Bottom Line: Ross consolidates

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ROSS Group was supposed to get some payback for its aggressive acquisitiveness with a big jump in earnings last year.

Instead, the company had to rethink its entire strategy as it watched a series of unforeseen setbacks unfold.

The rising yen left its Sonicare car audio unit high and dry, cutting into margins by 25 per cent when competition was stiff and demand patchy, losing Ross perhaps pounds 600,000.

Shareholders haven't been altogether comfortable with the Ross strategy over the past three years.

After tumbling from heady heights of about 140p in 1990 before the new management was brought in, the shares have languished between 40p and 20p as Ross has bought a string of loss-making companies - often victims of the recession in receivership - and brought them back to break-even.

Over the past year, Ross shares have nearly halved, underperforming the FT All-Share index by about 50 per cent.

But the latest restructuring signals an end to Ross's acquisition period and a new phase of consolidation that includes concentrating more on shareholder value.

The planned flotation of the Powercords International division on an Asian stock exchange next year is expected to value Ross at about pounds 20m, netting shareholders about half that if Ross keeps a controlling stake.

Its technical services division is expected to be up for sale when its order book doesn't look so bleak.

Looking at the performance of Ross's core businesses, particularly the power supplies division, last year's numbers don't appear so bad.

Not one for the widows and orphans, but perhaps cheap at 20p.