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

AireaAnnouncement

27/09/2017 07:06

RNS Number : 8939R
Airea PLC
27 September 2017
AIREA PLC
Interim report for the twelve months ended 30 June 2017
The principal activity of the group is the manufacturing, marketing and distribution of floor coverings.
Chairman's Statement
It is pleasing to report improved earnings for the twelve months ending 30th June 2017 and continuing strengthening of our competitive position despite challenging trading conditions.
- Profit before tax up 8.3%
- Basic earnings per share up 14.3%
- Interim dividend introduced
As indicated in the six month review in February, we were seeing signs of increases in commodity prices. The second six months of the current accounting period has seen further margin pressure in both the contract and residential flooring market, and we are working hard to manage margins. 
New product launches were well received in the UK contract sector, however market conditions worsened through the period as a combination of further public sector cut backs and ongoing economic and political uncertainty weighed on demand. 
Recent product launches and new routes to market led to sales growth in the residential sector. 
Exports continued to grow steadily in the period as the improved exchange rate restored competitiveness and new markets came on stream. 
The site consolidation is now fully complete and delivering both significant cost savings as well as improved service levels and reduced waste. We remain in negotiations over our remaining leasehold property. 
Group Results
Revenue for the period was 23.9m (2016: 24.6m). The operating profit was 2,121,000 (2016: 2,042,000). After charging pension related finance costs of 614,000 (2016: 651,000) and incorporating the appropriate tax charge the net profit for the period was 1,423,000 (2016 1,277,000). Basic earnings per share were 3.44p (2016 3.01p) 
Operating cash flows before exceptional items and movements in working capital were 2.8m (2016: 2.8m). Working capital increased in the period by 2.0m as a result of stock build for successful product launches. Contributions to the defined benefit pension scheme were 400,000 (2016: 400,000) in line with the agreement reached with the scheme trustees following the last triennial valuation as at 1st July 2014. Capital expenditure of 1,280,000 (2016: 704,000) was made in renewing and enhancing manufacturing plant and equipment. 
The increase in the pension deficit of 277,000 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, continues to produce an improved underlying position. 
Outlook
We are encouraged by the reaction to our new products from both domestic and overseas customers, continue to benefit from our reduced cost base and remain committed to bringing competitively priced products with high design content to market. This will hold us in good stead as we anticipate ongoing uncertainty of demand in all the markets that we serve. 
As previously announced we are in an eighteen month accounting period and this second interim report is unusual in covering a twelve month period. We stated in our last announcement that we would look to introduce an interim dividend, which is particularly relevant in the transition to our new accounting period end. Given the ongoing improvement in the financial performance of the group and a robust cash flow we are able to declare an interim dividend of 1.75p to be paid on the 23rd of November 2017 to shareholders on the register at close of business on 13th October 2017. The ex dividend date is 12th October 2017.
Martin Toogood
Chairman
26th September 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








12 months ended 30th June 2017










Unaudited 
Audited







12 months ended
year ended







30th June
30th June 







2017
2016







000
000














Revenue

23,894
24,577





Operating costs

(21,773)
(22,535)





Operating profit before exceptional items

2,121
2,013





Exceptional items:








Exceptional costs

-
(1,271)





Pension credit

-
1,300





Operating profit 

2,121
2,042





Finance income

-
-





Finance costs

(614)
(651)





Profit before taxation

1,507
1,391





Taxation

(84)
(114)





Profit attributable to shareholders of the group

1,423
1,277














Earnings per share (basic and diluted)

3.44p
3.01p














All amounts relate to continuing operations

















Consolidated Statement of Comprehensive Income






12 months ended 30th June 2017










Unaudited 
Audited







12 months ended
year ended







30th June
30th June 







2017
2016







000
000





Profit attributable to shareholders of the group

1,423
1,277














Actuarial loss recognised in the pension scheme

(79)
(291)





Related deferred taxation

16
(83)







(63)
(374)





Unrealised valuation gain

-
3,009





Related deferred taxation

-
(240)







-
2,769





Total comprehensive incomeattributable to shareholders of the group

1,360
3,672























Consolidated Balance Sheet








as at 30th June 2017

Unaudited
Audited







30th June
30th June 







2017
2016







000
000





Non-current assets








Property, plant and equipment

6,101
5,489





Investment property

2,701
2,701





Deferred tax asset

1,281
1,264







10,083
9,454





Current assets








Inventories

11,146
9,338





Trade and other receivables

4,704
4,601





Cash and cash equivalents

2,302
3,114







18,152
17,053





Total assets

28,235
26,507





Current liabilities








Trade and other payables

(5,574)
(5,505)





Provisions

-
(125)







(5,574)
(5,630)





Non-current liabilities








Obligation under finance leases

(767)
-





Pension deficit

(6,962)
(6,685)





Deferred tax

(241)
(241)







(7,970)
(6,926)





Total liabilities

(13,544)
(12,556)







14,691
13,951





Equity








Called up share capital

10,339
10,339





Share premium account

504
504





Capital redemption reserve

3,617
3,617





Revaluation reserve

3,009
3,009





Retained earnings

(2,778)
(3,518)







14,691
13,951































































































Consolidated Cash Flow Statement








12 months ended 30th June 2017 

Unaudited 
Audited







12 months ended
year ended







30th June
30th June 







2017
2016







000
000





Cash flow from operating activities








Profit attributable to shareholders of the group

1,423
1,277





Tax charged

84
114





Finance costs

614
651





Depreciation

668
837





Profit on disposal of property plant and equipment

-
(6)





Pension credit

-
(1,300)





Inventory impairment

-
468





Operating cash flows before exceptional items & movements in working capital

2,789
2,041





(Increase) / Decrease in inventories

(1,808)
841





Increase in trade and other receivables

(103)
(189)





(Decrease) / increase in trade and other payables

(68)
232





(Decrease) / Increase in provisions for liabilities and charges

(125)
125





Cash generated from operations

685
3,050





Income tax received

52
61





Contributions to defined benefit pension scheme

(400)
(400)





Net cash generated from operations

337
2,711














Investing activities








Purchase of property, plant and equipment

(1,280)
(704)





Proceeds on disposal of property, plant and equipment

-
25







(1,280)
(679)





Financing activities








Interest

(16)
-





Obligations under finance leases

767
-





Share repurchase

-
(410)





Equity dividends paid

(620)
(391)







131
(801)





Net (decrease) / increase in cash and cash equivalents

(812)
1,231





Cash and cash equivalents at start of period

3,114
1,883





Cash and cash equivalents at end of period

2,302
3,114




























































Consolidated Statement of Changes in Equity







12 months ended 30th June 2017











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

-
-
-
-
1,277
1,277


Other comprehensive income for the period

-
-
-
3,009
(614)
2,395




-
-
-
3,009
663
3,672


Contributions by and distributions to owners









Share repurchase

(512)

512
-
-
-


Consideration paid on share purchase

-
-
-
-
(410)
(410)


Dividend Paid

-
-
-
-
(391)
(391)


At 30th June and 1st July 2016

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


Comprehensive income for the period









Profit for the year

-
-
-
-
1,423
1,423


Other comprehensive income for the year

-
-
-
-
(63)
(63)




-
-
-
-
1,360
1,360


Contributions by and distributions to owners









Dividend Paid

-
-
-
-
(620)
(620)


At 30th June 2017

10,339
504
3,617
3,009
(2,778)
14,691






























































































































































































































Note









BASIS OF PREPARATION AND ACCOUNTING POLICIES

















The financial information for the twelve month periods ended 30th June 2017 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 and are also available, along with this announcement, on the company's website at www.aireaplc.co.uk

















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