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Armour Group PLC (AMR)

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Thursday 16 October, 2003

Armour Group PLC

Final Results

Armour Group PLC
16 October 2003



                       ARMOUR GROUP PLC ('ARMOUR GROUP ')
             Preliminary Results for the year ended 31 August 2003



                              CHAIRMAN'S STATEMENT

RESULTS AND DIVIDEND

I am pleased to report a record set of results for Armour Group plc for the year
ended 31 August 2003. The Group's operating profit after amortisation of
goodwill of £0.1 million rose by 143% to £1.2 million (31 August 2002: £0.5
million). Group sales were up 21% at £16.1 million (31 August 2002: £13.3
million). Basic underlying earnings per share increased by 80% to 2.7p (31
August 2002: 1.5p). Equity shareholders' funds were £9.7 million (31 August
2002: £8.8 million) and the Group's net cash position was £3.4 million (31
August 2002: £5.0 million).

The Board is recommending a dividend for the year of 0.35p (31 August 2002:
0.25p) per ordinary share, which represents a 40% increase over last year. The
dividend is payable on 15 December 2003 to shareholders on the register on 24
October 2003.

AUDIO ELECTRONICS DIVISION

The Audio Electronics Division has once again beaten both its budgeted targets
and last year's results with profitable growth coming from both organic
development and acquisition.

The organic growth has been achieved through the continued development of
Autoleads, the specialist range of connectivity solutions for in-car
entertainment and communications, and our fast growing Veba brand of in-car
audio visual products, which include DVDs, screens and accessories. Profitable
contributions to the Division's results have also been made by RM Audio, the
mid-market brand of car audio products, and Kicker, the high end brand of
specialist speakers and amplifiers.

On 10 March 2003, for a cash consideration of £2.1 million, we acquired
Continental Technologies and Investments Limited ('CTI'), one of the leading
European designers and manufacturers of specialist GSM and GPS aerials and
antennae for the automotive and marine aftermarkets. The operations of CTI have
been integrated into the infrastructure of the Audio Electronics Division and we
are well advanced in exploiting the potential synergies identified at the time
of acquisition in manufacturing, sourcing and channels to market. CTI has
performed well in the six months since the acquisition and it has been earnings
enhancing for the Group.

The continuing growth in organic development will be driven by our ongoing
programme of internal investment in the operating infrastructure and new product
development. Our product range is now one of the most comprehensive in the
in-car entertainment and communications market and underlines our position as a
market leader in this niche.

PEOPLE

The success, which we have achieved in the year, is a reflection of the quality,
dedication and professionalism of the people that we employ. I would like to
acknowledge the Board's appreciation of their commitment and efforts during the
past year.

OUTLOOK

The Group is financially strong with high quality earning streams. We operate in
growth markets and enjoy market leading positions, supported by strong branded
product ranges, in our niches in the in-car entertainment and communications
market.

Our strategy of profitable growth by both organic development and acquisition
remains unchanged. The Board is confident of the Group's prospects for the
current financial year.

BOB MORTON
Chairman
15 October 2003

Consolidated Profit and Loss Account
For the year ended 31 August 2003

                                             31 August 2003         31 August 2002
                                                                              
                               Note      Excluding  Amortisation    Total    Total
                                      amortisation            of
                                                of      goodwill
                                          goodwill
                                              £000          £000     £000     £000
                                            --------     -------- -------- --------

Turnover
Continuing
operations                                  15,147             -   15,147   13,304
Acquisitions                                   928             -      928        -
                                            --------     -------- -------- --------

                                            16,075             -   16,075   13,304
                                            --------     -------- -------- --------

Operating profit
Continuing
operations                                   1,101           (71)   1,030      508
Acquisitions                                   248           (42)     206        -
                                            --------     -------- -------- --------

                                             1,349          (113)   1,236      508
                                            --------     -------- -------- --------

Exceptional Items
Reorganisation
costs -
continuing
operations                        3                                     -     (266)
Loss on
discontinued
operations                        3                                     -     (145)

Amounts written back to
investments
Continuing
operations                        4                                    24        -
                                            --------     -------- -------- --------

                                                                       24     (411)
                                            --------     -------- -------- --------

Profit on
ordinary
activities
before
interest                                                            1,260       97
                                            --------     -------- -------- --------

Net interest                                                          141      149
                                            --------     -------- -------- --------

Profit on
ordinary
activities
before
taxation                                                            1,401      246
Taxation on
profit on
ordinary
activities                          5                                (406)    (133)
                                            --------     -------- -------- --------

Profit on
ordinary
activities
after taxation                                                        995      113
Equity
dividend                            6                                (138)    (100)
                                            --------     -------- -------- --------

Profit for the
year retained                                                         857       13
                                            --------     -------- -------- --------
                                                                       
