REG - Airea PLC - Half Yearly Report <Origin Href="QuoteRef">AIEA.L</Origin>

AireaAnnouncement

26/02/2016 07:10

RNS Number : 2200Q
Airea PLC
26 February 2016
AIREA PLC
Interim report for the six months ended 31 December 2015
The principal activity of the group is the manufacturing, marketing and distribution of floor coverings.
Chairman's statement
Airea is pleased to report earnings are broadly in line with the corresponding period last year, despite the adverse impact on international sales due to the strength of sterling against the Euro in the first half of the financial year. 
The first half of the current financial year has seen major progress across a number of strategic objectives. Most significant has been the recently announced consolidation of manufacturing operations from four locations onto two existing sites occupied by the company at Ossett and Wakefield. The move not only delivers significant cost savings and efficiency improvements, but enhances our operational capability, reducing lead-times and thereby improving customer service. 
Inevitably there have been one-off costs incurred as a consequence of the move, i.e. rationalisation of finished inventories, redundancy payments to staff who were not able to transfer, and the relocation of equipment and inventory. These exceptional costs have been highlighted in the income statement. 
On-going costs will be significantly reduced going forward. These include cost savings following the expiry of the lease of one of the properties vacated. In addition, Airea has agreed to lease to a third party its freehold property in Bury, which is no longer required for group operations as set out above, once it has been fully vacated by the company in the third quarter of this financial year.
The first six months also saw a reduction in the pension deficit arising from the completion of a Pension Increase Exchange exercise. The initiative allowed pensioners to opt for an income stream more aligned to their personal circumstances and preferences, whilst at the same time reducing the cost of past service benefits to the scheme. The gain to profit is highlighted as exceptional in the income statement. 
Group results
Revenue for the period was 12.7m (2014 restated: 13.4m). The operating profit before exceptional items was 730,000 (2014: 700,000). The exceptional charge of 1.3m related to the costs associated with the consolidation of manufacturing operations, and the exceptional income of 1.3m related to the Pension Increase Exchange. The operating profit after exceptional items was 759,000 (2014: 700,000). After charging pension related finance costs of 246,000 (2014:215,000) and incorporating the appropriate tax charge the net profit for the period was 372,000 (2014: 371,000). Basic earnings per share were 0.86p (2014: 0.80p).
Operating cash flows before exceptional items and movements in working capital were 1.1m (2014: 1.1m). The exceptional costs incurred a cash outflow of 0.5m (2014: 0.1m). Working capital decreased by 1.1m (2014: increase 0.4m) due to reductions in inventories. Contributions to the defined benefit pension scheme were 200,000 (2014: 200,000) in line with the agreement reached with the scheme trustees following the last triennial valuation as at 1st July 2014. Capital expenditure of 518,000 (2014: 136,000) was focussed on supporting new product launches. Overall the cash balance increased by 678,000 to 2.6m. 
Outlook
The Board does not detect any fundamental changes in the outlook for the markets that we serve, and competition for business is likely to remain intense. However, the business enters the second half of the year with a reduced cost base, simplified operation and a healthy new product pipeline. In line with its recent policy, the board has resolved to determine the level of dividend at the year end, and there will not be a dividend payment at the interim stage.
Martin Toogood
Chairman
26th February 2016
Enquiries:
Neil Rylance  01924 266561
Chief Executive Officer
Roger Salt  01924 266561
Group Finance Director
Richard Lindley  0113 388 4789
N+1 Singer

Consolidated Income Statement








6 months ended 31st December 2015










Unaudited 
Unaudited 
Audited






6 months ended
6 months ended
year ended






31st December
31st December
30th June 







restated







2015
2014
2015






000
000
000













Revenue

12,674
13,379
25,538




Operating costs

(11,915)
(12,679)
(24,440)




Operating profit before exceptional items

730
700
1,212




Exceptional items:








Pension credit

1,300
-
-




Restructure of operations

(1,271)
-
-




Property dispute

-
-
(15)




Share repurchase expenses

-
-
(99)




Operating profit 

759
700
1,098




Finance income

-
1
1




Finance costs

(246)
(215)
(449)




Profit before taxation

513
486
650




Taxation

(141)
(115)
(69)




Profit attributable to shareholders of the group

372
371
581













Earnings per share (basic and diluted)

0.86p
0.80p
1.29p













All amounts relate to continuing operations

















Consolidated Statement of Comprehensive Income






6 months ended 31st December 2015










Unaudited 
Unaudited 
Audited






6 months ended
6 months ended
year ended






31st December
31st December
30th June 






2015
2014
2015






000
000
000




Profit attributable to shareholders of the group

372
371 
581




Actuarial loss recognised in the pension scheme

(218)
- 
(1,635)




