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Armour Group PLC (AMR)

  Print      Mail a friend       Annual reports

Tuesday 06 November, 2007

Armour Group PLC

Final Results

Armour Group PLC
06 November 2007


                                                                                

                                ARMOUR GROUP PLC                                
                           ('Armour' or the 'Group')                            

             Preliminary Results for the year ended 31 August 2007              

 

                     FINANCIAL HIGHLIGHTS - GROWTH ON 2006                      

 

Group Total

-         Sales of £57.4 million, up 33%.

-         Operating profit of £3.8 million, up 40%.

-         EBITDA of £5.9 million, up 27%.

-         Basic underlying earnings per ordinary share of 4.7p, up 9%.

-         Basic loss per ordinary share of 1.3p.

-         Cash inflow from operating activities of £5.4 million, up 77%.

-         Recommended dividend of 0.65p, up 18%.

-         Net debt of £2.9 million, down 44%.

 

Continuing Operations

-         Sales of £55.2 million, up 38%.

-         Operating profit of £4.1 million, up 46%.

-         EBITDA of £6.1 million, up 31%.

-         Basic underlying earnings per ordinary share of 5.0p, up 16%.

-         Basic earnings per ordinary share of 3.1p, up 19%.

 

 

George Dexter, Chief Executive of Armour Group plc commented:

 

'This year's results demonstrate the strength of our core continuing businesses
and reflect a year of good progress. The strong performance has been driven by
the fundamentals that underpin the Group's businesses, being strong brands,
quality products, comprehensive product ranges and unrivalled distribution.

 

Armour Automotive's sales increased by 6%. Sales to our retail customer base,
which represents 61% of the division's sales, increased 2% due to record sales
through the national accounts channel in both the UK and Sweden. This
compensated for a decline in sales to smaller independent retailers in the UK
which have suffered in uncertain market conditions. Mutant, the Group's brand of
affordable high quality in-car audio systems has a distinctive identity and
appeal and has continued to win market share. Autoleads, our branded range of
specialist connectivity solutions for the in-car communication and entertainment
market has had a steady year and is responding to the increasingly complex
connectivity and fitting solutions required by the in-car aftermarket. Sales to
non-retail customers increased by 11%. This growth has come from our Veba
branded in-car multi-media systems, manufacturer incentive programmes driving
demand, and our CTI range of GSM and GPS Antennae.

 

Armour Home has had a very successful year with sales from continuing operations
increasing by 60%. All our core brands and channels to market showed healthy
increases, complemented by a full year's contribution from Alphason. On a
like-for-like basis, sales from continuing operations increased by 23%. Sales
into the retail channel grew by 30%. The brands driving this growth are QED
cables, Q Acoustics, Goldring and Alphason. In addition, we secured the
exclusive distribution rights to the NAD, PSB and Tivoli product ranges which
added a further £0.6 million. Sales in the home automation channel increased by
9%, driven by the introduction of new products such as our Systemline
Soundserver and the continued growth of Systemline Modular, our market leading
multi-room entertainment system. Export sales increased by 15%, the growth
principally coming from QED, Q Acoustics and Systemline Modular.

 

Our investment in research and development of new products is a critical element
of delivering future sales growth. Over the last year, to meet the needs of the
increased number of new product programmes, we have expanded our in-house
development teams and increased our partnership programmes with leading
technical and design companies. The largest investment in new product
development has been the creation of our Concept Design Centre ('CDC'), whose
remit is to focus on emerging technologies and future development strategies for
our core product categories. CDC is leading the development of key new products
that range from the next generation of multi-room entertainment systems to
complex in-car connectivity and engine diagnostic devices.

 

The Group is focused on delivering sustainable growth. To achieve this, we
continue to invest in the strong fundamentals that underline the Group. I am
confident that the Group is well positioned to meet the challenges that lie
ahead'.

 

For further information please contact:


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


KBC Peel Hunt Ltd, Nominated Adviser and Broker       Tel: 020 7418 8900
Richard Kauffer, David Anderson


Threadneedle Communications, Financial PR             Tel: 020 7936 9666
Trevor Bass, Alex White


 

                                  ABOUT ARMOUR                                  

 

Armour Group plc is the UK's leading consumer electronics group focused 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: Armour Automotive and Armour Home.

