REG - Airea PLC - Final Results for the year ended 31 December 2022
05/04/2023 07:15
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RNS Number : 4497V Airea PLC 05 April 2023
5 April 2023
AIREA plc
("AIREA", the "Group" or the "Company")
Final Results
AIREA plc (AIM: AIEA), the UK design-led specialist flooring company,
supplying both the UK and international markets, is pleased to announce its
final results for the twelve months ended 31 December 2022.
Financial summary
· Group revenue increased by 16.5% to £18.5m (2021: £15.9m)
· Operating profit before valuation gain increased by 25.8% to £1.7m
(2021: £1.3m)
· Profit before tax up 11.0% to £1.4m (2021: £1.3m)
· Cash and cash equivalents increased to £5.8m (2021: £5.7m)
· Net cash increased by 53.0% to £2.8m (2021: £1.9m)
· Final dividend of 0.5p per ordinary share (2021: 0.4p)
Operational highlights
· Appointment of Médéric Payne, Chief Executive Officer, in August
2022.
· Launch of sustainability principles, eco2matters to focus on improving
all aspects of the Group's impact on the environment and society.
· Employee Share Scheme relaunched to a wider employee pool to help
drive long-term performance.
Post-period end
· First carbon neutral flooring range arctic was launched in early
2023.
Médéric Payne, Chief Executive Officer of AIREA plc, commented:
"I am pleased to report on the Group's final results for the twelve months
ended 31 December 2022.
"AIREA has made continued progress and maintained a high standard of service
to our customers, with improved revenue growth of 16.5%, even in the face of
economic challenges. Despite the inflationary cost pressures the Group
experienced throughout the financial year, we maintained our margins and
balance sheet strength.
"The launch of our sustainability principles, eco2matters, along with our
product range and carbon-neutral flooring, focuses on the way we will improve
the Group's impact on the environment and society. These principles play an
important role in driving the inherent long-term values of the Group and we
are confident in our commitment to our ESG strategy.
"We have made progress in our energy efficiency and the Group will continue to
explore alternative methods to improve that further.
"Demand is starting to recover to pre-pandemic levels, as we have identified
further export growth opportunities.
"With our focused strategy, whilst leveraging the Burmatex® brand, we are
building a strong platform for growth to deliver continued progress for AIREA
and returns to its shareholders."
- Ends -
For further information please contact:
AIREA plc Tel: +44 (0) 192 426 6561
Médéric Payne, Chief Executive Officer
Ryan Thomas, Chief Financial Officer
Singer Capital Markets Tel: +44 (0) 20 7496 3000
(Nominated Adviser and Sole Broker)
Peter Steel / Sam Butcher
Yellow Jersey PR Tel: +44 (0) 20 3004 9512
(Financial media and PR)
Sarah Hollins / Shivantha Thambirajah / Jazmine Clemens
This announcement contains inside information for the purposes of article 7 of
the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication
of this announcement, this information is now considered to be in the public
domain.
Notes to Editors
AIREA plc is a UK design-led specialist flooring company, supplying both UK
and international markets. Since 2007, the Group has been focused solely on
floor coverings and enjoys a strong and growing brand position within the
commercial flooring market.
The Group's core brand Burmatex® is one of the UK's leading designers and
manufacturers of commercial carpet tiles and planks. Burmatex® focuses on the
design and creation of sustainable innovative flooring solutions to meet the
needs of architects, specifiers and contractors with a continuously developing
range to suit the education, leisure, commercial, hospitality and public
sectors. The brand was acquired by AIREA in 1984.
The Group was admitted to trading on AIM of the London Stock Exchange on 12
December 2007.
For further information, please visit: https://aireaplc.com/
(https://aireaplc.com/) .
Chairman's Statement
Overview
The Group is pleased to report the continued progress from the impacts of the
COVID-19 pandemic, where there has been a recovery in demand both in our home
and export markets. We do, however, have some key markets that continue to be
negatively impacted by the ongoing conflict in Ukraine.
