Ed, KCI just came out with their 2nd quarter '98 financials. As a top performer in your tracker over the last two months and the subject of questions from some of your readers, please find enclosed a summary of the release. The remainder of the report can be found at the KCI thread here at SI.
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Good afternoon to you all. Please find enclosed the latest quarterly results from King Communications. You will find that we have not enclosed the actual consolidated financial statements but we have included KCI's comprehensive overview of the results. The full consolidated statements can be found at the KCI web site, www.king-international.com, which is currently undergoing some changes but will be back up again in a couple of days.
We are very pleased with these second quarter results. In a market environment in which junior companies struggle just to survive, King Communications continues to prove through real revenues that it will become a significant participant in it's industry. We are particularly impressed with the companies ability to generate revenues and willingness to reinvest proceeds into it's growing operations. Though reinvestment does not immediately impact on the bottom line, it is a strong indication of the company's belief in their future capacity to generate revenues and profits.
At the end of the day, there is perhaps no better indication of KCI's progress than it's appreciating stock value. In December of 1997, KCI traded at .35. In mid-February, KCI stock hit a high of .75 and currently trades in the .55 range. We have stated on many occasions that we do not expect any sudden spikes in the price of KCI stock but these latest results do add credibility to our expectation that KCI will continue to appreciate in value for years to come.
King Communications has also confirmed that it has submitted a bid in the lucrative U.S. Federal tender for the supply, in total, of US$1 billion worth of APCO 25 compliant product. Yesterday we commented that, along with Motorola, KCI seemed to be the only company capable of fulfilling the tender. We would like to clarify the statement refers to the base station and repeaters aspect of the bid.
For your convenience, we would like to point out the following highlights.
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1] Sales averaged A$1,124,000 per month during this traditionally weaker half of the fiscal year while average gross profit increased and expenses decreased. Gross profit averaged 41.4% during the second quarter, compared to 32.3% in the first quarter and compared to 31.0% for fiscal 1997.
2] Costs of operations have been significantly reduced to the current level of approximately A$600,000 per month as the Company reduces emphasis on its lower margin traditional third party radio products distribution business.
3] Sales for the first two quarters were A$6.744 million compared to A$6.451 million for the corresponding prior year period, an increase of nearly 5% together with an increase of 50% in orders in-house and an increase in average gross profit from 32.6% to 36.3%.
4] Particularly satisfying was the increase in both sales volume and gross profit from the North American operations. Sales value increased by some 700%, reflecting the inroads the Company is starting to make.
5] The Company continued to invest significant funds in establishing its North American market. During the six months ended December 31, 1997, the Company incurred A$617,000 in establishment costs, which compared to A$549,000 in the corresponding period in fiscal 1997.
6] North American operations are now profitable and with significant opportunities in the mobile data and APCO 25 market, combined with strategic alliances with leading industry participants, the directors are optimistic about King's future operations.
7] In determining its financial position, the Company has not recognised estimated tax benefits of A$1,200,000.
8] In January 1998, the Company's principal bankers, National Australia Bank increased the Company's banking facilities by A$1 million.
9] For the months of January and February 1998, King USA reported sales and orders on hand of A$743,000. This is supported by very positive order intake and prospects of in excess of A$5.8 million.
10] Meeting the deadline, King filed its response to a tender for the United States Department of Interior for the supply, in total, of US$1 billion worth of APCO 25 compliant product over a five year period.
11] The Australian market should show strong growth in the next two quarters, as has been the case historically. January 1998 was a relatively slow month as the transition was made over the Christmas break into the traditionally strong selling season. Sales for February have shown a large improvement. King Australasia has orders in house of A$3,803,000 and current prospects in excess of A$18 million.
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Regards,
Agora Internet Relations Corp.
DISCLOSURE STATEMENT
AGORA INTERNET RELATIONS CORP. receives a monthly monetary fee from King Communications Inc. for the purposes of communicating with Internet shareholders - both current and prospective - to increase awareness of and interest in King Communications Inc. AGORA INTERNET RELATIONS CORP activities are aimed purely at keeping their clients' shareholders and prospective shareholders informed about their company. These activities consist of providing investors with previously disclosed factual information concerning the company, comments from company principals, copies of material that has been filed with regulatory authorities, comments prepared by registered brokers or investment dealers and material published in newspapers, magazines or journals.
AGORA INTERNET RELATIONS CORP does not participate in the maintenance of an orderly market in their client's securities, nor is required, or receives an incentive for, the maintenance or achievement of a price or trading volume for their client's securities at a certain level, for a specified period of time or by a certain date. AGORA INTERNET RELATIONS CORP. may, at any time, own shares in the company. |
