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Armour Group PLC (AMR)

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Friday 31 October, 2003

Armour Group PLC

Acquisition & Placing

Armour Group PLC
31 October 2003


                                  ARMOUR GROUP PLC

                                ACQUISITION OF:
                         VEDA PRODUCTS LIMITED ('VEDA')
                       QED AUDIO PRODUCTS LIMTED ('QED')
                     GOLDRING PRODUCTS LIMITED ('GOLDRING')
                 INTEGRATED MEDI INSTALLATIONS LIMITED ('IMI')
                                      and
        PLACING OF 11,111,111 ORDINARY SHARES AT 45P TO RAISE £5,000,000

Acquisitions

Armour Group plc ('Group'), through its subsidiary Armour Automotive Group
Limited, announces that it expects today to complete the acquisitions of the
entire issued share capital of each of Veda, QED, Goldring and IMI, which are
involved in the design, manufacture and supply of high end products and services
for the specialist hi-fi, home theatre and entertainment market.

The consideration for Veda, QED, Goldring and IMI totals £12.5 million of which
£11.0 million is payable on completion. Completion is expected to take place on
31 October 2003. At completion, £10.45 million is payable in cash and £0.55
million is to be satisfied by the issue of 1,057,692 new ordinary shares in the
Group at 52.0 pence per share, being the average of the closing middle market
share price of the Company for the 5 days ended 30 October 2003 ('Consideration
Shares'). The balance will be payable in cash twelve months from completion and
is subject to certain profit performance criteria being met by the companies. In
addition, the consideration will be adjusted up or down on a pound for pound
basis by reference to a guaranteed net asset figure of £2.3 million at
completion.

Application has been made for the Consideration Shares to be admitted to trading
on the Alternative Investment Market ('AIM') on 3 November 2003. The
Consideration Shares rank pari passu with the Group's existing ordinary shares
in issue and, for the avoidance of doubt, do not rank for the proposed dividend
of 0.35p per ordinary share announced on 16 October 2003, which is payable on 15
December 2003 to shareholders on the register on 24 October 2003.

The four companies, which will form the basis of a new Home Electronics Division
and will account for approximately 45% of the enlarged Group's sales, are market
leaders within their niches in the hi-fi, home theatre and entertainment market.
This market has similar characteristics, in terms of products, customers and
market structure, to the in-car entertainment and communications market in which
the Group operates. There is also product similarity between the two markets in
terms of interconnectivity and cabling as well as potential synergies in
manufacturing and sourcing in the Far East. Both markets typically have high
quality earnings streams, consumer facing product ranges and strong brands.

The four companies have common shareholders, but trade independently and are not
grouped for financial reporting purposes. In describing the companies trading
results below, certain adjustments have been made by the Group, which attempt to
provide information as if the companies have been trading on a grouped basis. An
outline of the four companies is detailed below:

Veda is one of the leading wholesalers / distributors to high end specialist
retailers and custom installers in the hi-fi, home theatre and entertainment
market in the United Kingdom. It has been trading for over 20 years and
represents some of the premier brands in its niche including, amongst others,
QED, Goldring, Grado, Linn, Systemline, Sonance, Imerge and Lutron. In the
United Kingdom, Veda acts as the exclusive distributor for the QED and Goldring
product ranges. Based on the last audited financial statements to 30 September
2002, adjusted for inter-company management charges and known operational
changes in respect of property costs, Veda had sales of £10.1 million and
generated an operating profit of £0.75 million. The company is based in Bishops
Stortford and employs 27 people.

QED is one of the leading European designers and manufacturers of cable
interconnects and multi-room systems for the hi-fi, home theatre and
entertainment market. It was set up in 1973 to focus on the development of its
high quality hi-fi interconnects and is recognised as one of the premier brands
in this market. Over the last 10 years, QED has also developed, under the
Systemline and MusiQ brand names, a strong position in the market for multi-room
systems, whereby hi-fi stereo sound and video can be distributed to anywhere in
the home. Based on the last audited financial statements to 31 May 2003,
adjusted for inter-company management charges and known operational changes in
respect of property and research and development costs, QED had sales of £4.8
million and generated an operating profit of £0.39 million. The company is based
in Woking and employs 40 people.

Goldring designs and manufactures high specification styli for vinyl record
players. Its product range is targeted at the high end market and is sold
throughout the world. Goldring has long been associated with styli and record
turntables and is currently recognised as one of the leading brands of styli.
Based on the last audited financial statements to 31 July 2003, adjusted for
inter-company management charges, Goldring had sales of £1.3 million and
generated an operating profit of £0.33 million. The company is based in Bury St.
Edmunds and employs 8 people.

IMI is a custom installation business, which was set up in 1996 to service the
increasing demand in the high end property market for automated systems to
manage the home environment. It integrates home entertainment, computer
networking, lighting and telephone systems. IMI targets the £0.75 million and
above new build property market and has customers that are both house builders
and purchasers. Based on the last audited financial statements to 31 December
2001, adjusted for inter-company management charges, IMI had sales of £1.3
million and generated an operating profit of £0.13 million. The company is based
in Aldershot and employs 15 people.

On an aggregated basis and based on the last audited financial statements for
Veda, QED, Goldring and IMI, adjusted for inter-company sales and the
operational matters mentioned above, the four companies had aggregated third
party sales of £13 million, which generated an aggregated attributable operating
profit of £1.6 million.

The acquisitions are expected to be earnings enhancing in the current financial
year.

George Dexter, Chief Executive of the Group, commented:

'Veda, QED, Goldring and IMI are the market leaders in their niches. They either
own or represent some of the premier brands in the hi-fi, home theatre and
entertainment market. They are also profitable and cash generative. Taken
together, they offer critical size in their market-place. Through these
acquisitions, the Group will be well positioned to take advantage of the
considerable growth that is anticipated in the hi-fi, home theatre and
entertainment and home automation markets

Placing

KBC Peel Hunt Limited has conditionally placed 11,111,111 new ordinary shares
('Placing Shares') with institutions and other investors at a price of 45 pence
per ordinary share, on the Group's behalf, raising £5,000,000 before associated
expenses. Application has been made for 2,222,222 of the Placing Shares to be
admitted to trading on AIM on 31 October 2003 and for 8,888,889 of the Placing
Shares to be admitted to trading on AIM on 3 November 2003.

The Placing Shares rank pari passu with the Group's existing ordinary shares in
issue and, for the avoidance of doubt, also do not rank for the proposed
dividend of 0.35p per ordinary share announced on 16 October 2003.

Bob Morton, Chairman of the Group, commented:

'These acquisitions strengthen the Group and provide us with a strong platform
from which to grow. The associated fundraising has also given the Group the
opportunity to widen our institutional shareholder base.'

Enquiries:

George Dexter Armour Group plc       Tel: 01892 502700

Adam Hart KBC Peel Hunt Limited      Tel: 0207 418 8900

Trevor Bass Fleet Financial          Tel: 020 7950 2854




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