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Armour Group PLC (AMR)

  Print      Mail a friend       Annual reports

Wednesday 04 April, 2007

Armour Group PLC

Interim Results

Armour Group PLC
04 April 2007


                                Armour Group Plc
                           ('Armour' or the 'Group')


          Interim statement for the six months ended 28 February 2007


Armour Group plc (AIM:AMR), the UK's leading consumer electronics group focussed
on the in-car communications and entertainment and home entertainment markets,
is pleased to announce its interim results for the six months ended 28 February
2007.


Financial overview


• Sales of £29.5 million (2006: £18.5 million) up 59%
• EBITDA of £3.0 million (2006: £2.1 million) up 44%
• Profit after taxation of £0.9 million (2006: £0.7 million) up 35%
• Cash inflow from operating activities of £1.3 million (2006: £29,000)
• Basic earnings per share of 1.3p (2006: 1.2p) up 8%
• Underlying basic earnings per share of 2.4p (2006: 2.1p) up 14%


Operational overview


• The Group has shown a strong improvement over last year
• Automotive sales and orders in the non-retail channel are much improved
• Automotive's Mutant sales growth continues to build market share
• Home's core proprietary brands of Alphason, QED, Q Acoustics and
  Systemline Modular have all outperformed
• Exclusive UK distribution of NAD, PSB and Tivoli Audio brands awarded
  to the Home division
• The Group research and development team, set up in August 2006, is
  already proving to be a valuable investment for new product development



George Dexter, Chief Executive of Armour Group plc commented:


'The results for the first six months to 28 February 2007 show good performances
from both the Automotive and Home divisions.

Our strategy continues to focus on product innovation, sales and marketing and
developing our channels to market. The underlying fundamentals of the Group are
strong, and the Board looks forward with confidence to the second half of the
financial year.'


For further information please contact:


Armour Group plc                             Tel: 01892 502700
George Dexter, Chief Executive
John Harris, Finance Director


KBC Peel Hunt Ltd                            Tel: 0207 418 8900
Richard Kauffer







ABOUT ARMOUR


Armour Group plc is the UK's leading consumer electronics group focussed on the
in-car communications and entertainment and home entertainment markets.


The Group has an impressive brand portfolio, which boasts some of the UK's
market leaders, regularly winning industry awards for quality and innovation. In
the UK consumer electronics market, the Group has direct access to over 5,000
retail outlets.


It comprises two divisions: Automotive and Home.


Automotive


The Automotive division is the market leader in Europe in the design,
manufacture and supply of products for the in-car entertainment and
communications markets.


Its proprietary brands include Autoleads (connectivity leads and smartleads such
as the telemute lead used in mobile telephone hands free kits), CTI (GSM and GPS
aerials), VEBA (a range of in-car audio-visual entertainment systems) and Mutant
(a range of quality amplifiers and speakers for the in-car entertainment
enthusiast).


Automotive supplies both retail and non-retail customers which include Halfords,
Motorworld, BMW, Hyundai and Vodafone.


Home


The Home division is a market leader in the UK's specialist home entertainment
market. The products based business, which now accounts for 95% of the
division's turnover, designs, manufactures, distributes and sells product into
the hi-fi, home theatre and home entertainment market.


Its proprietary brands include QED (quality cables and interconnects),
Systemline (multi-room home entertainment systems), Alphason (hi-fi and
audio-visual furniture), Goldring (turntables, styli and headphones) and Myryad
(mid to high end hi-fi separates).


The Home division also distributes third party brands, typically on an exclusive
basis in the UK. These brands include Grado headphones, Nevo remote controls,
Sonance speakers, NAD hi-fi separates, Tivoli radios and Audica speakers.


The Home division also includes a service based business providing specialist
custom design and installation services to builders, architects and home owners
in the home automation market. This business accounts for 5% of the Home
division's sales.


The Home division's customers are both retail and non-retail and include Comet,
Argos, JLP, Tesco, Sevenoaks Sound and Vision, Berkeley Homes, George Wimpey,
Taylor Woodrow, Linden Homes and David Wilson Homes.



          Interim statement for the six months ended 28 February 2007


Results and Dividend

The Group's results for the six months to 28 February 2007 are good with strong
performances from both the Automotive and Home divisions. The Group's sales,
EBITDA, profit after taxation, cash inflow from operating activities and
earnings per share are well ahead of last year.


