4th Apr 2007 07:00
Armour Group PLC04 April 2007 Armour Group Plc ("Armour" or the "Group") Interim statement for the six months ended 28 February 2007 Armour Group plc (AIM:AMR), the UK's leading consumer electronics group focussedon the in-car communications and entertainment and home entertainment markets,is pleased to announce its interim results for the six months ended 28 February2007. Financial overview • Sales of £29.5 million (2006: £18.5 million) up 59%• EBITDA of £3.0 million (2006: £2.1 million) up 44%• Profit after taxation of £0.9 million (2006: £0.7 million) up 35%• Cash inflow from operating activities of £1.3 million (2006: £29,000)• Basic earnings per share of 1.3p (2006: 1.2p) up 8%• Underlying basic earnings per share of 2.4p (2006: 2.1p) up 14% Operational overview • The Group has shown a strong improvement over last year• Automotive sales and orders in the non-retail channel are much improved• Automotive's Mutant sales growth continues to build market share• Home's core proprietary brands of Alphason, QED, Q Acoustics and Systemline Modular have all outperformed• Exclusive UK distribution of NAD, PSB and Tivoli Audio brands awarded to the Home division• The Group research and development team, set up in August 2006, is already proving to be a valuable investment for new product development George Dexter, Chief Executive of Armour Group plc commented: "The results for the first six months to 28 February 2007 show good performancesfrom both the Automotive and Home divisions. Our strategy continues to focus on product innovation, sales and marketing anddeveloping our channels to market. The underlying fundamentals of the Group arestrong, and the Board looks forward with confidence to the second half of thefinancial year." For further information please contact: Armour Group plc Tel: 01892 502700George Dexter, Chief ExecutiveJohn Harris, Finance Director KBC Peel Hunt Ltd Tel: 0207 418 8900Richard Kauffer ABOUT ARMOUR Armour Group plc is the UK's leading consumer electronics group focussed 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: Automotive and Home. Automotive The 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). Automotive supplies both retail and non-retail customers which include Halfords,Motorworld, BMW, Hyundai and Vodafone. Home The Home division is a market leader in the UK's specialist home entertainmentmarket. The products based business, which now accounts for 95% of thedivision's turnover, designs, manufactures, distributes and sells product intothe hi-fi, home theatre and home entertainment market. 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) and Myryad(mid to high end hi-fi separates). The Home division also distributes third party brands, typically on an exclusivebasis in the UK. These brands include Grado headphones, Nevo remote controls,Sonance speakers, NAD hi-fi separates, Tivoli radios and Audica speakers. The Home division also includes a service based business providing specialistcustom design and installation services to builders, architects and home ownersin the home automation market. This business accounts for 5% of the Homedivision's sales. The Home division's customers are both retail and non-retail and include Comet,Argos, JLP, Tesco, Sevenoaks Sound and Vision, Berkeley Homes, George Wimpey,Taylor Woodrow, Linden Homes and David Wilson Homes. Interim statement for the six months ended 28 February 2007 Results and Dividend The Group's results for the six months to 28 February 2007 are good with strongperformances from both the Automotive and Home divisions. The Group's sales,EBITDA, profit after taxation, cash inflow from operating activities andearnings per share are well ahead of last year. • Sales of £29.5 million (2006: £18.5 million) up 59% • EBITDA of £3.0 million (2006: £2.1 million) up 44% • Profit after taxation of £0.9 million (2006: £0.7 million) up 35% • Cash inflow from operating activities of £1.3 million (2006: £29,000) • Basic earnings per share of 1.3p (2006: 1.2p) up 8% • Underlying basic earnings per share of 2.4p (2006: 2.1p) up 14% The Board is not recommending an interim dividend. OperationsAutomotive Automotive has had a good six months with both sales and operating profit aheadof last year's figures. In the