2nd Nov 2005 07:00
Armour Group PLC02 November 2005 ARMOUR GROUP PLC (THE "GROUP") Preliminary Results for the year ended 31 August 2005 FINANCIAL HIGHLIGHTS • Sales of £35.5 million (2004: £31.1 million) up 14% • Profit before interest, taxation and amortisation of goodwill of £4.3 million (2004: £3.7 million) up 16% • Profit after taxation of £2.1 million (2004: £1.7 million) up 22% • Cash inflow from operating activities of £3.7 million (2004: £2.5 million) up 48% • Recommended dividend of 0.55p (2004: 0.45p) up 22% • Underlying earnings per share of 5.5p (2004: 4.7p) up 17% OPERATIONAL HIGHLIGHTS ARMOUR AUTOMOTIVE • New business won • Increased sales in both retail and export markets • New distribution agreement • Market leader in the in-car communications and entertainment sector ARMOUR HOME ELECTRONICS - Product • Acquisition of Myryad, extending brand portfolio • Two new distribution agreements • Won nine awards at the 2005 What Hi-Fi Sound and Vision awards ceremony • Busy programme of new product launches ARMOUR HOME ELECTRONICS - Services • Acquisition of The Hi-End extending our service provision • Entered into the higher margin retro-fit and large special project markets Bob Morton, Chairman of Armour Group plc commented: "The Group has an outstanding brand and product portfolio, exceptional channelsto market and a firm commitment to new product development. The Board remainsconfident with regard to the future prospects of the 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 RESULTS AND DIVIDEND I am pleased to report another year of strong growth and record results forArmour Group plc for the year ended 31 August 2005. The Group's operating profitbefore interest, taxation and amortisation of goodwill rose by 16% to £4.3million (31 August 2004: £3.7 million). Group sales were up 14% at £35.5 million(31 August 2004: £31.1 million). Basic underlying earnings per share increasedby 17% to 5.5p (31 August 2004: 4.7p). Equity shareholders' funds rose by 13% to£18.5 million (31 August 2004: £16.4 million) and the Group's cash inflow fromoperating activities rose by 48% to £3.7 million (31 August 2004: £2.5 million). The Board is recommending a dividend for the year of 0.55p (31 August 2004:0.45p) per ordinary share, which represents a 22% increase over last year. Thedividend is payable on 6 January 2006 to shareholders on the register on 9December 2005. ARMOUR AUTOMOTIVE Armour Automotive has performed well in testing market conditions. We have wonnew business, increased sales in the retail and export markets, entered into anew distribution agreement and invested in people, new product development andfacilities. Our proprietary brands of Autoleads, the specialist range of connectivitysolutions for in-car entertainment and communications, Mutant, the range ofaffordable high quality amplifiers and speakers for the in-car market, and Veba,the range of in-car audio-visual entertainment systems, have proved to beresilient in the weaker economic environment. Sales in our retail businessincreased by 2%, which demonstrates the strength of these brands in theirrespective markets. Autoleads and Veba also play a major part in our non-retailbusiness where they have maintained or increased their market share, supplyingproducts across Europe to customers such as Vodafone, Sony and BMW. Our proprietary brands of CTI, the range of specialist GSM and GPS aerials andantennae for the automotive aftermarket, and RM Audio, the range of in-vehiclecustomer branded speakers and head units, have had a frustrating year with lowerthan expected sales. Despite this, both brands have continued to make a positivecontribution to the results of the Division and secure new business, whichshould increase sales in the new financial year. During the year, we looked to exploit our excellent distribution channels byfinding complementary products that we can sell alongside our existing productportfolio. In August 2005, we entered into an agreement with Mio TechnologyLimited to distribute the Mio range of high quality in-car and portablesatellite navigation products to the automotive market in the United Kingdom.Satellite navigation is the fastest growing sector of the automotive accessoriesmarket and a new area for Armour Automotive. Sales of this new range have, thusfar, been good. Armour Automotive remains the market leader in the in-car communications andentertainment market in the United Kingdom with its formidable brands andchannels to market. ARMOUR HOME ELECTRONICS Armour Home Electronics has had a good year with increases in sales andoperating profit, two acquisitions, two new distribution agreements and a busyprogramme of new product launches. Product Our product based business, which designs, manufactures and sells products intothe hi-fi, home theatre and home entertainment market, has increased both salesand profit due to the rising demand for specialist home automation products inthe United Kingdom. The home automation market is still in its infancy in theUnited Kingdom and Europe. We anticipate that our sales will grow significantlyover the coming years as the market develops. Our impressive brand portfolio, which includes both proprietary and third partybrands, has performed well. The proprietary brands, which include theaward-winning QED, a range of interconnects and cables, Goldring, a range ofturntables, styli and accessories, and Systemline, a range of multi-roomentertainment systems, account for 70% of our product sales. They are sold inover 60 countries