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Armour Group PLC (AMR)

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Wednesday 19 November, 2008

Armour Group PLC

Final Results

RNS Number : 3830I
Armour Group PLC
19 November 2008
 


ARMOUR GROUP PLC

 ('Armour' or the 'Group')

Preliminary Results for the year ended 31 August 2008 


FINANCIAL HEADLINES

  • Sales £54.0 million (2007: £55.2 million)

  • EBITDA* of £5.2 million (2007: £6.5 million).

  • Profit before taxation £3.5 million (2007: £4.5 million)

  • Basic earnings per ordinary share 3.7p (2007: 4.8p).

  • Cash generated from operations of £3.1 million (31 August 2007: £5.9 million).

  • Recommended dividend of 0.65p (31 August 2007: 0.65p) per ordinary share.


* EBITDA is defined as profit before interest, taxation, depreciation, amortisation and share-based payments.


BUSINESS HIGHLIGHTS

  • New exclusive distribution agreements for Clifford, Viper, Hornet and Orion (car security and audio brands), Roth Audio, Aquavision bathroom televisions, Soundcast wireless audio streaming systems and Epson projectors for the home entertainment market.

  • Investment in new facilities in Manchester providing over 100,000 sqft. of manufacturingwarehousing, showroom and offices. This first class operating facility will allow for expansion, enhanced showcasing of Group products and increased levels of service to our customers.

  • New products launched during the year include iO (in-car Bluetooth music streaming and handsfree solutions), 'Viewsmart' (proprietary range of brackets, cables and audio-visual accessories) and additions and enhancements to the Autoleads, Alphason, QED, Q Acoustics, Audica, Myryad and NAD product ranges

  • Business awards from the trade and consumer press and numerous product awards and recommendations, won over the past year, recognise the Group operations' leading positions in their respective markets.


George Dexter, Chief Executive of Armour Group plc commented:


'The strong trading environment of the first six months gave way to challenging trading conditions in the second half of the year. Despite these deteriorating economic circumstances the Group has delivered a satisfactory set of results.


Strategically, our business model remains unchanged and is based upon strong recognised brands, a quality product portfolio, unrivalled distribution into the UK's consumer electronics market, a structured programme of product innovation and first class customer service. We have made good progress building on all these elements over the past year and will continue to pursue these strategic goals.


These are undoubtedly challenging times for all businesses, from which we are not immune. However, our business model and strategy gives the Group a strong foundation to weather the current economic downturn and be well prepared to return to growth when our markets recover.' 


For further information please contact: 


Armour Group plc                                                            Tel: 01892 502700

George Dexter, Chief Executive        

John Harris, Finance Director


FinnCap, Nominated Adviser and Broker                    Tel: 0207 600 1658

Geoff Nash, Corporate Finance Director


Threadneedle Communications, Financial PR           Tel: 020 7936 9666

Trevor Bass, Alex White

  


ABOUT ARMOUR


Armour Group is the United Kingdom's leading consumer electronics group within the home and in-car communication and entertainment markets, committed to designing, manufacturing and distributing leading-edge audio and visual products and solutions. 


Armour Group has two principle operating divisions, Armour Home and Armour Auto, and employs over 330 people across eight operating sites in the UKSweden and Hong Kong.


The Group possesses a strong brand portfolio, including more than 4,000 products and accessories, which is underpinned by innovative product development and investment in proprietary technology. 


An unrivalled distribution capability ensures that products are supplied direct to more than 6,000 retail outlets within the UK and to customers in 65 countries worldwide. Armour Group is also a leading supplier of audio and visual technology to a host of non-retail customers including vehicle manufacturers, hotel chains, house builders and custom installers. 


