10th May 2010 07:00
Armour Group plc
(AIM: AMR)
Unaudited Interim Statement
For the six months to 28 February 2010
Armour Group plc is the United Kingdom's leading consumer electronics group within the home and in-car communications and entertainment markets, committed to designing, manufacturing and distributing leading-edge audio and visual products and solutions. The Board is pleased to announce interim results for the six months to 28 February 2010.
Financial Headlines
·; Sales up 12% at £29.7 million (2009: £26.7 million).
·; Profit from operations up 21% at £1.2 million (2009: £1.0 million).
·; Profit after taxation up 55% at £0.8 million (2009: £0.5 million).
·; Cash outflow from operating activities of £0.3 million (2009: inflow £3.0 million).
·; Basic earnings per ordinary share up 63% at 1.3p (2009: 0.8p).
Commenting on today's results, George Dexter, CEO, said:
"The Group results for the six months to 28 February 2010 reflect a significant year-on-year improvement with sales up 12% at £29.7m and profit after tax up 55% at £0.8m. Both of the Group's operating divisions have traded profitably and continue to make satisfactory progress in these early stages of the wider economic recovery.
Our strategy to maintain investment in new product development throughout 2009 has undoubtedly helped sales, with new products such as QTV driving sales growth.
The conditions in the markets we serve have improved and we expect this to continue going forward, although we do anticipate further volatility as there are a number of uncertainties that remain concerning the strength and speed of the wider economic recovery. The Group's business model and strategy continues to deliver new contracts, new customers and new products. This underlines the Board's confidence in the Group's prospects and its ability to prosper as the economic recovery strengthens."
For further information please contact:
Armour Group plc Tel: 01892 502700
George Dexter, Chief Executive
John Harris, Finance Director
FinnCap, Nominated Adviser and Broker Tel: 0207 600 1658
Geoff Nash
Stephen Norcross (Sales)
Threadneedle Communications, Financial PR Tel: 0207 653 9850
Trevor Bass, Alex White
Unaudited Interim Statement
For the six months to 28 February 2010
Results and Dividend
The Group results for the six months to 28 February 2010 reflect a significant year-on-year improvement with sales up 12% at £29.7m and profit after tax up 55% at £0.8m. Both of the Group's operating divisions have traded profitably and continue to make satisfactory progress in these early stages of the wider economic recovery.
·; Sales up 12% at £29.7 million (2009: £26.7 million).
·; Profit from operations up 21% at £1.2 million (2009: £1.0 million).
·; Profit after taxation up 55% at £0.8 million (2009: £0.5 million).
·; Cash outflow from operating activities of £0.3 million (2009: inflow £3.0 million).
·; Basic earnings per ordinary share up 63% at 1.3p (2009: 0.8p).
The Board is not recommending an interim dividend.
Operations
The Group's operations have benefited from the general improvement in the trading environment, which we started to see in August/September 2009. Our strategy to maintain investment in new product development throughout 2009 has undoubtedly helped sales, with new products such as QTV driving sales growth.
The Group's performance in the run into Christmas was very pleasing, particularly in Armour Home where sales were buoyant. The poor weather in the UK in the important January sales period was a set back which left stock unsold with retailers, depressed our sales and caused stock to be held up in our supply chain. This in turn left the Group with higher than anticipated working capital at the half year stage resulting in a weaker cash performance. An improvement in working capital is expected during the second half of the year. Overall, whilst our results for the six months to 28 February 2010 have been tempered by the inclement weather, they are nevertheless very pleasing given the difficulties of 2009.
Armour Home
Armour Home has delivered a solid performance in the first six months of the year with sales growing by 15% to £23.5m. Market conditions have improved with the trading performance in the Christmas period well ahead of last year, although this out-performance has been partially offset by weaker trading in January and February caused by the heavy snow across the UK.
There have been strong sales performances from the Alphason brand of audio-visual furniture and Q Acoustics, particularly the new QTV discreet speaker system for flat screen televisions and the award winning Q 2000 series hi-fi speakers.
Sales into the retail channel have performed well with year-on-year growth across both the independent retailer channel and the national accounts. A combination of new products and additional product listings, both with existing and new customers, has helped to drive sales in the first six months.
