REG - Airea PLC - Interim report <Origin Href="QuoteRef">AIEA.L</Origin>

AireaAnnouncement

21/02/2017 07:06

RNS Number : 3748X
Airea PLC
21 February 2017
AIREA PLC
Interim report for the six months ended 31 December 2016
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 significantly ahead of the corresponding period.
- Operating profit up 51%
- Basic earnings per share up 76%
- EBITDA up 28%
New product launches targeted at the residential market have driven growth in this sector. On the contract side however, delays in projects led to a slow down in growth and as indicated in the annual report sales in the Euro zone took some time to recover. Exports grew steadily in the period and we are seeing sales ahead of last year as we enter the second six months of the accounting period.
Investment in new technology during the second half of the last financial year will facilitate the further extension of our product range with several new designs currently being finalised for launch. 
The site consolidation exercise is largely complete with discussions concerning our last leasehold operation in Wakefield reaching an advanced stage. The business continues to reap the benefits of shorter lead times, cost synergies and reduced waste. 
Group Results
Revenue for the period was 12.8m (2015: 12.7m). The operating profit was 1,149,000 (2015: 759,000). After charging pension related finance costs of 305,000 (2015: 246,000) and incorporating the appropriate tax charge the net profit for the period was 696,000 (2015: 372,000). Basic earnings per share were 1.51p (2015: 0.86p) 
Operating cash flows before exceptional items and movements in working capital were 1.5m (2015: 1.1m). Working capital increased in the period by 1.2m mainly as a result of timing of payments to trade creditors. Contributions to the defined benefit pension scheme were 200,000 (2015: 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 1,009,000 (2015: 518,000) was made in renewing and enhancing manufacturing plant and equipment. 
The increase in the pension deficit of 579,000 resulted from a deterioration in corporate bond yields. It is an accounting standards requirement that the reported pension valuation is based on corporate bond yields even though this does not reflect the investment strategy of the plan. In reality the plan is now largely hedged against interest rate movements and inflation, which, combined with a diversified growth asset base, has produced an improved underlying position. 
Outlook
Recent experience suggests that current exchange rate conditions will, in overall terms, prove to be beneficial for the company but in recent months there has been significant input price pressure resulting from commodity price rises. It is therefore difficult at this point in time to predict the longer term effect on our competitive position. As ever our margins remain the subject of careful management as we look to exploit any advantage.
Of far greater concern is the medium to long term impact of economic uncertainty on market demand. Our position is not unique of course but there has been a notable increase in volatility in an already cyclical market.
The Board intends to maintain the recent pattern of dividend payments, and taking into consideration the changes in accounting period announced in December, will determine the level of interim dividend on the basis of the twelve month period ended 30 June 2017. Therefore there will not be a dividend payment at this interim stage.
Martin Toogood
Chairman
20th February 2017 
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 2016











Unaudited 
Unaudited 
Audited







6 months ended
6 months ended
year ended







31st December
31st December
30th June 







2016
2015
2016







000
000
000















Revenue

12,771
12,674
24,577





Operating costs

(11,622)
(11,915)
(22,535)





Operating profit before exceptional items

1,149
730
2,013





Exceptional items:









Exceptional costs

-
(1,271)
(1,271)





Pension credit

-
1,300
1,300





Operating profit 

1,149
759
2,042





Finance income

-
-
-





Finance costs

(305)
(246)
(651)





Profit before taxation

844
513
1,391





Taxation

(148)
(141)
(114)





Profit attributable to shareholders of the group

696
372
1,277















Earnings per share (basic and diluted)

1.68p
0.86p
3.01p















All amounts relate to continuing operations



















Consolidated Statement of Comprehensive Income







6 months ended 31st December 2016











Unaudited 
Unaudited 
Audited







6 months ended
6 months ended
year ended







31st December
31st December
30th June 







2016
2015
2016







000
000
000





Profit attributable to shareholders of the group

696
372
1,277





Actuarial loss recognised in the pension scheme

(480)
(218)
(291)





Related deferred taxation

96
44
(83)







(384)
(174)
(374)





Unrealised valuation gain

-
-
3,009





Related deferred taxation

-
-
(240)







