6th Nov 2007 07:00
Armour Group PLC06 November 2007 ARMOUR GROUP PLC ("Armour" or the "Group") Preliminary Results for the year ended 31 August 2007 FINANCIAL HIGHLIGHTS - GROWTH ON 2006 Group Total - Sales of £57.4 million, up 33%. - Operating profit of £3.8 million, up 40%. - EBITDA of £5.9 million, up 27%. - Basic underlying earnings per ordinary share of 4.7p, up 9%. - Basic loss per ordinary share of 1.3p. - Cash inflow from operating activities of £5.4 million, up 77%. - Recommended dividend of 0.65p, up 18%. - Net debt of £2.9 million, down 44%. Continuing Operations - Sales of £55.2 million, up 38%. - Operating profit of £4.1 million, up 46%. - EBITDA of £6.1 million, up 31%. - Basic underlying earnings per ordinary share of 5.0p, up 16%. - Basic earnings per ordinary share of 3.1p, up 19%. George Dexter, Chief Executive of Armour Group plc commented: "This year's results demonstrate the strength of our core continuing businessesand reflect a year of good progress. The strong performance has been driven bythe fundamentals that underpin the Group's businesses, being strong brands,quality products, comprehensive product ranges and unrivalled distribution. Armour Automotive's sales increased by 6%. Sales to our retail customer base,which represents 61% of the division's sales, increased 2% due to record salesthrough the national accounts channel in both the UK and Sweden. Thiscompensated for a decline in sales to smaller independent retailers in the UKwhich have suffered in uncertain market conditions. Mutant, the Group's brand ofaffordable high quality in-car audio systems has a distinctive identity andappeal and has continued to win market share. Autoleads, our branded range ofspecialist connectivity solutions for the in-car communication and entertainmentmarket has had a steady year and is responding to the increasingly complexconnectivity and fitting solutions required by the in-car aftermarket. Sales tonon-retail customers increased by 11%. This growth has come from our Vebabranded in-car multi-media systems, manufacturer incentive programmes drivingdemand, and our CTI range of GSM and GPS Antennae. Armour Home has had a very successful year with sales from continuing operationsincreasing by 60%. All our core brands and channels to market showed healthyincreases, complemented by a full year's contribution from Alphason. On alike-for-like basis, sales from continuing operations increased by 23%. Salesinto the retail channel grew by 30%. The brands driving this growth are QEDcables, Q Acoustics, Goldring and Alphason. In addition, we secured theexclusive distribution rights to the NAD, PSB and Tivoli product ranges whichadded a further £0.6 million. Sales in the home automation channel increased by9%, driven by the introduction of new products such as our SystemlineSoundserver and the continued growth of Systemline Modular, our market leadingmulti-room entertainment system. Export sales increased by 15%, the growthprincipally coming from QED, Q Acoustics and Systemline Modular. Our investment in research and development of new products is a critical elementof delivering future sales growth. Over the last year, to meet the needs of theincreased number of new product programmes, we have expanded our in-housedevelopment teams and increased our partnership programmes with leadingtechnical and design companies. The largest investment in new productdevelopment has been the creation of our Concept Design Centre ("CDC"), whoseremit is to focus on emerging technologies and future development strategies forour core product categories. CDC is leading the development of key new productsthat range from the next generation of multi-room entertainment systems tocomplex in-car connectivity and engine diagnostic devices. The Group is focused on delivering sustainable growth. To achieve this, wecontinue to invest in the strong fundamentals that underline the Group. I amconfident that the Group is well positioned to meet the challenges that lieahead". For further information please contact: Armour Group plc Tel: 01892 502700George Dexter, Chief ExecutiveJohn Harris, Finance Director KBC Peel Hunt Ltd, Nominated Adviser and Broker Tel: 020 7418 8900Richard Kauffer, David Anderson Threadneedle Communications, Financial PR Tel: 020 7936 9666Trevor Bass, Alex White ABOUT ARMOUR Armour Group plc is the UK's leading consumer electronics group focused on thein-car communications and entertainment and home entertainment markets. The Group has an impressive brand portfolio, which boasts some of the UK'smarket leaders, regularly winning industry awards for quality and innovation. Inthe UK consumer electronics market, the Group has direct access to over 5,000retail outlets. It comprises two divisions: Armour Automotive and Armour