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Armour Group PLC (AMR)

  Print      Mail a friend       Annual reports

Thursday 02 November, 2006

Armour Group PLC

Final Results

Armour Group PLC
02 November 2006



                         ARMOUR GROUP PLC (THE 'GROUP')

             Preliminary Results for the year ended 31 August 2006



                               FINANCIAL RESULTS


  * Sales of £43.0 million (2005: £35.5 million).


  * EBITDA of £4.7 million (2005: £5.1 million).


  * Profit after taxation of £1.6 million (2005: £2.1 million).


  * Cash inflow from operating activities of £3.0 million (2005: £3.7
    million).


  * Recommended dividend maintained at 0.55p (2005: 0.55p).


  * Basic earnings per share of 2.5p (2005: 4.0p).


  * Underlying earnings per share of 4.3p (2005: 5.5p).



                              OPERATIONAL OVERVIEW


  * Both divisions profitable and delivering good margins.


  * Automotive significantly down on prior year due to challenging market
    conditions.


  * Home sales and profits up, both organically and through acquisition.


  * Acquisition of Alphason Designs Limited expected to enhance future
    earnings.


  * Access to over 5,000 retail outlets in the UK consumer electronics market.


  * New Group research and development team set up to focus on emerging
    technologies and core product ranges.



Bob Morton, Chairman of Armour Group plc commented:


'The year to 31 August 2006 has been challenging for the Group due to a less
favourable economic environment in the consumer related markets in which we
operate. Both our home and automotive divisions have traded profitably, although
the Group operating profit is down on last year due to a significant under
performance from our automotive division.

The Group's strategy is focused on developing and investing in our high quality
brand and product portfolio, sales and marketing and developing our channels to
market. This strategy is delivering award winning products and securing an ever
increasing number of new customers both in the UK and in our export market. We
expect the current economic environment to remain uncertain, but having made a
promising start to the new financial year with current trading ahead of
expectations, 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


The year to 31 August 2006 has been challenging for the Group due to a less
favourable economic environment in the consumer related markets in which we
operate. Both our home and automotive divisions have traded profitably, although
the Group operating profit is down on last year due to a significant under
performance from our automotive division.


Armour Automotive has had a difficult year, with lower demand, increased
competition and rising raw material costs, particularly the price of copper
during the year, which combined have had a major impact on the financial
results. We have responded by reducing our cost base and investing in sales and
new product development, focusing on those areas where we believe that sales and
profit growth can be maximised. There are promising signs of improvement in our
automotive division and we expect it to return to growth in the current
financial year.


The Group's home division has had a good year, growing sales and profits both
organically and through the acquisition of Alphason Designs Limited in February
2006. Alphason is the UK's brand leader in specialist audio visual furniture, a
market that is experiencing strong growth driven by demand for flat panel
televisions. The division's considerable investment in new product development,
sales and marketing is paying dividends. Sales have increased both domestically
and internationally across all major product categories and we believe that this
growth will continue through the current financial year.


In September 2005, we were appointed the exclusive United Kingdom distributor
for Audica Limited, a designer and developer of lifestyle speakers and home
theatre electronics. This distribution agreement has proven to be successful and
as a result of the potential that we see in the brand and new products to be
launched over the coming months, the Group completed a 25% strategic investment
in Audica in September 2006.


Strategically the Group continues to progress, enhancing its position as one of
the leading consumer electronics groups in the United Kingdom. The acquisition
of Alphason has been another step in pursuit of this strategy. It has added
another brand leading product range to the Group's strong portfolio and its
sales channels into the general consumer electronics market strengthen and
complement the specialist customer base already served.


Investment in research and new product development are key factors to delivering
organic growth for the Group. In August 2006, we put in place a new Group
research and development team called the Concept Design Centre. This new team
has a Group wide responsibility to look at emerging technologies and, working
with the divisional product development teams, specify the core products that we
should be bringing to market over the next two to three years. This large
investment by the Group has been made in order to deliver long term growth.


I would like to take this opportunity, on behalf of the Board, to thank our
employees for all their hard work and dedication over the course of last year.


The Group's strategy is focused on developing and investing in our high quality
brand and product portfolio, sales and marketing and developing our channels to
market. This strategy is delivering award winning products and securing an ever
increasing number of new customers both in the UK and in our export market. We
expect the current economic environment to remain uncertain, but having made a
promising start to the new financial year with current trading ahead of
expectations, the Board remains confident with regard to the future prospects of
the Group.


