Interim Report
30/07/2021 07:00
RNS Number : 9882G Airea PLC 30 July 2021 AIREA PLC (the "Group") Interim report for the six months ended 30 June 2021 The principal activity of the group is the design, manufacture, marketing and distribution of floor coverings. Chairman's Statement The group's performance in the six months ended 30th June 2021 has continued to be impacted by the COVID-19 pandemic and the related lockdown restrictions which continue to suppress activity in our key markets. Our export business has been most severely impacted by lockdown restrictions in target markets and the additional costs of administration and freight following the post Brexit transition period. Availability of labour and raw materials have been a major challenge with unprecedented increases in raw material prices. H1 delivered improved sales and operating profit versus the prior year as demand in the market continued to recover albeit at a slower pace than expected. Throughout H1 the group has remained open for business and continues to support customers whilst also looking to prioritise the well-being of employees. The board recognises and values the tremendous efforts of our employees throughout the period. With reference to COVID-19 support packages deferred VAT repayments have commenced, our loan balance repayments have recommenced and the level of furlough support has reduced significantly in the first half. As at 30th June 2021 our cash reserves were £6.2m (2020: £6.5m), excluding the CBILS loans our cash position was £3.5m (2020: £3.7m), with further liquidity available of £1.0m via our unutilised overdraft facility (2020: £1.0m unutilised). Our cash reserves and strong balance sheet enable us to manage the impact of the pandemic and related risks. Group Results Revenue for the period was £0.3m above the prior year, £7.4m (2020: £7.1m). In the UK our sales were 18.5% ahead of the prior six month comparative period as home sales began to recover. Export sales were down 35.5% compared to the comparative period, largely due to the effect of COVID-19 on all our target export markets and the significant disruption caused by differing interpretations of import regulations post Brexit. The operating profit was £574,000 (2020: £137,000). Excluding inventory absorption impacts, underlying product margins are broadly in line with prior year, however product margins are facing significant pressure due to significant raw material inflation and our ability to pass on these price increases. After charging pension, lease and loan related finance costs of £114,000 (2020: £193,000) and incorporating the appropriate tax charge the net profit for the period was £440,000 (2020: £43,000 loss). Basic earnings per share were 1.14p (2020:loss 0.11p). Operating cash flows before movements in working capital were £0.5m (2020: £0.5m). Working capital increased in the period by £0.1m (2020: £1.0m decrease). Contributions to the defined benefit pension scheme were £0.2m (2020: £0.2m) in line with the agreement reached with the scheme trustees following the last triennial valuation as at 1st July 2017. Capital expenditure of £1.2m (2020: £0.2m) was spent renewing and enhancing manufacturing plant and equipment, with major spend on new equipment to continue to support our new exciting product development programme. Outlook The UK sales recovery is expected to continue with a strong order book, however the impact of lifting lockdown restrictions is unknown and so forecasting sales performance in the second half is particularly difficult. Market activity in our European Markets is expected to improve but relatively slowly. Difficulties exporting to Europe are now well documented, with significant increases in cost and additional complexity in exporting to Europe Post-Brexit. Of greatest concern is the level of raw material price inflation and supply chain tensions putting a strain on the availability of materials and the costs