RNS Number:2668R
Amstrad PLC
15 February 2007
AMSTRAD PLC
INTERIM STATEMENT
SIX MONTHS ENDED 31 DECEMBER 2006
Chairman's Statement
Financial Results
The Group reported a profit before tax of #10.5m (2005: #12.5m) on sales of
#40.6m (2005: #49.6m). The earnings per share were 9.0p (2005: 10.6p).
The interim dividend is 2.5p (2005: 2.5p) per ordinary share to be paid on 13
April 2007 to shareholders on the register as at 23 February 2007.
On 8 December 2006 the Company distributed #30.4m of cash to shareholders by way
of a special dividend of 32p per ordinary share and a final dividend of 4.5p
(2005: 4.5p) per ordinary share.
Following payment of these dividends the Group's net assets have reduced to
#33.5m (2005: #51.9m). As at 31 December 2006 the Group had cash of #28.3m
(2005: #48.9m).
Review of Activities
Set top box volumes, which are normally weighted towards the first half of the
financial year, are lower than a year ago. We have continued to focus on driving
down the overall cost of manufacturing set top boxes and this has helped
mitigate the impact of the downward pressure on prices for more mature products.
The Hong Kong business, which designs, manufactures and sells audio products to
the US and European markets, has managed to maintain margins despite lower
volumes in what is a very competitive audio market.
In the previous financial year all remaining stocks of the e-mailer were sold to
retailers and in the first half of this financial year a further 14k units were
bought and registered by consumers bringing the total registered since the
initial launch of the product to 507k. 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 the figures for
December 2006 usage, this equated to an annualised revenue figure of #6.4m.
Outlook
As stated in the last Annual Report the broadcasting industry is increasingly
moving towards high definition television and we continue to work on developing
HDTV set top boxes and HDTV PVR boxes. We started delivering HDTV boxes at the
end of the last financial year and deliveries of an HDTV PVR box are due to
commence in the second half of the financial year. We are in the final stages of
developing a new PVR box which should leave us well placed for the future.
We continue to research the smart phone market working with leading telcos and
broadband providers.
Sir Alan Sugar
Chairman
15 February 2007
Amstrad plc
Registered No. 955321
Brentwood House
169 Kings Road
Brentwood
Essex CM14 4EF
Press Enquiries:
Andrew Bloch/David Fraser, Frank PR
Tel: 0207 693 6999
e-mail: amstrad@frankpr.it
Amstrad plc
Consolidated Income Statement - unaudited
Notes Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
#000 #000 #000
Revenue 2 40,646 49,622 91,651
Cost of sales 3 (27,727) (33,648) (64,709)
---------- ---------- --------
Gross profit 12,919 15,974 26,942
---------- ---------- --------
Distribution costs (403) (894) (1,438)
Administrative expenses (3,082) (3,458) (6,567)
---------- ---------- --------
Net operating expenses (3,485) (4,352) (8,005)
---------- ---------- --------
Operating profit 2 9,434 11,622 18,937
Finance income 4 1,285 924 2,067
Finance costs 5 (178) (89) (793)
---------- ---------- --------
Profit before tax 2 10,541 12,457 20,211
Tax 6 (3,035) (3,763) (5,122)
---------- ---------- --------
Profit for the period 7,506 8,694 15,089
attributable to equity
shareholders
========== ========== ========
Basic earnings per share 7 9.0p 10.6p 18.4p
Diluted earnings per share 7 9.0p 10.5p 18.2p
Consolidated Statement of Recognised Income and Expense - unaudited
Profit for the period 7,506 8,694 15,089
Exchange differences on (148) 109 (74)
translation of foreign
operations
Transitional adjustment on - - 570
adoption of IAS39
---------- ---------- --------
Total recognised income and 7,358 8,803 15,585
expense for the period
========== ========== ========
Amstrad plc
Consolidated Balance Sheet - unaudited
Notes As at As at As at
31 December 31 December 30 June
2006 2005 2006
#000 #000 #000
Non-current assets
Goodwill 685 685 685
Intangible assets 2,083 1,614 1,852
Property, plant and 616 394 706
equipment
Deferred tax assets 436 446 377
-------- -------- --------
3,820 3,139 3,620
-------- -------- --------
Current assets
Inventories 5,031 3,962 6,129
Trade and other 20,153 17,416 12,509
receivables
Corporation tax - 153 433
recoverable
Cash and cash 28,271 48,918 56,427
equivalents
-------- -------- --------
53,455 70,449 75,498
-------- -------- --------
Total assets 2 57,275 73,588 79,118
Current liabilities
Trade and other payables (14,696) (11,063) (11,959)
Corporation tax payable (3,121) (4,255) (2,555)
Short-term provisions 9 (3,279) (3,598) (5,111)
-------- -------- --------
(21,096) (18,916) (19,625)