 

Armour Automotive

The Armour 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).

 

Armour Automotive's customers have voted Autoleads as 'Best Cable Product' and
the Mutant MT3004X amplifier as 'Best 4 Channel Amplifier below £150' at the Car
Audio Retailer magazine 2007 ICE (in-car entertainment) awards.

 

Automotive supplies both retail and non-retail customers which include Halfords,
Motorworld, BMW, Hyundai and Vodafone and over 1,000 independent automotive
aftermarket retailers.

 

Armour Home

The Armour Home division designs, manufactures, and supplies products into the
hi-fi, home theatre and home entertainment market and is a market leader in the
UK.

 

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), Myryad
(mid to high end hi-fi separates) and Q Acoustics (range of high quality, value
for money speakers).

 

In September 2007, Lenbrook America was appointed as the exclusive distributor
in the USA of Armour Home's award winning range of QED cables.

 

The Armour 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.

 

Armour Home won six What Hi-Fi? Sound and Vision awards in 2007 in regard to
products within the QED, Q Acoustics, SoundStyle and Grado brands. In addition,
UK independent electrical retailers voted Alphason 'Best Accessory Company' in
the Independent Marketing Awards 2007. Alphason also won 'AV Furniture
Manufacturer of the Year' (What Plasma & LCD TV? awards 2007), 'Best Furniture
Maker' (What Home Cinema? awards 2007) and 'Product of the Year ' (Get Connected
awards 2007).

 

The Home division's customers are both retail and non-retail and include Comet,
Argos, John Lewis Partnership, Tesco, Sevenoaks Sound and Vision, Berkeley
Homes, Taylor Wimpey, Barratt Homes and David Wilson Homes.


                              CHAIRMAN'S STATEMENT                              

 

I am delighted to report record trading results for Armour Group plc for the
year ended 31 August 2007, which show significant growth over last year. Group
sales have increased by 33% to £57.4 million (31 August 2006: £43.0 million) and
operating profit has increased by 40% to £3.8 million (31 August 2006: £2.7
million as restated).

 

In September 2007, we announced the sale of the non-core, custom installation
services business. The Group is now fully focused on its fast growing and highly
successful branded product businesses in the home and automotive markets. Having
adjusted for the sale, the Group's sales and operating profit from continuing
operations have increased by 38% and 46% respectively.

 

The Group has reported strong net cash inflow from operating activities of £5.4
million (31 August 2006: £3.0 million). This has reduced net debt to £2.9
million (31 August 2006: £5.2 million). The deferred consideration for Alphason
Designs Limited ('Alphason') was agreed and settled in October 2007.

 

Basic underlying earnings per share from continuing operations have grown by 16%
to 5.0p (31 August 2006: 4.3p as restated). The proposed final dividend has been
increased by 18% to 0.65p (31 August 2006: 0.55p) per ordinary share.

 

Both our core operating divisions have enjoyed good growth in both sales and
operating profit. Armour Automotive reported sales growth of 6% and an increase
in operating profit of 25% in challenging market conditions. Armour Home's
continuing operations, which include a full year's contribution from Alphason,
have seen sales increase by 60% and operating profit by 52%. On a like-for-like
basis, sales and operating profit were up 23% and 12% respectively.

 

Sales in the UK from continuing operations were up by 44% overall and 18% on a
like-for-like basis. Export sales were up 10%. The Group now exports to 63
countries around the world. We have continued to expand our channels to market
over the past year. This expansion has taken our products into the hotel market,
luxury goods retailers and television shopping channels. We have also launched a
new e-commerce web site, www.endulgence.co.uk.

 

During the year, we were pleased to be appointed as the exclusive UK distributor
for Tivoli, the prestige radio brand, and NAD and PSB, the world-renowned hi-fi
brands. Following this appointment, our relationship with Lenbrook Corporation
of Canada, owners of the NAD and PSB brands, has grown. In September 2007, we
announced the appointment of Lenbrook America as the exclusive distributor in
the USA of Armour Home's award winning range of QED cables and interconnects.

 

Our investment in new product development remains central to our strategy for
delivering year-on-year organic growth. Last year we invested a record amount in
developing high quality products to add to our brand portfolio. We have in place
many new product programmes, which, we expect, will deliver innovative and
exciting new products over the coming year.