of obtaining them, the increases experienced to date are relentless and unprecedented. Key to our success will be our ability to pass on these price increases and a halt or reversal of current pricing trends. We have however continued to invest in development of our product range with investment in new equipment and the launches of new products ongoing throughout 2021 based upon our confidence in the future prospects of the business and our secure financial position. Given the financial performance of the group and the continued levels of uncertainty in the market and wider economy the group will continue to prioritise cash to ensure medium to long-term stability and therefore will not be proposing an interim dividend (2020: nil). MARTIN TOOGOOD Chairman 30th July 2021
| ConsolidatedIncomeStatement | |||
| 6monthsended30thJune2021 | |||
| Unaudited6 monthsended30thJune 2021 | Unaudited6 monthsended30thJune 2020 | Audited12months ended31stDecember 2020 | |
| £000 | £000 | £000 | |
| Revenue | 7,431 | 7,100 | 14,554 |
| Operatingcosts | (6,997) | (7,103) | (14,090) |
| Otheroperatingincome | 140 | 140 | 280 |
| Operatingprofitbeforevaluation gain | 574 | 137 | 744 |
| Unrealisedvaluationgain | - | - | 125 |
| Operatingprofit | 574 | 137 | 869 |
| Financeincome | 4 | 2 | 7 |
| Financecosts | (114) | (193) | (376) |
| Profit/(loss)beforetaxation | 464 | (54) | 500 |
| Taxation | (24) | 11 | (109) |
| Profit/(loss)attributabletoshareholdersofthegroup | 440 | (43) | 391 |
| Earningspershare(basicanddiluted)forthegroup | 1.14p | 0.11p | 1.00p |
| Unaudited6monthsended30thJune | Unaudited6monthsended30thJune | Audited12months ended 31stDecember | |
| 2021 | 2020 | 2020 | |
| £000 | £000 | £000 | |
| Profit/(loss)attributabletoshareholdersofthegroup | 440 | (43) | 391 |
| Itemsthatwillnotbereclassifiedtoprofitorloss Actuarialgain/(loss)recognisedinthepensionscheme | 3,997 | (3,448) | (389) |
| Relateddeferredtaxation | (797) | 655 | 74 |
| 3,200 | (2,793) | (315) | |
| Itemsthatwillbereclassifiedsubsequentlytoprofitorlosswhenspecificconditionsaremet Revaluationofproperty | - | 12 | 37 |
| Relateddeferredtaxation | - | (2) | (4) |
| - | 10 | 33 | |
| Totalothercomprehensiveincome/(loss) | 3,200 | (2,783) | (282) |
| Totalcomprehensiveincome/(loss)attributabletoshareholdersofthegroup | 3,640 | (2,826) | 109 |
| ConsolidatedBalanceSheet | |||
| asat30thJune2021 | |||
| Unaudited30thJune 2021 | Unaudited30thJune 2020 | Audited31stDecember 2020 | |
| £000 | £000 | £000 | |
| Non-currentassets | |||
| Property,plantandequipment | 5,279 | 4,282 | 4,271 |
| Intangibleassets | 62 | 67 | 54 |
| Investmentproperty | 3,725 | 3,600 | 3,725 |
| Right-of-useasset | 1,011 | 1,126 | 1,086 |
| PensionSurplus | 2,310 | - | - |
| Deferredtaxasset | 733 | 1,563 | 920 |
| 13,120 | 10,638 | 10,056 | |
| Currentassets | |||
| Inventories | 5,877 | 4,728 | 5,622 |
| Tradeandotherreceivables | 2,093 | 1,915 | 1,712 |
| Cashandcashequivalents | 6,226 | 6,451 | 6,555 |
| 14,196 | 13,094 | 13,889 | |
| Totalassets | 27,316 | 23,732 | 23,945 |
| Currentliabilities | |||
| Tradeandotherpayables | (3,679) | (2,482) | (2,895) |
| Provisions | (138) | (320) | (465) |
| Leaseliabilities | (145) | (213) | (243) |
| Loansandborrowings | (1,359) | (580) | (1,071) |
| (5,321) | (3,595) | (4,674) | |
| Non-currentliabilities | |||
| Pensiondeficit | - | (4,888) | (1,789) |
| Deferredtax | (1,206) | (526) | (609) |
| Leaseliabilities | (174) | (297) | (188) |
| Loansandborrowings | (2,911) | (3,317) | (2,641) |
| (4,291) | (9,028) | (5,227) | |
| Totalliabilities | (9,612) | (12,623) | (9,901) |
| Net assets | 17,704 | 11,109 | 14,044 |
| Equity | |||
| Calledupsharecapital | 10,339 | 10,339 | 10,339 |
| Sharepremiumaccount | 504 | 504 | 504 |
| OwnShares | (876) | (1,518) | (1,197) |
| Share-basedpaymentreserve | 161 | 141 | 141 |
| Capitalredemptionreserve | 3,617 | 3,617 | 3,617 |
| Revaluationreserve | 3,014 | 3,058 | 3,014 |