BOB MORTON

Chairman

2 November 2006





Consolidated Profit and Loss Account

For the year ended 31 August 2006



                                                                  Re-presented*
                                        31 August 2006           31 August 2005
                 Note        Excluding Amortisation of   Total           Total
                       amortisation of        goodwill
                              goodwill
                                £000            £000      £000            £000
                              --------        --------   -------        --------
Turnover
Continuing
operations                    36,353               -    36,353          35,452
Acquisitions       2           6,628               -     6,628               -
                              --------        --------   -------        --------
                              42,981               -    42,981          35,452
                              ========        ========   =======        ========
Operating profit
Continuing
operations                     2,871            (813)    2,058           3,459
Acquisitions       2           1,021            (289)      732               -
                              --------        --------   -------        --------
                               3,892          (1,102)    2,790           3,459
                              ========        ========   =======        ========

Interest
receivable                                                  29              12
Interest on
discounted
deferred
consideration      3                                      (159)              -
Interest
payable and
similar
charges                                                   (508)           (482)
                              ========        ========   =======        ========
Profit on
ordinary
activities
before
taxation                                                 2,152           2,989
Taxation on
profit on
ordinary
activities         4                                      (594)           (864)
                              --------        --------   -------        --------
Profit for the
year                                                     1,558           2,125
                              ========        ========   =======        ========
                              --------        --------   -------        --------
Earnings per
ordinary share     6
Basic                                                      2.5p            4.0p
Diluted                                                    2.5p            3.8p
                              ========        ========   =======        ========

* See Note 1




Consolidated Statement of Total Recognised Gains and Losses

For the year ended 31 August 2006


                                                    ----------       -----------
                                                31 August 2006    31 August 2005
                                                        £000              £000
                                                    ----------       -----------
Profit for the year                                    1,558             2,125
Currency translation differences on foreign
currency net investments                                   -                (2)
                                                    ----------       -----------
Total recognised gains and losses relating
to the year                                            1,558             2,123
                                                    ==========       ===========





Consolidated Balance Sheet

At 31 August 2006

                                                  31 August 2006      Restated *
                                                                  31 August 2005
                                                          £000            £000
                                                       ---------       ---------
Fixed assets
Intangible assets                                       23,338          14,533
Tangible assets                                          2,256           1,714
                                                       ---------       ---------
                                                        25,594          16,247
                                                       =========       =========
Current assets
Stocks                                                   9,836           7,648
Debtors                                                  9,937           6,937
Cash at bank and in hand                                   186             116
                                                       ---------       ---------
                                                        19,959          14,701
                                                       =========       =========
Creditors: amounts falling due within one year
Creditors                                              (13,547)         (6,882)
Borrowings                                              (1,610)         (2,553)
                                                       ---------       ---------
                                                       (15,157)         (9,435)
                                                       =========       =========
Net current assets                                       4,802           5,266
                                                       ---------       ---------
Total assets less current liabilities                   30,396          21,513
                                                       =========       =========
Creditors: amounts falling due after                      (127)           (192)
more than one year
Creditors
Borrowings                                              (3,767)         (2,502)
                                                       ---------       ---------
                                                        (3,894)         (2,694)
                                                       ---------       ---------
Net assets                                              26,502          18,819
                                                       =========       =========
                                                             ===             ===
Capital and reserves
Called up share capital                                  6,841           5,482
Share premium account                                    8,496           3,861
Other reserves                                             871             444
Profit and Loss Account                                 10,494           9,232
Share trust reserve                                       (200)           (200)
                                                       ---------       ---------
Shareholders' funds                                     26,502          18,819
                                                       =========       =========


* See Note 1





Consolidated Cash Flow Statement

For the year ended 31 August 2006





                                  Note     31 August 2006      31 August 2005
                                            £000      £000      £000      £000
                                          --------  --------   -------   -------

Net cash inflow from operating
activities                         7(a)              3,032               3,650

Returns on investments and
servicing of finance
Interest received                             29                  12
Interest paid                               (470)               (395)
Bank loan arrangement costs                 (150)                (13)
Interest element of finance lease
rentals                                       (7)                 (9)
                                          --------  --------   -------   -------
Net cash outflow from returns on
investments and servicing of                          (598)               (405)
finance

Corporate taxation paid                               (649)             (1,427)

