REG - Airea PLC - Interim Results
27/07/2023 07:15
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RNS Number : 3225H Airea PLC 27 July 2023
27 July 2023
AIREA plc
("AIREA", the "Group" or the "Company")
Interim results for the six months ended 30 June 2023
AIREA plc (AIM: AIEA), the UK design-led specialist flooring company,
supplying both the UK and international markets, is pleased to announce its
interim results for the six months ended 30 June 2023.
Financial highlights
30 June 2023 30 June 2022 Change
(£) (£) (%)
Group revenue 9,825k 8,551k 14.9
Operating profit before valuation 836k 756k 10.5
Profit before tax 620k 656k (5.4)
EBITDA (Earnings before interest tax depreciation and amortisation) 1,010k 1,016k (0.1)
Cash and cash equivalents 4,919k 5,450k (9.7)
Net cash 2,694k 2,493k 8.1
Operational highlights
· Continued focus on sales growth in existing and new territories, with
key wins in export markets.
· Successful launch of carbon-neutral products in line with market
trends and demand for low-carbon products.
· Installation and commissioning of solar panels, reducing exposure to
energy price volatility.
· Appointment of Tanya Ashton, Non-Executive Director, in May 2023.
Martin Toogood, Non-Executive Chairman of AIREA plc, commented:
"The first half of 2023 has seen continued growth in our sales fuelled by a
focus on refreshing our product offering and taking advantage of new markets.
The current economic environment continues to put a strain on the cost of
labour, energy, and raw materials. We do however continue to take actions to
manage these risks with investments for the future such as the installation of
our renewable energy solutions, all with a view to capitalising on the
opportunities in our markets as and when wider macro conditions improve."
- Ends -
For further information please contact:
AIREA plc Tel: +44 (0) 192 426 6561
Médéric Payne, Chief Executive Officer
Ryan Thomas, 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 / Jazmine Clemens
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/) .
Chief Executive Officer's Statement
Introduction
I am pleased to report the Group's interim results for the six months ended 30
June 2023. During this period, AIREA has made good progress and maintained
momentum in both its home and export markets. We have made a positive start to
the year and the Group's performance during the period is in line with
management expectations.
In May 2023, the Company seized the opportunity to exhibit at the renowned
Clerkenwell Design Week, which gave us the platform to showcase our new ranges
and 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.
Results
Revenue for the period increased by 15% to £9.8m (2022: £8.6m). In the
UK, our sales were 9.8% ahead of the prior six-month comparative period,
largely driven by a combination of cost increases being passed onto customers
combined with an improved sales mix. Export sales were up 36% compared to the
comparative period as demand recovered in most of our target export markets,
with good progress being made in new markets. The UK market remains
challenging given the economic backdrop, however, performance is encouraging
as our sales mix moves towards more design-led products.
The Group's operating profit was £0.8m (2022: £0.8m). Our underlying
product margins faced downward pressures due to increased energy, raw
materials, and labour costs. We were restricted in passing on these cost
increases in a price-sensitive market. Net finance costs increased by £0.1m
largely because of the increased pension interest charge. After charging net
finance costs of £0.2m (2022: £0.1m) and incorporating the appropriate tax
charge, the net profit for the period was £0.5m (2022: £0.6m). Basic
earnings per share were 1.18p (2022: 1.58p).
Operating cash flows before movements in working capital were £1.2m (2022: £0.8m). Working
capital increased in the period to £0.5m due to an increase in inventory for
new lines and higher receivables from customers (2022: £0.0m). Contributions
to the defined benefit pension scheme were £0.0m (2022: £0.0m) in line with
the agreement reached with the scheme trustees following the last triennial
valuation as of 1 July 2023. Capital expenditure of £0.9m (2022: £0.2m) was
spent renewing and enhancing the manufacturing plant and equipment, with an
important investment in our new solar panels.
Net cash (cash less loans and borrowings) decreased by £0.5m in the six-month
period to £2.7m as of 30 June 2023, from £3.2m as of 31 December 2022. We
continue to have further liquidity available of £1.0m via our unutilised
overdraft facility (2022: £1.0m unutilised). Our cash reserves and strong
balance sheet enable us to invest in the future of the business and manage the
impact of the continued economic uncertainty and related risks.