Home. Armour Automotive The Armour Automotive division is the market leader in Europe in the design,manufacture and supply of products for the in-car entertainment andcommunications markets. Its proprietary brands include Autoleads (connectivity leads and smartleads suchas the telemute lead used in mobile telephone hands free kits), CTI (GSM and GPSaerials), VEBA (a range of in-car audio-visual entertainment systems) and Mutant(a range of quality amplifiers and speakers for the in-car entertainmententhusiast). Armour Automotive's customers have voted Autoleads as "Best Cable Product" andthe Mutant MT3004X amplifier as "Best 4 Channel Amplifier below £150" at the CarAudio Retailer magazine 2007 ICE (in-car entertainment) awards. Automotive supplies both retail and non-retail customers which include Halfords,Motorworld, BMW, Hyundai and Vodafone and over 1,000 independent automotiveaftermarket retailers. Armour Home The Armour Home division designs, manufactures, and supplies products into thehi-fi, home theatre and home entertainment market and is a market leader in theUK. Its proprietary brands include QED (quality cables and interconnects),Systemline (multi-room home entertainment systems), Alphason (hi-fi andaudio-visual furniture), Goldring (turntables, styli and headphones), Myryad(mid to high end hi-fi separates) and Q Acoustics (range of high quality, valuefor money speakers). In September 2007, Lenbrook America was appointed as the exclusive distributorin the USA of Armour Home's award winning range of QED cables. The Armour Home division also distributes third party brands, typically on anexclusive basis in the UK. These brands include Grado headphones, Nevo remotecontrols, Sonance speakers, NAD hi-fi separates, Tivoli radios and Audicaspeakers. Armour Home won six What Hi-Fi? Sound and Vision awards in 2007 in regard toproducts within the QED, Q Acoustics, SoundStyle and Grado brands. In addition,UK independent electrical retailers voted Alphason "Best Accessory Company" inthe Independent Marketing Awards 2007. Alphason also won "AV FurnitureManufacturer of the Year" (What Plasma & LCD TV? awards 2007), "Best FurnitureMaker" (What Home Cinema? awards 2007) and "Product of the Year " (Get Connectedawards 2007). The Home division's customers are both retail and non-retail and include Comet,Argos, John Lewis Partnership, Tesco, Sevenoaks Sound and Vision, BerkeleyHomes, Taylor Wimpey, Barratt Homes and David Wilson Homes. CHAIRMAN'S STATEMENT I am delighted to report record trading results for Armour Group plc for theyear ended 31 August 2007, which show significant growth over last year. Groupsales have increased by 33% to £57.4 million (31 August 2006: £43.0 million) andoperating profit has increased by 40% to £3.8 million (31 August 2006: £2.7million as restated). In September 2007, we announced the sale of the non-core, custom installationservices business. The Group is now fully focused on its fast growing and highlysuccessful branded product businesses in the home and automotive markets. Havingadjusted for the sale, the Group's sales and operating profit from continuingoperations have increased by 38% and 46% respectively. The Group has reported strong net cash inflow from operating activities of £5.4million (31 August 2006: £3.0 million). This has reduced net debt to £2.9million (31 August 2006: £5.2 million). The deferred consideration for AlphasonDesigns Limited ("Alphason") was agreed and settled in October 2007. Basic underlying earnings per share from continuing operations have grown by 16%to 5.0p (31 August 2006: 4.3p as restated). The proposed final dividend has beenincreased by 18% to 0.65p (31 August 2006: 0.55p) per ordinary share. Both our core operating divisions have enjoyed good growth in both sales andoperating profit. Armour Automotive reported sales growth of 6% and an increasein operating profit of 25% in challenging market conditions. Armour Home'scontinuing operations, which include a full year's contribution from Alphason,have seen sales increase by 60% and operating profit by 52%. On a like-for-likebasis, sales and operating profit were up 23% and 12% respectively. Sales in the UK from continuing operations were up by 44% overall and 18% on alike-for-like basis. Export sales were up 10%. The Group now exports to 63countries around the world. We have continued to expand our channels to marketover the past year. This expansion has taken our products into the hotel market,luxury goods retailers and television shopping channels. We have also launched anew e-commerce web site, www.endulgence.co.uk. During the year, we were pleased to be appointed as the exclusive UK distributorfor Tivoli, the prestige radio brand, and NAD and PSB, the world-renowned hi-fibrands. Following