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Armour Group PLC (AMR)

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Thursday 30 March, 2006

Armour Group PLC

Interim Results

Armour Group PLC
30 March 2006



                                Armour Group Plc


           Interim Results for the six months ended 28 February 2006



                              CHAIRMAN'S STATEMENT


RESULTS AND DIVIDEND


The Group's results for the six months to 28 February 2006 have been mixed, with
good growth in Armour Home Electronics being overshadowed by a slowdown in
Armour Automotive.


Sales in the six months to 28 February 2006 were £18.5 million (28 February
2005: £17.6 million). Operating profit before amortisation of goodwill, interest
and tax was £1.7 million (28 February 2005: £2.0 million). Basic underlying
earnings per share were 2.1p (28 February 2005: 2.4p).


The Board is not recommending an interim dividend.


ACQUISITION


On 3 February 2006, the Group acquired Alphason Designs Limited ('Alphason').
Alphason is the UK's market leader in the design, manufacture and distribution
of specialist furniture for audio visual entertainment equipment, which is
predominantly marketed under the Alphason brand. It has very strong and
established distribution channels across the whole of the UK consumer
electronics market serving over 2,500 retail outlets. Taken together with our
existing customer base, the Group will have unprecedented access into the UK's
retail consumer electronics market. Alphason will continue to be run as a
separate operating unit within the products business of the Armour Home
Electronics division.


Consideration

The initial consideration of £10 million was paid on completion, £9.5 million in
cash and £0.5 million in new ordinary shares in the Group. At completion
Alphason had £3.7 million of net cash on its balance sheet, which is for the
benefit of the Group.


If Alphason meets certain challenging profit targets, a deferred consideration
payment of up to £10 million will be payable, primarily in cash, twelve months
after completion.


There will be a further £0.75 million payable in the second 12 months subject to
Alphason achieving an operating profit in excess of £3 million.


Placing

To fund the initial consideration, 12 million new ordinary shares in the Group
were placed at 50p per share raising £5.8 million net of expenses.





OPERATIONS


Armour Automotive

Armour Automotive has continued to experience challenging market conditions in
the first six months.


In the non-retail channel, the slowdown in the wider automotive market has been
significant with orders deferred or scaled back which has affected sales of
Autoleads, RM Audio and Veba. However, we do expect to see some improvement in
the second half of the year with deliveries scheduled to BMW following their
£400,000 order in January 2006 and further repeat business with our other OEM
customers.


We continue to pursue a number of new OEM opportunities that cover a range of
products from in-car radio, CD and DVD players to complex connectivity solutions
for the navigation market. We are confident that we are well positioned to
secure such new business, the difficulty at the current time is in predicting
the timing of the customer's requirements.


In the retail market our sales are in line with last year, though margins have
come under pressure. Mutant continues to perform well with further new products
from the range being listed with Halfords and Motorworld. There is also good
demand for the Autoleads range of MP3 adapter leads, which enable portable
digital music players to plug directly into the in-car entertainment system, and
the Veba range of reversing sensors. Both these product ranges are selling
through both the retail and non-retail channels with customers ranging from the
small independents through to large vehicle distributors, such as Arnold Clark.


We have increased our investment in new product development focusing on
in-vehicle connectivity solutions. The next generation of adapter leads that are
being designed will interface with CANbus, a serial communication system that is
increasingly being incorporated into many new motor vehicles. New products
scheduled for launch in the second half of the year include new ranges of
intelligent interconnect leads for the in-car mobile phone and navigation
markets.


Armour Home Electronics


Armour Home Electronics has had a good six months with like for like sales
growth in both our domestic and export markets as well as across all the key
product categories. In addition, we completed the acquisition of Alphason and
our services business opened its new showroom in Hampstead.


Products


There has been strong sales growth in the core proprietary brands of QED cables,
Systemline multiroom and Soundstyle furniture. Of the third party brands, the
two newcomers, being Universal Electronics' Nevo remote control and Audica's
speakers, have both had an encouraging first six months.


Sales of Systemline Modular, our multi-room entertainment system, have
out-performed our expectations. The adoption of the system by new home builders
as part of their build programme, either as an option or as a standard fit, is
ongoing. Of the top ten home builders in the UK who account for approximately
45% of all new home builds, nine have now adopted Systemline Modular and offer
it as their preferred multi-room entertainment system in one or more of their
regions. The home builders typically offer the system as an option with the
house purchase, though there are an increasing number of new home builds that
are including the system as standard, particularly with the smaller regional
home builders. There are now over 850 standard fit builds scheduled over the
next 12 months.