 

The success of the Group is a reflection of the hard work, dedication and
professionalism of our employees. Once again, I would like to acknowledge the
Board's appreciation of their commitment and efforts over the year.

 

The Group continues to invest significantly in new product development, promote
our high quality brand portfolio and develop our channels to market. This
strategy lies at the heart of achieving organic growth and maintaining our
position as one of the UK's leading consumer electronics groups in the
automotive and home markets. The Board remains confident of the Group's future
prospects.

 

BOB MORTON
Chairman
6 November 2007



Consolidated Profit and Loss Account

For the year ended 31 August 2007


                                                                        Restated* 
                                                            31 August   31 August
                                                                2007         2006
                                            Note                £000         £000
Turnover                                                                         
Continuing operations                         2               55,171       40,004
Discontinued operations                      2,4               2,185        2,977
                                                              57,356       42,981
Operating profit                                                                 
Continuing operations                         2                4,118        2,826
Discontinued operations                      2,4               (360)        (139)
                                                               3,758        2,687
                                                                                 
Share of loss in associated                   3                 (15)            -
undertakings                                                                     
Loss on disposal of discontinued              4              (2,711)            -
operations                                                                       
Profit on ordinary activities                                  1,032        2,687
before interest                                                                  
                                                                                 
Interest receivable                                               22           29
Interest on discounted deferred                                (113)        (159)
consideration                                                                    
Interest payable and similar                                   (652)        (508)
charges                                                                          
Profit on ordinary activities                                    289        2,049
before taxation                                                                  
Taxation on profit on ordinary                5              (1,155)        (563)
activities                                                                       
(Loss)/profit for the year                    8                (866)        1,486
                                                                                 
Earnings/(loss) per ordinary share            7                                  
From continuing and discontinued operations                                                                       
Basic                                                         (1.3)p         2.4p
Diluted                                                       (1.3)p         2.4p
                                                                                 
From continuing operations                                                       
Basic                                                           3.1p         2.6p
Diluted                                                         3.1p         2.5p
                                                                                 
From discontinued operations                                                     
Basic                                                         (4.4)p       (0.2)p
Diluted                                                       (4.4)p       (0.1)p
                                                                                 

* Note 1


 
Consolidated Statement of Total Recognised Gains and Losses

For the year ended 31 August 2007

 

 
                                                                        Restated*
                                                          31 August     31 August
                                                               2007          2006
                                                               £000          £000
(Loss)/profit for the year                                                  
Group                                                         (851)         1,486
Associated undertakings                                        (15)             -
                                                              (866)         1,486
Currency translation differences on foreign                     (7)             -
currency net investments                                                    
Total recognised gains and losses relating to                 (873)         1,486
the year                                                                    
Share-based payment prior year adjustment (Note 1)             (72)              
Total gains and losses recognised since last                  (945)              
statutory financial statements                                              

* Note 1





Consolidated Balance Sheet

At 31 August 2007                                                                              
                                                                                  
                                                                                  
                                                                                  
                                                                        Restated*    
                                        Note               31 August    31 August  
                                                               2007          2006            
                                                               £000          £000       
Fixed assets                                                                      
Intangible assets                                            19,914        23,338      
Tangible assets                                               1,741         2,256       
Investments                             3                       357             -         
                                                             22,012        25,594      
Current assets                                                                    
Stocks                                                       10,490         9,836       
Debtors                                                      11,721         9,993       
Cash at bank and in hand                                        892           186        
                                                             23,103        20,015      
Creditors: amounts falling due                                                    
within one year                                                                   
Creditors                                                  (15,860)      (13,547)  
Borrowings                                                    (714)       (1,610)  
                                                           (16,574)      (15,157)  
Net current assets                                            6,529         4,858       
Total assets less current                                    28,541        30,452      
liabilities                                                                       
                                                                                  
                                                                                  
Creditors: amounts falling                                                        
due after more than one year                                      -         (127)  
Creditors                                                                         
Borrowings                                                  (3,082)       (3,767)  
                                                            (3,082)       (3,894)  
Net assets                                                   25,459        26,558  
                                                                                  
Capital and reserves                                                              
Called up ordinary share                                      6,848         6,841  
capital                                                                           
Share premium account                                         8,513         8,496  
Other reserves                                                  871           871  
Profit and Loss Account                                       9,427        10,550  
Share trust reserve                                           (200)         (200)  
Shareholders' funds                     8                    25,459        26,558  

