REG - Airea PLC - Interim Results
26/09/2024 07:00
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RNS Number : 6945F Airea PLC 26 September 2024
26 September 2024
AIREA plc
("AIREA", the "Group" or the "Company")
Interim results for the six months ended 30 June 2024
Solid trading in challenging market conditions, business transformation
progressing well
AIREA plc (AIM: AIEA), the UK design-led specialist flooring company,
supplying both the UK and international markets, today announces its interim
results for the six months ended 30 June 2024.
Financial summary
· Group revenue decreased by 5.6% to £9.3m (2023: £9.8m)
· Operating profit decreased to £0.2m (2023: £0.8m), heavily impacted
by;
o sales slowdown in second quarter
o non-recurring costs associated with new investment
o ongoing strategic investment for future growth
· EBITDA decreased to £0.6m (2023: £1.1m)
· Cash and cash equivalents at £2.8m (2023: £4.9m)
Operational highlights
· Sales performance slightly ahead of market
· Business transformation progressing well, in line with plan
· Major investment in manufacturing facility on track for completion in
early 2025
· Review of Group's stockholding policy underway
· Successful launch of new carbon-neutral products
· The Group's sustainability principles eco2matters® fully embedded
Martin Toogood, Non-Executive Chairman of AIREA plc, commented:
"The year started well, with strong demand for our carbon-zero and low-carbon
product ranges in the first quarter. The Group then experienced an unforeseen
slowdown in the second quarter, with international sales impacted by ongoing
economic and geopolitical concerns. UK and ROI sales were less impacted,
performing slightly ahead of the overall market trend.
"The Group had an encouraging start to the third quarter, with positive
trading in July and August finishing with a strong order book. We anticipate
continued improvement in trading during the second half with several new
product launches scheduled and the Group is trading in line with the Board's
recently revised expectations for the full year.
"The Board remains confident in the Group's long-term prospects as we focus on
successfully delivering the investment in our manufacturing facility in early
2025 and the ongoing transformation of the business, positioning it for
profitable future growth."
- Ends -
For further information please contact:
AIREA plc Tel: +44 (0) 192 426 6561
Médéric Payne, Chief Executive Officer
Conleth Campbell, Chief Financial Officer
Singer Capital Markets Tel: +44 (0) 20 7496 3000
(Nominated Adviser and Sole Broker)
Peter Steel / Sam Butcher
Northstar Communications Tel: +44 (0) 113 730 3896
(Financial Media and PR)
Sarah Hollins
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 2024. Following a strong start to the year, there was an unexpected
slowdown in the second quarter. Sales in our international markets were
impacted by ongoing economic and geopolitical concerns, including the Middle
East. Sales in the UK and ROI delivered a solid performance in challenging
market conditions.
We remain focused on successfully delivering the investment in our
manufacturing facility in early 2025 and the ongoing transformation of the
business.
Results
Revenue for the period was 5.6% down year on year at
£9.3m (2023: £9.8m). In the UK and ROI, sales were 0.3% down year on year.
International sales were 21.9% behind the prior year.
The weaker than expected performance in the second quarter, due to the
uncertainty around the UK general election, impacted operating profit which
declined to £0.2m (2023: £0.8m). The Group's operating profit was also
impacted by non-recurring costs associated with the major investment and the
ongoing strategic investment in resources to deliver more profitable future
growth. After charging net finance costs of £0.3m (2023: £0.3m) and tax of
£0.1m (2023: £0.1m), the Group reported a loss of £0.2m (2023: profit of
£0.5m). Basic earnings per share were (0.56p) (2023: 1.27p).
Operating cash flows before movements in working capital were £0.7m (2023: £1.2m). Working
capital movements increased in the period to £1.6m (2023: £0.5m)
predominantly due to an increase in inventory as a result of the sales
shortfall in the second quarter. Appropriate action is being taken to reduce
inventory levels through the course of the second half of the year with the
aim of introducing a more efficient and cash generative strategy. Capital
expenditure increased to £1.3m (2023: £0.9m) as the major investment in the
Group's manufacturing facility commenced.