Earnings per
ordinary share                      7
Basic                                                                 2.5p     0.3p
Basic -
underlying                                                            2.7p     1.5p
Diluted                                                               2.5p     0.3p
Diluted -
underlying                                                            2.7p     1.5p
                                            --------     -------- -------- --------

Consolidated Statement of Total Recognised Gains and Losses
For the year ended 31 August 2003

                                                     ----------    -----------
                                                      31 August      31 August
                                                         2003           2002
                                                         £000           £000
                                                     ----------    -----------

Profit for the year                                       995            113
Currency translation differences on foreign
currency net investments                                   (1)             -
                                                     ----------    -----------

Total recognised gains and losses relating
to the year                                               994            113
                                                     ----------    -----------



Consolidated Balance Sheet
At 31 August 2003

                                     Note      31 August   31 August
                                                  2003        2002
                                                  £000        £000
                                               ---------   ---------
Fixed assets
Intangible assets                                2,846       1,200
Tangible assets                                    882         352
Investments                                        200         176
                                               ---------   ---------

                                                 3,928       1,728
                                               ---------   ---------

Current assets
Stocks                                           2,767       2,415
Debtors                                          3,956       2,494
Cash at bank and in hand                         3,407       4,950
                                               ---------   ---------

                                                10,130       9,859
                                               ---------   ---------

Creditors: amounts falling due
within                                          (4,408)     (2,793)
one year                                       ---------   ---------

Net current assets                               5,722       7,066
                                               ---------   ---------

Total assets less current                        9,650       8,794
liabilities                                    ---------   ---------

Capital and reserves
Called up share capital                          4,044       4,044
Special reserve account                  8           -       4,958
Profit and Loss Account                          5,606        (208)
                                               ---------   ---------

Equity shareholders' funds                       9,650       8,794
                                               ---------   ---------



Consolidated Cash Flow Statement
For the year ended 31 August 2003

                                Note        31 August 2003      31 August 2002
                                            £000      £000      £000      £000
                                          --------  --------  --------  --------

Net cash inflow from operating
activities                      9(a)                 1,271               1,010

Returns on investments and
servicing of finance
Interest received                            144                 143
Interest element of finance
lease                                         (3)                 (3)
rentals                                   --------  --------  --------  --------

Net cash inflow from returns
on                                                     141                 140
investments and servicing of
finance

Corporate taxation paid                               (225)               (129)

Capital expenditure and
financial investment
Payments to acquire tangible                (505)               (202)
assets
Sale of tangible assets                       27                  41
                                          --------  --------  --------  --------

Net cash outflow from capital
expenditure and financial                             (478)               (161)
investment

Acquisitions and disposals
Purchase of subsidiary                    (1,839)                  -
undertakings
Net overdraft acquired with
subsidiary undertakings                     (291)                  -
Litigation costs relating to
discontinued operations                        -              (145)
                                          --------  --------  --------  --------

Net cash outflow from
acquisitions                                        (2,130)               (145)
and disposals

Equity dividends paid                                 (100)                  -
                                          --------  --------  --------  --------

Net cash(outflow)/ inflow
before                                              (1,521)                715
financing

Financing
Issue of ordinary share                        -                   1
capital
Capital reduction and                          -                (266)
reorganisation
Capital element of finance
lease                                        (22)                (14)
rental repayments                         --------  --------  --------  --------

Net cash outflow from                                  (22)               (279)
financing                                 --------  --------  --------  --------

Net cash(outflow)/ inflow
after
financing, being the
(decrease)/increase in cash in  9(b)                (1,543)                436
the year                                  --------  --------  --------  --------


Notes to the preliminary financial information

1.   Basis of preparation

The financial information set out in this announcement does not constitute the
Group's financial statements for the year ended 31 August 2003 and the year
ended 31 August 2002. Financial statements for the year ended 31 August 2002
have been delivered to the Registrar of Companies. The auditors have reported on
those accounts; their report was unqualified and did not contain statements
under 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 2003
are expected to be posted to shareholders no later than 14 November 2003 and
will be available to the public at the Company's registered office, Lonsdale
House, 7-9 Lonsdale Gardens, Tunbridge Wells, TN1 1NU from that date.

2.   Acquisitions

On 10 March 2003, the Group acquired the entire share capital of Continental
Technologies & Investments Limited ('CTI'), for a consideration of £2.1 million,
£0.3 million of which is deferred. The deferred consideration is payable in cash
and is due for payment on 10 March 2004 but is subject to the level of sales
achieved by CTI in the 12 months immediately after acquisition.

3.   Exceptional Items

The exceptional items relate to the capital reduction and reoganisation and
litigation between a former supplier to the Group and a former subsidiary
undertaking. Both these issues were resolved in the prior year.

