REG - Airea PLC - Half-year Report

AireaAnnouncement

17/08/2018 07:05

RNS Number : 0905Y
Airea PLC
17 August 2018
 


AIREA PLC 
Interim report for the six months ended 30 June 2018
The principal activity of the group is the manufacturing, marketing and distribution of commercial floor coverings.
Chairman's Statement
The six months ending 30 June 2018 was another period of strategic progress. Following the completion of the closure of the residential carpets business, we are now in a position to focus on our ongoing commercial operation, which delivered an encouraging advance in financial performance:   
-               Sales up 13%
-               Profit attributable to shareholders up 31%
-               Basic earnings per share from continuing operations up 10.0%
-               Interim dividend maintained
Following the closure of Ryalux the business is positioned to generate improved shareholder returns. To illustrate this; in the 6 months ended 30 June 2018 the business generated profit after tax of £1.3m on a continuing basis (i.e. excluding Ryalux) in the 6 months ended 30 June 2017 the business (including Ryalux) generated profit after tax of £0.7m.
Strong growth in the order book and increased sales both in the UK and internationally was largely driven by the success of new product introductions.  The launch of further new products is transforming our offer in the medium and premium price sectors and our sales force has a growing portfolio of attractive complementary products to grow our share within this market sector.
Our international sales grew by 30% in the period, driven by the new products, increased penetration of existing markets and the ongoing development of the distribution network.
Group Results
Continuing operations:
Comparative financial results for the six months to 30 June 2017 and the eighteen months ended 31 December 2017 have been restated to take account of the closure of the residential carpets business1. Revenue for the period was £9.1m (2017: £8.1m).  The operating profit was £1,481,000 (2017: £1,457,000). After charging pension related finance costs of £158,000 (2017: £309,000) and incorporating the appropriate tax charge the net profit for the period was £1,314,000 (2017: £1,194,000). Basic earnings per share for the continuing operation were 3.18p (2017: 2.89p). 
Operating cash flows before exceptional items and movements in working capital were £1.7m (2017: £1.6m). Working capital increased in the period by £0.4m (2017: £1.2m) mainly as a result of the timing of stock build. Contributions to the defined benefit pension scheme were £200,000 (2017: £200,000) in line with the agreement reached with the scheme trustees following the last triennial valuation as at 1 July 2017. Capital expenditure of £61,000 (2017: £233,000) was made in renewing and enhancing manufacturing plant and equipment and supporting product launches. 
Discontinued operation
Running and closure costs net of tax amounted to £359,000. The disposal of inventory, collection of trade receivables and settlement of outstanding payables resulted in a cash inflow of £1,135,000 giving an overall net modest outflow of cash for the residential carpets business of £93,000 in the period. As indicated in the last annual report, over the total period of run down and closure, there was significant cash generation, which was returned to shareholders as part of the special dividend paid on 23 May 2018. 
Board Changes
I am pleased to welcome Paul Stevenson to the board following his recently announced appointment as Group Finance Director and Company Secretary. He takes over from Roger Salt who is retiring. We would like to extend our thanks to Roger for his hard work and dedication over the last 14 years.
Outlook
We are pleased by the progress we have made in driving sales growth in the ongoing commercial flooring operation with a strengthening portfolio of products.  Sales growth in our markets requires hard work and commitment over a sustained period of time, and we remain determined to build on the progress made. Uncertainties remain, including the outcome of Brexit negotiations; however, as a UK manufacturer with a strengthening position in the UK and internationally, we are well placed to mitigate risks and take advantage of growth opportunities. 
Given the ongoing progress in the financial performance of the group and a robust cash flow we are able to maintain the policy introduced last year of paying an interim dividend.  The board is please to declare an interim dividend of 1.75p (2017: 1.75p) to be paid on the 25 October 2018 to shareholders on the register at close of business on 21 September 2018.  The ex dividend date is 20 September 2018.
 
Martin Toogood 
17 August 2018
Chairman
 
1 The unaudited results for the six months ended 30 June 2017 and the audited results for the eighteen months ended 31 December 2017 have been restated to reclassify the residential carpets business as discontinued.  Details of the discontinued operation are included in note 2.
  