Related deferred taxation

44
- 
267




Total comprehensive incomeattributable to shareholders of the group

198
371 
(787)






















Consolidated Balance Sheet








as at 31st December 2015

Unaudited
Unaudited
Audited






31st December
31st December
30th June 






2015
2014
2015






000
000
000




Non-current assets








Property, plant and equipment

5,447
5,427
5,333




Deferred tax asset

1,350
1,288
1,557






6,797
6,715
6,890




Current assets








Inventories

8.313
10,358
10,647




Trade and other receivables

3,451
3,832
4,412




Cash and cash equivalents

2,561
1,915
1,883






14,325
16,105
16,942




Total assets

21,122
22,820
23,832




Current liabilities








Trade and other payables

(3,503)
(4,457)
(5,308)




Provisions

(325)
-
-






(3,828)
(4,457)
(5,308)




Non-current liabilities








Pension deficit

(6,406)
(5,776)
(7,443)




Deferred tax

(1)
(1)
(1)






(6,407)
(5,777)
(7,444)




Total liabilities

(10,235)
(10,234)
(12,752)






10,887
12,586
11,080




Equity








Called up share capital

10,851
11,561
10,851




Share premium account

504
504
504




Capital redemption reserve

3,105
2,395
3,105




Retained earnings

(3,573)
(1,874)
(3,380)






10,887
12,586
11,080













Consolidated Cash Flow Statement








6 months ended 31st December 2015

Unaudited 
Unaudited 
Audited






6 months ended
6 months ended
year ended






31st December
31st December
30th June 






2015
2014
2015






000
000
000




Cash flow from operating activities








Profit attributable to shareholders of the group

372
371
581




Tax charged

141
115
69




Finance costs

246
214
448




Pension credit

(1,300)
-
-




Exceptional costs

1,271
-
114




Depreciation

404
413
830




Operating cash flows before exceptional items & movements in working capital

1,134
1,113
2,042




Exceptional costs

(1,271)
-
(114)




Increase/(decrease) in provisions for liabilities and charges

325
(115)
(115)




Inventory impairment

468
-
-




Operating cash flows after exceptional items & movements in working capital

656
998
1,813




Decrease/(increase) in working capital

1,131
(400)
(375)




Cash generated from operations

1,787
598
1,438




Contributions to defined benefit pension scheme

(200)
(200)
(400)




Net cash generated from operations

1,587
398
1,038




Investing activities








Purchase of property, plant and equipment

(518)
(136)
(459)




Financing activities








Interest

-
-
(1)




Share repurchase

-
-
(348)




Equity dividends paid

(391)
(277)
(277)






(391)
(277)
(626)




Net increase/(decrease) in cash and cash equivalents

678
(15)
(47)




Cash and cash equivalents at start of period

1,883
1,930
1,930




Cash and cash equivalents at end of period

2,561
1,915
1,883






















Consolidated Statement of Changes in Equity






6 months ended 31st December 2015










Share capital
Share premium account
Capital redemption reserve
Retained Earnings
Total equity




000
000
000
000
000











At 1st July 2014

11,561 
504 
2,395 
(1,968)
12,492 


Profit attributable to shareholders of the group

- 
- 
- 
371
371 


Dividend paid

- 
- 
- 
(277) 
(277) 


At 1st January 2015

11,561 
504 
2,395 
(1,874)
12,586 


Profit attributable to shareholders of the group

-
-
-
210
210


Other comprehensive income for the period

- 
- 
- 
(1,368) 
(1,368) 


Share repurchase

(710)
-
710
-
-


Consideration paid on share repurchase

-
-
-
(348)
(348)


At 1st July 2015

10,851 
504 
3,105 
(3,380) 
11,080 


Profit attributable to shareholders of the group

- 
- 
- 
372 
372 


Other comprehensive income for the period

-
-
-
(174)
(174)


Dividend paid

- 
- 
- 
(391)
(391)


At 31st December 2015

10,851 
504 
3,105
(3,573) 
10,887 











Note

















BASIS OF PREPARATION AND ACCOUNTING POLICIES







The financial information for the six month periods ended 31st December 2015 and 31st December 2014 has not been audited and does not constitute full financial statements within the meaning of Section 434 of the Companies Act 2006. The revenue and operating costs for the six month period ended 31st December 2014 have been restated due to the reclassification of settlement discount as required by IAS 18, Revenue Recognition.

The financial information relating to the year ended 30th June 2015 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 the year ended 30th June 2015. These policies are set out in the annual report and accounts for the year ended 30th June 2015. The interim and annual reports, and this announcement are available on the company's website at www.aireaplc.co.uk.








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