around the world and are amongst the leading brands in theirmarkets. In November 2004, we added to our proprietary brand portfolio through theacquisition of Myryad Systems Limited ("Myryad"). Myryad designs andmanufacturers high end hi-fi separates. Its product range has filled animportant gap in our brand and product portfolio. Systemline Modular, the new generation of Systemline multi-room entertainmentproducts, has proved to be a huge success. Monthly sales since January 2005 haveincreased at a dramatic rate. It is now part of the build programme in at leastone region of almost every major home builder in the United Kingdom. There arenow over 45,000 new homes under construction, which are scheduled to offerSystemline Modular to the home buyer. In line with our strategy of maximising our distribution channels, we haverecently signed two new distribution agreements. In July 2005, we agreed withUniversal Electronics BV to distribute its award winning Nevo SL remote controldevice. Then, in September 2005, we agreed with Audica Limited to distribute itshigh end lifestyle home cinema speakers. These products complement our existingproduct portfolio and have the potential to deliver good future organic growth. At the 2005 What Hi-Fi Sound and Vision awards ceremony, we won nine productawards, which is unprecedented at this ceremony. There were five awards for QEDcables and one each for Goldring, Myryad, Grado and Nevo. The product based business has consolidated its position as one of the leadingsuppliers of specialist hi-fi, home theatre and home entertainment equipment inthe United Kingdom. Services The services based business, which provides specialist custom design andinstallation services to home builders, architects and homeowners in the homeautomation market, has made good progress over the past year. The business has grown profitably through a combination of organic developmentand acquisition. In September 2004, we acquired The Hi-End Limited ("Hi-End"),which has extended our service provision from the new build into the highermargin retro-fit and large special project markets. This expansion now enablesus to offer a complete range of services. Our services based business is one of the leading providers of custominstallation services for the home automation market in the United Kingdom. PEOPLE The continued success of the Group in this more challenging economic environmentis a testament to the hard work, dedication and professionalism of ouremployees. I would like to acknowledge the Board's appreciation of theircommitment and efforts over the last year. OUTLOOK The Group has continued to grow despite the uncertainty in the economy. It hasan outstanding brand and product portfolio, exceptional channels to market and afirm commitment to new product development. The Board remains confident withregard to the future prospects of the Group. BOB MORTON Chairman 2 November 2005 Consolidated Profit and Loss Account For the year ended 31 August 2005 31 August 2005 31 August 2004 Note Excluding Amortisation of Total Total amortisation of goodwill goodwill £000 £000 £000 £000TurnoverContinuing 33,913 - 33,913 31,113operationsAcquisitions 2 1,539 - 1,539 - 35,452 - 35,452 31,113Operating profitContinuing 4,134 (700) 3,434 3,078operationsAcquisitions 2 133 (108) 25 - 4,267 (808) 3,459 3,078 Net interest (470) (200)Profit on ordinary 2,989 2,878activities beforetaxationTaxation on profit 3 (864) (1,131)on ordinaryactivitiesProfit on ordinary 2,125 1,747activities aftertaxationDividend 4 (296) (237)Profit for the year 1,829 1,510retainedEarnings per 5ordinary shareBasic 4.0p 3.5pBasic - underlying 5.5p 4.7pDiluted 3.8p 3.3pDiluted - underlying 5.3p 4.4p Consolidated Statement of Total Recognised Gains and Losses For the year ended 31 August 2005 31 August 2005 31 August 2004 £000 £000Profit for the year 2,125 1,747Currency translation differences on foreign (2) (7)currency net investmentsTotal recognised gains and losses relating to 2,123 1,740the year Consolidated Balance Sheet At 31 August 2005 31 August 2005 31 August 2004 £000 £000Fixed assetsIntangible assets 14,533 13,068Tangible assets 1,714 1,765 16,247 14,833Current assetsStocks 7,648 5,904Debtors 6,937 7,207Cash at bank and in hand 116 1,081 14,701 14,192Creditors: amounts falling due within one yearCreditors (7,178) (8,961)Borrowings (2,553) (599) (9,731) (9,560)Net current assets 4,970 4,632Total assets less current liabilities 21,217 19,465Creditors: amounts falling due after more thanone yearCreditors (192) -Borrowings (2,502) (3,048) (2,694) (3,048)Net assets 18,523 16,417 Capital and reservesCalled up share capital 5,482 5,341Share premium account 3,861 3,723Other reserves 444 444Profit and Loss Account 8,936 7,109Share trust reserve (200) (200)Equity shareholders' funds 18,523 16,417 Consolidated Cash Flow Statement For the year ended 31 August 2005 Note 31 August 2005 31 August 2004 £000 £000 £000 £000 Net cash inflow from operating 6(a) 3,650 2,462activities Returns on investments and servicingof financeInterest received 12 54Interest paid (395) (156)Bank loan arrangement costs (13) (135)Interest element of finance lease (9) (9)rentalsNet cash outflow from returns on (405) (246)investments and servicing of finance Corporate taxation paid (1,427) (843) Capital expenditure and financialinvestmentPayments to acquire tangible assets (885) (854)Sale of tangible assets 127 76Net cash outflow from capital (758) (778)expenditure and financial investment Acquisitions and disposalsPurchase of