Update on Board composition
The Board appointed Tanya Ashton as Non-Executive Director to the Board on 10
May 2023. Tanya's appointment signals the importance that we attach to good
standards of corporate governance at AIREA.
We have commenced the selection process for our new Chief Financial Officer
following the resignation of Ryan Thomas on 4 July 2023. We have made good
progress and expect to be in a position to make an announcement in the coming
months.
We acknowledge the importance of reviewing Board composition on an ongoing
basis to ensure that the Group has the required level of skills and experience
to enable the business to operate efficiently and react quickly to any issues
that may arise.
Outlook
The development of our sustainable products indicates the transformational
change the Group is focused on to enable AIREA to be more competitive,
innovative, and agile. Our marketing and sales strategy is not only UK-focused
but also on growing our international sales in both existing and new
territories.
As the cost pressures persist, we continue to adapt our processes and
procedures to mitigate and manage the impact on the business. In some areas,
this has and will continue with the need to invest in our facilities such that
we reduce waste, improve productivity, and utilise energy efficiently.
Given the plans to continue to invest in the future of the business coupled
with 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 (2022: £nil). We
were pleased to have been able to declare and pay a final dividend following
the 2022 results and we cautiously expect to be in the position to do similar
once our 2023 results are finalised.
Finally, we would like to thank everyone associated with the AIREA Group for
their support during the period.
Médéric Payne
Chief Executive Officer
26 July 2023
Consolidated Income Statement
6 months ended 30 June 2023
Unaudited 6 months ended 30 June Unaudited 6 months ended 30 June Audited 12 months
2023 2022 ended 31 December
2022
£000 £000 £000
Revenue 9,825 8,551 18,483
Operating costs (9,301) (7,935) (17,111)
Other operating income 312 140 280
Operating profit before valuation gain 836 756 1,652
Unrealised valuation gain - - --
Operating profit 836 756 1,652
Finance income 39 8 32
Finance costs (255) (108) (251)
Profit before taxation 620 656 1,433
Taxation (130) (45) (138)
Profit attributable to shareholders of the Group 490 611 1,295
Earnings per share (basic and diluted) for the Group 1.18p 1.58p 3.36p
Consolidated Statement of Comprehensive Income
6 months ended 30 June 2023
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2023 2022 2022
£000 £000 £000
Profit attributable to shareholders of the Group 490 611 1,295
Items that will not be reclassified to profit or loss (1,247)
Actuarial gain/(loss) recognised in the pension scheme 513 35
Related deferred taxation (128) (7) 318
385 28 (929)
Items that will be reclassified subsequently to profit or loss when specific
conditions are met
Revaluation of property
- - (25)
Related deferred taxation - - 5
- - (20)
Total other comprehensive income/(loss) 385 28 (949)
Total comprehensive income attributable to shareholders of the Group
875 639 346
Consolidated Balance Sheet
as at 30 June 2023
Unaudited 30 June Unaudited 30 June Audited 31 December
2023 2022 2022
£000 £000 £000
Non-current assets
Property, plant and equipment 5,976 5,307 5,272
Intangible assets 59 51 71
Investment property 4,000 4,000 4,000
Right-of-use asset 754 943 917
Deferred tax asset 763 682 879
11,552 10,983 11,139
Current assets
Inventories 6,560 6,132 5,895
Trade and other receivables 2,871 2,370 2,351
Cash and cash equivalents 4,919 5,450 5,762
14,350 13,952 14,008
Total assets 25,902 24,935 25,147
Current liabilities
Trade and other payables (3,986) (3,683) (3,316)
Provisions (74) (175) (77)
Lease liabilities (127) (124) (131)
Loans and borrowings (736) (731) (734)
(4,923) (4,713) (4,258)
Non-current liabilities
Deferred tax (1,144) (1,047) (1,040)
Pension deficit (1,000) - (1,345)
Lease liabilities (140) (212) (202)
