2nd Nov 2006 07:00
Armour Group PLC02 November 2006 ARMOUR GROUP PLC (THE "GROUP") Preliminary Results for the year ended 31 August 2006 FINANCIAL RESULTS * Sales of £43.0 million (2005: £35.5 million). * EBITDA of £4.7 million (2005: £5.1 million). * Profit after taxation of £1.6 million (2005: £2.1 million). * Cash inflow from operating activities of £3.0 million (2005: £3.7 million). * Recommended dividend maintained at 0.55p (2005: 0.55p). * Basic earnings per share of 2.5p (2005: 4.0p). * Underlying earnings per share of 4.3p (2005: 5.5p). OPERATIONAL OVERVIEW * Both divisions profitable and delivering good margins. * Automotive significantly down on prior year due to challenging market conditions. * Home sales and profits up, both organically and through acquisition. * Acquisition of Alphason Designs Limited expected to enhance future earnings. * Access to over 5,000 retail outlets in the UK consumer electronics market. * New Group research and development team set up to focus on emerging technologies and core product ranges. Bob Morton, Chairman of Armour Group plc commented: "The year to 31 August 2006 has been challenging for the Group due to a lessfavourable economic environment in the consumer related markets in which weoperate. Both our home and automotive divisions have traded profitably, althoughthe Group operating profit is down on last year due to a significant underperformance from our automotive division. The Group's strategy is focused on developing and investing in our high qualitybrand and product portfolio, sales and marketing and developing our channels tomarket. This strategy is delivering award winning products and securing an everincreasing number of new customers both in the UK and in our export market. Weexpect the current economic environment to remain uncertain, but having made apromising start to the new financial year with current trading ahead ofexpectations, the Board remains confident with regard to the future prospects ofthe Group." For further information please visit www.armourgroup.uk.com or contact: George Dexter, Chief Executive, Armour Group plc. Tel: 01892 502700 CHAIRMAN'S STATEMENT The year to 31 August 2006 has been challenging for the Group due to a lessfavourable economic environment in the consumer related markets in which weoperate. Both our home and automotive divisions have traded profitably, althoughthe Group operating profit is down on last year due to a significant underperformance from our automotive division. Armour Automotive has had a difficult year, with lower demand, increasedcompetition and rising raw material costs, particularly the price of copperduring the year, which combined have had a major impact on the financialresults. We have responded by reducing our cost base and investing in sales andnew product development, focusing on those areas where we believe that sales andprofit growth can be maximised. There are promising signs of improvement in ourautomotive division and we expect it to return to growth in the currentfinancial year. The Group's home division has had a good year, growing sales and profits bothorganically and through the acquisition of Alphason Designs Limited in February2006. Alphason is the UK's brand leader in specialist audio visual furniture, amarket that is experiencing strong growth driven by demand for flat paneltelevisions. The division's considerable investment in new product development,sales and marketing is paying dividends. Sales have increased both domesticallyand internationally across all major product categories and we believe that thisgrowth will continue through the current financial year. In September 2005, we were appointed the exclusive United Kingdom distributorfor Audica Limited, a designer and developer of lifestyle speakers and hometheatre electronics. This distribution agreement has proven to be successful andas a result of the potential that we see in the brand and new products to belaunched over the coming months, the Group completed a 25% strategic investmentin Audica in September 2006. Strategically the Group continues to progress, enhancing its position as one ofthe leading consumer electronics groups in the United Kingdom. The acquisitionof Alphason has been another step in pursuit of this strategy. It has addedanother brand leading product range to the Group's strong portfolio and itssales channels into the general consumer electronics market strengthen andcomplement the specialist customer base already served. Investment in research and new product development are key factors to