REG - Airea PLC - Final Results for the year ended 31 December 2023
26/03/2024 07:00
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RNS Number : 2378I Airea PLC 26 March 2024
26 March 2024
AIREA plc
("AIREA", the "Group" or the "Company")
Final Results for the year ended 31 December 2023
Strong growth in challenging market conditions
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 2023.
Financial summary
· Group revenue increased by 14.1% to £21.1m (2022: £18.5m)
· Operating profit before valuation gain increased by 9.2% to £1.8m
(2022: £1.7m)
· EBITDA increased by 13.0% to £2.6m (2022: £2.3m)
· Cash and cash equivalents at £5.8m (2022: £5.8m)
· Net cash increased by 21.4% to £3.4m (2022: £2.8m)
· Final dividend increased by 10.0% to 0.55p per ordinary share (2022:
0.50p)
Operational highlights
· The successful launch of two carbon-neutral products, arctic® and
osaka®, and the refresh of two low-carbon products, infinity and go-to®
helped to drive sales growth.
· Implementation of the Group's sustainability principles,
eco(2)matters® across all business operations.
· Appointment of Tanya Ashton as Non-Executive Director in May 2023.
· Appointment of Conleth Campbell as Chief Financial Officer and
Executive Director in October 2023.
Post-period end
· As announced on 24 January 2024, a £5.0m investment in the Company's
manufacturing facility in Ossett, West Yorkshire to substantially increase
capacity and include the automation of certain processes using the latest
cutting-edge Artificial Intelligence imagery and inspection technology.
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 2023.
"AIREA made excellent progress in 2023 and has maintained a high standard of
service to our customers, with revenue growth of 14.1% over the period. The
growth was driven by an increase in demand for our more sustainable product
ranges, with limited cost increases as raw material inflation eased through
the second half of the year. We have firmly re-established our presence within
the UK and ROI, outperforming the market. This has given the Group confidence
to achieve greater growth scalability in the wider European and other key
international markets.
"We more closely aligned our key products to the Group's ten market sectors
throughout 2023, resulting in an increased rate of sales growth. We continue
to work closely with our customers to meet their needs and provide a
market-leading service.
"With the launch of the Group's eco(2)matters® sustainability principles in
December 2022 defining the scope of the direction for 2023, this accelerated
the launch of two carbon-neutral products and refreshing two low-carbon
products in the year. This is a significant step change in the business, and
we intend to continue to invest for future sales growth, incorporating the
eco(2)matters® principles and the journey towards net zero. We continue to
transform the business with a more focused growth strategy centred on
sustainability.
"The £5.0m investment in the manufacturing facility will enable the Group to
increase production and capitalise on efficiencies, whilst bringing new,
exciting, and more innovative products to the market. We are optimistic about
these opportunities as we continue to build a strong platform for growth and
delivering increased value to AIREA shareholders.
"Despite the current challenging economic conditions, we are pleased to report
the Group has experienced a good start to the year. Demand remains high for
our carbon-neutral and low-carbon products, and we are confident of continuing
to outperform the market through 2024."
- Ends -
For further information please contact:
AIREA plc Tel: +44 (0) 192 426 6561
Médéric Payne, Chief Executive Officer
Conleth Campbell, 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 / Soraya Jackson
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
AIREA is pleased to report another year of progress, both financially and
operationally. The strong sales growth reported in the first half of the year
continued throughout the second half, with further wins achieved in the UK and
key export markets.
During the first half of the year, the challenging economic conditions
continued to put a strain on the cost of labour, energy, and raw materials. We
took action to manage these risks, including the installation and
commissioning of solar panels to reduce our exposure to energy price
volatility.
There continues to be an ever-increasing interest in our low-carbon products.
We successfully launched two carbon-neutral products which were well-received
in the market and continue to work closely with our customers to ensure we
meet their needs.
Results
The Group's Burmatex® business delivered record sales of £21.1m, an increase
of 14.1% on the prior year, with sales now exceeding 2019 pre-pandemic levels
by 10%. Operating profit before valuation gain increased to £1.8m (2022:
£1.7m).
Looking to the future, the Group has developed a plan of investment in certain
areas that will form a platform on which to build a more sustainable
growth-focused business. In this regard, we were delighted to announce in
January 2024 that we would be investing £5.0m in our manufacturing facility.
This investment will substantially increase capacity and improve operational
efficiencies whilst at the same time improving the Group's sustainability
credentials.