In the first six months of the year we have launched a number of new products
including the new Goldring range of headphones, QED's highly successful HDMI
interconnect, the Systemline learning remote control and most recently, the Q
Acoustics speaker range. Our programme of product innovation and development
continues apace, with three new Myryad products scheduled for launch in the next
6 months as well as the Systemline Modular touchscreen keypad and music sound
server.


Services


Our custom install service business is performing well and in line with our
expectations. The value of both our order book and outstanding proposals is at
record levels and the conversion rate from proposal to order is above last year.
The business extended its operations in February 2006 opening a new Hi-End
showroom in Hampstead. The initial indications are encouraging for the new
showroom with a number of orders already placed.



OUTLOOK


Market conditions are challenging, particularly in our automotive business where
we do not expect conditions to improve significantly in the near term. Our home
division is performing well and we believe that this will continue, enhanced by
the recent acquisition of Alphason and the opportunities presented by the
forthcoming football World Cup. The Group has a well balanced portfolio of
products, brands and target markets, with both divisions making a healthy return
on sales. This gives the Group a good platform for future growth.





Bob Morton

Chairman

30 March 2006





                      CONSOLIDATED PROFIT AND LOSS ACCOUNT


FOR THE SIX MONTHS TO 28 FEBRUARY 2006


                                    ----------      ----------      ----------
                        Notes    Six months to   Re-presented*   Re-presented*
                                   28 February   Six months to   Twelve months
                                                                            to
                                        2006       28 February       31 August
                                 (Unaudited)            2005            2005
                                        £000     (Unaudited)       (Audited)
                                                        £000            £000
                                    ----------      ----------      ----------
Turnover

Continuing operations                 17,570          17,610          35,452
Acquisitions               3             961               -               -
                                    ----------      ----------      ----------
                           2          18,531          17,610          35,452
                                    ==========      ==========      ==========
Operating profit
Continuing operations                  1,525           2,020           4,267
Acquisitions               3             191               -               -
                                    ----------      ----------      ----------
Operating profit
before amortisation of
goodwill                               1,716           2,020           4,267
Amortisation of
goodwill                                (451)           (399)           (808)
                                    ----------      ----------      ----------
Profit on ordinary
activities before
interest                               1,265           1,621           3,459
                                    ----------      ----------      ----------
Net interest                            (235)           (225)           (470)
                                    ----------      ----------      ----------
Profit on ordinary
activities before
taxation                               1,030           1,396           2,989

Taxation on profit on
ordinary activities        4            (324)           (534)           (864)
                                    ----------      ----------      ----------
Profit for the
financial period           5             706             862           2,125
                                    ==========      ==========      ==========

Earnings per ordinary
share                      7
Basic                                    1.3p            1.6p            4.0p
Diluted                                  1.2p            1.5p            3.8p
                                    ==========      ==========      ==========



* See Note 1



          CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES


FOR THE SIX MONTHS TO 28 FEBRUARY 2006

                                         ----------     ----------    ----------
                                      Six months to  Six months to Twelve months
                                                                              to
                                        28 February    28 February     31 August
                                             2006           2005          2005
                                      (Unaudited)    (Unaudited)     (Audited)
                                             £000           £000          £000
                                         ----------     ----------    ----------
Profit for the financial
period                                        706            862         2,125

Currency translation
differences on foreign                          -             (1)           (2)
currency net investments
                                         ----------     ----------    ----------

Total recognised gains and losses
relating
to the financial period                       706            861         2,123
                                         ==========     ==========    ==========





                           CONSOLIDATED BALANCE SHEET



AT 28 FEBRUARY 2006


                                          ----------     ----------   ----------
                                Notes    28 February    28 February    Restated*
                                              2006           2005      31 August
                                       (Unaudited)    (Unaudited)         2005
                                              £000           £000    (Audited)
                                                                          £000
                                          ----------     ----------   ----------
Fixed assets
Intangible assets                           24,741         14,742       14,533
Tangible assets                              2,188          1,869        1,714
                                          ----------     ----------   ----------
                                            26,929         16,611       16,247
                                          ==========     ==========   ==========