deliveringorganic growth for the Group. In August 2006, we put in place a new Groupresearch and development team called the Concept Design Centre. This new teamhas a Group wide responsibility to look at emerging technologies and, workingwith the divisional product development teams, specify the core products that weshould be bringing to market over the next two to three years. This largeinvestment by the Group has been made in order to deliver long term growth. I would like to take this opportunity, on behalf of the Board, to thank ouremployees for all their hard work and dedication over the course of last year. The Group's strategy is focused on developing and investing in our high qualitybrand and product portfolio, sales and marketing and developing our channels tomarket. This strategy is delivering award winning products and securing an everincreasing number of new customers both in the UK and in our export market. Weexpect the current economic environment to remain uncertain, but having made apromising start to the new financial year with current trading ahead ofexpectations, the Board remains confident with regard to the future prospects ofthe Group. BOB MORTON Chairman 2 November 2006 Consolidated Profit and Loss Account For the year ended 31 August 2006 Re-presented* 31 August 2006 31 August 2005 Note Excluding Amortisation of Total Total amortisation of goodwill goodwill £000 £000 £000 £000 -------- -------- ------- --------TurnoverContinuingoperations 36,353 - 36,353 35,452Acquisitions 2 6,628 - 6,628 - -------- -------- ------- -------- 42,981 - 42,981 35,452 ======== ======== ======= ========Operating profitContinuingoperations 2,871 (813) 2,058 3,459Acquisitions 2 1,021 (289) 732 - -------- -------- ------- -------- 3,892 (1,102) 2,790 3,459 ======== ======== ======= ======== Interestreceivable 29 12Interest ondiscounteddeferredconsideration 3 (159) -Interestpayable andsimilarcharges (508) (482) ======== ======== ======= ========Profit onordinaryactivitiesbeforetaxation 2,152 2,989Taxation onprofit onordinaryactivities 4 (594) (864) -------- -------- ------- --------Profit for theyear 1,558 2,125 ======== ======== ======= ======== -------- -------- ------- --------Earnings perordinary share 6Basic 2.5p 4.0pDiluted 2.5p 3.8p ======== ======== ======= ======== * See Note 1 Consolidated Statement of Total Recognised Gains and Losses For the year ended 31 August 2006 ---------- ----------- 31 August 2006 31 August 2005 £000 £000 ---------- -----------Profit for the year 1,558 2,125Currency translation differences on foreigncurrency net investments - (2) ---------- -----------Total recognised gains and losses relatingto the year 1,558 2,123 ========== =========== Consolidated Balance Sheet At 31 August 2006 31 August 2006 Restated * 31 August 2005 £000 £000 --------- ---------Fixed assetsIntangible assets 23,338 14,533Tangible assets 2,256 1,714 --------- --------- 25,594 16,247 ========= =========Current assetsStocks 9,836 7,648Debtors 9,937 6,937Cash at bank and in hand 186 116 --------- --------- 19,959 14,701 ========= =========Creditors: amounts falling due within one yearCreditors (13,547) (6,882)Borrowings (1,610) (2,553) --------- --------- (15,157) (9,435) ========= =========Net current assets 4,802 5,266 --------- ---------Total assets less current liabilities 30,396 21,513 ========= =========Creditors: amounts falling due after (127) (192)more than one yearCreditorsBorrowings (3,767) (2,502) --------- --------- (3,894) (2,694) --------- ---------Net assets 26,502 18,819 ========= ========= === ===Capital and reservesCalled up share capital 6,841 5,482Share premium account 8,496 3,861Other reserves 871 444Profit and Loss Account 10,494 9,232Share trust reserve (200) (200) --------- ---------Shareholders' funds 26,502 18,819 ========= ========= * See Note 1 Consolidated Cash Flow Statement For the year ended 31 August 2006 Note 31 August 2006 31 August 2005 £000 £000 £000 £000 -------- -------- ------- ------- Net cash inflow from operatingactivities 7(a) 3,032 3,650 Returns on investments andservicing of financeInterest received 29 12Interest paid (470) (395)Bank loan arrangement costs (150) (13)Interest element of finance leaserentals (7) (9) -------- -------- ------- -------Net cash outflow from returns oninvestments and servicing of (598) (405)finance Corporate taxation paid (649) (1,427) Capital expenditure and financialinvestmentPayments to acquire tangible (920) (885)assetsSale of tangible assets 25 127 -------- -------- ------- -------Net cash outflow from capitalexpenditure