Dividends
The Group maintained its net cash position in the period and will continue to
prioritise investment in the business. We also believe in rewarding our loyal
shareholder base and therefore propose a final dividend of £0.2m or 0.55p per
share for the year (2022: £0.2m or 0.50p per share), which is the total
dividend for the year as no interim dividend was paid. The final dividend will
be paid on 20 May 2024 to shareholders on the register on 19 April 2024. This
proposal is subject to shareholder approval at the Group's Annual General
Meeting to be held on 8 May 2024.
Environmental, Social and Governance
Sustainability is at the heart of how we manage our business. We are committed
to helping deliver a more sustainable future because we believe that what we
do matters. Our sustainability principles, eco(2)matters®, introduced in
2022, are now fully embedded across the Group. The development of our more
sustainable products indicates the transformational change the Group is
focused on to enable it to be more innovative, competitive, and agile. The
installation of solar panels on the roof of our manufacturing facility was
completed during the year and will help to mitigate against energy price
volatility, whilst contributing to our sustainability goals.
Our Board
The Board appointed Tanya Ashton as an Independent Non-Executive Director and
member of the Board of Directors on 10 May 2023. Tanya is an experienced board
director with extensive expertise in increasing sustainability in consumer
products.
Conleth Campbell was appointed as Chief Financial Officer, Company Secretary,
and a member of the Board of Directors on 2 October 2023. Conleth is an
experienced finance professional with over 25 years of experience in public
company environments.
With these recent appointments, the Board has the experience to provide
effective oversight and guidance as AIREA enters its next phase of growth.
Our People
We recognise the role our people play in helping the Group achieve its success
and would like to sincerely thank them for their valuable contribution. In the
year, we appointed a Head of Human Resources to assist us in embedding our
values throughout the Group and ensure we invest in the training and
development of our people.
In 2022, the long-term share incentive scheme was relaunched to a wider
employee pool as the Board recognised 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 both Group and
individual performance conditions.
Outlook
We are now working much closer with our existing customers, whilst expanding
our reach both in the UK and in our key target overseas markets.
We have increased our resources and focus on our design and marketing
functions to support the development and launch of new products. Demand for
our new sustainable products and the ongoing refresh of existing products,
supported by a forward-looking product pipeline, is providing optimism for
future profitable growth.
Summary
The Group made further progress in the year, with increased sales volumes and
operating profits as demand for our low-carbon and carbon-neutral products
increased.
The Board is confident that our fully embedded eco(2)matters® sustainability
principles and continued investment in the business will deliver further
growth in 2024.
Martin Toogood
Chairman
25 March 2024
Chief Executive Officer's Statement
Introduction
2023 was another year of progress for AIREA, with a continued focus on sales
growth in existing and new territories. The year also saw the successful
launch of carbon-neutral products in line with market trends and increasing
demand for low-carbon products.
An increase in sales volume, higher demand for our more sustainable products,
and a widening customer base were the driving factors in the double-digit
increase in turnover. The Group's £5.0m investment in its manufacturing
facility in Ossett, West Yorkshire will significantly increase capacity and
further improve operational efficiency. The investment is expected to be
completed in early 2025.
In May 2023, the Company exhibited at the renowned Clerkenwell Design Week.
This provided a platform to showcase its exciting new ranges, promote the
Burmatex® brand to the market and engage with our target customer audience in
this setting for the first time in over ten years.
Export sales were 43% ahead of the prior year as demand recovered in most of
our target export markets, with good progress being made in new markets. The
UK market remained challenging given the economic backdrop, however,
performance is encouraging as we achieved sales growth, with our mix moving
towards the more design-led products at higher margins.
Products and Planet
The Group is focused on sustainability, design and quality being essential to
new product development and running through everything we do. Driven by our
eco(2)matters® principles, AIREA developed a carbon-neutral product range
offering for customers. In 2023, both arctic® and osaka® were launched
within this carbon-neutral range, along with infinity and go-to® in the
low-carbon range.
AIREA is fully committed to making sustainability at the forefront of our
principles. The carbon-neutral products have had a positive environmental
impact, with our products being 100% certified renewable. The Company operates
a zero-landfill policy, along with a recovery take-back service. This drives
the Group's actions to maintain a sustainable responsibility as we continue
the journey to net zero.