non-retail channel, there has been a steady recovery in orders and sales.This recovery is most evident in our Veba range of in-car audio-visualentertainment systems, CTI antennae and most recently, in Autoleads telemuteleads. A resurgence in demand by vehicle manufacturers for in-car DVD systemshas significantly increased sales of Veba branded products. The latest orderfrom BMW, which was announced in January 2007, is scheduled to start delivery inApril 2007. We have also experienced increasing demand for our range of GPSantennae driven principally by the growth in the vehicle tracking market, wherewe supply a number of the leading service providers. The recent change inlegislation, relating to the use of mobile phones in vehicles, has had animmediate and positive effect on sales of Autoleads telemute leads which weexpect to continue throughout the rest of this year. The retail channel remains flat, with sales levels similar to last year.However, our mix of business through this channel has changed with fewer salesof low margin satellite navigation products being compensated by increasingsales of our higher margin Mutant range of in-car audio systems. We arecurrently investing in the development of three new product ranges, which areexpected to stimulate our sales into the retail market. The intention is tolaunch all three ranges within the next twelve months, with the first beingtargeted for late summer. Our business in Sweden has had an excellent first six months with sales andoperating profit well ahead of last year. The securing of three important newcustomers is behind this growth and we anticipate that sales and operatingprofit will continue to outperform for the remainder of this year. Home The Home division has performed well in the first six months with sales andoperating profit increasing significantly on last year. In particular, ourproduct based businesses enjoyed a buoyant Christmas trading period deliveringrecord sales and operating profit. Our core proprietary brands have shown strong sales growth over the past sixmonths with QED, Alphason, Systemline Modular and Q Acoustics all performingparticularly well. The third party brands under our management have also madegood progress, with Grado headphones, Sanus brackets, Nevo remote controls andthe Audica range delivering above average sales growth. In the retail sector, the increasing demand for flat panel screens continues topull through sales of QED cables, Alphason furniture and Sanus wall brackets. Wehave also seen excellent sales growth of our award winning speaker brand QAcoustics, which has increased its market share both domestically andinternationally. The growing awareness in, and development of, the home automation market hasfuelled demand for multi-room entertainment where our Systemline Modular systemhas again delivered good like-for-like growth. We continue to invest in thedevelopment of the system with the launch of our Systemline touchscreen controlpanel. The Sonance iPort docking station has also increased the functionalityand flexibility of the overall system. The imminent launch of our Systemlinesound server will add further to Systemline Modular's capability. Our belief isthat sales of Systemline Modular, and its increasing range of associatedproducts, will continue to outperform. We announced in January 2007 that our Home division had been appointed as theexclusive United Kingdom distributor for NAD, the high performance home theatreand hi-fi electronics brand, PSB speakers and Tivoli Audio, the premiumlifestyle radio brand. All three brands complement our existing portfolio.Securing these high quality brands for distribution underlines our reputation asone of the leading companies in the UK's specialist home entertainment market.NAD, PSB and Tivoli are all expected to make positive contributions in thesecond half of the financial year. New Product Development In August 2006 we put in place a new Group research and development team calledthe Concept Design Centre ("CDC") with a remit to focus on emerging technologiesand future product development. This team is already proving to be a valuableinvestment for the Group, providing the resource to investigate, develop andintroduce new and unique products that will drive forward the