The second half has traditionally been less lucrative for Amstrad Plc than the first. But chairman Alan Sugar, a man well used to coping with fluctuations in fortunes over two halves with Tottenham Hotspur, believes that the nature of Amstrad’s business has been transformed so that a modest first half pre-tax profit of ú25,000 can result in full year figures staying in the black. Net losses stood at ú217,000 on turnover that edged up 2% to ú142.9m. The headline profit number is immaterial as most of the hit was at the old Amstrad, with around ú5m loss due to redundancy and stock write down, analyst Mike Styles at Credit Lyonnais told Reuters. The reorganisation under new chief executive David Rogers is well under way and the traditional core of Amstrad’s business is now a separate company. Amstrad Consumer Electronics Ltd now stands alongside Dancall A/S, 66%-owned Betacom Plc and Viglen Ltd. The ú30m paid by Amstrad as the first part of the acquisition of Viglen made a dent in its cash balances, but ú136.4m remains in the coffers. Viglen has traded profitably during the period and will open a new factory shortly. Dancall is the other reason for optimism within the group. It is currently working on new digital cellular phones and a price-busting product could well be imminent, according to a report in the Daily Mail. Dancall is due to launch products at CeBit in March, though it is unclear whether it will be able to get the new phone, rumoured to cost less than ú150 – well below rivals’ costs – ready in time. The consumer electronics division is also believed to have new products in the offing, including a bubblejet printer that uses ink rather than cartridges, cutting refill costs to as little as ú3. Sugar believes that the benefits of the new products will not felt this f inancial year, but he is confident of a significant impact in the future. Mike Styles of Credit Lyonnais estimates that Amstrad could achieve pre-tax profits of between ú15 and ú20m by 1996. The group’s share price rose slowly through the morning standing at 138 pence by the afternoon. Amstrad made a five-for-one share consolidation on November 30.
Betacom
The board will maintain the interim dividend at a penny. Betacom Plc, majority owned by Amstrad reported pre-tax profits for the period up 111% to ú218,000 on turnover up 21% to ú8.4m. The company is benefitting most from its export markets, especially those of Zimbabwe, where it is supplying telephones to the state-owned Zimbabwean PTT, and Germany where it is developing products to exploit the vast potential of Europe’s biggest market. The problems of supply and quality from the Far East have now been resolved, with an increased representation in the area and the consolidation of products at ports to cut freight costs to a minimum. However the company continues to struggle in the UK cordless phone market, where British Telecommunications Plc’s prices have squeezed Betacom’s margins. Betacom, with other UK telecommunications equipment manufacturers is currently in talks with the UK Office of Telecommunications regarding complaints about the subsidisation of British Telecom’s equipment sales. Broker Beeson Gregory expects ú400,000 full-year pre-tax profits from Betacom, which has not paid a dividend since 1989.