this appointment, our relationship with Lenbrook Corporationof Canada, owners of the NAD and PSB brands, has grown. In September 2007, weannounced the appointment of Lenbrook America as the exclusive distributor inthe USA of Armour Home's award winning range of QED cables and interconnects. Our investment in new product development remains central to our strategy fordelivering year-on-year organic growth. Last year we invested a record amount indeveloping high quality products to add to our brand portfolio. We have in placemany new product programmes, which, we expect, will deliver innovative andexciting new products over the coming year. The success of the Group is a reflection of the hard work, dedication andprofessionalism of our employees. Once again, I would like to acknowledge theBoard's appreciation of their commitment and efforts over the year. The Group continues to invest significantly in new product development, promoteour high quality brand portfolio and develop our channels to market. Thisstrategy lies at the heart of achieving organic growth and maintaining ourposition as one of the UK's leading consumer electronics groups in theautomotive and home markets. The Board remains confident of the Group's futureprospects. BOB MORTONChairman6 November 2007 Consolidated Profit and Loss Account For the year ended 31 August 2007 Restated* 31 August 31 August 2007 2006 Note £000 £000Turnover Continuing operations 2 55,171 40,004Discontinued operations 2,4 2,185 2,977 57,356 42,981Operating profit Continuing operations 2 4,118 2,826Discontinued operations 2,4 (360) (139) 3,758 2,687 Share of loss in associated 3 (15) -undertakings Loss on disposal of discontinued 4 (2,711) -operations Profit on ordinary activities 1,032 2,687before interest Interest receivable 22 29Interest on discounted deferred (113) (159)consideration Interest payable and similar (652) (508)charges Profit on ordinary activities 289 2,049before taxation Taxation on profit on ordinary 5 (1,155) (563)activities (Loss)/profit for the year 8 (866) 1,486 Earnings/(loss) per ordinary share 7 From continuing and discontinued operations Basic (1.3)p 2.4pDiluted (1.3)p 2.4p From continuing operations Basic 3.1p 2.6pDiluted 3.1p 2.5p From discontinued operations Basic (4.4)p (0.2)pDiluted (4.4)p (0.1)p * Note 1 Consolidated Statement of Total Recognised Gains and Losses For the year ended 31 August 2007 Restated* 31 August 31 August 2007 2006 £000 £000(Loss)/profit for the year Group (851) 1,486Associated undertakings (15) - (866) 1,486Currency translation differences on foreign (7) -currency net investments Total recognised gains and losses relating to (873) 1,486the year Share-based payment prior year adjustment (Note 1) (72) Total gains and losses recognised since last (945) statutory financial statements * Note 1 Consolidated Balance Sheet At 31 August 2007 Restated* Note 31 August 31 August 2007 2006 £000 £000 Fixed assets Intangible assets 19,914 23,338 Tangible assets 1,741 2,256 Investments 3 357 - 22,012 25,594 Current assets Stocks 10,490 9,836 Debtors 11,721 9,993 Cash at bank and in hand 892 186 23,103 20,015 Creditors: amounts falling due within one year Creditors (15,860) (13,547) Borrowings (714) (1,610) (16,574) (15,157) Net current assets 6,529 4,858 Total assets less current 28,541 30,452 liabilities Creditors: amounts falling due after more than one year - (127) Creditors Borrowings (3,082) (3,767) (3,082) (3,894) Net assets 25,459 26,558 Capital and reserves Called up ordinary share 6,848 6,841 capital Share premium account 8,513 8,496 Other reserves 871 871 Profit and Loss Account 9,427 10,550 Share trust reserve (200) (200) Shareholders' funds 8 25,459 26,558 * Note 1 Consolidated Cash Flow Statement For the year ended 31 August 2007 Note 31 August 2007 31 August 2006 £000 £000 £000 £000 Net cash inflow from operating 9(a) 5,353 3,032 activities Returns on investments and servicing of finance Interest received 22 29 Interest paid (507) (470) Bank loan arrangement costs - (150) Interest element of finance lease (4) (7) rentals Net cash outflow from returns on (489) (598)investments and servicing of finance Corporate taxation paid (919) (649) Capital expenditure and financial investment Payments to acquire tangible assets (825) (920) Sale of tangible assets 84 25 Net cash outflow from capital expenditure and financial investment (741) (895) Acquisitions and disposals Purchase of subsidiary undertakings (155) (10,402) Net cash acquired with subsidiary - 3,659 undertakings Investment in associated (372) - undertakings Net cash outflow from acquisitions (527) (6,743)and disposals Dividend paid (371) (296)Net cash inflow/(outflow) before 2,306 (6,149)financing Financing Issue of ordinary share capital 24 5,892 New bank loans - 