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Armour Group PLC (AMR)

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Wednesday 02 November, 2005

Armour Group PLC

Final Results

Armour Group PLC
02 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 channels
to market and a firm commitment to new product development. The Board remains
confident 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 for
Armour Group plc for the year ended 31 August 2005. The Group's operating profit
before interest, taxation and amortisation of goodwill rose by 16% to £4.3
million (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 increased
by 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 from
operating 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. The
dividend is payable on 6 January 2006 to shareholders on the register on 9
December 2005.


ARMOUR AUTOMOTIVE


Armour Automotive has performed well in testing market conditions. We have won
new business, increased sales in the retail and export markets, entered into a
new distribution agreement and invested in people, new product development and
facilities.


Our proprietary brands of Autoleads, the specialist range of connectivity
solutions for in-car entertainment and communications, Mutant, the range of
affordable high quality amplifiers and speakers for the in-car market, and Veba,
the range of in-car audio-visual entertainment systems, have proved to be
resilient in the weaker economic environment. Sales in our retail business
increased by 2%, which demonstrates the strength of these brands in their
respective markets. Autoleads and Veba also play a major part in our non-retail
business where they have maintained or increased their market share, supplying
products across Europe to customers such as Vodafone, Sony and BMW.


Our proprietary brands of CTI, the range of specialist GSM and GPS aerials and
antennae for the automotive aftermarket, and RM Audio, the range of in-vehicle
customer branded speakers and head units, have had a frustrating year with lower
than expected sales. Despite this, both brands have continued to make a positive
contribution to the results of the Division and secure new business, which
should increase sales in the new financial year.


During the year, we looked to exploit our excellent distribution channels by
finding complementary products that we can sell alongside our existing product
portfolio. In August 2005, we entered into an agreement with Mio Technology
Limited to distribute the Mio range of high quality in-car and portable
satellite navigation products to the automotive market in the United Kingdom.
Satellite navigation is the fastest growing sector of the automotive accessories
market and a new area for Armour Automotive. Sales of this new range have, thus
far, been good.


Armour Automotive remains the market leader in the in-car communications and
entertainment market in the United Kingdom with its formidable brands and
channels to market.


ARMOUR HOME ELECTRONICS


Armour Home Electronics has had a good year with increases in sales and
operating profit, two acquisitions, two new distribution agreements and a busy
programme of new product launches.


Product

Our product based business, which designs, manufactures and sells products into
the hi-fi, home theatre and home entertainment market, has increased both sales
and profit due to the rising demand for specialist home automation products in
the United Kingdom. The home automation market is still in its infancy in the
United Kingdom and Europe. We anticipate that our sales will grow significantly
over the coming years as the market develops.


Our impressive brand portfolio, which includes both proprietary and third party
brands, has performed well. The proprietary brands, which include the
award-winning QED, a range of interconnects and cables, Goldring, a range of
turntables, styli and accessories, and Systemline, a range of multi-room
entertainment systems, account for 70% of our product sales. They are sold in
over 60 countries around the world and are amongst the leading brands in their
markets.


In November 2004, we added to our proprietary brand portfolio through the
acquisition of Myryad Systems Limited ('Myryad'). Myryad designs and
manufacturers high end hi-fi separates. Its product range has filled an
important gap in our brand and product portfolio.


Systemline Modular, the new generation of Systemline multi-room entertainment
products, has proved to be a huge success. Monthly sales since January 2005 have
increased at a dramatic rate. It is now part of the build programme in at least
one region of almost every major home builder in the United Kingdom. There are
now over 45,000 new homes under construction, which are scheduled to offer
Systemline Modular to the home buyer.


In line with our strategy of maximising our distribution channels, we have
recently signed two new distribution agreements. In July 2005, we agreed with
Universal Electronics BV to distribute its award winning Nevo SL remote control
device. Then, in September 2005, we agreed with Audica Limited to distribute its
high end lifestyle home cinema speakers. These products complement our existing
product 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 product
awards, which is unprecedented at this ceremony. There were five awards for QED
cables and one each for Goldring, Myryad, Grado and Nevo.


