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  News – 23 September 2004  
     
  Amstrad Plc
Preliminary Announcement
Year Ended 30 June 2004


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  Chairman's Statement

 
 

Financial Review

The Group as a whole reported a profit before tax of £15.6m (2003: £3.8m) on sales of £57.3m (2003: £43.8m). The earnings per share were 14.6p (2003: 3.7p).

The Board of Directors recommend an increased final dividend of 3.5p (2003: 2.2p) per ordinary share to be paid on 6 December 2004 to shareholders on the register on 1 October 2004 which together with the interim dividend of 1.5p (2003: 0.8p) paid on 6 April 2004 makes a total distribution of 5.0p (2003: 3.0p) per ordinary share in respect of the year ended 30 June 2004.

The Group balance sheet remains strong with net assets of £32.5m (2003: £24.2m) including £21.8m (2003: £24.5m) of cash. Stocks, debtors and creditors are significantly higher than a year ago reflecting the increased level of business in the last few months of the financial year and the planned build up for shipments in the first few months of the current financial year.

Operating Review

Amstrad Business

The Amstrad business made a profit before tax of £12.5m (2003: £9.9m) on sales of £45.2m (2003: £34.4m).

The sales of standard digital decoders (set top boxes) were higher in volume terms than last year and in addition in March we commenced selling Sky + set top boxes. This new product is a personal video recorder (PVR) incorporating a hard disc drive in a set top box. Initial volumes have been very encouraging and we view this product as one of the best innovations to have been introduced to the consumer electronics market in the last few years.

Our Hong Kong business has had another very successful year with direct shipments of audio products, mainly to the US market, significantly ahead of last year. We continue to develop new innovative audio models.

Amserve Business

The Amserve business moved into profit in the year with a pre-tax profit of £3.1m (2003: £6.1m loss) on sales of £12.1m (2003: £9.4m).

As shareholders will recall the e-m@iler business model is based on subsidising the sales price of the units with the subsidy to be recouped through a revenue stream derived from usage of the e-m@iler. We have been selling an updated version of the e-m@iler which has some new features that increase the e-mail revenue potential. In view of the increased revenue generated, and in keeping with accounting practice generally adopted in this industry where hardware sales are subsidised, we consider it appropriate to take account of future revenue streams when assessing the net realisable value of stock.

Some 368k e-m@iler units have been bought and registered since the launch of the product of which 113k units were registered in the last financial year. Lower manufacturing costs together with additional revenue earning potential enabled the retail price of the unit to be reduced from £49 to around £29 after Christmas.

In June 2004 the average revenue generated from the installed base was £25.2k per day (an approximate annualised rate of £9.2m per annum). The majority of income continues to be generated by e-mail and surf usage. However, advertising income is making an increasingly significant contribution as the installed base grows. We have attracted a number of leading names such as AOL, BT, Halifax, BSkyB and OneTel all of whom regularly advertise on the e-m@iler.

Outlook

At the end of April we were pleased to announce an order to supply digital satellite set top boxes for the Italian broadcaster, Sky Italia. Deliveries of this product commenced in early August ahead of schedule, demonstrating our ability to develop and bring to market a new product in a very short period of time. We see the Italian market as being a very important fast growing digital TV market and we are pleased to be a key supplier to Sky Italia.

We have standard set top box and PVR orders in place for the current financial year for all of our markets. We will continue to focus on driving down unit costs and developing new units both for the UK market and other markets. As I have mentioned before we are in a strong position due to the lower level of overheads we have when competing with other set top box makers. Our speed of development and delivery also continues to put us in a stronger position.

We are developing some very innovative audio products targeted at the European and American markets. I am confident that they will have a significant impact on this sector of our business in the next financial year.

On 15 September we launched the new generation e-m@iler, the Amstrad E3. This phone will retail at around £99 and in addition to e-mail, sms, internet access and other functionality that is available on the previous model, this new phone includes a colour screen and has video phone functionality. The inbuilt camera will enable users to hold video calls with other users and send and receive picture messages with PCs and mobile phones. The existing model will continue to be sold alongside the new model.

At a retail price of around £99 the product will only have a small subsidy per unit and will receive ongoing revenue from e-mail, internet access, sms, games and advertising as well as new revenue from video calls and picture messaging.

Sir Alan Sugar
Chairman

23 September 2004

 
     
 
Amstrad plc
Register No. 955321
Brentwood House
169 Kings Road
Brentwood
Essex CM14 4EF
Press Enquiries
Graham Goodkind/David Fraser/Nita Rushi - Frank PR
Tel: 020 7693 6999
E-mail: david@frankpr.it

 

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