REG - Airea PLC - Interim Report
28/07/2022 07:17
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RNS Number : 9957T Airea PLC 28 July 2022
Airea plc
(the "Company")
Interim report for the six months ended 30th June 2022
The principal activity of the group is the design, manufacture, marketing and
distribution of floor coverings.
Chairman's Statement
The six months ended 30th June 2022 continued to see recovery from the impacts
of the COVID-19 pandemic, which had suppressed activity in our key markets. H1
delivered improved sales and operating profit versus the prior year as demand
in both our home and export markets continued to recover.
We remain focused on our operational and supply chain processes, which enable
us to navigate the challenges from the current economic environment and the
Ukrainian conflict both of which continue to put a strain on the availability
of labour and raw materials.
The launches of our new products into the market continues with a noted
increase in the sales of these products and the continuing specification of
our product in the medium and premium sectors.
Net cash (cash less loans and borrowings) increased by £0.3m in the 6 month
period to £2.5m as at 30th June 2022 from £2.2m as at 31 December 2021. We
continue to have further liquidity available of £1.0m via our unutilised
overdraft facility (2021: £1.0m unutilised). Our cash reserves and strong
balance sheet enable us to manage the impact of the current economic
environment and support our ongoing product development.
Group Results
Revenue for the period was £8.6m, £1.2m above the prior year (2021: £7.4m).
In the UK our sales were 7.5% ahead of the prior six month comparative period
as home sales recovered to pre-pandemic levels. Export sales were up 45.5%
compared to the comparative period, despite the recovery to date export sales
are 26% down on the pre-pandemic levels with the general economic environment
continuing to impact trading overseas.
The operating profit was £756,000 (2021: £574,000). Excluding inventory
absorption impacts, underlying product margins have come under some pressure
versus prior year due to significant raw material inflation. After charging
pension, lease and loan related interest costs of £108,000 (2021: £114,000)
and incorporating the appropriate tax charge the net profit for the period was
£611,000 (2021: £440,000). Basic earnings per share were 1.58p (2021:
1.14p).
Operating cash flows before movements in working capital were £0.8m (2021:
£0.5m). Working capital remained relatively stable in the period in spite of
the increased prices of raw materials. Contributions to the defined benefit
pension scheme were £nil (2021: £0.2m) in line with the agreement reached
with the scheme trustees following the last triennial valuation as at 1st July
2020. There was capital expenditure of £0.2m on small enhancements to plant
and equipment following the major spend in the previous year (2021: £1.2m).
Update on CEO Replacement
The selection process for our new CEO continues, we have made good progress
and expect to be in a position to make an announcement in the coming months.
Outlook
The development of our product ranges continues with the launches of new
products and the refresh of existing products planned for the second half of
the year. Our order book and sales of new products continue to grow as we
strengthen our portfolio of products.
Recovery of our UK market has been pleasing with recovery in export sales
expected to continue, however it must be noted that the Ukrainian conflict has
adversely impacted some of our key export markets.
We have experienced unprecedented pressure on costs over the last 18 months
and we have taken numerous actions to mitigate the impact on profitability.
Those cost pressures and managing them will continue to be challenging over
the remainder of this year and into the future.
Given the continued levels of uncertainty in the market and the wider economy
the group will continue to prioritise the preservation of cash. We will
therefore not be proposing an interim dividend at this time (2021: nil). We
were pleased to have been in a position to declare and pay a final dividend
following the 2021 results and we cautiously expect to be in the position to
do similar once our 2022 results are finalised.
MARTIN TOOGOOD
Chairman
28th July 2022
Enquiries:
Ryan Thomas via 01924 266 561
Group Finance Director
Peter Steel / Daniel Dearden-Williams 020 7496 3000
Singer Capital Markets
Consolidated Income Statement
6 months ended 30th June 2022
Unaudited 6 months ended 30th June Unaudited 6 months ended 30th June Audited 12 months
2022 2021 ended 31st December
2021
£000 £000 £000
Revenue 8,551 7,431 15,865
Operating costs (7,935) (6,997) (14,832)
Other operating income 140 140 280
Operating profit before valuation gain 756 574 1,313
Unrealised valuation gain - - 275
Operating profit 756 574 1,588
Finance income 8 4 8
Finance costs (108) (114) (305)
Profit before taxation 656 464 1,291
Taxation (45) (24) (249)
Profit attributable to shareholders of the group 611 440 1,042
Earnings per share (basic and diluted) for the group 1.58p 1.14p 2.70p
Consolidated Statement of Comprehensive Income
6 months ended 30th June 2022
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30th June 30th June 31st December
2022 2021 2021
£000 £000 £000
Profit attributable to shareholders of the group 611 440 1,042
Items that will not be reclassified to profit or loss
Actuarial gain recognised in the pension scheme 35 1,687 1,599
Related deferred taxation (7) (358) (380)
28 1,329 1,219
Items that will be reclassified subsequently to profit or loss when specific
conditions are met
Revaluation of property
- - 166
Related deferred taxation - - (32)