People
In 2023, the Group firmly embedded its values across the organisation as part
of its focus on putting its people at the heart of its business and continuing
to empower, encourage and inspire them to develop products that meet the needs
of its customers whilst contributing to protecting our planet. I would like to
take this opportunity to thank our people for their continued contribution to
the success of the Group.
During the year, we invested further in people across several departments. The
Group now has the expertise in place to deliver our current and anticipated
growth targets.
Summary and Outlook
AIREA's strong performance in 2023 was testimony to its strategy which will
form the basis for further progress in 2024.
The Group's £5.0m investment in its manufacturing facility will substantially
increase capacity and include the automation of certain processes using the
latest cutting-edge Artificial Intelligence imagery and inspection technology.
This investment will provide greater stability to the Group and help to
deliver a period of sustained profitable growth.
Médéric Payne
Chief Executive Officer
25 March 2024
Chief Financial Officer's Review
Group Results
Revenue increased 14.1% to £21.1m (2022: £18.5m). This increase was driven
by higher sales volumes and an increase in demand for our carbon-neutral and
low-carbon product ranges. UK home sales maintained their good momentum and
ended the year above the prior year. Following the impact of the Ukraine
conflict in 2022, and despite the political unrest in the Middle East,
overseas sales were strong with key wins in several markets.
Operating profit before property valuation gain increased to £1.8m (2022:
£1.7m).
There was an unrealised valuation gain of £0.1m on the investment property in
the year (2022: £nil gain/loss), with the Group recording an operating profit
after the valuation gain of £1.9m (2022: £1.7m).
The transformational change in the Group continued in 2023 with further
investment in resources to deliver more profitable future growth. This has had
a short-term impact on operating margin which declined to 8.5% (2022: 8.9%).
Finance costs of £0.5m (2022: £0.2m) increased on the prior year due mainly
to higher costs relating to the pension scheme.
Taxation increased to £0.6m (2022: £0.1m) due to the change in tax rate to
25% and brought forward losses fully utilised in the prior year.
Profit attributable to shareholders of the Group for the year was £0.8m
(2022: £1.3m). Earnings per share were 2.0p (2022: 3.4p).
Operating cash flows before movements in working capital and other payables
were £2.6m (2022: £1.8m). Working capital increased by £0.2m (2022: £0.1m
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 £1.2m (2022: £0.4m) included the
purchase and installation of solar panels and the Group's ongoing investment
in maintaining its manufacturing facility.
The Group had £5.8m of cash on hand as of 31 December 2023 (2022: £5.8m). In
2021, the Group borrowed £2.75m under the government Coronavirus Business
Interruption Loan Scheme, as of 31 December 2023, the amount outstanding was
£1.4m (2022: £1.9m). The Group has access to further liquidity of £1.0m via
our unutilised banking facility (2022: £1.0m).
The deficit on the defined benefit pension scheme increased from £1.3m to
£5.0m. The Group's contributions to the scheme were £nil (2022: £nil).
There continues to be volatility in global equity markets with the scheme's
investment strategy constantly under review to mitigate its long-term risk
profile as much as possible. The Company will engage with the scheme's
trustees to agree on a reasonable and affordable recovery plan. A further
update will be provided at the announcement of the interim results.
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 2023, operating profit return on sales was 8.5% (2022: 8.9%), return
on net operating assets was 8.5% (2022: 8.3%) and working capital to sales
percentage was 24.2% (2022: 26.7%).