The Group's strength is based on 5 fundamentals:


  • Strong recognised brands


  • Quality product portfolio


  • Unrivalled distribution into the UK's electronics market


  • Structured programme of product innovation


  • First class customer service



Armour Home

Armour Home is the leading provider of high-end, products, solutions and services to the hi-fi, home theatre and entertainment market within the UK


Armour Home boasts a diverse mix of more than 1,700 products that span all aspects of vision, sound and the living experience within home entertainment. This wide-ranging portfolio includes brands that are at the forefront of the hi-fi and audio-visual sectors, with the recognised industry leaders QED cable interconnects, Systemline multi-room entertainment systems and Alphason furniture solutions. A mix of eleven owned brands and twelve distributed brands are supplied to more than 2,500 customers, 4,000 retail outlets and 150 international partners across 70 markets. Within the UK, customers include Sevenoaks Sound and Vision, Audio T, Comet, Argos, Tesco, Selfridges, Harrods, Asda and Marks & Spencer.


The Division has two operating companies- Armour Home Electronics and Alphason Designs.


Armour Auto

Armour Auto is the UK and Sweden's market leader in the supply of audio and video products and accessories for the in-car entertainment and communications market.


Armour Auto's portfolio of 9 specialist brands, 5 of which are owned, offer in excess of 2,500 products that are supplied to over 1,500 customers across a wide range of market sectors including the retail aftermarket, original equipment manufacturers (OEM), leisure, commercial vehicles, car dealerships and agriculture. 


Brands include Autoleads, acknowledged as being the industry standard for in-vehicle connectivity solutions; Radiomobile, the longest established aftermarket car stereo marque in the UK; iO, Armour Auto's new brand of in-car Bluetooth music streaming and handsfree solutions; and Clifford, the UK's market leading Thatcham approved vehicle security brand. 

Armour Auto's customers include Halfords, Carphone Warehouse, Motorworld, BMW, Bentley, Hyundai, Scania Trucks, Claas, Case New Holland Tractors and over 1,500 independent specialist automotive retailers across the UK and Ireland. 
  

CHAIRMAN'S STATEMENT


The Group results for the year to 31 August 2008 reflect the significant changes that have taken place in the economy as a whole and, in particular, our core trading markets. Group sales were down by 2% to £54.0 million (31 August 2007: £55.2 million) and profit from operations declined by 23% to £4.0 million (31 August 2007: £5.2 million)Basic underlying earnings per ordinary share are 3.9p, a reduction of 20% and the full year dividend is maintained at 0.65p per ordinary share.


The Group's strong first half results were followed by a weaker trading performance in the second half of the financial year, brought about by the deteriorating economic climate and falling levels of consumer confidence. Both operating divisions have been impacted by the slowing economy in the second half of the year, although this has been more pronounced in the automotive division. Nonetheless, the Group has delivered a credible overall performance against an increasingly difficult economic backdrop.

We offer our customers a comprehensive range of quality brands and products in our core areas of focus and further differentiate ourselves from our competitors by service excellence. We are the United Kingdom market leader in the supply of distributed audio and video multi-room entertainment systems and audio-visual furniture, have the United Kingdom's leading brand of hi-fi interconnects and are the leading accessory supplier to the in-car entertainment aftermarket. 


Our market leading position in both the home and automotive sectors is underlined by the 26 awards presented over the past year by the trade and consumer press to our operating divisions. These included best business awards for Alphason Designs Limited ('Alphason') and Armour Auto as well as a host of product awards and recommendations across many of the Group's brands.   


As part of our strategy to offer quality products and recognised brands, we continue to look for partners who have complementary brands and productswhich can be successfully distributed through our channels to market. In July 2008, we were pleased to announce the agreement with Directed Electronics appointing Armour Auto as its exclusive distributor for its automotive brands in the United KingdomSweden and Republic of IrelandThis distribution agreement was one of a number of such agreements signed in the year. Currently, third party brands, which are typically distributed on an exclusive basis, account for 23% of the Group's sales.


We continue to invest in the Group's operations, infrastructure, new product development and sales and marketing. This investment is central to our strategy and will support the Group's sales in the medium
term by providing innovative products and infrastructure to deliver a first class service to our customers. The largest single investment in the year has been the relocation of Alphason onto a single site in Wigan, which provides over 100,000 sq. ft. of manufacturing, warehousing, showroom and offices. This first class operating facility allows for expansion and increased levels of service to our customers.