The home automation sales channel has continued to be sluggish in terms of sales, caused by the subdued nature of the house building and renovation market. There are clear signs that market conditions are improving and we are seeing a significant increase in enquiries and specifications for our products. Whilst this is encouraging, the lead time on orders in this market is long, due to the build schedules, and consequently the positive impact of the improving market is unlikely to have a major effect in the current financial year.
The second half of the financial year presents grounds for continued cautious optimism with the Football World Cup expected to be a driver of consumer demand for televisions and associated accessories, which in turn is expected to benefit Armour Home's sales.
Armour Auto
The automotive market remains a tough environment. Whilst there are signs that markets will improve, progress has proved slow with Armour Auto's sales in the first six months being in line with last year.
In the retail market our sales performance has been mixed. We continue to see year-on-year improvement of sales into the independent retailer channel, which we believe comes from increased market share. Demand remains volatile from one month to another, but it is encouraging that the underlying trend with independent retailers is one of growth. In the national accounts channel, the trading performance has been more challenging with key customers continuing to reduce their stock levels and restrict new product listings.
Sales into the non-retail channels are in line with last year. Given the decline suffered through 2009, we see this stable platform as a positive sign going forward. The new contracts won in 2009 are all now on stream and it is very encouraging to report that further contract wins have been secured in the first six months of the current financial year which should start to generate revenues in the second half of the year. We expect that by the end of the financial year, this channel will show respectable year-on-year sales growth.
Our business in Scandinavia, Armour Nordic, which forms part of Armour Auto, has had a good first six months. The expansion of our operations into Norway continues to gather momentum which, when taken with the incorporation of our home product portfolio into the Swedish operations, have delivered strong incremental sales growth in the Nordic region.
Looking forward to the second half of the financial year, we believe that Armour Auto will deliver a modest year-on-year improvement, although the general conditions in the automotive aftermarket are expected to remain relatively subdued.
Outlook
The Group has made good progress in the first six months of the year. The conditions in the markets we serve have improved and we expect this to continue going forward, although we do anticipate further volatility as there are a number of uncertainties that remain concerning the strength and speed of the wider economic recovery. The Group's business model and strategy continues to deliver new contracts, new customers and new products. This underlines the Board's confidence in the Group's prospects and its ability to prosper as the economic recovery strengthens.
Bob Morton George Dexter
Chairman Chief Executive
10 May 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months to 28 February 2010
|
|
Notes |
Six months to 28 February 2010 (Unaudited) £000 |
Six months to 28 February 2009 (Unaudited) £000 |
Twelve months to 31 August 2009
£000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
2 |
29,735 |
26,663 |
51,614 |
|
|
|
|
|
|
|
Profit from operations |
|
1,225 |
1,010 |
1,528 |
|
Share of loss of associates |
|
- |
(20) |
(16) |
|
Finance income |
|
4 |
12 |
17 |
|
Finance expense |
|
(99) |
(271) |
(409) |
|
Profit before taxation |
|
1,130 |
731 |
1,120 |
|
Taxation expense |
3 |
(309) |
(201) |
(234) |
|
Profit for the financial period |
|
821 |
530 |
886 |
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
Exchange gain/(loss) arising on translation of foreign operations |
|
28 |
(23) |
(5) |
|
Total comprehensive income |
|
849 |
507 |
881 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ordinary share |
4 |
|
|
|
|
|
|
|
|
|
|
Basic |
|
1.3p |
0.8p |
1.4p |
|
Diluted |
|
1.3p |
0.8p |
1.4p |
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 28 February 2010
|
|
|
28 February 2010 (Unaudited) £000 |
28 February 2009 (Unaudited) £000 |
31 August 2009
£000 |
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Goodwill |
|
21,084 |
21,082 |
21,084 |
|
Other intangible assets |
|
3,877 |
2,317 |
3,112 |
|
Property, plant and equipment |
|
1,930 |
2,014 |
2,044 |
|
Investment in associates |
|
- |
348 |
352 |
|
Total non-current assets |
|
26,891 |
25,761 |