Our continued efforts to enhance our operational and supply chain processes
have helped manage the impact of the unprecedented increases in the prices of
raw materials, energy and availability of labour. Where possible, increased
costs have been mitigated through cost-saving initiatives, consumption
reduction actions or increased onward pricing.
The Group continues to maintain its cash reserves and strong balance sheet
position to enable us to invest in the future of the business and manage the
impact of the continued economic uncertainty and related risks.
Results
AIREA has delivered good revenue growth in the year following the recovery
from the COVID-19 pandemic. Underlying volumes remain below pre-pandemic
levels with price increases and sales mix being the major contributory factors
of the 16.5% revenue growth. The Group's operating profit margins have been
maintained despite the increases in raw materials, labour and energy costs.
Dividends
The Group has been cash generative in the period and plans to continue to
invest in the future of the business. We also believe in rewarding our loyal
shareholder base and therefore propose a final dividend of £0.2m or 0.5p per
share for FY22, also representing the total dividend for the year as no
interim dividend was paid (2021: £0.2m or 0.4p per share). The final dividend
will be paid on 18 May 2023 to shareholders on the register on 21 April 2023.
This proposal is subject to shareholder approval at the Group's Annual General
Meeting to be held on 10 May 2023.
Environmental, Social and Governance (ESG)
ESG is fundamental to the continued commercial success of AIREA, as evidenced
in our values, our actions and our products. We have made excellent progress
in 2022 through the launch of our sustainability principles, eco2matters,
which have been laid out to highlight our ongoing commitment in anchoring our
business to a sustainable ethos. The Group's focus is, and will continue to
be, the promotion of trade responsibility and the active pursuit of achieving
a Net Zero business.
We have begun work on the installation of solar panels on the roof of our
factory and warehouse as the implementation of this investment is believed to
help protect us against energy price volatility, whilst contributing to our
sustainable goals.
Our Board
The Board appointed Médéric Payne as Chief Executive Officer and as a member
of the Board of Directors on 25 August 2022. Médéric brings his extensive
leadership, commercial, supply chain and marketing expertise to the role with
a passion for developing people.
The Board's composition continues to evolve based on the required level of
skills and experience alongside ensuring the business operates efficiently and
is able to react quickly to any issues that may arise.
Our People
We recognise the hard work and dedication of our staff throughout the year and
sincerely thank them for the continued contribution they make towards the
future of AIREA.
The employee share scheme that was launched in 2019 has lapsed, with none of
the 2.8 million shares being held in the employee benefit trust ("EBT")
vesting. The scheme has been re-launched to a wider employee pool as the
Board recognises the need to retain and reward members of staff for long-term
performance. The scheme incentivises employees through nil cost share awards.
Awards will vest with beneficiaries over a three-year period ending 31
December 2025 after the achievement of the Group and individual performance
conditions.
Outlook
The development of our product ranges is exciting with the launches of new
sustainable products and the refresh of existing products with a drive towards
sustainability whilst refreshing the colour and design including as
appropriate switching to a better more sustainable yarn.
We launched our first carbon neutral range arctic, which has been well
received in the market and thus fulfilling the demands of our existing
customers.
Even though the Ukrainian conflict has adversely impacted some of our key
export markets, the Group has been able to recover in both our UK and export
market, along with identifying further export growth opportunities.
We are pleased that cost pressures are beginning to ease and stabilise,
however, it should be noted that the cost increases experienced during 2022
will be felt in 2023. In managing these cost pressures, we have taken
mitigating actions including the installation of solar panels, increased
onward pricing and a continued focus on waste reduction.
Summary
We are optimistic that the Group has been able to minimise our cost pressures
and inflationary headwinds in 2022 to ensure margins and profitability are
maintained. The Group made significant progress in our ESG ambitions through
creating a point of distinction and competitive advantage through the launch
of our eco2matters principle as this will be the foundation to help drive
AIREA shareholder growth for FY23 and beyond.