and financial investment (895) (758) Acquisitions and disposalsPurchase of subsidiary (10,402) (3,587)undertakingsNet cash acquired with subsidiaryundertakings 3,659 142 -------- -------- ------- -------Net cash outflow fromacquisitions (6,743) (3,445)and disposals Dividend paid (296) (237) -------- -------- ------- -------Net cash outflow before financing (6,149) (2,622) FinancingIssue of ordinary share capital 5,892 279New bank loans 5,000 -Repayment of bank loans (3,483) (571)Capital element of finance leaserental repayments (56) (35) -------- -------- ------- -------Net cash inflow/(outflow) fromfinancing 7,353 (327) -------- -------- ------- -------Net cash inflow/(outflow) afterfinancing, being theincrease/(decrease) in cash inthe 7(b) 1,204 (2,949)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 2006 and the yearended 31 August 2005. Financial statements for the year ended 31 August 2005have been delivered to the Registrar of Companies. The auditors have reported onthose accounts; their report was unqualified and did not contain statementsunder section 237 (2) or 237 (3) of the Companies Act 1985. The full audited accounts of Armour Group plc for the year ended 31 August 2006are expected to be posted to shareholders no later than 20 November 2006 andwill be available to the public at the Company's registered office, LonsdaleHouse, 7-9 Lonsdale Gardens, Tunbridge Wells, Kent, TN1 1NU from that date. This year the Group has adopted FRS 21: Events after the Balance Sheet Date,FRS22: Earnings per Share, the presentational requirements of FRS 25: FinancialInstruments, Disclosure and Presentation and FRS 28: Corresponding amounts. Under FRS 21, dividends are only recognised in the period in which a bindingobligation for payment arises. Consequently, dividends declared after thebalance sheet date are no longer accrued but are appropriated from reserves inthe period in which the declaration takes place. The prior year comparativefigures have been restated to reflect the adoption of FRS 21. The ConsolidatedProfit and Loss Account has been re-presented to reflect the appropriation ofdividends from shareholders' funds. By implementing FRS 21, the Consolidated Balance Sheet at 31 August 2005 hasbeen restated to remove the £296,000 dividend accrual, which was declared at theAnnual General Meeting on 9 December 2005. Consequently, shareholders funds at31 August 2005 have increased by £296,000 and creditors falling due within oneyear are decreased by £296,000. The dividend of £296,000 has been appropriatedfrom shareholders' funds in the current year. Adoption of FRS 22 has removed the Basic Underlying EPS and Diluted UnderlyingEPS measures from the face of the Consolidated Profit and Loss Account. However,the Directors believe that these remain useful indicators of underlyingperformance and they are shown in Note 6. FRS 25 and FRS 28 have had no material impact on the results. 2. Acquisitions In February 2006, the Group acquired Alphason Designs Limited, the UK's leadingbrand in specialist furniture for audio visual entertainment equipment. Theinitial consideration was £10.9 million (including costs) which was settled incash of £10.4 million and by the issue of consideration shares of £0.5 million.£3.7 million of cash was acquired with the business. Further deferred consideration, up to a maximum of £10.75 million, may bepayable but this is dependent upon the operating profit of Alphason DesignsLimited over the two years immediately following the acquisition. In the firstyear, deferred consideration is payable on a sliding scale if the company'soperating profit is between £1.5 million and £3.5 million. The maximum deferredconsideration is £10 million if the company's operating profit equals or exceeds£3.5 million. The balance of £750,000 is payable if, in the second year, thecompany's operating profit equals or exceeds £3 million. At the discretion ofthe Group, a proportion of the deferred consideration may be settled by theissue of consideration shares. Based on the full deferred consideration of£10.75 million, the maximum market value of such consideration shares isestimated to be £897,000. The balance of any deferred consideration is payableby way of loan notes. 3. Interest on discounted deferred consideration Interest on discounted deferred consideration arises through the application ofFRS 7: Fair Values in Acquisition Accounting. Under this standard, contingentdeferred consideration is taken to be the estimated amount payable, butdiscounted to its present value. Consequently, an interest charge is incurredover the discount period to uplift the present value of the contingent deferredconsideration back to the full estimated amount payable. 