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  22 February 2006

Download the Full Interim Statement  
  Chairman's Statement  
  Financial Review  
  The Group reported a profit before tax of £12.5m (2004: £14.2m) on sales of £49.6m (2004: £63.0m). The earnings per share were 10.6p (2004: 12.2p).

The results published in this Interim Statement are the first to be prepared by the Group on the basis of International Financial Reporting Standards, as opposed to UK Generally Accepted Accounting Practice as has previously been the case. The main impact on the Group’s accounts are the need to revalue (i.e. mark to market) foreign exchange forward contracts and certain foreign currency denominated stock purchase contracts, the capitalisation and subsequent amortisation of development expenditure and the charging to the income statement of a fair value in relation to share option grants. In these statements the comparative figures for the six months to 31 December 2004 and year to 30 June 2005 have been restated accordingly and the full impact of these changes to reporting under IFRS are outlined in the notes to the statement.

The interim dividend is to be increased to 2.5p (2004: 2.0p) per ordinary share to be paid on 6 April 2006 to shareholders on the register as at 3 March 2006.

The Group’s net assets have increased to £51.9m (2004: £43.3m). As at 31 December 2005 the Group had cash of £48.9m (2004: £22.1m). Inventories of £4.0m (2004: £15.4m) were significantly lower than last year reflecting both the successful sale through of e-mailer stocks and a strong demand for satellite products in the run up to Christmas.

  Operating Review  
  Satellite set top box volumes to the UK and Italian markets were similar overall to a year ago. The reduction in sales value largely reflects the higher volume of standard set top boxes compared to last year where the sales value was higher in the same period due to higher value PVR set top boxes representing a larger proportion of the volume mix. There is the inevitable downward pressure on selling prices which is an ongoing trend in this industry. However, our continuing focus on cost reduction through re-engineering and component price and manufacturing cost reductions has helped mitigate the impact of price pressure on profits.

The Hong Kong business, which designs, manufactures and sells audio products to the US and European markets, has managed to achieve a similar level of sales to last year which was a good result in what is a very competitive audio products market.

The Amserve business had a successful first half selling most of its e-mailer stocks to retailers. At 31 December 2005 the business only had minimal e-mailer stocks which are expected to all be sold in the second half of the financial year.In the first half of the financial year approximately 25k e-mailer units were bought and registered by consumers bringing the total registered since the initial launch of the product to 454k.

The installed base of e-mailers continues to generate significant usage revenue for the Group from e-mail, internet access, sms, downloading of ringtones and advertising. Based on December 2005’s usage revenue this equates to an annualised figure of £6.6m.

In September 2005 we moved into a new consumer product category in the health care market through the launch of the Integra face care system which is sold exclusively on-line through our dedicated website ( It is still early days for this operation but recently the website has been enhanced to facilitate sales in some other European countries.

  In September 2005 we announced that we had agreed with BSkyB to develop and supply a new PVR set top box which should result in significant volumes of this new product being sold in the next financial year. The broadcasting industry is increasingly moving towards high definition television and we are working with our broadcasting customers to develop HDTV set top boxes and HDTV PVR boxes for supply in the next financial year.

We continue to invest in development of the next generation of smart phones for use on fast broadband lines as well as conventional PSTN lines. These VOIP enabled phones are targeted to be sold on a contract basis to telco or service providers throughout the world as opposed to sales via retail channels.

In early January we announced that we expected sales in the second half of the financial year to be better than we had originally expected and we continue to anticipate this to be the case.

  Sir Alan Sugar
22 February 2006
  Amstrad plc
Registered No. 955321
Brentwood House
169 Kings Road
Essex CM14 4EF
Press Enquiries:
Neil Ashurst, Frank PR
Tel: 0207 693 6999
  Download the Full Interim Statement  

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