4.   Amounts Written off Investments

The trustees of the Armour Employees Share Trust hold 966,000 of the Company's
shares, which are shown as fixed asset investments in accordance with UITF 13.
At 31 August 2003 the market value of the shares was £440,000 (31 August 2002:
£171,000), and so provisions of £24,000 have been released to hold the shares at
original cost.

5.   Taxation on Profit on Ordinary Activities

                                            31 August 2003   31 August 2002
                                                      £000             £000
                                               ------------     ------------

UK Corporation Tax at 30% (2002:30%)                 (427)            (189)
Adjustment in respect of prior years                  (13)              47
Deferred taxation                                      54               17
Overseas taxation                                     (20)              (8)
                                               ------------     ------------

                                                     (406)            (133)
                                               ------------     ------------

The UK taxation charge assessed for the year is higher than the standard rate of
UK Corporation Tax primarily due to the amortisation of goodwill.

6.   Equity dividend

                                            31 August 2003   31 August 2002
                                                      £000             £000
                                               ------------     ------------

Proposed dividend for the year of
0.35p(2002: 0.25 p) per ordinary share               (138)            (100)
                                               ------------     ------------

The Board is recommending a dividend for the year of 0.35 p (31 August 2002:
0.25 p) per ordinary share. The dividend is payable on 15 December 2003 to
shareholders on the register on 24 October 2003.

7.   Earnings per ordinary share

Basic earnings per share is calculated by dividing the profit for the year of
£995,000 (31 August 2002: £113,000) by the weighted average number of ordinary
shares in issue during the year of 39,477,042 (31 August 2002: 39,468,017).

Underlying earnings per share is also shown calculated by reference to earnings
before the amortisation of goodwill, non-operating exceptional items and amounts
written back to investments. The Directors consider that this gives a useful
additional indication of underlying performance.

Diluted earnings per share is calculated with reference to 40,406,857 (31 August
2002: 39,887,548) ordinary shares. The effect of exercise of options on the
weighted average number of shares in issue is 929,815 (31 August 2002: 419,531).


                              31 August 2003                31 August 2002
                        £'000   Basic p Diluted p       £'000  Basic p Diluted p
                      -------   -------  --------    --------  ------- ---------
Profit for the
year                      995       2.5       2.5         113      0.3      0.3
Amortisation of
goodwill                  113       0.3       0.3          72      0.2      0.2
Exceptional Items           -         -         -         411      1.0      1.0
Amounts written
back to
investments               (24)     (0.1)     (0.1)          -        -        -
                      -------   -------  --------    --------  ------- ---------

Underlying
earnings                1,084       2.7       2.7         596      1.5      1.5
                      -------   -------  --------    --------  ------- ---------

8.  Special reserve account

On 31 January 2002, the Court approved the transfer of the share premium account
to an undistributable special reserve. The Court also approved subsequent
transfers from the special reserve to the Profit and Loss Account, subject to
conditions. By 31 August 2003, these conditions had been met and consequently
the special reserve has been transferred to the Profit and Loss Account.

9.  Group cash flow statement

(a) Reconciliation of operating profit to net cash inflow from operating
activities

                                                        31 August      31 August
                                                           2003           2002
                                                           £000           £000
                                                      -----------    -----------

Operating profit                                          1,236            508
Depreciation and other amounts written off
tangible fixed assets                                       281            255
Amortisation of goodwill                                    113             72
Increase in stocks                                          (27)          (430)
Increase in debtors                                        (715)          (153)
Increase in creditors                                       388            771
Profit on disposal of tangible fixed assets                  (5)           (13)
                                                      -----------    -----------
                                                              
Net cash inflow from operating activities                 1,271          1,010
                                                      -----------    -----------
                                                             
(b) Reconciliation of net cash flow to movement in net debt

                                          31 August      31 August
                                             2003           2002
                                             £000           £000
                                         ----------    -----------

(Decrease)/increase in cash                (1,543)           436
Cash outflow from finance leases               22             14
                                         ----------    -----------

Change in net debt resulting from          (1,521)           450
cash flows
New finance leases                            (76)             -
                                         ----------    -----------
                                                
Movement in net debt in the year           (1,597)           450
Opening net debt                            4,950          4,500
                                         ----------    -----------

Closing net debt                            3,353          4,950
                                         ----------    -----------

(c)    Analysis of net debt movement

                            ----------   ---------     ----------    -----------
                             31 August  Cashflow    Acquisition        31 August
                                2002                                      2003
                                £000        £000           £000           £000
                            ----------   ---------     ----------    -----------

Cash                           4,950      (1,543)             -          3,407
Finance leases                     -          22            (76)           (54)
                            ----------   ---------     ----------    -----------

                               4,950      (1,521)           (76)         3,353
                            ----------   ---------     ----------    -----------


10.   Annual General Meeting

The Annual General Meeting will be held on 10 December 2003 at the offices of
Arnold & Porter, Tower 42, 25 Old Broad Street, London, EC2 1HQ at 11.00 a.m.




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