Loans and borrowings (1,489) (2,226) (1,858)
(3,773) (3,485) (4,445)
Total liabilities (8,696) (8,198) (8,703)
Net assets 17,206 16,737 16,444
Equity
Called up share capital 10,339 10,339 10,339
Share premium account 504 504 504
Own Shares (1,805) (2,000) (2,000)
Share-based payment reserve --80 - ---
Capital redemption reserve 3,617 3,617 3,617
Revaluation reserve 3,096 3,150 3,096
Retained earnings 1,375 1,127 888
Total equity 17,206 16,737 16,444
Consolidated Cash Flow Statement
6 months ended 30 June 2023
Unaudited 6 months ended 30 June Unaudited 6 months ended 30 June Audited 12 months
2023 2022 ended 31 December
2022
£000 £000 £000
Cash flow from operating activities
Profit for the period 490 611 1,295
Depreciation 165 165 309
Depreciation of right-of-use assets 124 126 260
Amortisation 15 14 29
Movement in Provision (3) (70) (168)
Share-based payment expense/(credit) 80 (157) (157)
Net Finance costs 216 100 219
Profit on disposal of property, plant and equipment - (77) (77)
Tax charge 130 45 138
Operating cash flows before movements in working capital 1,217 757 1,848
(Increase)/decrease in inventory (665) 18 255
Increase in trade and other receivables (520) (483) (464)
Increase in trade and other payables 670 425 66
Cash generated from operations 702 717 1,705
Contributions to defined benefit pension scheme - - ---
Net cash generated from operating activities 702 717 1,705
Cash flows from investing activities
Payments to acquire intangible fixed assets (4) (10) (45)
Payments to acquire tangible fixed assets (868) (167) (312)
Receipts from sales of tangible fixed assets - 77 77
Net cash used in investing activities (872) (100) (280)
Cash flows from financing activities
Interest paid on lease liabilities (5) (4) (11)
Interest paid on borrowings (82) (69) (142)
Interest received 39 8 32
Principal paid on lease liabilities (66) (67) (141)
Repayment of loans and borrowings (366) (569) (935)
Equity dividends paid (193) (154) (154)
Net cash used in financing activities (673) (855) (1,351)
Net (decrease)/increase in cash and cash equivalents (843) (238) 74
Cash and cash equivalents at start of the period 5,762 5,688 5,688
Cash and cash equivalents at end of the period 4,919 5,450 5,762
Consolidated Statement of Changes in Equity
6 months ended 30 June 2023
Share premium account Share-based Capital redemption Profit and loss account Total equity
Share capital Own Shares payment reserve reserve Revaluation
reserve
£000 £000 £000 £000 £000 £000 £000 £000
At 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 year - - - - - (25) 371 346
Contributions by and
distributions to owners
Dividend paid - - - - - (154)
- (154)
Share-based payment - - - (157) - (157)
- -
Own share transfer Revaluation Reverse - - (1,445) - - -
- 1,445
Transfer
- - -
-
- -
(29) 29
Total contributions by and distributions to owners
- - (1,445) (157) - (29) 1,320 (311)
At 31 December 2022
and 1 January 2023 10,339 504 (2,000) - 3,617 3,096 888 16,444
Comprehensive income for the period
Profit for the period -
Actuarial gain recognised - - - - - 490 490
on the pension scheme -
- - - - - 385 385
Revaluation of property - - - - - - - -
Total comprehensive
income for the period - - - - - - 875 875
Contributions by and distributions to owners
Dividend paid - - - - - - (193) (193)
Share-based payment - - - 80 - - - 80
Own Shares Transfer - - 195 - - - (195) -
Total contributions by and distributions to
owners
-
- 195 80 - - (388) (113)
At 30 June 2023 10,339 504 (1,805) 80 3,617 3,096 1,375 17,206
Notes to the Financial Statements
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The financial information for the six months ended 30 June 2023 and the six
months ended 30 June 2022 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 31 December 2022 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 31 December 2022. These policies are
set out in the annual report and accounts for the period ended 31 December
2022 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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