                 
  Provision for liabilities             (1,332)          (1,121)      (1,278) 
  and charges                                                                 

  Net assets employed                    2,526            7,005        5,064  

  Financed by:                                                                

  Capital and reserves                                                        
  Called up share capital                6,271            6,271        6,271  
  Share premium account                 22,942           22,942       22,942  
  Revaluation reserve                    2,383            5,036        4,965  
  Profit and loss account              (29,070)         (27,244)     (29,114) 

  Total equity shareholders'             2,526            7,005        5,064  
  funds                                                                       


Consolidated cash flow statement

                                                                              
                                6 months to      6 months to    12 months to  
                               30 September     30 September        31 March  
                                       2001             2000            2001  
                                       £000             £000            £000  

  Cash flow from operating             (253)          (3,266)         (2,034) 
  activities                                                                  
  Returns on investments                (78)            (117)           (199) 
  and servicing of finance                                                    
  Taxation                               14             (255)            213  
  Capital expenditure and             1,711           (1,022)         (1,040) 
  disposals                                                                   
  Sale of businesses                      -                 -            300  

  Cash inflow/(outflow)               1,394           (4,660)         (2,760) 
  before financing                                                            

  Increase/(decrease) in              1,394           (4,660)         (2,760) 
  cash in period                                                              
                                                     
                         
                                6 months to      6 months to    12 months to  
                               30 September     30 September        31 March  
                                       2001             2000            2001  
                                       £000             £000            £000  
  Reconciliation of net                                                       
  cash flow to movement                                                       
  in net funds/(debt)                                                         
  Increase/(decrease) in               1,394          (4,660)         (2,760) 
  cash in period                                                              
  Translation difference                 (3)             (49)              58 

  Movement in net                      1,391          (4,709)         (2,702) 
  funds/(debt) in period                                                      

  Net funds at beginning of              295            2,997           2,997 
  period                                                                      

  Net funds/(debt) at end              1,686          (1,712)             295 
  of period                                                                   





Notes

1       The interim results for the six months ended 30 September 2001 have
neither been reviewed nor audited and have been prepared on the basis of
accounting policies consistent with those adopted for the year ended  31 March
2001 as set out in the financial statements of the Group. The financial
information contained herein does not constitute statutory accounts within the
meaning of Section 240 of the Companies Act 1985.  Statutory accounts for the
year ended 31 March 2001, incorporating an unqualified audit report, have been
filed with the Registrar of Companies.

2       The loss per share of 4.0p (30 September 2000 - 3.5p) is calculated on
the loss of £2,517,000 (30 September 2000 - loss of £2,202,000) and the
average number of shares in issue 62,705,749 (30 September 2000 - 62,705,749).
The diluted loss per share of 4.0p (30 September 2000 - 3.5p) is calculated on
the loss of £2,517,000 (30 September 2000 - loss of £2,202,000) and the
average number of shares in issue 62,705,749 (30 September 2000 - 62,705,749)
plus the number of shares that would have been issued on the conversion of all
the dilutive potential shares into ordinary shares, none (30 September 2000 -
none).

3       The profit and loss account, balance sheet and cash flow statements
have been prepared on a basis consistent with the statutory financial
statements for the year ended 31 March 2001.  FRS 19 will be applied for the
first time this year, whereby full provision for deferred tax will be made.
There is no impact in the interim results.

4       Reconciliation of operating profits to operating cash flows

                                                                            
                               6 months to      6 months to     12 months to  
                              30 September     30 September         31 March  
                                      2001             2000             2001  
                                      £000             £000             £000  

  Operating loss                    (1,469)          (2,048)          (4,013) 
  Depreciation charge                  441              474              931  
  Decrease in stocks                   197              277              361  
  Decrease in debtors                4,233              233            1,006  
  (Decrease) in creditors           (3,655)          (2,202)            (319) 
                                                                              
  Net cash outflow from               (253)          (3,266)          (2,034) 
  operating activities                                                        



5       Analysis of net funds

                                                                              
                                                             
                                                                     
                       1 April          Cash          Exchange   30 September
                         2001           Flow          Movement           2001  
                         £000           £000              £000           £000 

  Cash at bank           295          1,394                (3)          1,686 
  and in hand                                                                 
  Overdraft,                -             -                 -               - 
  included in                                                                 
  Creditors                                                                   
                         295          1,394                (3)          1,686 
  Debt due                 -              -                 -               - 
  within one                                                                  
  year                                                                        
  Finance                   -             -                 -               - 
  leases                                                                      
  Total net              295          1,394                (3)          1,686 



6       Copies of the Interim Report can be obtained from the Company
Secretary, Kalamazoo Computer Group plc, Northfield, Birmingham, B31 2RW.



                                                   

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