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January 3, 1988

DOWNSIDE LOOKS LIMITED AS SPECTRUM GROUP CLEARS DECKS FOR THE YEAR

By CBR Staff Writer

Spectrum Group Plc appears to be well on the road to recovery, despite posting a loss last week of UKP477,000 for the year to June 30 1987. Over the past two years, the group’s turnover has plummeted from over UKP40m to just UKP4.3m as it has sold off or closed a succession of businesses. More importantly for the investor, in that time the annual loss has been reduced from UKP2.5m to less than a fifth of that total. The bank overdraft which was over UKP4m in 1985 has been reduced to under UKP400,000. Fixed costs have been slashed, helped by the sale, since the financial year-end, of the Hitchin headquarters and warehouse. Gross margins at SBC, the own-label IBM-compatible personal computer distributor, are improving, while the redesign of Computer Trade Weekly has boosted profits at Specialist Retail Press Ltd. The acquisition of computer consumables supplier March Data Plc in September also appears to be paying off, with sales considerably up and plans for further expansion. Finally, and not least for those wanting a long-term home for their money, Neil Scott, former chairman of holiday firm Owners Abroad has taken a major shareholding and has plans to develop a leisure division within the group – which could easily become the pre eminent force in Spectrum with Scott behind it, even though it needs acquisitions to get up and running. The standard recommendation is to avoid shell operations in a bear market, but, despite Scott’s presence, Spectrum is more than a shell. At 45p up from 19p over the last 12 months, the shares would seem to have little downside even in a bear market.

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