Capital expenditure and financial
investment
Payments to acquire tangible                (920)               (885)
assets
Sale of tangible assets                       25                 127
                                          --------  --------   -------   -------
Net cash outflow from capital
expenditure and financial                            
investment                                            (895)               (758)

Acquisitions and disposals
Purchase of subsidiary                   (10,402)             (3,587)
undertakings
Net cash acquired with subsidiary
undertakings                               3,659                 142
                                          --------  --------   -------   -------
Net cash outflow from
acquisitions                                        (6,743)             (3,445)
and disposals

Dividend paid                                         (296)               (237)
                                          --------  --------   -------   -------
Net cash outflow before financing                   (6,149)             (2,622)

Financing
Issue of ordinary share capital            5,892                 279
New bank loans                             5,000                   -
Repayment of bank loans                   (3,483)               (571)
Capital element of finance lease
rental repayments                            (56)                (35)
                                          --------  --------   -------   -------
Net cash inflow/(outflow) from
financing                                            7,353                (327)
                                          --------  --------   -------   -------
Net cash inflow/(outflow) after
financing, being the
increase/(decrease) in cash in
the                               7(b)               1,204              (2,949)
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 2006 and the year
ended 31 August 2005. Financial statements for the year ended 31 August 2005
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 2006
are expected to be posted to shareholders no later than 20 November 2006 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.


This year the Group has adopted FRS 21: Events after the Balance Sheet Date,
FRS22: Earnings per Share, the presentational requirements of FRS 25: Financial
Instruments, Disclosure and Presentation and FRS 28: Corresponding amounts.


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 in which the declaration takes place. The prior year comparative
figures have been restated to reflect the adoption of FRS 21. The Consolidated
Profit and Loss Account has been re-presented to reflect the appropriation of
dividends from shareholders' funds.


By implementing FRS 21, the Consolidated Balance Sheet at 31 August 2005 has
been restated to remove the £296,000 dividend accrual, which was declared at the
Annual General Meeting on 9 December 2005. Consequently, shareholders funds at
31 August 2005 have increased by £296,000 and creditors falling due within one
year are decreased by £296,000. The dividend of £296,000 has been appropriated
from shareholders' funds in the current year.


Adoption of FRS 22 has removed the Basic Underlying EPS and Diluted Underlying
EPS measures from the face of the Consolidated Profit and Loss Account. However,
the Directors believe that these remain useful indicators of underlying
performance and they are shown in Note 6.


FRS 25 and FRS 28 have had no material impact on the results.



2.      Acquisitions


In February 2006, the Group acquired Alphason Designs Limited, the UK's leading
brand in specialist furniture for audio visual entertainment equipment. The
initial consideration was £10.9 million (including costs) which was settled in
cash of £10.4 million and by the issue of consideration shares of £0.5 million.
£3.7 million of cash was acquired with the business.


Further deferred consideration, up to a maximum of £10.75 million, may be
payable but this is dependent upon the operating profit of Alphason Designs
Limited over the two years immediately following the acquisition. In the first
year, deferred consideration is payable on a sliding scale if the company's
operating profit is between £1.5 million and £3.5 million. The maximum deferred
consideration is £10 million if the company's operating profit equals or exceeds
£3.5 million. The balance of £750,000 is payable if, in the second year, the
company's operating profit equals or exceeds £3 million. At the discretion of
the Group, a proportion of the deferred consideration may be settled by the
issue of consideration shares. Based on the full deferred consideration of
£10.75 million, the maximum market value of such consideration shares is
estimated to be £897,000. The balance of any deferred consideration is payable
by way of loan notes.






3.      Interest on discounted deferred consideration


Interest on discounted deferred consideration arises through the application of
FRS 7: Fair Values in Acquisition Accounting. Under this standard, contingent
deferred consideration is taken to be the estimated amount payable, but
discounted to its present value. Consequently, an interest charge is incurred
over the discount period to uplift the present value of the contingent deferred
consideration back to the full estimated amount payable.