26,592 |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Inventories |
|
13,075 |
11,710 |
11,681 |
|
Trade and other receivables |
|
10,247 |
9,185 |
9,876 |
|
Cash and cash equivalents |
|
88 |
115 |
72 |
|
Total current assets |
|
23,410 |
21,010 |
21,629 |
|
Total assets |
|
50,301 |
46,771 |
48,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Bank overdrafts and borrowings |
|
(5,459) |
(5,418) |
(3,521) |
|
Trade and other payables |
|
(12,261) |
(8,898) |
(12,465) |
|
Corporation taxation liability |
|
(652) |
(639) |
(580) |
|
Provisions |
|
(167) |
(120) |
(95) |
|
Total current liabilities |
|
(18,539) |
(15,075) |
(16,661) |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Borrowings |
|
(957) |
(1,917) |
(1,438) |
|
Provisions |
|
- |
(197) |
(141) |
|
Deferred taxation liability |
|
(806) |
(659) |
(656) |
|
Total non-current liabilities |
|
(1,763) |
(2,773) |
(2,235) |
|
Total liabilities |
|
(20,302) |
(17,848) |
(18,896) |
|
Total net assets |
|
29,999 |
28,923 |
29,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital |
|
6,848 |
6,848 |
6,848 |
|
Share premium |
|
8,513 |
8,513 |
8,513 |
|
Other reserves |
|
871 |
871 |
871 |
|
Retained earnings |
|
14,248 |
13,218 |
13,602 |
|
Translation reserve |
|
91 |
45 |
63 |
|
Share trust reserve |
|
(572) |
(572) |
(572) |
|
Total equity |
|
29,999 |
28,923 |
29,325 |
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the six months to 28 February 2010 (unaudited)
|
|
Share capital |
Share premium |
Other reserves |
Retained earnings |
Translation reserve |
Share trust reserve |
Total equity |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
At 1 September 2009 |
6,848 |
8,513 |
871 |
13,602 |
63 |
(572) |
29,325 |
|
Total comprehensive income |
- |
- |
- |
821 |
28 |
- |
849 |
|
Share-based payments |
- |
- |
- |
20 |
- |
- |
20 |
|
Dividend |
- |
- |
- |
(195) |
- |
- |
(195) |
|
At 28 February 2010 |
6,848 |
8,513 |
871 |
14,248 |
91 |
(572) |
29,999 |
For the six months to 28 February 2009 (unaudited)
|
|
Share capital |
Share premium |
Other reserves |
Retained earnings |
Translation reserve |
Share trust reserve |
Total equity |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
At 1 September 2008 |
6,848 |
8,513 |
871 |
13,074 |
68 |
(572) |
28,802 |
|
Total comprehensive income |
- |
- |
- |
530 |
(23) |
- |
507 |
|
Share-based payments |
- |
- |
- |
37 |
- |
- |
37 |
|
Dividend |
- |
- |
- |
(423) |
- |
- |
(423) |
|
At 29 February 2009 |
6,848 |
8,513 |
871 |
13,218 |
45 |
(572) |
28,923 |
For the twelve months ended 31 August 2009
|
|
Share capital |
Share premium |
Other reserves |
Retained earnings |
Translation reserve |
Share trust reserve |
Total equity |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
At 1 September 2008 |
6,848 |
8,513 |
871 |
13,074 |
68 |
(572) |
28,802 |
|
Total comprehensive income |
- |
- |
- |
886 |
(5) |
- |
881 |
|
Share-based payments |
- |
- |
- |
65 |
- |
- |
65 |
|
Dividend |
- |
- |
- |
(423) |
- |
- |
(423) |
|
At 31 August 2009 |
6,848 |
8,513 |
871 |
13,602 |
63 |
(572) |
29,325 |
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months to 28 February 2010
|
|
Notes |
Six months to 28 February 2010 (Unaudited) £000 |
Six months to 28 February 2009 (Unaudited) £000 |
Twelve months to 31 August 2009
£000 |
|
|
|
|
|
|
|
Cash flow from operating activities |
|
|
|
|
|
Cash generated from operations |
5 |
(321) |
2,999 |
7,171 |
|
Income taxes (paid)/recovered |
|
(88) |
251 |
156 |
|
Net cash from operating activities |
|
(409) |
3,250 |
7,327 |
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
Acquisition of subsidiary undertaking, net of cash acquired |
|
- |
- |
(2) |
|
Purchase of property, plant and equipment |
|
(187) |
(229) |
(604) |
|
Sale of property, plant and equipment |
|
1 |
20 |
40 |
|
Expenditure on intangible assets |
|
(770) |
(608) |
(1,853) |
|
Interest received |
|
4 |
12 |
17 |
|
Net cash used in investing activities |
|
(952) |
(805) |
(2,402) |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Dividend paid |
|
- |
(423) |
(423) |
|
Repayment of bank loans |
|
(500) |
(360) |
(720) |
|
Interest paid |
|
(89) |
(326) |
(475) |
|
Net cash used in financing activities |
|
(589) |
(1,109) |
(1,618) |
|
|
|
|
|
|
|
Net (decrease)/increase in cash, cash equivalents and bank overdrafts |
6 |
(1,950) |
1,336 |
3,307 |
|
Currency variations |
|
27 |
(23) |
(6) |
|
Cash, cash equivalents and bank overdrafts at the start of the period |
|
(2,491) |
(5,792) |
(5,792) |
|
Cash, cash equivalents and bank overdrafts at the end of the period |
|
(4,414) |
(4,479) |
(2,491) |
Notes to the Interim Financial Statements
1. Basis of Preparation
These interim financial statements have been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively "Adopted IFRS").