-------- -------- --------
Non-current liabilities
Deferred tax liabilities (625) (514) (562)
Long-term provisions 9 (2,056) (2,233) (2,629)
-------- -------- --------
(2,681) (2,747) (3,191)
-------- -------- --------
Total liabilities 2 (23,777) (21,663) (22,816)
======== ======== ========
Net assets 2 33,498 51,925 56,302
======== ======== ========
Equity attributable to
equity holders of the
parent
Called up share capital 8,331 8,245 8,290
Share premium account 7,050 6,744 6,888
Share option reserve 171 108 153
Translation reserve (179) 152 (31)
Capital reserve 3,618 3,618 3,618
Retained earnings 14,507 33,058 37,384
-------- -------- --------
Total equity 10 33,498 51,925 56,302
======== ======== ========
Amstrad plc
Consolidated Cash Flow Statement - unaudited
Note Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
#000 #000 #000
Cash flow from operating
activities
Cash generated from operations 11 4,376 15,748 29,019
Tax paid (2,021) (2,445) (5,661)
-------- -------- -------
Net cash flow from operating 2,355 13,303 23,358
activities
-------- -------- -------
Investing activities
Interest received 1,360 934 2,054
Proceeds on disposal of - - 6
property, plant and equipment
Purchases of property, plant (114) (223) (794)
and equipment
Expenditure on product (1,273) (936) (2,116)
development
-------- -------- -------
Net cash used in investing (27) (225) (850)
activities
-------- -------- -------
Financing activities
Dividends paid (30,408) (3,691) (5,760)
Decrease in bank overdrafts - (980) (980)
Proceeds on issue of shares 203 230 419
-------- -------- -------
Net cash used in financing (30,205) (4,441) (6,321)
activities
-------- -------- -------
Net (decrease)/increase in (27,877) 8,637 16,187
cash and cash equivalents
Cash and cash equivalents at 56,427 40,256 40,256
beginning of period
Effect of foreign exchange (279) 25 (16)
rate changes
-------- -------- -------
Cash and cash equivalents at 28,271 48,918 56,427
end of period
======== ======== =======
Amstrad plc
Notes to the Interim Financial Statements
1. Basis of preparation of the interim financial statements
The Interim Financial Statements for the six month period to 31 December 2006
were approved by the directors on 15 February 2007. The Interim Financial
Statements have been prepared in accordance with the Listing Rules of the
Financial Services Authority and the accounting policies set out in the Group's
Annual Report and Accounts for the year ended 30 June 2006. The Interim
Financial Statements are unaudited and do not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985 but have been
reviewed by the auditors.
The financial information for the year ended 30 June 2006 does not constitute
the Company's statutory accounts for that period but has been extracted from
those accounts which have been filed with the Registrar of Companies. The
auditors have reported on those accounts, their report was unqualified and did
not contain statements under Sections 237(2) or (3) of the Companies Act 1985.
2. Business segments
For management purposes, the Group is currently organised into two operating
divisions, the Amstrad business division and the Amserve business division.
These divisions are the basis on which the Group reports its primary segment
information as below.
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
#000 #000 #000
Revenue:
Amstrad 37,427 45,408 83,684
Amserve 3,219 4,214 7,967
--------- -------- --------
40,646 49,622 91,651
========= ======== ========
Operating profit:
Amstrad 6,301 9,608 13,664
Amserve 3,133 2,014 5,273
--------- -------- --------
9,434 11,622 18,937
========= ======== ========
Pre-tax profit:
Amstrad 7,230 10,417 14,807
Amserve 3,311 2,040 5,404
--------- -------- --------
10,541 12,457 20,211
========= ======== ========
2. Business segments (continued)
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
#000 #000 #000
Assets:
Amstrad 54,770 68,133 76,368
Amserve 10,102 5,867 8,105
--------- -------- --------
64,872 74,000 84,473
Less intra-group (7,597) (412) (5,355)
balances
--------- -------- --------
57,275 73,588 79,118
========= ======== ========
Liabilities:
Amstrad 29,617 19,886 26,053
Amserve 1,757 2,189 2,118
--------- -------- --------
31,374 22,075 28,171
Less intra-group (7,597) (412) (5,355)
balances
--------- -------- --------
23,777 21,663 22,816
========= ======== ========
Net Assets:
Amstrad 25,153 48,247 50,315
Amserve 8,345 3,678 5,987
--------- -------- --------
33,498 51,925 56,302
========= ======== ========
The Amstrad business consists of the Group's satellite set top box and audio
products business. The Amserve business is the Group's e-mailer business where
the Group receives usage revenue from the installed base of e-mailers.