The Group now employs over 330 people in the United KingdomIrelandSweden and Hong Kong. It is thanks to their hard work, dedication and professionalism that the Group continues its development even in these more testing times. I would like to acknowledge the Board's appreciation of their commitment and effort over the course of the year.


The wider economic outlook for the next year is one of uncertainty, presenting challenges that will affect both businesses and households alike. The Group has a broad portfolio of strong brands, customers and products and a business model and strategy that the Board believes will deliver sustainable long-term growth. The current economic volatility and period of weak consumer demand are cyclical events, which will stabilise and recover in due course. Whilst we are aware of the current economic weakness and are taking appropriate steps to minimise its impact, pursuit of our strategic goals will continue such that the Group is in a position of strength when the economy recovers 





BOB MORTON

Chairman

19 November 2008




  ARMOUR GROUP PLC


CONSOLIDATED INCOME STATEMENT

For the year ended 31 August 2008





Note

31 August

2008 

£000

31 August 

2007

£000

Revenue

2

54,008

55,171





Changes in inventory of finished goods and work in progress


2,870

1,609

Raw materials and consumables


(31,272)

(30,038)

Employee benefits costs


(9,631)

(9,516)

Depreciation and amortisation expense


(1,075)

(1,178)

Other expenses


(10,871)

(10,805)

Total expenses


(49,979)

(49,928)

Profit from operations


4,029

5,243

Finance expense


(703)

(765)

Finance income


166

22

Share of (loss)/profit of associated undertakings


(7)

3

Profit before taxation

2

3,485

4,503

Taxation expense

3

(991)

(1,262)

Profit from continuing operations


2,494

3,241

Post taxation loss on disposal of discontinued operations

4

-

(2,979)

Profit for the year


2,494

262













Earnings/(loss) per ordinary share

5



From continuing and discontinued operations




Basic


3.7p

0.4p

Diluted


3.7p

0.4p





From continuing operations




Basic


3.7p

4.8p

Diluted


3.7p

4.7p





From discontinued operations




Basic


-

(4.4)p

Diluted


-

(4.3)p




  ARMOUR GROUP PLC


CONSOLIDATED BALANCE SHEET

At 31 August 2008





Note

31 August 

2008

£000

31 August 

2007

£000





Non-current assets




Goodwill


21,082

21,082

Other intangible assets


2,041

991

Property, plant and equipment


2,102

1,604

Investment in associated undertakings


368

375

Total non-current assets


25,593

24,052





Current assets




Inventories


12,826

10,490

Trade and other receivables


10,220

11,430

Cash and cash equivalents


170

892

Total current assets


23,216

22,812

Total assets

2

48,809

46,864









Current liabilities




Bank overdrafts and borrowings


(6,650)

(714)

Trade and other payables


(9,755)

(14,664)

Corporation taxation liability


(326)

(1,146)

Provisions


(136)

(296)

Total current liabilities


(16,867)

(16,820)





Non-current liabilities




Borrowings


(2,394)

(3,082)

Provisions


(226)

-

Deferred taxation liability


(520)

(18)

Total non-current liabilities


(3,140)

(3,100)

Total liabilities

2

(20,007)

(19,920)

Total net assets

2

28,802

26,944

















Equity




Share capital


6,848

6,848

Share premium


8,513

8,513

Other reserves


871

871

Retained earnings


13,074

10,919

Translation reserve


68

(7)

Share trust reserve


(572)

(200)

Total equity 


28,802

26,944


  

ARMOUR GROUP PLC


CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the years ended 31 August 2008






Share

capital

Share

premium

Other

reserves

Retained

earnings

Translation

reserve

Share trust

reserve

Total

equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000









At 1 September 2006

6,841

8,496

871

10,907

-

(200)

26,915

Profit for the year

-

-

-

262

-

-

262

Currency translation

-

-

-

-

(7)

-

(7)


-

-

-

262

(7)

-

255

Options exercised

7

17

-

-

-

-

24

Share-based payments

-

-

-

121

-

-

121

Dividend paid

-

-

-

(371)

-

-

(371)

At 31 August 2007

6,848

8,513

871

10,919

(7)