 

* Note 1


Consolidated Cash Flow Statement

For the year ended 31 August 2007


 
                                                                                 
                                    Note      31 August 2007       31 August 2006  
                                                 £000   £000        £000     £000
                                                                                 
Net cash inflow from operating       9(a)              5,353                3,032  
activities                                                                       
                                                                                 
Returns on investments and                                                       
servicing of finance                                                             
Interest received                                  22                  29               
Interest paid                                   (507)               (470)         
Bank loan arrangement costs                        -                (150)         
Interest element of finance lease                 (4)                 (7)         
rentals                                                                          
Net cash outflow from returns on                        (489)               (598)
investments and servicing of finance                                                                          
                                                                                 
Corporate taxation paid                                 (919)               (649)
                                                                                 
Capital expenditure and financial                                                
investment                                                                       
Payments to acquire tangible assets             (825)               (920)         
Sale of tangible assets                            84                  25            
Net cash outflow from capital                                                    
expenditure and financial investment                    (741)               (895)
                                                                                 
Acquisitions and disposals                                                       
Purchase of subsidiary undertakings             (155)            (10,402)         
Net cash acquired with subsidiary                   -               3,659           
undertakings                                                                     
Investment in associated                        (372)                   -             
undertakings                                                                     
Net cash outflow from acquisitions                      (527)             (6,743)
and disposals                                                                    
                                                                                 
Dividend paid                                           (371)               (296)
Net cash inflow/(outflow) before                        2,306             (6,149)
financing                                                                        
                                                                                 
Financing                                                                        
Issue of ordinary share capital                    24               5,892           
New bank loans                                      -               5,000           
Repayment of bank loans                         (720)             (3,483)         
Capital element of finance lease                 (44)                (56)         
rental repayments                                                                
Net cash (outflow)/inflow from                          (740)               7,353  
financing                                                                        
Net cash inflow after financing,                                                 
being the                           9(b)                1,566               1,204  
increase in cash in the year                                                     

 

 
Notes to the preliminary financial information


1.      Basis of preparation

 

The financial information set out in this announcement does not constitute the
Group's financial statements for the year ended 31 August 2007 and the year
ended 31 August 2006. Financial statements for the year ended 31 August 2006
have been delivered to the Registrar of Companies and those for 2007 will be
delivered in due course. The auditors' report on both accounts was unqualified,
did not include references to any matters to which the auditors drew attention
by way of emphasis without qualifying their report and did not contain a
statement under section 237 (2) - (3) of the Companies Act 1985.

 

In accordance with Rule 20 of the AIM Rules, the full audited accounts of Armour
Group plc for the year ended 31 August 2007 are expected to be posted to
shareholders no later than 19 November 2007 and will be available to the public
at the Company's registered office, Lonsdale House, 7-9 Lonsdale Gardens,
Tunbridge Wells, Kent, TN1 1NU and available to view on the Company's website at
www.armourgroup.uk.com from that date.

 

This year the Group has adopted FRS 20: Share-based payment. In accordance with
the transitional provisions of FRS 20, it has been applied retrospectively to
all grants of equity instruments made after 7 November 2002 that remained
unvested as at 1 September 2006.

 

The Group's figures for the year ended 31 August 2006 have been restated to
reflect the adoption of FRS 20. The restatement 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 at 31 August 2006 have increased by £56,000,
being the deferred taxation asset for the year ended 31 August 2006 and a
further deferred taxation asset of £25,000 relating to those share-based
payments that had been granted after 7 November 2002 but that had not vested by
1 September 2005.

 

The Group's share-based payment charge for the year ended 31 August 2007 is
£121,000.