The product based business has consolidated its position as one of the leading
suppliers of specialist hi-fi, home theatre and home entertainment equipment in
the United Kingdom.


Services

The services based business, which provides specialist custom design and
installation services to home builders, architects and homeowners in the home
automation market, has made good progress over the past year.


The business has grown profitably through a combination of organic development
and acquisition. In September 2004, we acquired The Hi-End Limited ('Hi-End'),
which has extended our service provision from the new build into the higher
margin retro-fit and large special project markets. This expansion now enables
us to offer a complete range of services.


Our services based business is one of the leading providers of custom
installation services for the home automation market in the United Kingdom.


PEOPLE


The continued success of the Group in this more challenging economic environment
is a testament to the hard work, dedication and professionalism of our
employees. I would like to acknowledge the Board's appreciation of their
commitment and efforts over the last year.


OUTLOOK


The Group has continued to grow despite the uncertainty in the economy. It has
an outstanding brand and product portfolio, exceptional channels to market and a
firm commitment to new product development. The Board remains confident with
regard 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            £000
Turnover
Continuing                        33,913               -  33,913          31,113
operations
Acquisitions         2             1,539               -   1,539               -
                                  35,452               -  35,452          31,113
Operating profit
Continuing                         4,134           (700)   3,434           3,078
operations
Acquisitions         2               133           (108)      25               -
                                   4,267           (808)   3,459           3,078

Net interest                                               (470)           (200)
Profit on ordinary                                         2,989           2,878
activities before
taxation
Taxation on profit   3                                     (864)         (1,131)
on ordinary
activities
Profit on ordinary                                         2,125           1,747
activities after
taxation
Dividend             4                                     (296)           (237)
Profit for the year                                        1,829           1,510
retained
Earnings per         5
ordinary share
Basic                                                       4.0p            3.5p
Basic - underlying                                          5.5p            4.7p
Diluted                                                     3.8p            3.3p
Diluted - 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            £000
Profit for the year                                        2,125           1,747
Currency translation differences on foreign                  (2)             (7)
currency net investments
Total recognised gains and losses relating to              2,123           1,740
the year





Consolidated Balance Sheet

At 31 August 2005

                                                  31 August 2005  31 August 2004
                                                            £000            £000
Fixed assets
Intangible assets                                         14,533          13,068
Tangible assets                                            1,714           1,765
                                                          16,247          14,833
Current assets
Stocks                                                     7,648           5,904
Debtors                                                    6,937           7,207
Cash at bank and in hand                                     116           1,081
                                                          14,701          14,192
Creditors: amounts falling due within one year
Creditors                                                (7,178)         (8,961)
Borrowings                                               (2,553)           (599)
                                                         (9,731)         (9,560)
Net current assets                                         4,970           4,632
Total assets less current liabilities                     21,217          19,465
Creditors: amounts falling due after more than
one year
Creditors                                                  (192)               -
Borrowings                                               (2,502)         (3,048)
                                                         (2,694)         (3,048)
Net assets                                                18,523          16,417

Capital and reserves
Called up share capital                                    5,482           5,341
Share premium account                                      3,861           3,723
Other reserves                                               444             444
Profit and Loss Account                                    8,936           7,109
Share 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               2,462
activities

Returns on investments and servicing
of finance
Interest received                                12                 54
Interest paid                                 (395)              (156)
Bank loan arrangement costs                    (13)              (135)
Interest element of finance lease               (9)                (9)
rentals
Net cash outflow from returns on                       (405)               (246)
investments and servicing of finance

Corporate taxation paid                              (1,427)               (843)

Capital expenditure and financial
investment
Payments to acquire tangible assets           (885)              (854)
Sale of tangible assets                         127                 76
Net cash outflow from capital                          (758)               (778)
expenditure and financial investment