(200)

26,944

















Profit for the year

-

-

-

2,494

-

-

2,494

Currency translation

-

-

-

-

75

-

75


-

-

-

2,494

75

-

2,569

Shares acquired by share trust

-

-

-

-

-

(372)

(372)

Share-based payments

-

-

-

100

-

-

100

Dividend paid

-

-

-

(439)

-

-

(439)

At 31 August 2008

6,848

8,513

871

13,074

68

(572)

28,802




  ARMOUR GROUP PLC


CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 August 2008





Note

31 August 

2008

£000

31 August 

2007

£000





Cash flow from operating activities




Cash generated from operations

7

3,124

5,892

Income taxes paid


(1,308)

(919)

Net cash from operating activities


1,816

4,973





Investing activities




Acquisition of subsidiary undertaking, net of cash acquired


(4,302)

(155)

Disposal of subsidiary undertaking, net of cash disposed


400

-

Purchase of property, plant and equipment


(1,196)

(718)

Sale of property, plant and equipment


147

84

Expenditure on intangible assets 


(1,506)

(646)

Invested in associated undertakings


-

(372)

Interest received


166

22

Net cash used in investing activities


(6,291)

(1,785)





Financing activities




Proceeds on issue of shares


-

24

Dividend paid


(439)

(371)

Repayment of bank loans


(720)

(720)

Repayment of finance lease creditors


(26)

(44)

Shares acquired by share trust


(372)

-

Interest paid


(726)

(511)

Net cash used in financing activities


(2,283)

(1,622)

Net (decrease)/increase in cash, cash equivalents and bank overdrafts

8

(6,758)

1,566

Currency variations on cash, cash equivalents and bank overdrafts


74

(8)

Cash, cash equivalents and bank overdrafts at the start of the year 


892

(666)

Cash, cash equivalents and bank overdrafts at the end of the year


(5,792)

892






  

ARMOUR GROUP PLC



Preliminary Announcement of the audited financial statements for the year ended 
31 August 2008
 
1.         Accounting Policies
 
Basis of preparation
 
The principal accounting policies adopted in the preparation of this preliminary announcement are unchanged from those disclosed in the interim announcement published on 14 April 2008.
 
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (“IFRS”), this announcement does not itself contain sufficient information to comply with IFRS. The Group expects to publish full financial statements that comply with IFRS in December 2008.
 
This is the first time that the Group has prepared its preliminary announcement in accordance with Adopted IFRS, having previously prepared its preliminary announcement in accordance with UK accounting standards. The date of transition to IFRS is 1 September 2006. Details of how the transition from UK accounting standards to Adopted IFRS has affected the Group’s reported financial position, financial performance and cash flows are given in Note 11.
 
 
 
2.        Segment Information
 
The Group operates in the following main business segments:
 
Armour Auto:                       The design, manufacture and supply of products for the in-car communications and entertainment market.
 
Armour Home:                     The design, manufacture and supply of products into the hi-fi, home theatre and home entertainment markets.
 
Central operations:            The provision of finance and support services, including future product concepts and quality control based in Hong Kong, to the other business segments within the Group.
 
The Group’s primary reporting format for reporting segment information is business segments.


Year ended 31 August 2008

Armour 

Auto

£000

Armour 

Home

£000

Central

operations

£000


Total

£000

Revenue

14,409

39,599

-

54,008

Profit/(loss) before taxation

1,284

4,872

(2,671)

3,485

Balance Sheet





Assets

8,557

18,650

21,602

48,809

Liabilities

(2,281)

(6,538)

(11,188)

(20,007)

Net Assets

6,276

12,112

10,414

28,802

Other





Capital expenditure

(210)

(973)

(13)

(1,196)

Depreciation 

209

397

13

619

Amortisation of intangible assets

133

323

-

456



ARMOUR GROUP PLC


Preliminary Announcement of the audited financial statements for the year ended 
31 August 2008

 

2.        Segment Information (continued)



Year ended 31 August 2007

Armour 

Auto

£000

Armour 

Home

£000

Central

operations

£000


Total

£000

Revenue

17,290

37,881

-

55,171

Profit/(loss) before taxation

2,158

4,600

(2,255)

4,503

Balance Sheet





Assets

9,709

16,008

21,147

46,864

Liabilities

(3,267)

(7,335)

(9,318)

(19,920)

Net Assets

6,442

8,673

11,829

26,944

Other





Capital expenditure

(286)

(325)

(39)

(650)

Depreciation 

234

395

9

638

Amortisation of intangible assets

139

401

-

540


The Group's secondary reporting format for reporting segment information is geographic segments.




