6th Feb 2006 07:00
Armour Group PLC06 February 2006 06 February 2006 Armour Group plc Acquisition and Placing Armour Group plc ("Armour" or the "Company"), the UK's leading consumerelectronics group focussed on the home entertainment and in-car communicationand entertainment markets, is pleased to announce that KBC Peel Hunt hassuccessfully raised £6 million with existing and new institutional investors toacquire today the entire share capital of Alphason Designs Limited ("ADL"), theUK's brand leading specialist designer and supplier audio visual ("AV")furniture to the consumer electronics market. The Acquisition ADL, which was incorporated in 1985, has been designing, manufacturing anddistributing specialist AV furniture for over 10 years, predominately marketedunder the Alphason brand. ADL has established very strong distribution channelsacross the whole of the UK consumer electronics market with direct access toover 2,500 retail outlets that range from 1,000 independent retailers through tothe multiples that include John Lewis Partnership, Comet and Argos. The market for specialist AV furniture is expected to grow over the coming yearswith the surge in demand for LCD and plasma televisions. There are currentlyapproximately 60 million cathode ray tube ("CRT") televisions and 2.5 millionLCD and plasma televisions in the UK. The Board are of the belief that over thenext five to seven years a significant proportion of these CRT televisions willbe replaced for LCDs and plasmas with a consequential increase in demand for theassociated accessories such as AV furniture. As the leading branded independentsupplier of such products in the UK, Armour expect ADL to benefit from thisconversion to LCD and plasma televisions. ADL has enjoyed strong growth over the past four years with sales increasingfrom £4.1 million in 2001 to £12.7 million in the year ended 31 May 2005 andprofits before interest and tax increasing from £0.2 million to £2.5m over thisperiod. Net assets as at 31 May 2005 totalled £5.0 million. ADL will be run as a separate operating unit within the Armour Home Electronicsdivision. In the enlarged Group, Armour Home Electronics will account forapproximately two thirds of the group sales and just over two thirds in terms ofprofit contribution. The remaining third of the Group's business is generatedfrom the automotive division, Armour Automotive. Benefits of the Acquisition The Armour board expect the acquisition: • to strengthen Armour's position in a growth sector of the AV market driven by the increasing demand for flat screen televisions;• to create a comprehensive UK distribution network into the consumers electronics market; and• to deliver cost savings through improved sourcing of product. ConsiderationThe initial consideration comprises the issue and allotment by the Company tothe vendors of 1,017,563 new Ordinary Shares (the "Initial ConsiderationShares") at 52p per share (being the average mid-market closing price over theprevious fifteen days) and a cash payment of £9.5 million. At completion ADLwill have approximately £4 million of net cash on its balance sheet for thebenefit of the enlarged group. All of the vendors have agreed not to dispose ofany of the Initial Consideration Shares for a period of eighteen monthsfollowing admission. If ADL meets certain profit targets of up to £3.5 million, a deferredconsideration payment of up to £10 million will be payable, primarily in cash,twelve months after completion. There will be a further £0.75m payable to those vendors who continue in thebusiness in the second 12 months subject to the Company achieving an operatingprofit in excess of £3 million. Funding Placing The Company today announces a placing of 12 million new Ordinary Shares at 50pper share ("Placing Shares") by KBC Peel Hunt to raise £6 million beforeexpenses ("Placing"). The net proceeds of the placing will be used to fund theinitial cash consideration of £10 million. The Initial Consideration Shares and Placing Shares represent approximately 19per cent. of the enlarged share capital of the Company which were admitted totrading today. Consequently there are now 68,355,067 shares in issue. Banking The Group has arranged new banking facilities with its bank, the NationalWestminster Bank PLC, to take account of the requirements of the enlargedGroup. The new facilities are structured to allow for the maximum deferredconsideration payment whilst providing for sufficient headroom to allow theGroup to continue to grow. Current Trading The Group's trading has followed the pattern reported in the AGM statement on 9December 2005. Armour Automotive continues to find the market conditions, particularly on theOEM side of its business, more challenging. Whilst retail sales are ahead yearon year, the OEM order flow has been slower than expected. The recentannouncement of a further order from Bayerische Motoren Werke Aktiengesellschaft("BMW AG") to supply its unique rear seat entertainment system is encouraging,though the expectation is that the OEM business will remain slower thanpreviously expected. Armour Home Electronics has continued to make good progress with trading buoyantacross all key products categories. Systemline Modular is maintaining animpressive growth rate and continues to secure further listings with homebuilders. There is a busy schedule of new product launches over the coming 6months, which should further enhance the performance of the division in thesecond half of the year. The Board remains confident of the prospects for the Group and its ongoingpotential. Commenting on the acquisition, George Dexter, Chief Executive said: "I am delighted with this acquisition. ADL is a high quality business that wehave tracked for two years. It generates strong profits and cash and isrecognised as the UK's market leader in its sector, a sector that I am confidentwill continue to grow driven by the conversion from CRT to flat screen TVs. The acquisition is expected to considerably strengthen Armour's position in theUK consumer electronics market and give the enlarged Group the ability to reacha wider consumer audience with its product portfolio." Enquiries: George Dexter Tel: 01892 502700Chief ExecutiveArmour Group plc Richard Kauffer Tel:020 7418 8850KBC Peel Hunt Trevor Bass Tel:020 7067 0743WSSM This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
OneView Group