Conleth Campbell
Chief Financial Officer
25 March 2024
Consolidated Income Statement
for the year ended 31 December 2023
Year ended Year ended
31 December 2023 31 December 2022
£000 £000
Continuing Operations
Revenue 21,102 18,483
Operating costs (19,788) (17,111)
Other operating income 490 280
Operating profit before valuation gain 1,804 1,652
Unrealised valuation gain 60 -
Operating profit 1,864 1,652
Finance income 72 32
Finance costs (523) (251)
Profit before taxation 1,413 1,433
Taxation (644) (138)
Profit attributable to shareholders of the Group 769 1,295
Basic and diluted earnings per share for the Group 1.99p 3.36p
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023
2023 2023 2022 2022
£000 £000 £000 £000
Profit attributable to shareholders of the Group 769 1,295
Items that will not be classified to profit or loss
Remeasurement of the net defined benefit liability (3,281) (1,247)
Related deferred taxation 820 318
Revaluation of Property 315 (25)
Related deferred taxation (79) 5
Total other comprehensive (2,225) (949)
(loss)/income
Total comprehensive (loss) / income attributable to shareholders of the Group (1,456) 346
Consolidated Balance Sheet
as at 31 December 2023
2023 2023 2022 2022
£000 £000 £000 £000
Non-current assets
Property, plant and equipment 6,379 5,272
Intangible assets 65 71
Investment property 4,060 4,000
Deferred tax asset 1,413 917
Right-of-use-asset 895 879
12,812 11,139
Current assets
Inventories 5,753 5,895
Trade and other receivables 3,156 2,351
Cash and cash equivalents 5,758 5,762
14,667 14,008
Total assets 27,479 25,147
Current liabilities
Trade and other payables (3,795) (3,316)
Provisions - (77)
Lease liabilities (183) (131)
Loans and borrowings (739) (734)
(4,717) (4,258)
Non-current liabilities
Deferred tax (1,439) (1,040)
Pension deficit (4,972) (1,345)
Lease liabilities (287) (202)
Loans and borrowings (1,119) (1,858)
(7,817) (4,445)
Total liabilities (12,534) (8,703)
Net assets 14,945 16,444
Equity
Called up share capital 10,339 10,339
Share premium account 504 504
Own Shares (1,636) (2,000)
Share-based payment reserve 150 -
Capital redemption reserve 3,617 3,617
Revaluation reserve 3,376 3,096
Retained earnings (1,405) 888
Total equity 14,945 16,444
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
Year Year
ended ended
31 December 2023 31 December 2022
£000 £000
Cash flows from operating activities
Profit for the year 769 1,295
Depreciation 374 309
Depreciation of right-of-use assets 279 260
Amortisation 33 29
Movement in provisions (77) (168)
Share-based payment expense 150 (157)
Net Finance costs 451 219
Tax charge 644 138
Profit on disposal of tangible fixed asset - (77)
Unrealised valuation gain (60) -
Operating cash flows before movements in working capital 2,563 1,848
Decrease in inventories 142 255
Increase in trade and other receivables (807) (464)
Increase in trade and other payables 479 66
Cash generated from operations 2,377 1,705
Contributions to defined benefit pension scheme - -
Net cash generated from operating activities 2,377 1,705
Cash flows from investing activities
Payments to acquire intangible fixed assets (27) (45)
Payments to acquire tangible fixed assets (1,166) (312)
Receipt from the sale of tangible fixed assets - 77
Net cash used in investing activities (1,193) (280)
Cash flows from financing activities
Interest paid on lease liabilities (17) (11)
Interest paid on borrowings (160) (142)
Interest received 72 32
Proceeds from asset financing - -
Principal paid on lease liabilities (156) (141)
Equity dividend paid (193) (154)
Repayment of loans (734) (935)
Net cash used in financing activities (1,188) (1,351)
Net (decrease)/increase in cash and cash equivalents (4) 74
Cash and cash equivalents at start of the year 5,762 5,688
Cash and cash equivalents at end of the year 5,758 5,762
Consolidated Statement of Changes in Equity
as at 31 December 2023
Share based payment reserve
Share premium account Capital redemption
Share Own Shares reserve Revaluation Retained earnings Total equity
capital reserve
£000 £000 £000 £000 £000 £000 £000 £000
As 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
And 1 January 2023 504 (2,000) - 3,617 3,096 888 16,444
Comprehensive income for
the year
Profit for the year - - - - - - 769 769
Actuarial loss recognised
on the pension scheme - - - - - - (2,461) (2,461)
Revaluation of property - - - - - 315 (79) 236
Total comprehensive income -
for the - - - - 315 (1,771) (1,456)
year
Contributions by and
distributions to owners
Dividend Paid - - - - - - (193) (193)
Share-based payment - - - 150 - - - 150
Own Share Transfer - - 364 - - - (364) -
Revaluation Reserve Transfer - - - - - (35) 35 -
Total contributions by and -
distributions to owners - 364 150 - (35) (522) (43)
At 31 December 2023 10,339 504 (1,636) 150 3,617 3,376 (1,405) 14,945
In accordance with Rule 20 of the AIM Rules, AIREA confirms that the annual
report and accounts for the year ended 31 December 2023 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
26 March 2024 and will be posted to shareholders by 12 April 2024. The AGM
will be held on 8 May 2024, 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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