Revenue by location

of customers

Total assets by location of assets

Capital expenditure by location of assets


2008

£000

2007

£000

2008

£000

2007

£000

2008

£000

2007

£000

United Kingdom

45,855

46,930

28,349

26,593

(1,185)

(636)

Rest of Europe

6,346

6,624

446

357

(8)

(3)

Rest of world

1,807

1,617

7

(6)

(3)

(11)


54,008

55,171

28,802

26,944

(1,196)

(650)


3.        Taxation Expense




31 August 

2008

£000

31 August 

2007

£000

Current taxation expense



UK Corporation Tax on profit for the year

(478)

(1,211)

Adjustment in respect of prior years

36

10

Income tax of overseas operations

(47)

(38)

Total current taxation expense

(489)

(1,239)

Deferred taxation expense



UK operations

(544)

(12)

Adjustment in respect of prior years

62

-

Overseas operations

(20)

(11)

Total deferred taxation expense 

(502)

(23)

Total taxation expense

(991)

(1,262)



ARMOUR GROUP PLC


Preliminary Announcement of the audited financial statements for the year ended 
31 August 2008


 

3.    Taxation Expense (continued)
The current taxation assessed for the year is lower (31 August 2007: Lower) than the standard rate of UK Corporation Tax. The differences are explained below:



31 August 

2008

£000

31 August 

2007

£000

Profit on ordinary activities before taxation

3,485

4,503

Profit multiplied by the rate of UK corporation tax of 29.17% (2007: 30%)

(1,017)

(1,351)

Effects of:



Expenses not deductible for taxation purposes

(166)

(146)

Taxation credits (Research and Development and options relief)

40

53

Recognition of losses carried forward

11

-

Use of previously unrecognised losses

20

175

Lower taxation rates on overseas profit and marginal relief

10

3

Corporate and deferred taxation rate differences

13

(6)

Adjustments in respect of prior years

98

10

Total taxation expense

(991)

(1,262)


The current year rate of UK Corporation Tax is shown as 29.17% reflecting the rate change from 30% to 28% effective from April 2008.


4.        Discontinued Operations
In August 2007, the Group sold the entire ordinary share capital of Armour Custom Services Limited and The Hi-End Limited. The loss on disposal has been calculated as follows:


 



£000

Non-current assets


463

Inventories


547

Trade and other receivables


600

Trade and other payables


(183)



1,427




Sale proceeds


400

Cost of sale


(30)

Provision for onerous lease


(120)



250

Loss before goodwill


(1,177)

Goodwill written off


(1,625)

Loss after taxation for the year


(177)

Loss on disposal 


(2,979)


The trading result for the year ended 31 August 2007 of the discontinued operations is shown below:




£000

Revenue


2,185

Expenses


(2,454)

Loss before taxation


(269)

Taxation


92

Loss after taxation for the year


(177)




ARMOUR GROUP PLC


Preliminary Announcement of the audited financial statements for the year ended
 31 August 2008


5.        Earnings per Ordinary Share


Basic earnings per ordinary share 
are calculated using the weighted average number of ordinary shares in issue during the financial year of 67,191,706 (31 August 2007: 67,493,840). Diluted earnings per ordinary share is calculated with reference to 68,044,400 (31 August 2007: 68,831,976) ordinary sharesThe effect of the exercise of options on the weighted average number of ordinary shares in issue is 852,694 (31 August 2007: 1,338,136).