 




Consolidated Income Statement


 


 


 


 


 


 


 


 


 




6 months ended 30 June 2018


 


 


 


 


 


 


 


 


 




 


 


 


Unaudited


 


(Restated) unaudited


 


(Restated) Audited


 




 


 


 


6 months     ended


6 months    ended


 


18 months ended


 




 


 


 


30 June


 


30 June


 


 


31 December


 




 


 


 


2018


 


2017


 


 


2017


 




 


 


 


 


 


 


 


 


 


 




 


 


 


£000


 


£000


 


 


£000


 




 


 


 


 


 


 


 


 


 


 




CONTINUING OPERATIONS


 


 


 


 


 


 


 


 


 




Revenue


 


 


9,132


 


8,073


 


 


26,890


 




Operating costs


 


 


(7,651)


 


(6,616)


 


 


(22,658)


 




Operating profit before exceptional items


 


 


1,481


 


1,457


 


 


4,255


 




Exceptional items:


 


 


 


 


 


 


 


 


 




Exceptional costs


 


 


- 


 


- 


 


 


(472)


 




Unrealised valuation gain


 


 


- 


 


- 


 


 


449


 




Operating profit


 


 


1,481


 


1,457


 


 


4,232


 




Finance costs


 


 


(158)


 


(309)


 


 


(932)


 




Profit before taxation


 


 


1,323


 


1,148


 


 


3,300


 




Taxation


 


 


(9)


 


46


 


 


186


 




Profit attributable to shareholders of the group from continuing operations


1,314


 


1,194


 


 


3,486


 




 


 


 


 


 


 


 


 


 


 




DISCONTINUED OPERATIONS


 


 


 


 


 


 


 


 


 




Loss attributable to shareholders of the group from discontinued operations


(359)


 


(467)


 


 


(4,856)


 




 


 


 


 


 


 


 


 


 


 




Profit / (loss) attributable to shareholders of the group for the period


955


 


727


 


 


(1,370)


 




 


 


 


 


 


 


 


 


 


 




Earnings/(loss) per share (basic and diluted)


 


 


2.31 p


 


1.76 p


 


 


(3.31)p


 




Earnings per share (basic and diluted) from continuing operations


3.18 p


 


2.89 p


 


 


8.43 p


 




Loss per share (basic and diluted) from discontinued operations


(0.87)p


 


(1.13)p


 


 


(11.74)p


 




 


 


 


 


 


 


 


 


 


 




Consolidated Statement of Comprehensive Income


 


 


 


 


 


 


 


 


 




6 months ended 30 June 2018


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 




 


 


 


Unaudited


 


(Restated) unaudited


 


(Restated) Audited


 




 


 


 


6 months     ended


6 months
ended


 


18 months ended


 




 


 


 


30 June


 


30 June


 


 


31 December


 




 


 


 


2018


 


2017


 


 


2017


 




 


 


 


£000


 


£000


 


 


£000


 




 


 


 


 


 


 


 


 


 


 




Profit / (loss) attributable to shareholders of the group


 


955


 


727


 


 


(1,370)


 




Actuarial gain recognised in the pension scheme


 


 


- 


 


401


 


 


4,827


 




Related deferred taxation


 


 


- 


 


(80)


 


 


(862)


 




 


 


 


- 


 


321


 


 


3,965


 




Unrealised valuation gain


 


 


39


 


- 


 


 


117


 




 


 


 


 


 


 


 


 


 


 




Total comprehensive income attributable to shareholders of the group


994


 


1,048


 


 


2,712


 




 


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 




 
 
 
 


 


 


 


 


 


 


 


 


 




The unaudited results for the six months ended 30 June 2017 and the audited results for the eighteen months ended 31 December 2017 have been restated to reclassify the residential carpets business as discontinued.  Details of the discontinued operation are included in note 2.


 




 


 


 


 


 


 


 


 


 


 




 
 
Consolidated Balance Sheet


 


 


 


 


 


 


 




as at 30 June 2018


 


 


 


 


 


 


 




 


 


 


Unaudited


 


Unaudited


 


Audited




 


 


 


30 June


 


30 June


 


30 December




 


 


 


2018


 


2017


 


2017




 


 


 


£000


 


£000


 


£000




Non-current assets


 


 


 


 


 


 


 




Property, plant and equipment


 


 


5,107


 


6,101


 


5,294




Intangible assets


 


 


114


 


 


 


124




Investment property


 


 


3,150


 


2,701


 


3,150




Deferred tax asset


 


 


1,415


 


1,281


 


389




 


 


 


9,786


 


10,083


 


8,957




Current assets


 


 


 


 


 


 


 




Inventories


 


 