Group's organicgrowth. CDC is now at the heart of this process. In the eight months since CDCwas set up, it has initiated seven new product projects, the first of which isscheduled to be launched in the late summer and will be for the automotivemarket. Outlook We have seen a good recovery in the Group's financial performance in the firstsix months. Our two operating divisions continue to trade well and the Boardlooks forward with confidence to the second half of the financial year. Bob Morton George DexterChairman Chief Executive4 April 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS TO 28 FEBRUARY 2007 Restated* Restated* Six months Six months Twelve months to to to 28 February 28 February 31 August Notes 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Turnover 2 29,489 18,531 42,981 Operating profit before 2,570 1,664 3,789amortisation of goodwillAmortisation of goodwill 3 (655) (451) (1,102) Operating profit 1,915 1,213 2,687Share of operating loss in 4 (13) - -associated undertakings Profit on ordinary activities 1,902 1,213 2,687before interestNet interest (379) (235) (638) Profit on ordinary activities 1,523 978 2,049before taxationTaxation on profit on ordinary 5 (616) (308) (563)activities Profit for the financial period 6 907 670 1,486 Earnings per ordinary share 8Basic 1.3p 1.2p 2.4pDiluted 1.3p 1.2p 2.4p * See Note 1 CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE SIX MONTHS TO 28 FEBRUARY 2007 Restated* Restated* Six months Six months Twelve months to to to 28 February 28 February 31 August 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Profit for the financial period 907 670 1,486Currency translation differences onforeign currency net investments (1) - - Total recognised gains and lossesrelating to the financial period 906 670 1,486Share-based payment prior year 56adjustment (Note 1) Total gains and losses recognisedsince the last statutory accounts 962 *See Note 1 CONSOLIDATED BALANCE SHEET AT 28 FEBRUARY 2007 Restated* Restated* 28 February 28 February 31 August 2007 2006 2006 Notes (Unaudited) (Unaudited) (Audited) £000 £000 £000Fixed assetsIntangible assets 3 22,683 24,741 23,338Tangible assets 2,225 2,188 2,256Investment in associated 4 359 - -undertaking 25,267 26,929 25,594 Current assetsStocks 11,065 10,400 9,836Debtors 11,255 8,350 9,993Cash at bank and in hand 445 86 186 22,765 18,836 20,015Creditors: Amounts falling duewithin one yearCreditors (14,976) (12,801) (13,547)Borrowings (2,456) (2,216) (1,610) (17,432) (15,017) (15,157) Net current assets 5,333 3,819 4,858 Total assets less current 30,600 30,748 30,452liabilities Creditors: Amounts falling dueafter more than one yearCreditors - (877) (127)Borrowings (3,423) (4,180) (3,767) (3,423) (5,057) (3,894) Net assets 27,177 25,691 26,558 Capital and reservesCalled up share capital 6,848 6,841 6,841Share premium account 8,512 8,496 8,496Other reserves 871 871 871Profit and Loss Account 11,146 9,683 10,550Share trust reserve (200) (200) (200)Shareholders' funds 6 27,177 25,691 26,558 * See Note 1 CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS TO 28 FEBRUARY 2007 Six months Six months Twelve months to to to 28 February 28 February 31 August 2007 2006 2006 Notes (Unaudited) (Unaudited) (Audited) £000 £000 £000 Net cash inflow from operating 7(a) 1,327 29 3,032 activities Returns on investment and servicing of finance Interest received 11 10 29 Interest paid (238) (242) (470) Bank loan arrangement costs - (125) (150) Interest element of finance lease (2) (6) (7) rentals Net cash outflow from returns on investment and servicing of finance (229) (363) (598) Corporate taxation paid (140) (132) (649) Capital expenditure and financial investment Payments to acquire tangible fixed (393) (339) (920) assets Sale of tangible fixed assets 14 22 25 Net cash outflow from capital (379) (317) (895) expenditure and financial investment Acquisitions and disposals Purchase of subsidiary undertakings (85) (9,840) (10,402) Net cash acquired with subsidiary - 3,659 3,659 undertakings Investment in associated undertaking (372) - - Net cash outflow from acquisitions and disposals (457) (6,181) (6,743) Dividend paid (371) (296) (296) Net cash outflow before financing (249) (7,260) (6,149) Financing Issue of ordinary share capital 23 