subsidiary undertakings (3,587) (13,177)Net cash acquired with subsidiary 142 1,812undertakingsNet cash outflow from acquisitions (3,445) (11,365)and disposals Dividend paid (237) (138)Net cash outflow before financing (2,622) (10,908) FinancingIssue of ordinary share capital 279 4,914New bank loans - 4,000Repayment of bank loans (571) (286)Capital element of finance lease (35) (40)rental repaymentsNet cash (outflow)/ inflow from (327) 8,588financingNet cash outflow after financing, 6(b) (2,949) (2,320)being the decrease in cash in theyear 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 2005 and the yearended 31 August 2004. Financial statements for the year ended 31 August 2004have 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 2005are expected to be posted to shareholders no later than 16 November 2005 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. 2. Acquisitions In September 2004, the Group acquired The Hi-End Limited. The consideration was£1.8 million, all of which was paid during the year. In November 2004, the Group acquired Myryad Systems Limited. The considerationfor the equity was £0.5million, £0.3 million of which is deferred and payableover the next three years. Further consideration, up to a maximum of £2.0million, may be payable over the next three years but this is subject to thevalue of sales of Myryad branded products made by the Group in the four yearsafter acquisition in accordance with the measurement calculations and proceduresagreed with the vendors at acquisition. These calculations take account of thepayments made for the equity and require a significant increase in sales overhistorical performance. It is too early to judge whether these targets will beachieved and consequently only the deferred consideration of £257,000 for theequity has been recognised. 3. Taxation on profit on ordinary activities 31 August 2005 31 August 2004 £000 £000UK Corporation Tax at 30% (2004:30%) (947) (1,233)Adjustment in respect of prior years 187 -Overseas taxation (26) (14)Current taxation (786) (1,247)Deferred taxation - current year (60) 121Deferred taxation - prior year (18) (5) (864) (1,131) The UK taxation charge assessed for the year is lower than the standard rate ofUK Corporation Tax primarily due to tax relief arising from the exercise ofoptions and the release of provisions made in the consolidated accounts forunrealised profit in stock. This release was possible following the integration,during the year, of three businesses within the Armour Home Electronicsdivision. 4. Equity dividend 31 August 2005 31 August 2004 £000 £000Proposed dividend for the year of 0.55p (2004: (296) (237)0.45p) per ordinary share The Board is recommending a dividend for the year of 0.55p (31 August 2004:0.45p) per ordinary share. The dividend is payable on 6 January 2006 toshareholders on the register on 9 December 2005. 5. Earnings per ordinary share Basic earnings per share is calculated by dividing the profit for the year of£2,125,000 (31 August 2004: £1,747,000) by the weighted average number ofordinary shares in issue during the year of 52,981,021 (31 August 2004:49,934,924). 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 55,747,383 (31 August2004: 53,569,068) ordinary shares. The effect of exercise of options on theweighted average number of shares in issue is 2,766,362 (31 August 2004:3,634,144). 31 August 2005 31 August 2004 £'000 Basic p Diluted p £'000 Basic p Diluted pProfit for the year 2,125 4.0 3.8 1,747 3.5 3.3Amortisation of goodwill 808 1.5 1.5 599 1.2 1.1Underlying earnings 2,933 5.5 5.3 2,346 4.7 4.4 6. Group cash flow statement (a) Reconciliation of operating profit to net cash inflow from operatingactivities 31 August 2005 31 August 2004 £000 £000 Operating profit 3,459 3,078Depreciation and other amounts written off 792 630tangible fixed assetsAmortisation of goodwill 808 599Increase in stocks (1,320) (1,740)Decrease/(increase) in debtors 341 (1,231)(Decrease)/increase in creditors (503) 1,131Loss/(profit) on disposal of tangible fixed 73 (5)assetsNet cash inflow from operating activities 3,650 2,462 (b) Reconciliation of net cash flow to movement in net debt 31 August 2005 31 August 2004 £000 £000 Decrease in cash (2,949) (2,320)New bank loans - (4,000)Repayment of bank loans 571 286Cash outflow from finance leases 35 40Change in net debt resulting from cash flows (2,343) (5,994)New finance leases (2) (31)Bank loan arrangement costs 13 135Bank loan arrangement costs expensed (39) (23)Exchange adjustments (2) (6)Movement in net debt in the year (2,373) (5,919)Opening net (debt)/funds (2,566) 3,353Closing net debt (4,939) (2,566) (c) Analysis of net debt movement 31 August 2004 Cash flow Other Acquisitions Exchange 31 August 2005 £000 £000 non-cash £000 adjustments £000 changes £000 £000 Cash 1,081 (965) - - - 116Overdraft - (1,984) - - (2) (1,986) 1,081 (2,949) - - (2) (1,870)Short-term (554) 571 (572) - - (555)debtLong-term (3,048) - 546 - - (2,502)debtFinance (45) 35 - (2) - (12)leases (2,566) (2,343) (26) (2) (2) (4,939) Bank loan arrangement costs of £13,000 were incurred during the year which havebeen fully charged to the Consolidated Profit and Loss Account at 31 August2005. The other net non-cash changes of £26,000 relate to the further write-offof unamortised bank loan arrangement costs incurred last year. 7. 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 9 December 2005 at 12.00noon. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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