At 31 August 2008, the Armour Employees' Share Trust held 3,424,000 (31 August 2007: 966,000ordinary shares. The weighted average number of ordinary shares held by the Armour Employees' Share Trust during the year of 1,288,361 (31 August 2007: 966,000) are not included in either the weighted average, or diluted weighted average, ordinary shares in issue during the financial year.


Underlying earnings per ordinary share are also shown calculated by reference to earnings before share-based payments. The Directors consider that this gives a useful additional indication of underlying performance. It should be noted that the term 'underlying' is not defined under IFRS and may not therefore be comparable with similarly titled profit measures reported by other entities






31 August 2008

31 August 2007



£000

Basic

p

Diluted

p


£000

Basic

p

Diluted

p

Total operations







Profit for the financial period

2,494

3.7

3.7

262

0.4

0.4

Share-based payments 

100

0.2

0.1

121

0.2

0.2

Underlying earnings

2,594

3.9

3.8

383

0.6

0.6

Continuing operations







Profit from continuing operations

2,494

3.7

3.7

3,241

4.8

4.7

Share-based payments 

100

0.2

0.1

115

0.1

0.1

Underlying earnings

2,594

3.9

3.8

3,356

4.9

4.8


6.        Dividend




31 August 

2008

£000

31 August 

2007

£000

Proposed dividend for the year of 0.65p (31 August 2007: 0.65p) per ordinary share

(423)

(439)


The Board is recommending an unchanged dividend for the year of 0.65 pence per ordinary share. The proposed dividend for the year has not been accrued in the Consolidated Balance Sheet as at 31 August 2008. The dividend proposed in the financial statements as at 31 August 2007, and approved by shareholders at the Annual General Meeting held on 11 December 2007, was charged to reserves and paid during the year. 



ARMOUR GROUP PLC


Preliminary Announcement of the audited financial statements for the year ended 
31 August 2008


7.    Net Cash Inflow from Operations



Twelve months to

31 August

2008

£000

Twelve months to

31 August

2007

£000




Profit from operations

4,029

5,243

Loss from trading of discontinued operations

-

(269)

Depreciation of property, plant and equipment

619

715

Amortisation of intangible assets

456

553

Share-based payments

100

121

(Gain)/loss on sale of property, plant and equipment

(68)

9

Movements before working capital

5,136

6,372

Increase in inventories

(2,335)

(1,201)

Decrease/(increase) in trade and other receivables

810

(1,926)

(Decrease)/increase in trade, other payables and provisions

(487)

2,647

Net cash from operations

3,124

5,892



8.    Reconciliation of Net Cash Flow to Movement in Net Debt

Net debt incorporates the Group's borrowings, bank overdrafts and obligations under finance leases, less cash and cash equivalents. A reconciliation of the movement in the net debt from the beginning to the end of the year is shown below:



Twelve months to

31 August

2008

£000

Twelve months to

31 August

2007

£000




Net (decrease)/increase in cash and cash equivalents

(6,758)

1,566

Net cash outflow from debt and lease financing

746

764

Other non-cash movements

42

(43)

(Increase)/decrease in net debt 

(5,970)

2,287

Opening net debt

(2,904)

(5,191)

Closing net debt

(8,874)

(2,904)



9.    Publication of non-statutory accounts

The financial information set out in this preliminary announcement does not constitute the Group's financial statements for the year ended 31 August 2008 and the year ended 31 August 2007. 


The financial statements for the year ended 31 August 2007 were prepared in accordance with applicable UK Generally Accepted Accounting Practice and have been delivered to the Registrar of Companies. Details of the affect on those financial statements having subsequently adopted IFRS are given in note 11 to this preliminary announcement. The financial statements for the year ended 31 August 2008 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. 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 statements under sections 237(2) or (3) of the Companies Act 1985.


The full audited financial statements of Armour Group plc for the period ended 31 August 2008 are expected to be posted to shareholders no later than 22 December 2008 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. 



10.    Annual General Meeting

The Annual General Meeting will be held at the offices of Arnold & Porter (UK) LLP, Tower 42, 25 Old Broad StreetLondonEC2N 1HQ on 29 January 2009.