Acquisitions and disposals
Purchase of subsidiary undertakings         (3,587)           (13,177)
Net cash acquired with subsidiary               142              1,812
undertakings
Net cash outflow from acquisitions                   (3,445)            (11,365)
and disposals

Dividend paid                                          (237)               (138)
Net cash outflow before financing                    (2,622)            (10,908)

Financing
Issue of ordinary share capital                 279              4,914
New bank loans                                    -              4,000
Repayment of bank loans                       (571)              (286)
Capital element of finance lease               (35)               (40)
rental repayments
Net cash (outflow)/ inflow from                        (327)               8,588
financing
Net cash outflow after financing,     6(b)           (2,949)             (2,320)
being the decrease in cash in 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 2005 and the year
ended 31 August 2004. Financial statements for the year ended 31 August 2004
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 2005
are expected to be posted to shareholders no later than 16 November 2005 and
will be available to the public at the Company's registered office, Lonsdale
House, 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 consideration
for the equity was £0.5million, £0.3 million of which is deferred and payable
over the next three years. Further consideration, up to a maximum of £2.0
million, may be payable over the next three years but this is subject to the
value of sales of Myryad branded products made by the Group in the four years
after acquisition in accordance with the measurement calculations and procedures
agreed with the vendors at acquisition. These calculations take account of the
payments made for the equity and require a significant increase in sales over
historical performance. It is too early to judge whether these targets will be
achieved and consequently only the deferred consideration of £257,000 for the
equity has been recognised.


3.      Taxation on profit on ordinary activities

                                              31 August 2005     31 August 2004
                                                        £000               £000
UK 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)                121
Deferred taxation - prior year                          (18)                (5)
                                                       (864)            (1,131)


The UK taxation charge assessed for the year is lower than the standard rate of
UK Corporation Tax primarily due to tax relief arising from the exercise of
options and the release of provisions made in the consolidated accounts for
unrealised profit in stock. This release was possible following the integration,
during the year, of three businesses within the Armour Home Electronics
division.


4.      Equity dividend

                                                  31 August 2005  31 August 2004
                                                            £000            £000
Proposed 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 to
shareholders 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 of
ordinary 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 earnings
before the amortisation of goodwill. The Directors consider that this gives a
useful additional indication of underlying performance.


Diluted earnings per share is calculated with reference to 55,747,383 (31 August
2004: 53,569,068) ordinary shares. The effect of exercise of options on the
weighted 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 p
Profit for the year         2,125      4.0        3.8  1,747      3.5        3.3
Amortisation of goodwill      808      1.5        1.5    599      1.2        1.1
Underlying 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 operating
activities

                                                  31 August 2005  31 August 2004
                                                            £000            £000

Operating profit                                           3,459           3,078
Depreciation and other amounts written off                   792             630
tangible fixed assets
Amortisation of goodwill                                     808             599
Increase in stocks                                       (1,320)         (1,740)
Decrease/(increase) in debtors                               341         (1,231)
(Decrease)/increase in creditors                           (503)           1,131
Loss/(profit) on disposal of tangible fixed                   73             (5)
assets
Net 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              286
Cash outflow from finance leases                            35               40
Change in net debt resulting from cash flows           (2,343)          (5,994)
New finance leases                                         (2)             (31)
Bank loan arrangement costs                                 13              135
Bank 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)            3,353
Closing 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)         -             -            -             116
Overdraft                -    (1,984)         -             -          (2)         (1,986)
                     1,081    (2,949)         -             -          (2)         (1,870)
Short-term           (554)        571     (572)             -            -           (555)
debt
Long-term          (3,048)          -       546             -            -         (2,502)
debt
Finance               (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 have
been fully charged to the Consolidated Profit and Loss Account at 31 August
2005. The other net non-cash changes of £26,000 relate to the further write-off
of 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 12.00
noon.



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