-
-
2,769





Total comprehensive incomeattributable to shareholders of the group

312
198
3,672





Consolidated Balance Sheet









as at 31st December 2016

Unaudited
Unaudited
Audited







31st December
31st December
30th June 







2016
2015
2016







000
000
000





Non-current assets









Property, plant and equipment

6,164
5,447
5,489





Investment property

2,701
-
2,701





Deferred tax asset

1,326
1,350
1,264







10,191
6,797
9,454





Current assets









Inventories

9,017
8.313
9,338





Trade and other receivables

4,076
3,451
4,601





Cash and cash equivalents

2,499
2,561
3,114







15,592
14,325
17,053





Total assets

25,783
21,122
26,507





Current liabilities









Trade and other payables

(3,656)
(3,503)
(5,505)





Provisions

(125)
(325)
(125)







(3,781)
(3,828)
(5,630)





Non-current liabilities









Obligation under finance leases

(854)
-
-





Pension deficit

(7,264)
(6,406)
(6,685)





Deferred tax

(241)
(1)
(241)







(8,359)
(6,407)
(6,926)





Total liabilities

(12,140)
(10,235)
(12,556)







13,643
10,887
13,951





Equity









Called up share capital

10,339
10,851
10,339





Share premium account

504
504
504





Capital redemption reserve

3,617
3,105
3,617





Revaluation reserve

3,009
-
3,009





Retained earnings

(3,826)
(3,573)
(3,518)







13,643
10,887
13,951













































Consolidated Cash Flow Statement









6 months ended 31st December 2016

Unaudited 
Unaudited 
Audited







6 months ended
6 months ended
year ended







31st December
31st December
30th June 







2016
2015
2016







000
000
000





Cash flow from operating activities









Profit attributable to shareholders of the group

696
372
1,277





Tax charged

148
141
114





Finance costs

305
246
651





Depreciation

334
404
837





Profit on disposal of property plant and equipment

-
-
(6)





Pension credit

-
(1,300)
(1,300)





Inventory impairment

-
468
468





Operating cash flows before exceptional items & movements in working capital

1,483
331
2,041





Decrease in inventories

321
1,866
841





Decrease / (increase) in trade and other receivables

525
961
(189)





(Decrease) / increase in trade and other payables

(2,015)
(1,696)
232





Increase in provisions for liabilities and charges

-
325
125





Cash generated from operations

314
1,787
3,050





Income tax received

52
-
61





Contributions to defined benefit pension scheme

(200)
(200)
(400)





Net cash generated from operations

166
1,587
2,711















Investing activities









Purchase of property, plant and equipment

(1,009)
(518)
(704)





Proceeds on disposal of property, plant and equipment

-
-
25







(1,009)
(518)
(679)





Financing activities









Interest

(6)
-
-





Obligations under finance leases

854
-
-





Share repurchase

-
-
(410)





Equity dividends paid

(620)
(391)
(391)







228
(391)
(801)





Net increase/(decrease) in cash and cash equivalents

(615)
678
1,231





Cash and cash equivalents at start of period

3,114
1,883
1,883





Cash and cash equivalents at end of period

2,499
2,561
3,114













































Consolidated Statement of Changes in Equity







6 months ended 31st December 2016











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 2015

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


Comprehensive income for the period









Profit for the period

-
-
-
-
372
372


Other comprehensive income for the period

-
-
-
-
(174)
(174)




-
-
-
-
198
198


Contributions by and distributions to owners









Dividend Paid

-
-
-
-
(391)
(391)


At 31st December 2015

10,851
504
3,150
-
(3,573)
10,887


Comprehensive income for the period









Profit for the period

-
-
-
-
905
905


Other comprehensive income for the period

-
-
-
3,009
(440)
2,569




-
-
-
3,009
465
3,474


Contributions by and distributions to owners









Share repurchase

(512)
-
512
-
-
-


Consideration paid on share purchase

-
-
-
-
(410)
(410)




(512)
-
512
-
(410)
(410)


At 30th June 2016

10,339
504
3,617
3,009
(3,518)
13,951


Comprehensive income for the period









Profit for the year

-
-
-
-
696
696


Other comprehensive income for the year

-
-
-
-
(384)
(384)




-
-
-
-
312
312


Contributions by and distributions to owners









Dividend Paid

-
-
-
-
(620)
(620)


At 31st December 2016

10,339
504
3,617
3,009
(3,826)
13,643




















































Note









BASIS OF PREPARATION AND ACCOUNTING POLICIES











The financial information for the six month periods ended 31st December 2016 and 31st December 2015 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 year ended 30th June 2016 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 2016. These policies are set out in the annual report and accounts for the year ended 30th June 2016 which is available on the company's website 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.
















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