• Sales of £29.5 million (2006: £18.5 million) up 59%

• EBITDA of £3.0 million (2006: £2.1 million) up 44%

• Profit after taxation of £0.9 million (2006: £0.7 million) up 35%

• Cash inflow from operating activities of £1.3 million (2006: £29,000)

• Basic earnings per share of 1.3p (2006: 1.2p) up 8%

• Underlying basic earnings per share of 2.4p (2006: 2.1p) up 14%


The Board is not recommending an interim dividend.


Operations
Automotive

Automotive has had a good six months with both sales and operating profit ahead
of last year's figures.


In the non-retail channel, there has been a steady recovery in orders and sales.
This recovery is most evident in our Veba range of in-car audio-visual
entertainment systems, CTI antennae and most recently, in Autoleads telemute
leads. A resurgence in demand by vehicle manufacturers for in-car DVD systems
has significantly increased sales of Veba branded products. The latest order
from BMW, which was announced in January 2007, is scheduled to start delivery in
April 2007. We have also experienced increasing demand for our range of GPS
antennae driven principally by the growth in the vehicle tracking market, where
we supply a number of the leading service providers. The recent change in
legislation, relating to the use of mobile phones in vehicles, has had an
immediate and positive effect on sales of Autoleads telemute leads which we
expect to continue throughout the rest of this year.


The retail channel remains flat, with sales levels similar to last year.
However, our mix of business through this channel has changed with fewer sales
of low margin satellite navigation products being compensated by increasing
sales of our higher margin Mutant range of in-car audio systems. We are
currently investing in the development of three new product ranges, which are
expected to stimulate our sales into the retail market. The intention is to
launch all three ranges within the next twelve months, with the first being
targeted for late summer.


Our business in Sweden has had an excellent first six months with sales and
operating profit well ahead of last year. The securing of three important new
customers is behind this growth and we anticipate that sales and operating
profit will continue to outperform for the remainder of this year.


Home

The Home division has performed well in the first six months with sales and
operating profit increasing significantly on last year. In particular, our
product based businesses enjoyed a buoyant Christmas trading period delivering
record sales and operating profit.


Our core proprietary brands have shown strong sales growth over the past six
months with QED, Alphason, Systemline Modular and Q Acoustics all performing
particularly well. The third party brands under our management have also made
good progress, with Grado headphones, Sanus brackets, Nevo remote controls and
the Audica range delivering above average sales growth.


In the retail sector, the increasing demand for flat panel screens continues to
pull through sales of QED cables, Alphason furniture and Sanus wall brackets. We
have also seen excellent sales growth of our award winning speaker brand Q
Acoustics, which has increased its market share both domestically and
internationally.


The growing awareness in, and development of, the home automation market has
fuelled demand for multi-room entertainment where our Systemline Modular system
has again delivered good like-for-like growth. We continue to invest in the
development of the system with the launch of our Systemline touchscreen control
panel. The Sonance iPort docking station has also increased the functionality
and flexibility of the overall system. The imminent launch of our Systemline
sound server will add further to Systemline Modular's capability. Our belief is
that sales of Systemline Modular, and its increasing range of associated
products, will continue to outperform.


We announced in January 2007 that our Home division had been appointed as the
exclusive United Kingdom distributor for NAD, the high performance home theatre
and hi-fi electronics brand, PSB speakers and Tivoli Audio, the premium
lifestyle radio brand. All three brands complement our existing portfolio.
Securing these high quality brands for distribution underlines our reputation as
one of the leading companies in the UK's specialist home entertainment market.
NAD, PSB and Tivoli are all expected to make positive contributions in the
second half of the financial year.


New Product Development

In August 2006 we put in place a new Group research and development team called
the Concept Design Centre ('CDC') with a remit to focus on emerging technologies
and future product development. This team is already proving to be a valuable
investment for the Group, providing the resource to investigate, develop and
introduce new and unique products that will drive forward the Group's organic
growth. CDC is now at the heart of this process. In the eight months since CDC
was set up, it has initiated seven new product projects, the first of which is
scheduled to be launched in the late summer and will be for the automotive
market.


Outlook

We have seen a good recovery in the Group's financial performance in the first
six months. Our two operating divisions continue to trade well and the Board
looks forward with confidence to the second half of the financial year.