6,918


 


11,146


 


6,937




Trade and other receivables


 


 


2,870


 


4,704


 


2,893




Cash and cash equivalents


 


 


2,448


 


2,302


 


3,702




 


 


 


12,236


 


18,152


 


13,532




Total assets


 


 


22,022


 


28,235


 


22,489




Current liabilities


 


 


 


 


 


 


 




Trade and other payables


 


 


(4,793)


 


(5,574)


 


(4,045)




Obligations under finance leases


 


 


(185)


 


- 


 


(183)




 


 


 


(4,978)


 


(5,574)


 


(4,228)




Non-current liabilities


 


 


 


 


 


 


 




Pension deficit


 


 


(2,114)


 


(6,962)


 


(2,164)




Deferred tax


 


 


(268)


 


(241)


 


(268)




Obligation under finance leases


 


 


(417)


 


(767)


 


(510)




 


 


 


(2,799)


 


(7,970)


 


(2,942)




Total liabilities


 


 


(7,777)


 


(13,544)


 


(7,170)




 


 


 


14,245


 


14,691


 


15,319




Equity


 


 


 


 


 


 


 




Called up share capital


 


 


10,339


 


10,339


 


10,339




Share premium account


 


 


504


 


504


 


504




Capital redemption reserve


 


 


3,617


 


3,617


 


3,617




Revaluation reserve


 


 


3,165


 


3,009


 


3,126




Retained earnings


 


 


(3,380)


 


(2,778)


 


(2,267)




 


 


 


14,245


 


14,691


 


15,319




 


 


 


 


 


 


 


 



 
 
 
 
 
 
 
 
 
 
 
 
 
 



 
  




Consolidated Cash Flow Statement


 


 


 


 


 


 




6 months ended 30 June 2018


 


 


 


 


 


 




 


 


Unaudited


 


Unaudited


 


Audited




 


 


6 months ended


 


6 months ended


 


18 months ended




 


 


30 June 


 


30 June 


 


31 December




 


 


2018


 


2017


 


2017




 


 


£000


 


£000


 


£000




Cash flow from continuing operations


 


 


 


 


 


 




Profit for the period


 


1,314


 


1,194


 


3,486




Depreciation of tangible fixed assets


 


155


 


103


 


291




Amortisation of other intangible fixed assets


 


28


 


- 


 


39




Finance costs


 


158


 


309


 


932




Taxation


 


9


 


(46)


 


(225)




Unrealised valuation gain


 


- 


 


- 


 


(449)




Operating cash flows before movements in working capital


1,664


 


1,560


 


4,074




 


 


 


 


 


 


 




Increase in inventories


 


(762)


 


(1,866)


 


(138)




(Increase) / decrease in trade and other receivables


(607)


 


(821)


 


1,046




Increase / (decrease) in trade and other payables


 


972


 


1,517


 


(874)




Cash generated from operations


 


1,267


 


390


 


4,108




Income tax received


 


- 


 


                                          -  


 


                                      143




Contributions to defined benefit pension scheme


 


(200)


 


(200)


 


(600)




Net cash generated from operating activities in continuing operations


1,067


 


190


 


3,651




Net cash used in operating activities in discontinued operations


(93)


 


(19)


 


(900)




Net cash generated from operating activities


 


974


 


171


 


2,751




 


 


 


 


 


 


 




Investing activities


 


 


 


 


 


 




Payments to acquire tangible fixed assets


 


(43)


 


(233)


 


(334)




Payments to acquire intangible fixed assets


 


(18)


 


 


 


(163)




Net cash used by investing activities on continuing operations


(61)


 


(233)


 


(497)




Net cash used by investing activities on discontinuing operations


- 


 


(38)


 


(58)




 


 


(61)


 


(271)


 


(555)




 


 


 


 


 


 


 




Financing activities


 


 


 


 


 


 




Interest


 


(8)


 


(10)


 


(26)




Obligations under finance leases


 


(91)


 


(87)


 


(238)




Equity dividends paid


 


(2,068)


 


- 


 


(1,344)




Net cash used in financing activities in continuing operations


(2,167)


 


(97)


 


(1,608)




Net cash used in financing activities in discontinued operations


- 


 


                                          -  


 


                                          -  




Net cash used in financing activities


 


(2,167)


 


(97)


 


(1,608)




 


 


 


 


 


 


 




Net (decrease) / increase in cash and cash equivalents


(1,254)


 


