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Compel – Individual Report

According to Computer Weekly COM, Compel Group continues to share market’s leading position at the rental, IT services, and IT consulting. In a market which continued to be very difficult Compel delivered a creditable result for the year ended 30 June 2003, performing better that its main competitors. Revenues of the organization of 53 million and operating profit before exceptional costs and goodwill of  0. 5 million were as expected and the business has sustaining  11 million of cash.

It keeping with its approach of strongly managing its cost base in response to market changes, Compel undertook cost reduction measures in the first half of the year, incurring a restructuring charge of approximately  400,000 in so doing. In implementing these costs reductions Compel have minimised any impact upon the excellence of its customer service, its ability to win new business and its long term prospects. Regarding Annual reports of the Compel, its performance this year was respectable against a backdrop of the most difficult market conditions the Information Technology industry has ever experienced.

At the year end the Group had an excellent cash position with gross cash balances of  11. 0 million (2002:  9. 7 million) boosted by tax refunds and strong

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customer collections at June. Total debt was  3. 9 million (2002:  5. 7 million), comprising a bank loan of 1. 7 million and a bank loan notes of 2. 2 million. The loan notes are backed by matching treasury deposits, shown under current assets investments. The net funds position at the year end was therefore 9. 3 million (2002: 7. 7 million).

The book value of rental equipment assets in Hamilton Rentals reduced over the year by 26% from i?? 5. 4 million to  4. 0 million , as the level of investment was scaled down to match demand in respond to market conditions . Purchases of new rental equipment during the year amounted to 5. 1 million, a reduction of 23% on the previous year.

New purchases during the year as a percentage of equipment cost at the year end were 39% (2002: 44%). Sales of ex-rental equipment realised  2. 3 million in cash (2002: 2. 3 million) and generated profits on disposal of  0. 4 million (2002: 0. 4 million) Results, from reading and investigating Compels Balance Sheets for the last years (starting from 2000) and Cash and Flow Statement as follows: Turnover for the year declined by 17% to 52. 9 million compared to  63. 9 million in the previous year. Gross profit reduced by lesser amount of 14% from  16. 2 million to $14. 0 million.

Gross margins have improved from 23. 8% in 2001 to 25. 3% in 2002 and 26.4% in the current year, as product sales have represented a smaller proportion of sales and higher margin services revenues progressively assume greater importance. Operating expenses before exceptional costs and goodwill charges amounted to  13. 5 million (2002:  14. 9 million) at reduction of 10%, following the restructuring undertaken in the first half of the current and previous years. Operating profit for the year, before exceptional items and goodwill charges, was 0. 5 million (2002; 1. 3 million).

Cash generation remained healthy, with cash inflow generated from operating activities at  3. 5 million. After net expenditure on the rental fleet of  2. 7 million, cash inflow was  0. 9 million. During the year the Group received refunds of corporation tax paid under self-assessment amounting to 1. 2 million. Including net interest receipts of  0. 2 million and dividends paid of 0. 5 million the Group had an overall net cash inflow before financing of  1. 5 million (2002:  1. 9 million)

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