ARMOUR GROUP PLC


Preliminary Announcement of the audited financial statements for the year ended 
31 August 2008


11.    First time adoption of IFRS


Reconciliations and explanatory notes on how the transition to IFRS has affected profit and net assets previously reported under UK GAAP are given below:


Profit and Loss Account Reconciliation for the Year Ended 31 August 2007. 






UK GAAP

£000

Transition 

adjustments

£000


IFRS

£000






Revenue





Continuing operations


55,171

-

55,171

Discontinued operations


2,185

(2,185)

-



57,356

(2,185)

55,171






Profit from operations





Continuing operations


4,118

1,125

5,243

Discontinued operations


(360)

360

-



3,758

1,485

5,243

Share of (loss)/profit of associated undertakings


(15)

18

3

Finance income


22

-

22

Finance costs


(765)

-

(765)

Profit before taxation


3,000

1,503

4,503

Taxation expense


(1,155)

(107)

(1,262)



1,845

1,396

3,241

Discontinued operations


(2,711)

(268)

(2,979)

(Loss)/profit for the financial year


(866)

1,128

262




Summary of adjustments

Sub-note

£000




Reversal of amortisation of goodwill 

a

1,168

Development costs capitalised in the financial year

c

539

Amortisation and amounts written off capitalised development costs

c

(484)

Losses recognised on derivatives

e

(58)

Restatement of lease rental incentives

f

(40)

Restatement of associated undertakings

g

18

Deferred taxation adjustment

h

(15)

Total of adjustments


1,128


The trading result of discontinued operations, being a post taxation loss of £268,000 (inclusive of amortisation of goodwill of £91,000), has been reclassified within the single income statement heading of 'Discontinued operations'.



ARMOUR GROUP PLC


Preliminary Announcement of the audited financial statements for the year ended 
31 August 2008


11.    First time adoption of IFRS (continued)



Consolidated Balance Sheet Reconciliation at 1 September 2006.





Sub-

note


UK GAAP

£000

Transition 

adjustments

£000


IFRS

£000






Non-current assets





Goodwill

a

23,338

-

23,338

Other intangible assets

b, c

-

950

950

Property, plant and equipment

b

2,256

(151)

2,105

Deferred taxation assets

h, i

291

(291)

-

Total non-current assets


25,885

508

26,393






Current assets





Inventories


9,836

-

9,836

Trade and other receivables


9,702

-

9,702

Cash and cash equivalents


186

-

186

Total current assets


19,724

-

19,724

Total assets


45,609

508

46,117











Current liabilities





Bank overdrafts and borrowings


(1,610)

-

(1,610)

Trade and other payables

e, f, i

(12,631)

(8)

(12,639)

Corporation taxation liability


(916)

-

(916)

Provisions

i

-

(140)

(140)

Total current liabilities


(15,157)

(148)

(15,305)






Non-current liabilities





Borrowings


(3,767)

-

(3,767)

Deferred consideration


(127)

-

(127)

Deferred taxation liability

h, i

-

(3)

(3)

Total non-current liabilities


(3,894)

(3)

(3,897)

Total liabilities


(19,051)

(151)

(19,202)

Total net assets


26,558

357

26,915































Equity





Share capital


6,841

-

6,841

Share premium 


8,496

-

8,496

Other reserves


871

-

871

Retained earnings


10,550

357

10,907

Share trust reserve


(200)

-

(200)

Total equity


26,558

357

26,915




ARMOUR GROUP PLC


Preliminary Announcement of the audited financial statements for the year ended 
31 August 2008


11.    First time adoption of IFRS (continued)


Consolidated Balance Sheet Reconciliation at 31 August 2007.