| Retainedearnings | 945 | (5,032) | (2,374) |
| Total equity | 17,704 | 11,109 | 14,044 |
| ConsolidatedCashFlowStatement | |||
| 6monthsended30thJune2021 | |||
| Unaudited6monthsended30thJune 2021 | Unaudited6monthsended30thJune 2020 | Audited12months ended31stDecember 2020 | |
| £000 | £000 | £000 | |
| Cashflowfromoperatingactivities | |||
| Profit/(loss)fortheperiod | 440 | (43) | 391 |
| Depreciation | 123 | 114 | 228 |
| Depreciationofright-of-useassets | 128 | 140 | 270 |
| Amortisation | 16 | 25 | 38 |
| MovementinProvision | (327) | - | 145 |
| Share-basedpaymentexpense | 20 | 56 | 56 |
| NetFinancecosts | 110 | 191 | 369 |
| Taxcharge/(credit) | 24 | (11) | 109 |
| Unrealisedvaluationgain | - | - | (125) |
| Operatingcashflowsbeforemovementsinworkingcapital | 534 | 472 | 1,481 |
| (Increase)/decreaseininventory | (255) | 733 | (161) |
| (Increase)/decreaseintradeandotherreceivables | (417) | 197 | 456 |
| Increaseintradeandotherpayables | 784 | 70 | 467 |
| Cashgeneratedfromoperations | 646 | 1,472 | 2,243 |
| Contributionstodefinedbenefitpensionscheme | (200) | (200) | (400) |
| Netcashgeneratedfromoperatingactivities | 446 | 1,272 | 1,843 |
| Cash flows from investingactivities | |||
| Paymentstoacquireintangiblefixedassets | (24) | (33) | (53) |
| Paymentstoacquiretangiblefixedassets | (1,131) | (156) | (233) |
| (1,155) | (189) | (286) | |
| Cash flows from financingactivities | |||
| Interestpaidonleaseliabilities | (6) | (8) | (15) |
| Interestpaidonborrowings | (11) | (18) | (33) |
| Interestreceived | 4 | 2 | 7 |
| Proceedsfromnewloansandborrowings | 934 | 2,750 | 2,750 |
| Principalpaidonleaseliabilities | (166) | (177) | (344) |
| Repaymentofloans and borrowings | (375) | (138) | (324) |
| Netcash generated fromfinancingactivities | 380 | 2,411 | 2,041 |
| Net(decrease)/increaseincashandcashequivalents | (329) | 3,494 | 3,598 |
| Cashandcashequivalentsatstartoftheperiod | 6,555 | 2,957 | 2,957 |
| Cashandcashequivalentsatendoftheperiod | 6,226 | 6,451 | 6,555 |
| Sharecapital | Sharepremiumaccount | OwnShares | Share-based paymentreserve | Capitalredemption reserve | Revaluation reserve | Profitand lossaccount | Totalequity | ||
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | ||
| At1stJanuary2020 | 10,339 | 504 | (1,839) | 85 | 3,617 | 3,048 | (1,875) | 13,879 | |
| Comprehensiveincome | |||||||||
| fortheyear | |||||||||
| Profitfortheyear | - - - - - - | 391 | 391 | ||||||
| Actuariallossrecognised | |||||||||
| onthepensionscheme | - - - - - - | (315) | (315) | ||||||
| Impairmentofproperty | - - - - - - | 33 | 33 | ||||||
| Totalcomprehensive | |||||||||
| incomefortheyear - | - | - | - | - | - | 109 | 109 | ||
| Contributionsbyand | |||||||||
| distributionsto | |||||||||
| owners | |||||||||
| Dividendpaid - | - | - | - | - | - | - | - | ||
| Share-basedpayment - | - | - | 56 | - | - | - | 56 | ||
| Ownsharetransfer - | - | 642 | - | - | - | (642) | - | ||
| RevaluationReverse | |||||||||
| Transfer - | - | - | - | - | (34) | 34 | - | ||
| Totalcontributionsbyanddistributions toowners - | - | 642 | 56 | - | (34) | (608) | 56 | ||
| At31stDecember2020 and1stJanuary2021 10,339 | 504 | (1,197) | 141 | 3,617 | 3,014 | (2,374) | 14,044 | ||
| Comprehensive incomefortheperiod | |||||||||
| Profitfortheperiod | - - - - - - | 440 | 440 | ||||||
| Actuarialgainrecognised | |||||||||
| onthepensionscheme | - - - - - - | 3,200 | 3,200 | ||||||
| Revaluationofproperty | - | - | - | - | - | - | - | - | |
| Totalcomprehensive | |||||||||
| incomefortheperiod - | - | - | - | - | - | 3,640 | 3,640 | ||
| Contributionsbyand | |||||||||
| distributionsto | |||||||||
| owners | |||||||||
| Share-basedpayment - | - | - | 20 | - | - | - | 20 | ||
| OwnSharesTransfer - | - | 321 | - | - | - | (321) | - | ||
| Totalcontributionsbyanddistributionsto owners - | - | 321 | 20 | - | - | (321) | 20 | ||
| At30thJune2021 10,339 | 504 | (876) | 161 | 3,617 | 3,014 | 945 | 17,704 | ||