 

2.      Turnover and operating profit by class of business

 

 
                                               31 August 2007     31 August 2006  
                                                    Operating          Operating
                                           Turnover    Profit Turnover    Profit
                                               £000      £000     £000      £000
                                                                               
Continuing operations                                                           
Armour Automotive                            17,290     2,180   16,381     1,744
Armour Home                                  37,881     4,604   23,623     3,026
Amortisation of goodwill                          -   (1,168)        -  (1,012) 
Central costs                                     -   (1,498)        -     (932)
Total continuing operations                  55,171     4,118   40,004     2,826
                                                                                
Discontinued operations                                                         
Armour Home                                   2,185     (269)    2,977      (49)
Amortisation of goodwill                          -      (91)        -      (90)
Total continuing operations                   2,185     (360)    2,977     (139)
Total Group                                  57,356     3,758   42,981     2,687


3.      Investment in associated undertakings


In September 2006, the Group acquired a 25% strategic investment in Audica
Limited. In the Group's financial statements, this has been accounted for using
the equity method of accounting. The Consolidated Profit and Loss Account
includes the Group's share of the operating results, interest, pre-taxation
results and attributable taxation. The Consolidated Balance Sheet shows the
Group's share of identifiable net assets including any unamortised premium paid
on acquisition. This premium is amortised to nil through the Consolidated Profit
and Loss Account in equal instalments over its estimated useful life of 20
years.

 
                                                                      £000
25% of net liabilities acquired                                          4
Consideration paid including costs                                     372
Premium paid on acquisition                                            376
                                                                          
                                                                          
Investment made in associated                                          372
undertakings                                                              
Amortisation of acquisition premium                                   (18)   
Share of profit in associated undertaking                                3    
Carrying value of investment at 31 August                              357
2007                                                                      
                                                                          


4.      Discontinued operations

 

In August 2007, the Group sold the entire share capital of Armour Custom
Services Limited and The Hi-End Limited, which together formed the custom
installation services business segment within Armour Home. The loss on disposal
has been calculated as follows:

 

 
                                                                       £000
Fixed assets                                                            463
Stocks                                                                  547
Debtors                                                                 600
Creditors                                                             (183)
                                                                      1,427
                                                                           
Sale proceeds                                                           400
Cost of sale                                                           (30)
Provision for onerous lease                                           (120)
                                                                        250
                                                                           
Loss before goodwill                                                (1,177)
Goodwill written off                                                (1,534)
Loss on disposal                                                    (2,711)

 

5.      Taxation on profit on ordinary activities
                                                                          
                                                                          
                                                    31 August    31 August
                                                         2007         2006
                                                         £000         £000
UK Corporation Tax at 30% (2006:30%)                  (1,121)        (699)
Adjustment in respect of prior years                       10           39
Overseas taxation                                        (38)         (20)
Current taxation                                      (1,149)        (680)
Deferred taxation - current year                          (6)           86
Deferred taxation - prior year (Note 1)                     -           31
                                                      (1,155)        (563)

 

6.      Dividend

 
                                                    31 August    31 August   
                                                         2007         2006        
                                                         £000         £000    
Proposed dividend for the year of 0.65p (2006:          (439)        (371)
0.55p)                                                                     
                                                                           
per ordinary share                                                         

 

The Board is recommending an 18% increase in the final dividend for the year of
0.65p (31 August 2006: 0.55p) per ordinary share. The dividend is payable on 11
January 2008 to shareholders on the register on 14 December 2007. The proposed
dividend for the year has not been accrued in the Consolidated Balance Sheet as
at 31 August 2007. The dividend proposed in the financial statements as at 31
August 2006, and approved by shareholders at the Annual General Meeting held on
12 December 2006, was paid during the year.

 

7.      Earnings/(loss) per ordinary share

 

The weighted average number of ordinary shares in issue during the year was
67,493,840 (31 August 2006: 61,664,304). Diluted earnings per share is
calculated with reference to 68,831,976 (31 August 2006: 63,184,137) ordinary
shares. The effect of the exercise of options on the weighted average number of
ordinary shares in issue is 1,338,136 (31 August 2006: 1,519,833).

 

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

 

Underlying earnings per ordinary share is also shown calculated by reference to
earnings before the amortisation of goodwill, non-operating exceptional items
and share-based payments. The Directors consider that this gives a useful
additional indication of underlying performance.