5,000 Repayment of bank loans (720) (3,483) Capital element of finance lease (44) (56) rental repayments Net cash (outflow)/inflow from (740) 7,353 financing Net cash inflow after financing, being the 9(b) 1,566 1,204 increase in cash in the year Notes to the preliminary financial information 1. Basis of preparation The financial information set out in this announcement does not constitute theGroup's financial statements for the year ended 31 August 2007 and the yearended 31 August 2006. Financial statements for the year ended 31 August 2006have been delivered to the Registrar of Companies and those for 2007 will bedelivered in due course. The auditors' report on both accounts was unqualified,did not include references to any matters to which the auditors drew attentionby way of emphasis without qualifying their report and did not contain astatement under section 237 (2) - (3) of the Companies Act 1985. In accordance with Rule 20 of the AIM Rules, the full audited accounts of ArmourGroup plc for the year ended 31 August 2007 are expected to be posted toshareholders no later than 19 November 2007 and will be available to the publicat the Company's registered office, Lonsdale House, 7-9 Lonsdale Gardens,Tunbridge Wells, Kent, TN1 1NU and available to view on the Company's website atwww.armourgroup.uk.com from that date. This year the Group has adopted FRS 20: Share-based payment. In accordance withthe transitional provisions of FRS 20, it has been applied retrospectively toall grants of equity instruments made after 7 November 2002 that remainedunvested as at 1 September 2006. The Group's figures for the year ended 31 August 2006 have been restated toreflect the adoption of FRS 20. The restatement has resulted in a net decreasein profit of £72,000, being the share-based payment charge net of deferredtaxation of £31,000. Net assets at 31 August 2006 have increased by £56,000,being the deferred taxation asset for the year ended 31 August 2006 and afurther deferred taxation asset of £25,000 relating to those share-basedpayments that had been granted after 7 November 2002 but that had not vested by1 September 2005. The Group's share-based payment charge for the year ended 31 August 2007 is£121,000. 2. Turnover and operating profit by class of business 31 August 2007 31 August 2006 Operating Operating Turnover Profit Turnover Profit £000 £000 £000 £000 Continuing operations Armour Automotive 17,290 2,180 16,381 1,744Armour Home 37,881 4,604 23,623 3,026Amortisation of goodwill - (1,168) - (1,012) Central costs - (1,498) - (932)Total continuing operations 55,171 4,118 40,004 2,826 Discontinued operations Armour Home 2,185 (269) 2,977 (49)Amortisation of goodwill - (91) - (90)Total continuing operations 2,185 (360) 2,977 (139)Total Group 57,356 3,758 42,981 2,687 3. Investment in associated undertakings In September 2006, the Group acquired a 25% strategic investment in AudicaLimited. In the Group's financial statements, this has been accounted for usingthe equity method of accounting. The Consolidated Profit and Loss Accountincludes the Group's share of the operating results, interest, pre-taxationresults and attributable taxation. The Consolidated Balance Sheet shows theGroup's share of identifiable net assets including any unamortised premium paidon acquisition. This premium is amortised to nil through the Consolidated Profitand Loss Account in equal instalments over its estimated useful life of 20years. £00025% of net liabilities acquired 4Consideration paid including costs 372Premium paid on acquisition 376 Investment made in associated 372undertakings Amortisation of acquisition premium (18) Share of profit in associated undertaking 3 Carrying value of investment at 31 August 3572007 4. Discontinued operations In August 2007, the Group sold the entire share capital of Armour CustomServices Limited and The Hi-End Limited, which together formed the custominstallation services business segment within Armour Home. The loss on disposalhas been calculated as follows: £000Fixed assets 463Stocks 547Debtors 600Creditors (183) 1,427 Sale proceeds 400Cost of sale (30)Provision for onerous lease (120) 250 Loss before goodwill (1,177)Goodwill written off (1,534)Loss on disposal (2,711) 5. Taxation on profit on ordinary activities 31 August 31 August 2007 2006 £000 £000UK Corporation Tax at 30% (2006:30%) (1,121) (699)Adjustment in respect of prior years 10 39Overseas taxation (38) (20)Current taxation (1,149) (680)Deferred taxation - current year (6) 86Deferred taxation - prior year (Note 1) - 31 (1,155) (563) 6. Dividend 31 August 31 August 2007 2006 £000 £000 Proposed dividend for the year of 0.65p (2006: (439) (371)0.55p) per ordinary share The Board is recommending an 18% increase in the final dividend for the year of0.65p (31 August 2006: 0.55p) per ordinary share. The dividend is payable on 11January 2008 to shareholders on the register on 14 December 2007. The proposeddividend for the year has not been accrued in the Consolidated Balance Sheet asat 31 August 2007. The dividend proposed in the financial statements as at 31August 2006, and approved by shareholders at the Annual General Meeting held on12 December 2006, was paid during the year. 7. Earnings/(loss) per ordinary share The weighted average number of ordinary shares in issue during the year was67,493,840 (31 August 2006: 61,664,304). Diluted earnings per share iscalculated with reference to 68,831,976 (31 August 2006: 63,184,137) ordinaryshares. The effect of the exercise of options on the weighted average number ofordinary shares in issue is 1,338,136 (31 August 2006: 1,519,833). The 966,000 ordinary shares held by the Armour Employees' Share Trust are notincluded in either the weighted average, or diluted weighted average, ordinaryshares in issue during the year. Underlying earnings per ordinary share is also shown calculated by reference toearnings before the amortisation of goodwill, non-operating exceptional itemsand share-based payments. The Directors consider that this gives a usefuladditional indication of underlying performance. Continuing and discontinued operations: 31 August 2007 31 August 2006 £000 Basic p Diluted £000 Basic p Diluted p p (Loss)/profit for the (866) (1.3) (1.3) 1,486 2.4 2.4 year Amortisation of goodwill 1,259 1.9 1.8 1,102 1.8 1.7 Loss on disposal of 2,711 4.0 4.0 - - - discontinued operations Share-based payments 87 0.1 0.1 72 0.1 0.1 (Note 1) Underlying earnings 3,191 4.7 4.6 2,660 4.3 4.2 Continuing operations: The profit from continuing operations is calculated in the table below: 31 August 31 August 2007 2006 £000 £000(Loss)/profit for the year (866) 1,486Loss for the year from discontinued operations 268 98Loss on disposal of discontinued operations 2,711 -Profit from continuing operations 2,113 1,584 The loss for the year from discontinued operations is the operating loss of£360,000 (31 August 2006: £139,000) less the taxation benefit of £92,000 (31August 2006: £41,000). 31 August 2007 31 August 2006 £000 Basic p Diluted £000 Basic p Diluted p pProfit for the year 2,113 3.1 3.1 1,584 2.6 2.5Amortisation of goodwill 1,168 1.8 1.7 1,012 1.6 1.6Share-based payments 83 0.1 0.1 68 0.1 0.1(note 1) Underlying earnings 3,364 5.0 4.9 2,664 4.3 4.2 8. Reconciliation of movements in shareholders' funds 31 August 2007 31 August 2006 £000 £000 Opening shareholders' funds as 26,502 18,819 previously reported Prior year adjustment (Note 1) 56 25Opening shareholders' funds restated 26,558 18,844(Loss)/profit for the year (866) 1,486Dividend paid (371) (296)(Loss)/profit for the year retained (1,237) 1,190New share capital subscribed 24 6,120New share capital issue costs - (228) Ordinary shares issued as - 529consideration for acquisition Share-based payments 121 103Currency translation differences on (7) -foreign currency investments Net movement in shareholders' funds (1,099) 7,714Closing shareholders' funds 25,459 26,558 9. Group cash flow statement (a) Reconciliation of operating profit to net cash inflow from operatingactivities 31 August 31 August 2007 2006 £000 £000 Operating profit 3,758 2,687Depreciation and other amounts written off 784 760tangible fixed assets Amortisation of goodwill 1,259 1,102Share-based payments 121 103Increase in stocks (1,201) (724)Increase in debtors (1,926) (173)Increase/(decrease) in creditors 2,549 (737)Loss on disposal of tangible fixed assets 9 14 Net cash inflow from operating activities 5,353 3,032 (b) Reconciliation of net cash flow to movement in net debt 31 August 2007 31 August 2006 £000 £000 Increase in cash 1,566 1,204 New bank loans - (5,000) Repayment of bank loans 720 3,483 Cash outflow from finance leases 44 56 Change in net debt resulting from 2,330 (257)cash flows New finance leases - (114)Bank loan arrangement costs - 150Bank loan arrangement costs (35) (31)expensed Exchange adjustments (8) -Movement in net debt in the year 2,287 (252)Opening net debt (5,191) (4,939)Closing net debt (2,904) (5,191) (c) Analysis of net debt movement Other 31 August Cash flow non-cash Exchange 31 August 2006 £000 changes £000 2007 £000 £000 £000 Cash 186 714 - (8) 892Overdraft (852) 852 - - - (666) 1,566 - (8) 892Short-term debt (688) 720 (720) - (688)Long-term debt (3,767) - 685 - (3,082)Finance leases (70) 44 - - (26) (5,191) 2,330 (35) (8) (2,904) 10. Annual General Meeting The Annual General Meeting will be held at the offices of Arnold & Porter (UK)LLP, Tower 42, 25 Old Broad Street, London, EC2N 1HQ on 11 December 2007 at12.00 noon. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
OneView Group