Bob Morton                                           George Dexter
Chairman                                             Chief Executive
4 April 2007



                      CONSOLIDATED PROFIT AND LOSS ACCOUNT


FOR THE SIX MONTHS TO 28 FEBRUARY 2007

                                                            Restated*     Restated*
                                             Six months    Six months Twelve months
                                                     to            to            to
                                            28 February   28 February     31 August
                                    Notes          2007          2006          2006
                                            (Unaudited)   (Unaudited)     (Audited)
                                                   £000          £000          £000

Turnover                              2          29,489        18,531        42,981

Operating profit before                           2,570         1,664         3,789
amortisation of goodwill
Amortisation of goodwill              3           (655)         (451)       (1,102)

Operating profit                                  1,915         1,213         2,687
Share of operating loss in            4            (13)             -             -
associated undertakings

Profit on ordinary activities                     1,902         1,213         2,687
before interest
Net interest                                      (379)         (235)         (638)

Profit on ordinary activities                     1,523           978         2,049
before taxation
Taxation on profit on ordinary        5           (616)         (308)         (563)
activities

Profit for the financial period       6             907           670         1,486


Earnings per ordinary share           8
Basic                                              1.3p          1.2p          2.4p
Diluted                                            1.3p          1.2p          2.4p


* See Note 1



          CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES


FOR THE SIX MONTHS TO 28 FEBRUARY 2007

                                                            Restated*     Restated*
                                             Six months    Six months Twelve months
                                                     to            to            to
                                            28 February   28 February     31 August
                                                   2007          2006          2006
                                            (Unaudited)   (Unaudited)     (Audited)
                                                   £000          £000          £000

Profit for the financial period                     907           670         1,486
Currency translation differences on
foreign currency net investments                    (1)             -             -

Total recognised gains and losses
relating to the financial period                    906           670         1,486
Share-based payment prior year                       56
adjustment (Note 1)

Total gains and losses recognised
since the last statutory accounts                   962

*See Note 1





                           CONSOLIDATED BALANCE SHEET


AT 28 FEBRUARY 2007

                                                            Restated*     Restated*
                                            28 February   28 February     31 August
                                                   2007          2006          2006
                                    Notes   (Unaudited)   (Unaudited)     (Audited)
                                                   £000          £000          £000
Fixed assets
Intangible assets                     3          22,683        24,741        23,338
Tangible assets                                   2,225         2,188         2,256
Investment in associated              4             359             -             -
undertaking
                                                 25,267        26,929        25,594

Current assets
Stocks                                           11,065        10,400         9,836
Debtors                                          11,255         8,350         9,993
Cash at bank and in hand                            445            86           186
                                                 22,765        18,836        20,015
Creditors: Amounts falling due
within one year
Creditors                                      (14,976)      (12,801)      (13,547)
Borrowings                                      (2,456)       (2,216)       (1,610)

                                               (17,432)      (15,017)      (15,157)

Net current assets                                5,333         3,819         4,858

Total assets less current                        30,600        30,748        30,452
liabilities

Creditors: Amounts falling due
after more than one year
Creditors                                             -         (877)         (127)
Borrowings                                      (3,423)       (4,180)       (3,767)

                                                (3,423)       (5,057)       (3,894)

Net assets                                       27,177        25,691        26,558

Capital and reserves
Called up share capital                           6,848         6,841         6,841
Share premium account                             8,512         8,496         8,496
Other reserves                                      871           871           871
Profit and Loss Account                          11,146         9,683        10,550
Share trust reserve                               (200)         (200)         (200)
Shareholders' funds                   6          27,177        25,691        26,558




* See Note 1



                        CONSOLIDATED CASH FLOW STATEMENT


FOR THE SIX MONTHS TO 28 FEBRUARY 2007
                                                                                       
                                                Six months    Six months Twelve months 
                                                        to            to            to 
                                               28 February   28 February     31 August 
                                                      2007          2006          2006 
                                      Notes    (Unaudited)   (Unaudited)     (Audited) 
                                                      £000          £000          £000 
                                                                                       
 Net cash inflow from operating       7(a)           1,327            29         3,032 
 activities                                                                            
                                                                                       
 Returns on investment and                                                             
 servicing of finance                                                                  
 Interest received                                      11            10            29 
 Interest paid                                       (238)         (242)         (470) 
 Bank loan arrangement costs                             -         (125)         (150) 
 Interest element of finance lease                     (2)           (6)           (7) 
 rentals                                                                               
                                                                                       
 Net cash outflow from returns on                                                      
 investment and servicing of finance                 (229)         (363)         (598) 
                                                                                       
 Corporate taxation paid                             (140)         (132)         (649) 
                                                                                       
 Capital expenditure and financial                                                     
 investment                                                                            
 Payments to acquire tangible fixed                  (393)         (339)         (920) 
 assets                                                                                
 Sale of tangible fixed assets                          14            22            25 
                                                                                       
 Net cash outflow from capital                       (379)         (317)         (895) 
 expenditure and financial 
 investment 
                                                             