Martin Toogood
Chairman
4 April 2023
Chief Executive Officer's Statement
Introduction
2022 for AIREA started off with the sad passing of Neil Rylance, former Chief
Executive Officer, in March 2022. Whilst the situation may have caused some
initial uncertainty, a recruitment process was put in place and I feel
privileged to have taken the role in August 2022 to continue the legacy that
Neil achieved.
AIREA has faced many price pressures throughout the year, not least the
increase in energy prices which triggered a focused response in trying to
address the opportunities available in reducing energy usage across our
business. We have made progress towards improving our energy efficiency and
the Group is looking to explore alternative methods to improve that further. I
am confident that the team will rise to those challenges.
The increasing cost pressures have resulted in us passing on some price
increases to customers. However, we have sought to do this in keeping with
our value of principles in being honest, transparent and providing notice as
early as possible of forthcoming price changes.
As noted in the Chairman's statement, demand is beginning to recover to
pre-pandemic levels, with further opportunities in our export markets which we
have identified as being key areas of growth.
Products and Planet
Our product offering continues to develop with sustainability, design and
quality being key to our success, we have developed our first Carbon neutral
range arctic which launched at the beginning of 2023, with more yet to come.
Our eco2matters sustainability principles were launched as we focus on
improving all aspects of the way we impact the environment and society.
Our efforts in this area have been well received in the market, particularly
by the specifier and architect communities.
People
2022 saw the launch of our new values across the organisation as part of our
transformation project of putting our people at the heart of our business,
empowering, encouraging and inspiring them to deliver the products to our
customers whilst contributing to protecting our planet. These are the
fundamentals for us to succeed as a team, driving sustainable shareholder
value.
Summary and Outlook
The results for FY22 have shown AIREA is able to continuously provide a high
standard of service to our customers, even in the face of economic
challenges. As referred to in the Chairman's statement, we have maintained
our margins and stable balance sheet.
The Group has a number of opportunities that we are looking to explore,
notably on products that are commercially more sustainable, a more
customer-orientated business, new markets and appropriate investment to
improve manufacturing capabilities.
We are confident in our commitment to our ESG strategy which will deliver
shareholder returns in due course. With our focused strategy, we are building
a strong platform for growth within the commercial flooring market and will
leverage the value of the Burmatex® brand.
Finally, we would like to thank everyone associated with the AIREA Group for
their support during the period.
Médéric Payne
Chief Executive Officer
4 April 2023
Chief Financial Officer's Review
Group Results
Revenue increased 16.5% year on year to £18.5m (2021: £15.9m) with home
sales recovering to pre-pandemic levels. Our access to some export markets has
been impacted by the Ukraine conflict. We are, however, seeing recovery in
markets outside this region. Operating profit before property valuation gain
nevertheless increased to £1.7m (2021: £1.3m). Gross profit margins
increased marginally year on year despite the cost pressures experienced.
There was no unrealised valuation gain/(loss) on the investment property in
the year (2021: £0.3m gain), with the Group recording an operating profit
after valuation gains of £1.7m (2021: £1.6m).
Other finance costs relating largely to borrowing costs were £0.2m (2021:
£0.3m).
After a tax charge of £0.1m primarily due to deferred tax on property, plant
and equipment and changes in the tax rate at which deferred tax is recognised
(2021: £0.2m), profit attributable to shareholders of the Group for the year
was £1.3m (2021: £1.0m). Earnings per share were 3.36p (2021: 2.70p).
Operating cash flows before movements in working capital and other payables
were £1.8m (2021: £1.7m). Working capital increased by £0.1m (2021: £0.3m
increase) following an increase in trade and other receivables partially
offset by a decrease in inventories coupled with an increase in trade and
other payables. Capital expenditure of £0.4m (2021: £1.3m) related to the
Group's investment in maintaining the site, plant and machinery.
