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.
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.
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
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.
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
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
23 September 2004