 

Continuing and discontinued operations:

 
                         31 August 2007            31 August 2006            
                          £000   Basic p  Diluted    £000   Basic p  Diluted 
                                             p                          p    
(Loss)/profit for the     (866)   (1.3)    (1.3)    1,486     2.4      2.4   
year                                                                         
Amortisation of goodwill  1,259    1.9      1.8     1,102     1.8      1.7   
Loss on disposal of       2,711    4.0      4.0       -        -        -    
discontinued                                                                 
                                                                             
operations                                                                   
Share-based payments       87      0.1      0.1       72      0.1      0.1   
(Note 1)                                                                     
Underlying earnings       3,191    4.7      4.6     2,660     4.3      4.2   

 

 

Continuing operations:

 

The profit from continuing operations is calculated in the table below:

 
                                                      31 August     31 August
                                                           2007          2006
                                                           £000          £000
(Loss)/profit for the year                                (866)         1,486
Loss for the year from discontinued operations              268            98
Loss on disposal of discontinued operations               2,711             -
Profit from continuing operations                         2,113         1,584

 

The loss for the year from discontinued operations is the operating loss of
£360,000 (31 August 2006: £139,000) less the taxation benefit of £92,000 (31
August 2006: £41,000).


                                 31 August 2007             31 August 2006      
                            £000  Basic p  Diluted     £000  Basic p  Diluted
                                                 p                          p
Profit for the year        2,113      3.1      3.1    1,584      2.6      2.5
Amortisation of goodwill   1,168      1.8      1.7    1,012      1.6      1.6
Share-based payments          83      0.1      0.1       68      0.1      0.1
(note 1)                                                                     
Underlying earnings        3,364      5.0      4.9    2,664      4.3      4.2

 

8.      Reconciliation of movements in shareholders' funds

 
                                                   31 August 2007 31 August 2006
                                                             £000           £000     
                                                                                
Opening shareholders' funds as                             26,502         18,819        
previously reported                                                             
Prior year adjustment (Note 1)                                 56             25
Opening shareholders' funds restated                       26,558         18,844
(Loss)/profit for the year                                  (866)          1,486
Dividend paid                                               (371)          (296)
(Loss)/profit for the year retained                       (1,237)          1,190
New share capital subscribed                                   24          6,120
New share capital issue costs                                   -          (228)         
Ordinary shares issued as                                       -            529
consideration for acquisition                                                   
Share-based payments                                          121            103
Currency translation differences on                           (7)              -
foreign currency investments                                                    
Net movement in shareholders' funds                       (1,099)          7,714
Closing shareholders' funds                                25,459         26,558        


9.      Group cash flow statement
 

(a)    Reconciliation of operating profit to net cash inflow from operating
activities
                                                                             
                                                                             
                                                      31 August     31 August
                                                           2007          2006
                                                           £000          £000
                                                                             
Operating profit                                          3,758         2,687
Depreciation and other amounts written off                  784           760
tangible fixed assets                                                        
Amortisation of goodwill                                  1,259         1,102
Share-based payments                                        121           103
Increase in stocks                                      (1,201)         (724)
Increase in debtors                                     (1,926)         (173)
Increase/(decrease) in creditors                          2,549         (737)
Loss on disposal of tangible fixed assets                     9            14      
Net cash inflow from operating activities                 5,353         3,032    

 
(b)    Reconciliation of net cash flow to movement in net debt


                                                   31 August 2007 31 August 2006
                                                             £000           £000
                                                                                
Increase in cash                                            1,566          1,204     
New bank loans                                                  -        (5,000)    
Repayment of bank loans                                       720          3,483     
Cash outflow from finance leases                               44             56      
Change in net debt resulting from                           2,330          (257)
cash flows                                                                      
New finance leases                                              -          (114)
Bank loan arrangement costs                                     -            150
Bank loan arrangement costs                                  (35)           (31)
expensed                                                                        
Exchange adjustments                                          (8)              -
Movement in net debt in the year                            2,287          (252)
Opening net debt                                          (5,191)        (4,939)
Closing net debt                                          (2,904)        (5,191)       


(c)    Analysis of net debt movement
                                                     Other
                        31 August  Cash flow      non-cash   Exchange  31 August
                             2006       £000       changes       £000       2007
                             £000                    £000                   £000              
                                                                               
Cash                          186        714             -        (8)        892
Overdraft                   (852)        852             -          -          -
                            (666)      1,566             -        (8)        892
Short-term debt             (688)        720         (720)          -      (688)
Long-term debt            (3,767)          -           685          -    (3,082)
Finance leases               (70)         44             -          -       (26)
                          (5,191)      2,330          (35)        (8)    (2,904)

 

10.  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 11 December 2007 at
12.00 noon.



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