Bottom Line: File Kalamazoo

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The Independent Online
KALAMAZOO, the arrestingly named company once a byword among filing clerks for its stationery products, is now driven by technology. Computer services, which now dwarfs the paper and printing division, turned in pounds 2.3m of the pounds 3m operating profits reported by the group at the half-way stage yesterday.

Overall pre-tax profits of pounds 2.5m for the six months to 30 September was a substantial improvement on pounds 900,000 last time.

The driving force behind that recovery has been the pick-up in car sales - Kalamazoo is the leading supplier of computer services to motor dealers.

The printing business also made a recovery, turning in operating profits of pounds 700,000 against a pounds 1.5m loss last time.

Although it is a mature business still in decline - turnover was 17 per cent lower - Kalamazoo has refocused it onto growth areas such as security printing.

Albert E Sharp, the company stockbroker, is forecasting full- year profits of pounds 5m before tax. At yesterday's closing price of 99p, Kalamazoo is on an undemanding prospective p/e ratio of 11 1/2 times earnings, despite the fact that the shares have already risen from a low of 26p over the past 12 months.

But there is a large drawback. The marketability of its shares is severely restricted by the fact that a trust set up by the founders holds a 51.5 per cent stake.

The indications are that this holding will be progressively diluted by issues of paper for acquisitions. So the name, which is hard to forget, is one to file away for future reference.