Current assets
Stocks                                      10,400          6,309        7,648
Debtors                                      8,309          6,273        6,937
Cash at bank and in hand                        86             85          116
                                          ----------     ----------   ----------
                                            18,795         12,667       14,701
                                          ==========     ==========   ==========
Creditors: Amounts falling due
within one year
Creditors                                  (12,801)        (5,423)      (6,882)
Borrowings                                  (2,216)        (3,538)      (2,553)
                                          ----------     ----------   ----------
                                           (15,017)        (8,961)      (9,435)
                                          ==========     ==========   ==========
Net current assets                           3,778          3,706        5,266
                                          ==========     ==========   ==========
Total assets less current
liabilities                                 30,707         20,317       21,513
                                          ==========     ==========   ==========
Creditors: Amounts falling due
after more than one year
Creditors                                     (877)          (192)        (192)
Borrowings                                  (4,180)        (2,777)      (2,502)
                                          ----------     ----------   ----------
                                            (5,057)        (2,969)      (2,694)
                                          ----------     ----------   ----------
Net assets                                  25,650         17,348       18,819
                                          ==========     ==========   ==========

Capital and reserves
Called up share capital                      6,841          5,374        5,482
Share premium account                        8,496          3,760        3,861
Other reserves                                 871            444          444
Profit and Loss Account                      9,642          7,970        9,232
Share trust reserve                           (200)          (200)        (200)
                                          ----------     ----------   ----------
Equity shareholders' funds        5         25,650         17,348       18,819
                                          ==========     ==========   ==========



          * See Note 1



                        CONSOLIDATED CASH FLOW STATEMENT


FOR THE SIX MONTHS TO 28 FEBRUARY 2006

                                        -----------     ----------    ----------
                               Notes  Six months to  Six months to Twelve months
                                                                              to
                                        28 February    28 February     31 August
                                             2006           2005          2005
                                      (Unaudited)    (Unaudited)     (Audited)
                                             £000           £000          £000
                                        -----------     ----------    ----------

Net cash inflow
from operating
activities                     6(a)            29          1,465         3,650

Returns on investment and
servicing of finance
Interest received                              10              8            12
Interest paid                                (242)          (161)         (395)
Bank loan
arrangement costs                            (125)           (13)          (13)
Interest element of
finance lease
rentals                                        (6)            (4)           (9)
                                        -----------     ----------    ----------
Net cash outflow from returns
on investment
and servicing of
finance                                      (363)          (170)         (405)

Corporate taxation
paid                                         (132)          (922)       (1,427)

Capital expenditure and
financial investment

Payments to acquire
tangible fixed
assets                                       (339)          (477)         (885)
Sale of tangible
fixed assets                                   22             65           127
                                        -----------     ----------    ----------
Net cash outflow
from capital
expenditure                                  (317)          (412)         (758)
and financial investment

Acquisitions and disposals
Purchase of
subsidiary
undertakings                               (9,840)        (3,590)       (3,587)
Net cash acquired
with subsidiary
undertakings                                3,659            140           142
                                        -----------     ----------    ----------
Net cash outflow from
acquisitions
and disposals                              (6,181)        (3,450)       (3,445)
Dividend paid                                (296)          (237)         (237)
                                        ===========     ==========    ==========

Net cash outflow
before financing                           (7,260)        (3,726)       (2,622)

Financing
Issue of ordinary
share capital                               5,892             70           279
New bank loans                              5,000              -             -
Repayment of bank
loans                                      (3,143)          (285)         (571)
Capital element of
finance lease
rental repayments                             (17)           (24)          (35)
                                        ===========     ==========    ==========
Net cash
inflow/(outflow)
from financing                              7,732           (239)         (327)
                                        ===========     ==========    ==========
Net cash inflow/(outflow)
after financing, being
the
increase/(decrease)
in cash in the
period                         6(b)           472         (3,965)       (2,949)
                                        ===========     ==========    ==========






                       NOTES TO THE FINANCIAL STATEMENTS


1. BASIS OF PREPARATION


The interim financial statements have been prepared on the basis of accounting
policies consistent with those set out in the Group's Annual Report and
financial statements for the twelve months to 31 August 2005, except that during
the period the Group has adopted FRS 21: Events after the Balance Sheet Date and
FRS 22: Earnings per Share.


Under FRS 21, dividends are only recognised in the period in which a binding
obligation for payment arises.