5,892 5,892 New bank loans - 5,000 5,000 Repayment of bank loans (360) (3,143) (3,483) Capital element of finance lease (23) (17) (56) rental repayments Net cash (outflow)/inflow from (360) 7,732 7,353 financing Net cash (outflow)/inflow after financing, being the (decrease) /increase in cash in the period 7(b) (609) 472 1,204 NOTES TO THE FINANCIAL STATEMENTS 1. BASIS OF PREPARATION The interim financial statements have been prepared on the basis of accountingpolicies consistent with those set out in the Group's Annual Report andfinancial statements for the twelve months to 31 August 2006, except that theGroup has adopted FRS 20: Share-based payment. FRS 20: Share-based payment requires the recognition of share-based payments atfair value at the date of grant. In accordance with the transitional provisionsof FRS 20, the standard has been applied retrospectively to all grants of equityinstruments made after 7 November 2002 that remained unvested as at 1 September2006. For the twelve months to 31 August 2006, the adoption of FRS 20 has resulted ina net decrease in profit of £72,000, being the share-based payment charge net ofdeferred taxation of £31,000. Net assets have increased by £56,000, being thedeferred taxation asset for the year and a further deferred taxation asset of£25,000 relating to those share-based payments that existed at 1 September 2005. For the six months to 28 February 2006, the adoption of FRS 20 has resulted in anet decrease in profit of £36,000, being the share-based payment charge net ofdeferred taxation of £16,000. Net assets have increased by £41,000, being thedeferred taxation asset for the period and a further deferred taxation asset of£25,000 relating to those share-based payments that existed at 1 September 2005. The net charge to the Consolidated Profit and Loss Account for the six months to28 February 2007 is £43,000 and an increase in net assets of £18,000. The results of the Group for the six months to 28 February 2007, and thecomparative figures for the six months to 28 February 2006, are unaudited. Thefinancial information contained herein does not constitute statutory accountswithin the meaning of Section 240 of the Companies Act 1985. The statutory accounts for the twelve months to 31 August 2006, which wereapproved by the shareholders at the Annual General Meeting and which have beendelivered to the Registrar of Companies, carry an unqualified Auditor's Report.They do not contain a statement under Section 237(2) or 237(3) of the CompaniesAct 1985. 2. TURNOVER Six months Six months Twelve months to to to 28 February 28 February 31 August 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000Group sales by business segmentAutomotive 8,490 7,674 16,381Home 20,999 10,857 26,600 29,489 18,531 42,981Group sales by country of operationUnited Kingdom 29,217 18,348 42,532Sweden 572 381 857Inter-area eliminations (300) (198) (408) 29,489 18,531 42,981Group sales by country ofdestinationUnited Kingdom 25,298 15,023 35,499Rest of Europe 3,444 2,651 5,795Rest of world 747 857 1,687 29,489 18,531 42,981 3. GOODWILL ON ACQUISITION AND AMORTISATION In February 2006, the Group acquired Alphason Designs Limited. Part of theconsideration was deferred and dependent upon the operating profit of AlphasonDesigns Limited in the first two years immediately following acquisition. The quantum of deferred consideration relating to the first of these two years isunder negotiation. Consequently, the estimates relating to deferredconsideration, and therefore goodwill, remain as stated in the Group's auditedstatutory accounts for the twelve months to 31 August 2006. 4. INVESTMENT IN ASSOCIATED UNDERTAKING In September 2005, the Group's Home division was appointed the exclusive UnitedKingdom distributor for Audica Limited, a designer and developer of lifestylespeakers and home theatre electronics. As a result of this successful distribution agreement, and due to the anticipated new product launches, theGroup made a 25% strategic investment in Audica Limited on 12 September 2006. 5. TAXATION ON PROFIT ON ORDINARY ACTIVITIES The taxation charge for the six months to 28 February 2007 is based on theeffective taxation rate, which is estimated will apply to earnings for the fullyear. 6. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Six months Six months Twelve months to to to 28 February 28 February 31 August 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Profit for the financial period 907 670 1,486Dividend (371) (296) (296)Profit for the financial period 536 374 1,190retainedNew share capital subscribed 23 6,120 6,120New share capital issue costs - (228) (228)Ordinary shares issued as - 529 529consideration for acquisitionShare-based payment (Note 1) 61 52 103Currency translation differences onforeign currency investments (1) - -Net movement in shareholders' funds 619 6,847 7,714Opening shareholders' funds (as 26,502 18,819 18,819originally stated)Share-based payment prior year 56 25 25adjustment (Note 1)Opening shareholders' funds restated 26,558 18,844 18,844Closing shareholders' funds 27,177 25,691 26,558 7(a). RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES Six months Six months Twelve months to to to 28 February 28 February 31 August 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Operating profit 1,915 1,213 2,687Depreciation of tangible fixed 410 404 760assetsAmortisation of goodwill 655 451 1,102Share-based payment charges (Note 1) 61 52 103Increase in stocks (1,229) (1,099) (724)(Increase)/decrease in debtors (1,244) 1,382 (173)Increase/(decrease) in creditors 759 (2,374) (737)Loss on disposal of tangible fixed - - 14assetsNet cash inflow from operating 1,327 29 3,032activities 7(b). RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Six months Six months Twelve months to to to 28 February 28 February 31 August 2007 2006 2006 (Unaudited) (Unaudited) (Audited) £000 £000 £000 (Decrease)/increase in cash (609) 472 1,204New bank loans - (5,000) (5,000)Repayment of bank loans 360 3,143 3,483Cash outflow from finance leases 23 17 56Change in net debt resulting from (226) (1,368) (257)cash flowsNew finance leases - (114) (114)Bank loan arrangement costs - 125 150Bank loan arrangement costs expensed (16) (14) (31)Exchange adjustments (1) - -Movement in net debt in the period (243) (1,371) (252)Opening net debt (5,191) (4,939) (4,939)Closing net debt (5,434) (6,310) (5,191) 7(c). ANALYSIS OF NET DEBT MOVEMENT Other 28 31 August Cash non-cash Exchange February 2006 Flow changes adjustment 2007 £000 £000 £000 £000 £000 Cash 186 259 - - 445Overdraft (852) (868) - (1) (1,721) (666) (609) - (1) (1,276)Loans: Due within one (688) 360 (360) - (688)yearLoans: Due after more (3,767) - 344 - (3,423)than one yearFinance leases (70) 23 - - (47)Net debt (5,191) (226) (16) (1) (5,434) 8. EARNINGS PER ORDINARY SHARE Basic earnings per share is calculated using the weighted average number ofshares in issue during the period of 67,473,568 (28 February 2006: 55,789,760and 31 August 2006: 61,664,304). Underlying earnings per share is also shown calculated by reference to earningsbefore amortisation of goodwill and share-based payments. The Directors considerthat this information gives a useful additional indication of underlyingperformance. Six months to Six months to Twelve months to 28 February 28 February 31 August 2007 2006 2006 (Unaudited) (Unaudited) (Audited)Basic earnings per ordinary £000 p £000 p £000 pshare Profit for the financial 907 1.3 670 1.2 1,486 2.4periodAmortisation of goodwill 655 1.0 451 0.8 1,102 1.8Share-based payment (Note 1) 43 0.1 36 0.1 72 0.1Underlying earnings 1,605 2.4 1,157 2.1 2,660 4.3 Diluted earnings per share is calculated with reference to 68,709,936 (28February 2006: 57,477,692 and 31 August 2006: 63,184,137) ordinary shares. Six months to Six months to Twelve months to 28 February 28 February 31 August 2007 2006 2006 (Unaudited) (Unaudited) (Audited)Diluted earnings per ordinary £000 p £000 p £000 pshare Profit for the financial 907 1.3 670 1.2 1,486 2.4periodAmortisation of goodwill 655 1.0 451 0.8 1,102 1.7Share-based payment (Note 1) 43 - 36 - 72 0.1Underlying earnings 1,605 2.3 1,157 2.0 2,660 4.2 9. COPIES OF INTERIM REPORT Copies of this interim report are being sent to shareholders and will also bemade available upon request to members of the public at the Company's RegisteredOffice, Lonsdale House, 7-9 Lonsdale Gardens, Tunbridge Wells, Kent TN1 1NU. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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