The principal accounting policies used in preparing these interim financial statements are those expected to apply to the Group's Consolidated Financial Statements for the year ending 31 August 2010 and are unchanged from those disclosed in the Group's Annual Report for the year ended 31 August 2009.
As a result of the application of IAS1 (Amendment): Presentation of Financial Statements, the Group has elected to present a single Consolidated Statement of Comprehensive Income which replaces the previously published Consolidated Income Statement.
The financial information for the six months ended 28 February 2010 and 28 February 2009 is unaudited and does not constitute statutory financial statements for those periods.
The comparative financial information for the twelve months ended 31 August 2009 has been derived from the audited statutory financial statements for that year. These financial statements were approved by shareholders at the Annual General Meeting and have been delivered to the Registrar of Companies. The Auditors' Report on those financial statements was unqualified, did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and did not include a statement under section 498(2) or 498(3) of the Companies Act 2006.
The Board of Directors approved this interim report on 10 May 2010.
2. Business Segments
The Group operates in the following main business segments:
Armour Auto: The design, manufacture and supply of products for the in-car communications and entertainment market.
Armour Home: The design, manufacture and supply of products into the Hi-Fi, home theatre, home entertainment and office furniture markets.
Central operations: The provision of finance and support services, including future product concepts and Hong Kong based quality control, to the other business segments within the Group.
|
|
|
Six months to 28 February 2010 (Unaudited) £000 |
Six months to 28 February 2009 (Unaudited) £000 |
Twelve months to 31 August 2009
£000 |
|
Revenue by business segment |
|
|
|
|
|
Armour Auto |
|
6,217 |
6,264 |
13,092 |
|
Armour Home |
|
23,518 |
20,399 |
38,522 |
|
Total |
|
29,735 |
26,663 |
51,614 |
|
Revenue by location of customers |
|
|
|
|
|
United Kingdom |
|
24,385 |
21,848 |
41,851 |
|
Hong Kong |
|
862 |
848 |
2,074 |
|
Sweden |
|
856 |
665 |
1,603 |
|
France |
|
681 |
560 |
1,025 |
|
Other countries |
|
2,951 |
2,742 |
5,061 |
|
Total |
|
29,735 |
26,663 |
51,614 |
3. Taxation
The taxation charge for the six months to 28 February 2010 is based on the effective taxation rate, which is estimated will apply to earnings for the year ending 31 August 2010.
4. Earnings per Ordinary Share
Basic earnings per ordinary share are calculated using the weighted average number of ordinary shares in issue during the financial period of 65,056,067 (28 February 2009: 65,056,067 and 31 August 2009: 65,056,067).
Diluted earnings per ordinary share are calculated using the weighted average number of ordinary shares in issue during the financial period of 65,056,067 (28 February 2009: 65,056,067 and 31 August 2009: 65,056,067). The effect of the exercise of options on the weighted average number of ordinary shares in issue is nil for all periods.
The weighted average number of ordinary shares held by the Armour Employees' Share Trust of 3,424,000 (28 February 2009: 3,424,000 and 31 August 2009: 3,424,000) are not included in either the weighted average, or diluted weighted average, ordinary shares in issue during the financial period.