Consequently, dividends declared after the balance sheet date are no longer
accrued but are appropriated from reserves in the period the declaration takes
place. The prior year comparative figures have been restated to reflect the
adoption of FRS 21 and the effect is set out in note 5: Reconciliation of
Movement in Equity Shareholders' Funds. The Consolidated Profit and Loss Account
has been re-presented to reflect the appropriation of dividends from equity
shareholders' funds.


Implementation of FRS 21 has had no effect on the Consolidated Balance Sheet as
at 28 February 2005. However, the Consolidated Balance Sheet as at 31 August
2005 has been restated to remove the £296,000 dividend accrual declared at the
Annual General Meeting on 9 December 2005. Consequently, at 31 August 2005,
equity shareholders' funds are increased, and creditors falling due within one
year are decreased, by £296,000 from the figures previously reported. This
dividend of £296,000 has been appropriated from shareholders' funds during the
six month period to 28 February 2006.


FRS 22 relates to the calculation of earnings per share but this has had no
material impact on the results.


The results of the Group for the six months to 28 February 2006, and the
comparative figures for the six months to 28 February 2005, are unaudited. The
financial information contained herein does not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985.


The statutory accounts for the twelve months to 31 August 2005, which were
approved by the shareholders at the Annual General Meeting and which have been
delivered 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 Companies
Act 1985.


2. TURNOVER
                                        -----------    -----------   -----------
                                      Six months to  Six months to Twelve months
                                                                              to
                                        28 February    28 February     31 August
                                             2006           2005          2005
                                      (Unaudited)    (Unaudited)     (Audited)
                                             £000           £000          £000
                                        -----------    -----------   -----------
Group sales by business segment
Armour Automotive                           7,674          8,842        18,213
Armour Home Electronics                    10,857          8,768        17,239
                                        -----------    -----------   -----------
                                           18,531         17,610        35,452
                                        ===========    ===========   ===========
Group sales by country of operation
United Kingdom                             18,348         17,416        34,984
Sweden                                        381            324           811
Inter-area eliminations                      (198)          (130)         (343)
                                        -----------    -----------   -----------
                                           18,531         17,610        35,452
                                        ===========    ===========   ===========
Group sales by country of
destination
United Kingdom                             15,023         13,828        27,753
Rest of Europe                              2,651          3,298         6,498
Rest of world                                 857            484         1,201
                                        -----------    -----------   -----------
                                           18,531         17,610        35,452
                                        ===========    ===========   ===========



3. ACQUISITIONS

On 3 February 2006, the Group acquired Alphason Designs Limited, the UK's brand 
leading specialist designer and supplier of audio visual furniture to the 
consumer electronics market.



4. TAXATION ON PROFIT ON ORDINARY ACTIVITIES


The taxation charge for the six months to 28 February 2006 is based on the
effective taxation rate, which is estimated will apply to earnings for the full
year.





5. RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS

                                        -----------    -----------   -----------
                                      Six months to  Six months to Twelve months
                                                                              to
                                        28 February    28 February     31 August
                                             2006           2005          2005
                                      (Unaudited)    (Unaudited)     (Audited)
                                             £000           £000          £000
                                        -----------    -----------   -----------
Profit for the financial
period                                        706            862         2,125
Dividend                                     (296)          (237)         (237)
                                        -----------    -----------   -----------
Profit for the financial
period retained                               410            625         1,888
New share capital
subscribed (net of issue
expenses)                                   5,892             70           279
Ordinary shares issued as
consideration for
acquisitions                                  529              -             -
Currency translation differences on
foreign
currency investments                            -             (1)           (2)
                                        -----------    -----------   -----------
Net movement in equity
shareholders' funds                         6,831            694         2,165
                                        -----------    -----------   -----------
Opening equity
shareholders' funds                        18,819         16,417        16,417
Prior year adjustment (Note
1)                                              -            237           237
                                        -----------    -----------   -----------
Opening equity
shareholders' funds
restated                                   18,819         16,654        16,654
                                        ===========    ===========   ===========
Closing equity
shareholders' funds                        25,650         17,348        18,819
                                        ===========    ===========   ===========





6(a). RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING A
CTIVITIES

                               -----------         -----------       -----------
                             Six months to       Six months to     Twelve months
                                                                              to
                               28 February         29 February         31 August
                                    2006                2005              2005
                             (Unaudited)         (Unaudited)         (Audited)
                                    £000                £000              £000
                               -----------         -----------       -----------