The Group had £5.8m of cash on hand as of 31 December 2022 (2021: £5.7m). In
2021 the Group borrowed £2.75m under the government Coronavirus Business
Interruption Loan Scheme, as of 31 December 2022 the amount outstanding was
£1.9m (2021: £2.4m). The Group fully repaid the long-term loan which was
taken out to acquire shares for the Employee Benefit Trust. The Group has
access to further liquidity of £1.0m via our unutilised banking facility
(2021: £1.0m unutilised).
The Group has £2.8m of net cash as of 31 December 2022 (2021: £1.9m).
The value of our investment property was maintained in the year.
The defined benefit pension scheme deficit increased from an unrecognised
surplus of £5.1m to a deficit of £1.3m. The Group's contributions to the
scheme were £nil (2021: £0.4m) based on the latest agreed schedule of
contributions between the Group and the scheme's trustees. There continues to
be volatility in global equity markets with the scheme's investment strategy
constantly under review to mitigate the scheme's long-term risk profile as
much as possible.
Key performance indicators
As part of its internal financial control procedures the Board monitors the
key financial metrics of revenue, operating profit, gross margin, working
capital (debtor and creditor days), inventory turns and cash. These KPIs are
reviewed in comparison to the previous year and the budget and analysis
undertaken to establish trends and variances. For the year ended 31 December
2022, operating profit return on sales was 8.9% (2021: 8.3%), return on net
operating assets was 8.3% (2021: 6.7%) and working capital to sales percentage
was 52.8% (2021: 57.7%).
Ryan Thomas
Chief Financial Officer
4 April 2023
Consolidated Income Statement
for the year ended 31 December 2022
Year Year
ended 31 December ended 31 December
2022 2021
£000 £000
Continuing Operations
Revenue 18,483 15,865
Operating costs (17,111) (14,832)
Other operating income 280 280
Operating profit before valuation gain 1,652 1,313
Unrealised valuation gain - 275
Operating profit 1,652 1,588
Finance income 32 8
Finance costs (251) (305)
Profit before taxation 1,433 1,291
Taxation (138) (249)
Profit attributable to shareholders of the Group 1,295 1,042
Basic and diluted earnings per share for the Group 3.36p 2.70p
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
2022 2022 2021 2021
£000 £000 £000 £000
Profit attributable to shareholders of the Group 1,295 1,042
Items that will not be classified to profit or loss
Actuarial (loss)/gain recognised in the pension scheme (1,247) 1,599
Related deferred taxation 318 (380)
Revaluation of Property (25) 166
Related deferred taxation 5 (32)
Total other comprehensive (949) 1,353
(loss)/income
Total comprehensive income attributable to shareholders of the Group 346 2,395
Consolidated Balance Sheet
as at 31 December 2022
2022 2022 2021 2021
£000 £000 £000 £000
Non-current assets
Property, plant and equipment 5,272 5,305
Intangible assets 71 55
Investment property 4,000 4,000
Deferred tax asset 917 720
Right-of-use-asset 879 972
11,139 11,052
Current assets
Inventories 5,895 6,150
Trade and other receivables 2,351 1,887
Cash and cash equivalents 5,762 5,688
14,008 13,725
Total assets 25,147 24,777
Current liabilities
Trade and other payables (3,316) (3,258)
Provisions (77) (245)
Lease liabilities (131) (124)
Loans and borrowings (734) (935)
(4,258) (4,562)
Non-current liabilities
Deferred tax (1,040) (1,031)
Pension deficit (1,345) -
Lease liabilities (202) (183)
Loans and borrowings (1,858) (2,592)
(4,445) (3,806)
Total liabilities (8,703) (8,368)
Net assets 16,444 16,409
Equity
Called up share capital 10,339 10,339
Share premium account 504 504
Own Shares (2,000) (555)
Share-based payment reserve - 157
Capital redemption reserve 3,617 3,617
Revaluation reserve 3,096 3,150
Retained earnings 888 (803)
Total equity 16,444 16,409