(197)


 


588




Cash and cash equivalents at start of the period


 


3,702


 


2,499


 


3,114




Cash and cash equivalents at end of the period


 


2,448


 


2,302


 


3,702




 


 


 


 


 


 


 




 
  




Consolidated Statement of Changes in Equity


 


 


 


 


 




6 months ended 30 June 2018


 


 


 


 


 


 




 


Share capital


Share premium account


Capital redemption reserve


Revaluation reserve


Profit and loss account


Total equity




 


£000


£000


£000


£000


£000


£000




 


 


 


 


 


 


 




At 1st July 2016


10,339


504


3,617


3,009


(3,518)


13,951




 


 


 


 


 


 


 




Comprehensive income for the period


 


 


 


 


 


 




Loss for the period


- 


- 


- 


- 


(1,370)


(1,370)




Other comprehensive income for the period


- 


- 


- 


117


3,965


4,082




Total comprehensive income for the year


- 


- 


- 


117


2,595


2,712




Contributions by and distributions
to owners


 


 


 


 


 




Dividend paid


- 


- 


- 


- 


(1,344)


(1,344)




 


 


 


 


 


 


 




At 31st December 2017 and 1st January 2018


10,339


504


3,617


3,126


(2,267)


15,319




 


 


 


 


 


 


 




Comprehensive income for the period


 


 


 


 


 


 




Profit for the period


- 


- 


- 


- 


955


955




Other comprehensive income for the period


- 


- 


- 


39


- 


39




Total comprehensive income for the year


- 


- 


- 


39


955


994




Contributions by and distributions
 to owners


 


 


 


 


 




Dividend paid


- 


- 


- 


- 


(2,068)


(2,068)




 


 


 


 


 


 


 




At 30th June 2018


10,339


504


3,617


3,165


(3,380)


14,245




 


 


 


 


 


 


 




 
 
 








1


BASIS OF PREPARATION AND ACCOUNTING POLICIES


 




 


 


 




 


The financial information for the six months ended 30 June 2018 and the six months ended 30 June 2017 has not been audited and does not constitute full financial statements within the meaning of Section 434 of the Companies Act 2006.




 


The financial information relating to the eighteen month period ended 31st December 2017 does not constitute full financial statements within the meaning of Section 434 of the Companies Act 2006. This information is based on the group's statutory accounts for that period. The statutory accounts were prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") and received an unqualified audit report and did not contain statements under Section 498(2) or (3) of the Companies Act 2006. These financial statements have been filed with the Registrar of Companies.




 


These interim financial statements have been prepared using the recognition and measurement principles of International Financial Reporting Standards as adopted by the European Union ("IFRS").  The accounting policies used are the same as those used in preparing the financial statements for theperiod ended 31st December 2017.  These policies are set out in the annual report and accounts for theperiod ended 31st December 2017 which is available on the Company's website at www.aireaplc.co.uk.




 


Further copies of this report are available from the Company Secretary at the registered office at Victoria Mills, The Green, Ossett, Wakefield, West Yorkshire WF5 0AN and are also available, along with this announcement, on the company's website at www.aireaplc.co.uk




 


 




 


 


 




 


 


 




 


 


 




 


 


 




 
 




2


DISCONTINUED OPERATIONS


 


 


 


 


 




 


 


 


 


 


 


 




 


It was announced in the last annual report that the company had entered into a process concerning the closure of the residential carpets business.  This process has now been completed.  The analysis of the result of the discontinued business that has been included in the consolidated income statement including a deferred tax benefit following the closure of the residential carpets business is as follows:




 


 


 


 


 


 


 




 


 


 


 


 


 


 




 


 


 


 


 


 


 




 


 


Unaudited


 


Unaudited


 


Audited




 


 


6 months ended


 


6 months ended


 


18 months ended




 


 


30 June


 


30 June


 


31 December




 


 


2018


 


2017


 


2017




 


 


 


 


 


 


 




 


 


£000


 


£000


 


£000




 


Discontinued operations


 


 


 


 


 




 


 


 


 


 


 


 




 


Revenue


920


 


3,196


 


9,859




 


Operating costs


(2,313)


 


(3,681)


 


(14,669)




 


Loss before taxation


(1,393)


 


(485)


 


(4,810)




 


Taxation


1,034


 


18


 


(46)




 


Loss attributable to shareholders of the group from discontinued operations


(359)


 


(467)


 


(4,856)




 




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