Operating profit                   1,265               1,621             3,459
Depreciation of tangible
fixed assets                         404                 379               792
Amortisation of goodwill             451                 399               808
(Increase)/decrease in
stocks                            (1,099)                178            (1,320)
Decrease in debtors                1,382               1,184               341
Decrease in creditors             (2,374)             (2,289)             (503)
(Profit)/loss on disposal
of tangible fixed assets               -                  (7)               73
                               -----------         -----------       -----------
Net cash inflow from
operating activities                  29               1,465             3,650
                               ===========         ===========       ===========




6(b). RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT

                                 -----------        -----------      -----------
                               Six months to      Six months to    Twelve months
                                                                              to
                                 28 February        28 February        31 August
                                      2006               2005             2005
                               (Unaudited)        (Unaudited)        (Audited)
                                      £000               £000             £000
                                 -----------        -----------      -----------
Increase/(decrease) in cash            472             (3,965)          (2,949)
New bank loans                      (5,000)                 -                -
Repayment of bank loans              3,143                285              571
Cash outflow from finance
leases                                  17                 24               35
                                 -----------        -----------      -----------
Change in net debt
resulting from cash flows           (1,368)            (3,656)          (2,343)
New finance leases                    (114)                (1)              (2)
Bank loan arrangement costs            125                 13               13
Bank loan arrangement costs
expensed                               (14)               (20)             (39)
Exchange adjustments                     -                  -               (2)
                                 -----------        -----------      -----------
Movement in net debt in the
period                              (1,371)            (3,664)          (2,373)
Opening net debt                    (4,939)            (2,566)          (2,566)
                                 ===========        ===========      ===========
Closing net debt                    (6,310)            (6,230)          (4,939)
                                 ===========        ===========      ===========



6(c). ANALYSIS OF NET DEBT MOVEMENT

                 ---------  --------       ---------      --------     --------
                 31 August      Cash  Other non-cash  Acquisitions  28 February
                    2005        Flow         changes        £000         2006
                    £000      £000            £000                       £000
                 ---------  --------       ---------      --------     --------
Cash                 116       (30)              -             -           86
Overdraft         (1,986)      502               -             -       (1,484)
                 ---------  --------       ---------      --------     --------
                  (1,870)      472               -             -       (1,398)
                 ---------  --------       ---------      --------     --------
Loans: Due
within one
year                (555)      215            (330)            -         (670)
Loans: Due
after more
than one year     (2,502)   (2,072)            441             -       (4,133)
Finance leases       (12)       17               -          (114)        (109)
                 ---------  --------       ---------      --------     --------
Net debt          (4,939)   (1,368)            111          (114)      (6,310)
                 =========  ========       =========      ========     ========



7. EARNINGS PER ORDINARY SHARE


Basic earnings per share is calculated using the weighted average number of
shares in issue during the period of 55,789,760 (28 February 2005: 52,638,710
and 31 August 2005: 52,981,021).


Underlying earnings per share is also shown calculated by reference to earnings
before amortisation of goodwill. The Directors consider that this information
gives a useful additional indication of underlying performance.



                             Six months to     Six months to   Twelve months to
                              28 February       28 February        31 August
                                      2006              2005              2005
                               (Unaudited)       (Unaudited)         (Audited)
Basic earnings per
ordinary                     £000          p   £000          p   £000          p
share                       -------  -------  -------  -------  -------  -------

Profit for the financial
period                        706      1.3      862      1.6    2,125      4.0
Amortisation of goodwill      451      0.8      399      0.8      808      1.5
                            -------  -------  -------  -------  -------  -------
Underlying earnings         1,157      2.1    1,261      2.4    2,933      5.5
                            =======  =======  =======  =======  =======  =======






Diluted earnings per share is calculated with reference to 57,477,692 (28
February 2005: 56,037,243 and 31 August 2005: 55,747,383) ordinary shares.

                             Six months to     Six months to   Twelve months to
                              28 February       28 February        31 August
                                      2006              2005              2005
                               (Unaudited)       (Unaudited)         (Audited)
Diluted earnings per
ordinary share               £000          p   £000          p   £000          p
                            -------  -------  -------  -------  -------  -------
Profit for the financial
period                        706      1.2      862      1.5    2,125      3.8
Amortisation of goodwill      451      0.8      399      0.8      808      1.5
                            -------  -------  -------  -------  -------  -------
Underlying earnings         1,157      2.0    1,261      2.3    2,933      5.3
                            =======  =======  =======  =======  =======  =======



8. 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.



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