 Acquisitions and disposals                                                            
 Purchase of subsidiary undertakings                  (85)       (9,840)      (10,402) 
 Net cash acquired with subsidiary                       -         3,659         3,659 
 undertakings                                                                          
 Investment in associated undertaking                (372)             -             - 
                                                                                       
 Net cash outflow from acquisitions                                                    
 and disposals                                       (457)       (6,181)       (6,743) 
 Dividend paid                                       (371)         (296)         (296) 
                                                                                       
                                                                                       
 Net cash outflow before financing                   (249)       (7,260)       (6,149) 
                                                                                       
 Financing                                                                             
 Issue of ordinary share capital                        23         5,892         5,892 
 New bank loans                                          -         5,000         5,000 
 Repayment of bank loans                             (360)       (3,143)       (3,483) 
 Capital element of finance lease                     (23)          (17)          (56) 
 rental repayments                                                                     
                                                                                       
 Net cash (outflow)/inflow from                      (360)         7,732         7,353 
 financing                                                                             
                                                                                       
 Net cash (outflow)/inflow after                                                       
 financing, being the (decrease)
 /increase in cash in the period      7(b)           (609)           472         1,204 
                                                                             
                                                                                       



                       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 2006, except that the
Group has adopted FRS 20: Share-based payment.


FRS 20: Share-based payment requires the recognition of share-based payments at
fair value at the date of grant. In accordance with the transitional provisions
of FRS 20, the standard has been applied retrospectively to all grants of equity
instruments made after 7 November 2002 that remained unvested as at 1 September
2006.


For the twelve months to 31 August 2006, the adoption of FRS 20 has resulted in
a net decrease in profit of £72,000, being the share-based payment charge net of
deferred taxation of £31,000. Net assets have increased by £56,000, being the
deferred taxation asset for the year and a further deferred taxation asset of
£25,000 relating to those share-based payments that existed at 1 September 2005.


For the six months to 28 February 2006, the adoption of FRS 20 has resulted in a
net decrease in profit of £36,000, being the share-based payment charge net of
deferred taxation of £16,000. Net assets have increased by £41,000, being the
deferred taxation asset for the period and a further deferred taxation asset of
£25,000 relating to those share-based payments that existed at 1 September 2005.


The net charge to the Consolidated Profit and Loss Account for the six months to
28 February 2007 is £43,000 and an increase in net assets of £18,000.


The results of the Group for the six months to 28 February 2007, and the
comparative figures for the six months to 28 February 2006, 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 2006, 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     Six months  Twelve months
                                                 to             to             to
                                        28 February    28 February      31 August
                                               2007           2006           2006
                                        (Unaudited)    (Unaudited)      (Audited)
                                               £000           £000           £000
Group sales by business segment
Automotive                                    8,490          7,674         16,381
Home                                         20,999         10,857         26,600
                                             29,489         18,531         42,981
Group sales by country of operation
United Kingdom                               29,217         18,348         42,532
Sweden                                          572            381            857
Inter-area eliminations                       (300)          (198)          (408)
                                             29,489         18,531         42,981
Group sales by country of
destination
United Kingdom                               25,298         15,023         35,499
Rest of Europe                                3,444          2,651          5,795
Rest of world                                   747            857          1,687
                                             29,489         18,531         42,981



3. GOODWILL ON ACQUISITION AND AMORTISATION

In February 2006, the Group acquired Alphason Designs Limited. Part of the
consideration was deferred and dependent  upon the operating profit of Alphason
Designs Limited in the first two years immediately following acquisition. The 
quantum of deferred consideration relating to the first of these two years is
under negotiation. Consequently, the  estimates relating to deferred
consideration, and therefore goodwill, remain as stated in the Group's audited
statutory  accounts for the twelve months to 31 August 2006.


4. INVESTMENT IN ASSOCIATED UNDERTAKING

In September 2005, the Group's Home division was appointed the exclusive United
Kingdom distributor for Audica Limited,  a designer and developer of lifestyle
speakers and home theatre electronics. As a result of this successful 
distribution agreement, and due to the anticipated new product launches, the
Group made a 25% strategic investment in  Audica Limited on 12 September 2006.



5. TAXATION ON PROFIT ON ORDINARY ACTIVITIES


The taxation charge for the six months to 28 February 2007 is based on the
effective taxation rate, which is estimated will apply to earnings for the full
year.



6. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS


                                         Six months     Six months  Twelve months
                                                 to             to             to
                                        28 February    28 February      31 August
                                               2007           2006           2006
                                        (Unaudited)    (Unaudited)      (Audited)
                                               £000           £000           £000

Profit for the financial period                 907            670          1,486
Dividend                                      (371)          (296)          (296)
Profit for the financial period                 536            374          1,190
retained
New share capital subscribed                     23          6,120          6,120
New share capital issue costs                     -          (228)          (228)
Ordinary shares issued as                         -            529            529
consideration for acquisition
Share-based payment (Note 1)                     61             52            103
Currency translation differences on
foreign currency investments                    (1)              -              -
Net movement in shareholders' funds             619          6,847          7,714
Opening shareholders' funds (as              26,502         18,819         18,819
originally stated)
Share-based payment prior year                   56             25             25
adjustment (Note 1)
Opening shareholders' funds restated         26,558         18,844         18,844
Closing shareholders' funds                  27,177         25,691         26,558





7(a). RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING ACTIVITIES

                                         Six months     Six months  Twelve months
                                                 to             to             to
                                        28 February    28 February      31 August
                                               2007           2006           2006
                                        (Unaudited)    (Unaudited)      (Audited)
                                               £000           £000           £000

Operating profit                              1,915          1,213          2,687
Depreciation of tangible fixed                  410            404            760
assets
Amortisation of goodwill                        655            451          1,102
Share-based payment charges (Note 1)             61             52            103
Increase in stocks                          (1,229)        (1,099)          (724)
(Increase)/decrease in debtors              (1,244)          1,382          (173)
Increase/(decrease) in creditors                759        (2,374)          (737)
Loss on disposal of tangible fixed                -              -             14
assets
Net cash inflow from operating                1,327             29          3,032
activities





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

                                         Six months     Six months  Twelve months
                                                 to             to             to
                                        28 February    28 February      31 August
                                               2007           2006           2006
                                        (Unaudited)    (Unaudited)      (Audited)
                                               £000           £000           £000

(Decrease)/increase in cash                   (609)            472          1,204
New bank loans                                    -        (5,000)        (5,000)
Repayment of bank loans                         360          3,143          3,483
Cash outflow from finance leases                 23             17             56
Change in net debt resulting from             (226)        (1,368)          (257)
cash flows
New finance leases                                -          (114)          (114)
Bank loan arrangement costs                       -            125            150
Bank loan arrangement costs expensed           (16)           (14)           (31)
Exchange adjustments                            (1)              -              -
Movement in net debt in the period            (243)        (1,371)          (252)
Opening net debt                            (5,191)        (4,939)        (4,939)
Closing net debt                            (5,434)        (6,310)        (5,191)





7(c). ANALYSIS OF NET DEBT MOVEMENT


                                                     Other                    28
                           31 August      Cash    non-cash    Exchange  February
                                2006      Flow     changes  adjustment      2007
                                £000      £000        £000       £000       £000

Cash                             186       259           -          -        445
Overdraft                      (852)     (868)           -        (1)    (1,721)
                               (666)     (609)           -        (1)    (1,276)
Loans: Due within one          (688)       360       (360)          -      (688)
year
Loans: Due after more        (3,767)         -         344          -    (3,423)
than one year
Finance leases                  (70)        23           -          -       (47)
Net debt                     (5,191)     (226)        (16)        (1)    (5,434)





8. EARNINGS PER ORDINARY SHARE


Basic earnings per share is calculated using the weighted average number of
shares in issue during the period of 67,473,568 (28 February 2006: 55,789,760
and 31 August 2006: 61,664,304).


Underlying earnings per share is also shown calculated by reference to earnings
before amortisation of goodwill and share-based payments. 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
                                      2007              2006              2006
                                   (Unaudited)       (Unaudited)        (Audited)
Basic earnings per ordinary       £000        p     £000        p     £000        p
share

Profit for the financial           907      1.3      670      1.2    1,486      2.4
period
Amortisation of goodwill           655      1.0      451      0.8    1,102      1.8
Share-based payment (Note 1)        43      0.1       36      0.1       72      0.1
Underlying earnings              1,605      2.4    1,157      2.1    2,660      4.3



Diluted earnings per share is calculated with reference to 68,709,936 (28
February 2006: 57,477,692 and 31 August 2006: 63,184,137) ordinary shares.

                                  Six months to     Six months to   Twelve months to
                                   28 February       28 February        31 August
                                      2007              2006              2006
                                   (Unaudited)       (Unaudited)        (Audited)
Diluted earnings per ordinary     £000        p     £000        p     £000        p
share

Profit for the financial           907      1.3      670      1.2    1,486      2.4
period
Amortisation of goodwill           655      1.0      451      0.8    1,102      1.7
Share-based payment (Note 1)        43        -       36        -       72      0.1
Underlying earnings              1,605      2.3    1,157      2.0    2,660      4.2



9. 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.



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