Consolidated Statement of Cash Flows
as at 31 December 2022
Year Year
ended 31 December ended 31 December
2022 2021
£000 £000
Cash flows from operating activities
Profit for the year 1,295 1,042
Depreciation 309 276
Depreciation of right-of-use assets 260 250
Amortisation 29 30
Movement in provisions (168) (220)
Share-based payment expense (157) 16
Net Finance costs 219 297
Tax charge 138 249
Profit on disposal of tangible fixed asset (77) -
Unrealised valuation gain - (275)
Operating cash flows before movements in working capital 1,848 1,665
Decrease / (Increase) in inventories 255 (528)
Increase in trade and other receivables (464) (152)
Increase in trade and other payables 66 347
Cash generated from operations 1,705 1,332
Contributions to defined benefit pension scheme - (400)
Net cash generated from operating activities 1,705 932
Cash flows from investing activities
Payments to acquire intangible fixed assets (45) (31)
Payments to acquire tangible fixed assets (312) (1,236)
Receipt from the sale of tangible fixed assets 77 -
Net cash used in investing activities (280) (1,267)
Cash flows from financing activities
Interest paid on lease liabilities (11) (12)
Interest paid on borrowings (142) (83)
Interest received 32 8
Proceeds from asset financing - 934
Principal paid on lease liabilities (141) (260)
Equity dividend paid (154) -
Repayment of loans (935) (1,119)
Net cash used in financing activities (1,351) (532)
Net increase/(decrease) in cash and cash equivalents 74 (867)
Cash and cash equivalents at start of the year 5,688 6,555
Cash and cash equivalents at end of the year 5,762 5,688
Consolidated Statement of Changes in Equity
as at 31 December 2022
Share based payment reserve
Share premium account Capital redemption
Share capital Own Shares reserve Revaluation Retained earnings Total equity
reserve
£000 £000 £000 £000 £000 £000 £000 £000
As 1 January 2021 10,339 504 (1,197) 141 3,617 3,014 (2,420) 13,998
Comprehensive income for
the year
Profit for the year - - - - - - 1,042 1,042
Actuarial gain recognised
on the pension scheme - - - - - - 1,219 1,219
Revaluation of property - - - - - 166 (32) 134
Total comprehensive income
for the - - - - - 166 2,229 2,395
year
Contributions by and
distributions to owners
Share-based payment - - - 16 - - - 16
Own Share Transfer - - 642 - - - (642) -
Revaluation Reserve Transfer - - - - - (30) 30 -
Total contributions by and
distributions to owners - - 642 16 - (30) (612) 16
At 31 December 2021
And 1 January 2022 10,339 504 (555) 157 3,617 3,150 (803) 16,409
Comprehensive income for
the year
Profit for the year - - - - - - 1,295 1,295
Actuarial loss recognised
on the pension scheme - - - - - - (929) (929)
Revaluation of property - - - - - (25) 5 (20)
Total comprehensive income -
for the - - - - (25) 371 346
year
Contributions by and
distributions to owners
Dividend Paid - - - - - - (154) (154)
Share-based payment - - - (157) - - - (157)
Own Share Transfer - - (1,445) - - - 1,445 -
Revaluation Reserve Transfer - - - - - (29) 29 -
Total contributions by and -
distributions to owners - (1,445) (157) - (29) 1,320 (311)
At 31 December 2022 10,339 504 (2,000) - 3,617 3,096 888 16,444
In accordance with Rule 20 of the AIM Rules, AIREA confirms that the annual
report and accounts for the year ended 31 December 2022 and notice of Annual
General Meeting ("AGM") and related proxy form will be available to view on
the Company's website at: www.aireaplc.co.uk (http://www.aireaplc.co.uk) on
5 April 2023 and will be posted to shareholders by 18 April 2023. The AGM will
be held on 10 May 2023, at 2.00 p.m. at Victoria Mills, The Green, Ossett,
West Yorkshire, WF5 0AN. Further details are set out in the notice of the AGM
available within the financial statements which can be viewed on the Group's
website.
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