3. Exceptional Costs
In the year ended 30 June 2006 cost of sales included an exceptional warranty
provision of #3.9m. There were no exceptional costs in the six months ended 31
December 2006 or the six months ended 31 December 2005.
4. Finance income
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
#000 #000 #000
Bank interest 1,285 924 2,067
receivable
========= ======== ========
5. Finance costs
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
#000 #000 #000
Mark to market losses (178) (89) (793)
on financial derivatives
========= ======== ========
6. Taxation
Taxation for the half year ended 31 December 2006 is based on the effective tax
rate of 28.8% (2005: 30.2%) which is estimated to apply in the year ending 30
June 2007.
7. Basic earnings per share and diluted earnings per share
The basic earnings per share is based upon earnings of #7,506,000 (2005:
#8,694,000) and 83,099,272 (2005: 81,945,132) ordinary shares being the average
number of ordinary shares in issue during the six months ended 31 December 2006.
The diluted earnings per share is based upon earnings of #7,506,000 (2005:
#8,694,000) and 83,396,404 (2005: 82,995,421) ordinary shares allowing for the
exercise of outstanding share purchase options exercisable at a price below the
average fair value during the period.
8. Dividends
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
#000 #000 #000
Final dividend for 2004/2005 of 4.5p - 3,691 3,691
Interim dividend for 2005/2006 of 2.5p - - 2,069
Final dividend for 2005/2006 of 4.5p 3,749 - -
Special dividend of 32p 26,659 - -
--------- -------- --------
30,408 3,691 5,760
========= ======== ========
The directors propose an interim dividend for 2006/2007 of 2.5p. In accordance
with IAS10 as this was not payable as at 31 December 2006 it is not reflected in
these interim financial statements.
9. Provisions
Provisions, which are in respect of goods returned under warranty and royalty
claims, were as follows:-
Warranty Royalties Total
#000 #000 #000
At 1 July 2006 6,460 1,280 7,740
Provided in the period 2,303 111 2,414
Released in the period (430) - (430)
Utilised in the period (4,389) - (4,389)
-------- -------- --------
At 31 December 2006 3,944 1,391 5,335
======== ======== ========
Included in current liabilities 3,279 - 3,279
Included in non-current 665 1,391 2,056
liabilities -------- -------- --------
3,944 1,391 5,335
======== ======== ========
It is generally expected that the provisions are expected to be utilised within
three years of the balance sheet date.
A warranty provision is made on every unit sold to cover the forecast costs of
repairing units that fail within their warranty period. The amount that is
provided per unit is an estimate and is normally based on past experience.
Adjustments are made to the warranty provisions in light of product returns
experience.
The owners of patents covering technology used by the Group have indicated
claims for royalties relating to the Group's current and past use of that
technology. The directors have accordingly made a provision for potential
royalties payable based on the latest information available.
10. Reconciliation of movements in equity
#000
Shareholders' funds at 1 July 2006 56,302
Shares issued during the period 203
Profit for the financial period 7,506
Exchange translation differences (148)
Dividends (note 8) (30,408)
Share based payment net of transfer to retained earnings 43
-------
Shareholders' funds at 31 December 2006 33,498
=======
11. Net cash inflow from operating activities
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
#000 #000 #000
Operating profit 9,434 11,622 18,937
Increase in share option 43 34 79
reserve
Exchange translation (65) 75 (6)
differences
Amortisation of product 1,042 909 1,851
development
Depreciation 198 210 457
Profit on sale of tangible - - (3)
fixed assets
Decrease in inventories 1,098 4,769 2,602
Increase in debtors (7,685) (5,094) (1,239)
Increase in creditors 2,646 2,703 3,876
(Decrease)/Increase in (2,335) 520 2,465
provisions
----------- ---------- ---------
Net cash inflow from operating 4,376 15,748 29,019
activities
=========== ========== =========
12. Imposition of duty
The EU is currently considering whether to impose duty on the import of
interactive satellite set top boxes to the EU. The Group currently manufactures
outside the EU. The imposition of duty is not expected to have an impact on the
current financial year and the impact on future business is uncertain as
non-duty considerations such as labour rates and labour efficiency may still
make it more attractive to manufacture outside the EU.
13. EU Environmental Directives
The Company is currently preparing for compliance with the Waste Electrical and
Electronic Equipment ("WEEE") Directive. The WEEE Directive sets goals for the
recycling of electrical goods and comes into effect in the UK on 1 July 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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