4.      Taxation on profit on ordinary activities

                                              31 August 2006     31 August 2005
                                                      £000               £000
                                                ------------       ------------
UK Corporation Tax at 30% (2005:30%)                  (699)              (947)
Adjustment in respect of prior years                    39                187
Overseas taxation                                      (20)               (26)
                                                ------------       ------------
Current taxation                                      (680)              (786)
Deferred taxation - current year                        86                (60)
Deferred taxation - prior year                           -                (18)
                                                ------------       ------------
                                                      (594)              (864)
                                                ============       ============


5.      Equity dividend

                                               31 August 2006     31 August 2005
                                                       £000               £000
                                                 ============       ============
Proposed dividend for the year of 0.55p
(2005: 0.55p)                                          (371)              (296)
per ordinary share
                                                 ============       ============


The Board is recommending a maintained final dividend for the year of 0.55p (31
August 2005: 0.55p) per ordinary share. The dividend is payable on 12 January
2007 to shareholders on the register on 15 December 2006. The proposed dividend
for the year has not been accrued in the Consolidated Balance Sheet as at 31
August 2006 (see Note 1).


6.      Earnings per ordinary share


Basic earnings per share is calculated by dividing the profit for the year of
£1,558,000 (31 August 2005: £2,125,000) by the weighted average number of
ordinary shares in issue during the year of 61,664,304 (31 August 2005:
52,981,021).


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 63,184,137 (31 August
2005: 55,747,383) ordinary shares. The effect of exercise of options on the
weighted average number of shares in issue is 1,519,833 (31 August 2005:
2,766,362).


The 966,000 shares held by the Armour Employees' Share trust are not included in
either the weighted average or the diluted weighted average shares in issue
during the year.



                31 August 2006                       31 August 2005
                    £'000       Basic p    Diluted p  £'000    Basic p Diluted p
                    -------     -------      -------  -------  -------   -------
Profit for the
year                1,558         2.5          2.5    2,125      4.0       3.8
Amortisation of
goodwill            1,102         1.8          1.7      808      1.5       1.5
                    -------     -------      -------  -------  -------   -------
Underlying
earnings            2,660         4.3          4.2    2,933      5.5       5.3
                    =======     =======      =======  =======  =======   =======



7.      Group cash flow statement


(a)    Reconciliation of operating profit to net cash inflow from operating
activities
                                                31 August 2006    31 August 2005
                                                        £000              £000
                                                   -----------       -----------

Operating profit                                       2,790             3,459
Depreciation and other amounts written off
tangible fixed assets                                    760               792
Amortisation of goodwill                               1,102               808
Increase in stocks                                      (724)           (1,320)
(Increase)/decrease in debtors                          (173)              341
Decrease in creditors                                   (737)             (503)
Loss on disposal of tangible fixed assets                 14                73
                                                   -----------       -----------
Net cash inflow from operating activities              3,032             3,650
                                                   ===========       ===========



(b)    Reconciliation of net cash flow to movement in net debt
                                                  31 August 2006  31 August 2005
                                                          £000            £000
                                                      ----------     -----------

Increase/(decrease) in cash                              1,204          (2,949)
New bank loans                                          (5,000)              -
Repayment of bank loans                                  3,483             571
Cash outflow from finance leases                            56              35
                                                      ----------     -----------
Change in net debt resulting from cash
flows                                                     (257)         (2,343)
New finance leases                                        (114)             (2)
Bank loan arrangement costs                                150              13
Bank loan arrangement costs expensed                       (31)            (39)
Exchange adjustments                                         -              (2)
                                                      ----------     -----------
Movement in net debt in the year                          (252)         (2,373)
Opening net debt                                        (4,939)         (2,566)
                                                      ----------     -----------
Closing net debt                                        (5,191)         (4,939)
                                        ---  ---      ==========     ===========



(c)    Analysis of net debt movement
                       --------   --------  --------     --------        --------
                 31 August 2005  Cash flow     Other  Acquisition  31 August 2006
                         £000       £000    non-cash       £000            £000
                                             changes
                                              £000
                       --------   --------  --------     --------        --------

Cash                      116         70         -            -             186
Overdraft              (1,986)     1,134         -            -            (852)
                       --------   --------  --------     --------        --------
                       (1,870)     1,204         -            -            (666)
                       --------   --------  --------     --------        --------
Short-term debt          (555)       555      (688)           -            (688)
Long-term debt         (2,502)    (2,072)      807            -          (3,767)
Finance leases            (12)        56         -         (114)            (70)
                       --------   --------  --------     --------        --------
                       (4,939)      (257)      119         (114)         (5,191)
                       ========   ========  ========     ========        ========


Bank loan arrangement costs of £150,000 were incurred during the year of which
£119,000 had not been charged to the Consolidated Profit and Loss Account at 31
August 2006.


8.      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 12 December 2006 at
12.00 noon.



                      This information is provided by RNS
            The company news service from the London Stock Exchange