Underlying earnings per ordinary share is also shown calculated by reference to earnings before share-based payments. The Directors consider that this gives a useful additional indication of underlying performance.
|
|
Six months to 28 February 2010 (Unaudited) |
Six months to 28 February 2009 (Unaudited) |
Twelve months to 31 August 2009
|
|||
|
|
£000 |
p |
£000 |
p |
£000 |
p |
|
|
|
|
|
|
|
|
|
Basic earnings per ordinary share |
|
|
|
|
|
|
|
Profit for the financial period |
821 |
1.3 |
530 |
0.8 |
886 |
1.4 |
|
Share-based payments |
20 |
- |
37 |
0.1 |
65 |
0.1 |
|
Underlying earnings |
841 |
1.3 |
567 |
0.9 |
951 |
1.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per ordinary share |
|
|
|
|
|
|
|
Profit for the financial period |
821 |
1.3 |
530 |
0.8 |
886 |
1.4 |
|
Share-based payments |
20 |
- |
37 |
0.1 |
65 |
0.1 |
|
Underlying earnings |
841 |
1.3 |
567 |
0.9 |
951 |
1.5 |
5. Net Cash Inflow from Operations
|
|
Six months to 28 February 2010 (Unaudited) £000 |
Six months to 28 February 2009 (Unaudited) £000 |
Twelve months to 31 August 2009
£000 |
|
|
|
|
|
|
Profit from operations |
1,225 |
1,010 |
1,528 |
|
Depreciation of property, plant and equipment |
296 |
309 |
631 |
|
Amortisation of intangible assets |
453 |
332 |
782 |
|
Share-based payments |
20 |
37 |
65 |
|
Gain on sale of property, plant and equipment and fair value adjustments |
(92) |
(12) |
(9) |
|
(Increase)/decrease in inventories |
(1,394) |
1,116 |
1,145 |
|
(Increase)/decrease in trade and other receivables |
(372) |
1,035 |
344 |
|
(Decrease)/increase in trade, other payables and provisions |
(457) |
(828) |
2,685 |
|
Net cash from operations |
(321) |
2,999 |
7,171 |
6. Reconciliation of Net Cash Flow to Movement in Net Debt
Net debt incorporates the Group's borrowings and bank overdrafts less cash and cash equivalents. A reconciliation of the movement in the net debt is shown below:
|
|
Six months to 28 February 2010 (Unaudited) £000 |
Six months to 28 February 2009 (Unaudited) £000 |
Twelve months to 31 August 2009
£000 |
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
(1,950) |
1,336 |
3,307 |
|
Net cash outflow from debt financing |
500 |
360 |
720 |
|
Other non-cash movements |
9 |
(42) |
(40) |
|
(Increase)/decrease in net debt in the financial period |
(1,441) |
1,654 |
3,987 |
|
Opening net debt |
(4,887) |
(8,874) |
(8,874) |
|
Closing net debt |
(6,328) |
(7,220) |
(4,887) |
7. Copies of Interim Report
Copies of this interim report are being sent to shareholders and will also be made available upon request to members of the public at the Company's Registered Office, Lonsdale House, 7-9 Lonsdale Gardens, Tunbridge Wells, Kent, TN1 1NU. This interim report can also be viewed on the Group's website: www.armourgroup.uk.com.
ABOUT ARMOUR
Armour Group is the United Kingdom's leading consumer electronics group within the home and in-car communications and entertainment markets, committed to designing, manufacturing and distributing leading-edge audio and visual products and solutions.
Armour Group has two principal operating divisions, Armour Home and Armour Auto, and employs over 300 people across eight operating sites in the UK, Scandinavia and Hong Kong.
The Group possesses a strong brand portfolio, including more than 6,000 products and accessories, which is underpinned by innovative product development and investment in proprietary technology.
An unrivalled distribution capability ensures that products are supplied direct to more than 6,000 retail outlets within the UK and to customers in 68 countries worldwide. Armour Group is also a leading supplier of audio and visual technology to a host of non-retail customers including vehicle manufacturers, hotel chains, house builders and custom installers.
The Group's strength is based on 5 fundamentals:
·; Strong recognised brands
·; Quality product portfolio
·; Structured programme of product innovation
·; Unrivalled distribution into the UK's retail electronics market
·; First class customer service
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