- - 134
Total other comprehensive income 28 1,329 1,353
Total comprehensive income attributable to shareholders of the group
639 1,769 2,395
Consolidated Balance Sheet
as at 30th June 2022
Unaudited 30th June Unaudited 30th June Audited 31st December
2022 2021 2021
£000 £000 £000
Non-current assets
Property, plant and equipment 5,307 5,279 5,305
Intangible assets 51 62 55
Investment property 4,000 3,725 4,000
Right-of-use asset 943 1,011 972
Deferred tax asset 682 733 720
10,983 10,810 11,052
Current assets
Inventories 6,132 5,877 6,150
Trade and other receivables 2,370 2,093 1,887
Cash and cash equivalents 5,450 6,226 5,688
13,952 14,196 13,725
Total assets 24,935 25,006 24,777
Current liabilities
Trade and other payables (3,683) (3,679) (3,258)
Provisions (175) (138) (245)
Lease liabilities (124) (145) (124)
Loans and borrowings (731) (1,359) (935)
(4,713) (5,321) (4,562)
Non-current liabilities
Deferred tax (1,047) (767) (1,031)
Lease liabilities (212) (174) (183)
Loans and borrowings (2,226) (2,911) (2,592)
(3,485) (3,852) (3,806)
Total liabilities (8,198) (9,173) (8,368)
Net assets 16,737 15,833 16,409
Equity
Called up share capital 10,339 10,339 10,339
Share premium account 504 504 504
Own Shares (2,000) (876) (555)
Share-based payment reserve - 161 157
Capital redemption reserve 3,617 3,617 3,617
Revaluation reserve 3,150 3,014 3,150
Retained earnings 1,127 (926) (803)
Total equity 16,737 15,833 16,409
Consolidated Cash Flow Statement
6 months ended 30th June 2022
Unaudited 6 months ended 30th June Unaudited 6 months ended 30th June Audited 12 months
2022 2021 ended 31st December
2021
£000 £000 £000
Cash flow from operating activities
Profit for the period 611 440 1,042
Depreciation 165 123 276
Depreciation of right-of-use assets 126 128 250
Amortisation 14 16 30
Movement in Provision (70) (327) (220)
Share-based payment (credit)/expenses (157) 20 16
Net Finance costs 100 110 297
Profit on disposal of property, plant and equipment (77) - -
Tax charge 45 24 249
Unrealised valuation gain - - (275)
Operating cash flows before movements in working capital 757 534 1,665
Decrease/(increase) in inventory 18 (255) (528)
Increase in trade and other receivables (483) (417) (152)
Increase in trade and other payables 425 784 347
Cash generated from operations 717 646 1,332
Contributions to defined benefit pension scheme - (200) (400)
Net cash generated from operating activities 717 446 932
Cash flows from investing activities
Payments to acquire intangible fixed assets (10) (24) (31)
Payments to acquire tangible fixed assets (167) (1,131) (1,236)
Receipts from sales of tangible fixed assets 77 - -
(100) (1,155) (1,267)
Cash flows from financing activities
Interest paid on lease liabilities (4) (6) (12)
Interest paid on borrowings (69) (11) (83)
Interest received 8 4 8
Proceeds from asset financing - 934 934
Principal paid on lease liabilities (67) (166) (260)
Repayment of loans and borrowings (569) (375) (1,119)
Equity dividends paid (154) - -
Net cash generated from financing activities (855) 380 (532)
Net decrease in cash and cash equivalents (238) (329) (867)
Cash and cash equivalents at start of the period 5,688 6,555 6,555
Cash and cash equivalents at end of the period 5,450 6,226 5,688
Consolidated Statement of Changes in Equity
6 months ended 30th June 2022
Share premium account Share-based Capital redemption Profit and loss account
Share capital Own Shares payment reserve reserve Revaluation Total equity
reserve
£000 £000 £000 £000 £000 £000 £000 £000
At 1st 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 loss recognised
on the pension scheme - - - - - - 1,219 1,219
Revaluation of property - - - - - 166 (32) 134
Total comprehensive
income for the year - - - - - 166 2,229 2,395
Contributions by and distributions to owners
Dividend paid - - - - - -
- -
Share-based payment - - - 16 - 16
- -
Own share transfer Revaluation Reverse - - 642 - - -
- (642)
Transfer
- - -
-
- -
(30) 30
Total contributions by and distributions to owners
- - 642 16 - (30) (612) 16
At 31st December 2021
and 1st January 2022 10,339 504 (555) 157 3,617 3,150 (803) 16,409
Comprehensive income for the period
Profit for the period -
Actuarial gain recognised - - - - - 611 611
on the pension scheme -
- - - - - 28 28
Revaluation of property - - - - - - - -
Total comprehensive
income for the period - - - - - - 639 639
Contributions by and distributions to owners
Dividend paid - - - - - - (154) (154)
Share-based payment - - - (157) - - - (157)
Own Shares Transfer - - (1,445) - - - 1,445 -
Total contributions by and distributions to
owners
-
- (1,445) (157) - - 1,291 (311)
At 30th June 2022 10,339 504 (2,000) - 3,617 3,150 1,127 16,737
Notes to the Financial Statements
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The financial information for the six months ended 30th June 2022 and the six
months ended 30th June 2021 have not been audited and do not constitute full
financial statements within the meaning of Section 434 of the Companies Act
2006.
The financial information relating to the year ended 31st December 2021 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 UK adopted International Accounting Standards 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 UK adopted International Accounting Standards.
The accounting policies used are the same as those used in preparing the
financial statements for the period ended 31st December 2021. These policies
are set out in the annual report and accounts for the period ended 31st
December 2021 which is available on the company's website at
www.aireaplc.co.uk. (http://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. (http://www.aireaplc.co.uk/)
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