Sub-

note


UK GAAP

£000

Transition 

adjustments

£000


IFRS

£000






Non-current assets





Goodwill

a

19,914

1,168

21,082

Other intangible assets

b, c

-

991

991

Property, plant and equipment

b

1,741

(137)

1,604

Investment in associated undertakings

g

357

18

375

Deferred taxation assets

h, i

291

(291)

-

Total non-current assets


22,303

1,749

24,052






Current assets





Inventories


10,490

-

10,490

Trade and other receivables


11,430

-

11,430

Cash and cash equivalents


892

-

892

Total current assets


22,812

-

22,812

Total assets


45,115

1,749

46,864
















Current liabilities





Bank overdrafts and borrowings


(714)

-

(714)

Trade and other payables

e, f, i

(14,714)

50

(14,664)

Corporation taxation liability


(1,146)

-

(1,146)

Provisions

i

-

(296)

(296)

Total current liabilities


(16,574)

(246)

(16,820)






Non-current liabilities





Borrowings


(3,082)

-

(3,082)

Deferred taxation liability

h, i

-

(18)

(18)

Total non-current liabilities


(3,082)

(18)

(3,100)

Total liabilities


(19,656)

(264)

(19,920)

Total net assets


25,459

1,485

26,944































Equity





Share capital


6,848

-

6,848

Share premium 


8,513

-

8,513

Other reserves


871

-

871

Retained earnings


9,427

1,492

10,919

Translation reserve

d

-

(7)

(7)

Share trust reserve


(200)

-

(200)

Total equity


25,459

1,485

26,944



ARMOUR GROUP PLC


Preliminary Announcement of the audited financial statements for the year ended 
31 August 2008

 



 


11. First time adoption of IFRS (continued)
 
Explanations of the adjustments made to the UK GAAP Profit and Loss Account and Consolidated Balance Sheets are as follows:
 
(a)         Goodwill
Under IFRS 3, goodwill is not amortised but instead is subject to an annual impairment review. An adjustment has been made to remove the goodwill amortisation charge made under UK GAAP. Under the transition rules, no adjustment need be made to the carrying value of goodwill at the date of transition.
 
(b)         Software Costs
Under UK GAAP, software is considered to be part of the operating system of the computer systems used by the Group and is capitalised within plant and equipment. Under IAS 38, this software should be separately identified as an intangible asset. The net book value of these assets at 31 August 2007 was £137,000 (1 September 2006: £151,000).
 
(c)         Product Development Expenditure
Under UK GAAP, the Group’s accounting policy was to expense all development expenditure when incurred. In accordance with IAS 38, costs incurred on product development are capitalised as an intangible asset where the asset created can be identified, its cost measured reliably and it is probable that the asset will generate future economic benefits. Capitalised development expenditure is amortised over its expected useful life.
 
(d)         Translation Reserve
Under IAS 21, foreign exchange differences arising from the translation of opening net assets, must be included in a separate translation reserve rather than being included in retained profit. The Group has elected not to revisit currency translation reserve movements prior to the date of transition. Accordingly, at the date of transition, the translation reserve balance was zero. Only cumulative translation differences arising after the date of transition in respect of overseas subsidiary undertakings will be recycled to the income statement on disposal of these subsidiaries.
 
(e)         Forward foreign currency contracts
The Group makes use of foreign currency derivatives (forward foreign currency contracts) to protect its position on the purchase of inventories. Under UK GAAP, foreign currency derivatives were held off balance sheet. Under IAS 32 and IAS 39, derivative contracts are valued (“marked to market”) at the balance sheet date and any resulting gains or losses are taken to the income statement.
 
(f)           Lease Incentives
In accordance with IAS 17: Leases and SIC 15: Operating Leases – Incentives, adjustments have been made to recognise the benefit of lease incentives over the full lease term rather than to the date of the first rent review.
 
(g)         Share of Profit/Losses in Associated Undertakings
Under UK GAAP, the premium on acquisition of the investment was amortised to nil in equal annual instalments over its estimated useful life of 20 years. Under IFRS, the premium is not amortised but instead is subject to an annual impairment review. An adjustment has been made to remove the amortisation charge made under UK GAAP.
 
(h)         Deferred Taxation
Adoption of IFRS has caused adjustment to the value of deferred taxation assets and liabilities. The most significant adjustment has been caused by the recognition of product development expenditure as an asset, thereby creating a deferred taxation liability.
 
(i)           Balance sheet Reclassifications
To comply with IFRS 1, various amounts such as provisions and deferred taxation have been reclassified.  
 

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