4. Taxation on profit on ordinary activities 31 August 2006 31 August 2005 £000 £000 ------------ ------------UK Corporation Tax at 30% (2005:30%) (699) (947)Adjustment in respect of prior years 39 187Overseas taxation (20) (26) ------------ ------------Current taxation (680) (786)Deferred taxation - current year 86 (60)Deferred taxation - prior year - (18) ------------ ------------ (594) (864) ============ ============ 5. Equity dividend 31 August 2006 31 August 2005 £000 £000 ============ ============Proposed dividend for the year of 0.55p(2005: 0.55p) (371) (296)per ordinary share ============ ============ The Board is recommending a maintained final dividend for the year of 0.55p (31August 2005: 0.55p) per ordinary share. The dividend is payable on 12 January2007 to shareholders on the register on 15 December 2006. The proposed dividendfor the year has not been accrued in the Consolidated Balance Sheet as at 31August 2006 (see Note 1). 6. Earnings per ordinary share Basic earnings per share is calculated by dividing the profit for the year of£1,558,000 (31 August 2005: £2,125,000) by the weighted average number ofordinary shares in issue during the year of 61,664,304 (31 August 2005:52,981,021). Underlying earnings per share is also shown calculated by reference to earningsbefore the amortisation of goodwill. The Directors consider that this gives auseful additional indication of underlying performance. Diluted earnings per share is calculated with reference to 63,184,137 (31 August2005: 55,747,383) ordinary shares. The effect of exercise of options on theweighted average number of shares in issue is 1,519,833 (31 August 2005:2,766,362). The 966,000 shares held by the Armour Employees' Share trust are not included ineither the weighted average or the diluted weighted average shares in issueduring the year. 31 August 2006 31 August 2005 £'000 Basic p Diluted p £'000 Basic p Diluted p ------- ------- ------- ------- ------- -------Profit for theyear 1,558 2.5 2.5 2,125 4.0 3.8Amortisation ofgoodwill 1,102 1.8 1.7 808 1.5 1.5 ------- ------- ------- ------- ------- -------Underlyingearnings 2,660 4.3 4.2 2,933 5.5 5.3 ======= ======= ======= ======= ======= ======= 7. Group cash flow statement (a) Reconciliation of operating profit to net cash inflow from operatingactivities 31 August 2006 31 August 2005 £000 £000 ----------- ----------- Operating profit 2,790 3,459Depreciation and other amounts written offtangible fixed assets 760 792Amortisation of goodwill 1,102 808Increase in stocks (724) (1,320)(Increase)/decrease in debtors (173) 341Decrease in creditors (737) (503)Loss on disposal of tangible fixed assets 14 73 ----------- -----------Net cash inflow from operating activities 3,032 3,650 =========== =========== (b) Reconciliation of net cash flow to movement in net debt 31 August 2006 31 August 2005 £000 £000 ---------- ----------- Increase/(decrease) in cash 1,204 (2,949)New bank loans (5,000) -Repayment of bank loans 3,483 571Cash outflow from finance leases 56 35 ---------- -----------Change in net debt resulting from cashflows (257) (2,343)New finance leases (114) (2)Bank loan arrangement costs 150 13Bank loan arrangement costs expensed (31) (39)Exchange adjustments - (2) ---------- -----------Movement in net debt in the year (252) (2,373)Opening net debt (4,939) (2,566) ---------- -----------Closing net debt (5,191) (4,939) --- --- ========== =========== (c) Analysis of net debt movement -------- -------- -------- -------- -------- 31 August 2005 Cash flow Other Acquisition 31 August 2006 £000 £000 non-cash £000 £000 changes £000 -------- -------- -------- -------- -------- Cash 116 70 - - 186Overdraft (1,986) 1,134 - - (852) -------- -------- -------- -------- -------- (1,870) 1,204 - - (666) -------- -------- -------- -------- --------Short-term debt (555) 555 (688) - (688)Long-term debt (2,502) (2,072) 807 - (3,767)Finance leases (12) 56 - (114) (70) -------- -------- -------- -------- -------- (4,939) (257) 119 (114) (5,191) ======== ======== ======== ======== ======== Bank loan arrangement costs of £150,000 were incurred during the year of which£119,000 had not been charged to the Consolidated Profit and Loss Account at 31August 2006. 8. 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 12 December 2006 at12.00 noon. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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