Net cash (cash less loans and borrowings) decreased to £1.3m (2023: £2.7m).
The Group has access to further liquidity of £1.0m via its unutilised
overdraft facility (2023: £1.0m). The Group has also taken the decision to
divest its investment property, which has a carrying value of £4.1m.
Following the triennial valuation of the defined benefit pension scheme as at
1 July 2023, the Company and the trustees of the pension scheme have agreed in
principle to a reasonable and affordable recovery plan to address the scheme's
current deficit. At the end of July 2024, the Company made an initial
contribution of £0.3m to the scheme.
Current Trading and Outlook
There has been an encouraging start to the third quarter, with positive
trading in both July and August coupled with a strong order book. The Group's
commitment to innovation and sustainability remains steadfast, with several
new product launches scheduled for the second half of the year.
The Group's short term priority is the installation and commissioning of the
new equipment at its manufacturing facility, which is pivotal to the
transformation of the business. The Group will maintain its focus on cash
preservation and will therefore not be proposing an interim dividend at this
time (2023: £nil).
The Board anticipates a continued improvement in trading during the second
half and the Group is trading in line with the Board's recently revised
expectations for the full year.
The Board remains confident in the Group's long-term trading and growth
prospects.
Médéric Payne
Chief Executive Officer
26 September 2024
Consolidated Income Statement
6 months ended 30 June 2024
Unaudited 6 months ended Unaudited 6 months ended Audited 12 months
30 June 30 June ended 31 December
2024 2023 2023
£'000 £'000 £'000
Revenue 9,276 9,825 21,102
Operating costs (9,239) (9,301) (19,788)
Other operating income 178 312 490
Operating profit before valuation gain 215 836 1,804
Unrealised valuation gain - - 60
Operating profit 215 836 1,864
Finance income 42 39 72
Finance costs (325) (255) (523)
(Loss)/Profit before taxation (68) 620 1,413
Taxation (147) (130) (644)
(Loss)/Profit attributable to shareholders of the Group (215) 490 769
Earnings per share (basic and diluted) for the Group (0.56p) 1.27p 1.99p
Consolidated Statement of Comprehensive Income
6 months ended 30 June 2024
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2024 2023 2023
£'000 £'000 £'000
(Loss)/Profit attributable to shareholders of the Group (215) 490 769
Items that will not be reclassified to profit or loss 1,709 (3,281)
Actuarial gain/(loss) recognised in the pension scheme 513
Related deferred taxation (427) (128) 820
1,282 385 (2,461)
Items that will be reclassified subsequently to profit or loss when specific 315
conditions are met
Revaluation of property
- -
Related deferred taxation - - (79)
- - 236
Total other comprehensive income/(loss) 1,282 385 (2,225)
Total comprehensive income/(loss) attributable to shareholders of the Group 1,067 (1,456)
875
Consolidated Balance Sheet
as at 30 June 2024
Unaudited 30 June Unaudited 30 June Audited 31 December
2024 2023 2023
£'000 £'000 £'000
Non-current assets
Property, plant and equipment 7,429 5,976 6,379
Intangible assets 61 59 65
Investment property 4,060 4,000 4,060
Right-of-use asset 1,053 754 1,413
Deferred tax asset 841 763 895
13,444 11,552 12,812
Current assets
Inventories 7,620 6,560 5,753
Trade and other receivables 2,565 2,871 3,156
Cash and cash equivalents 2,814 4,919 5,758
12,999 14,350 14,667
Total assets 26,443 25,902 27,479
Current liabilities
Trade and other payables (3,438) (3,986) (3,795)
Provisions - (74) -
Lease liabilities (187) (127) (183)
Loans and borrowings (742) (736) (739)
(4,367) (4,923) (4,717)
Non-current liabilities
Deferred tax (1,653) (1,144) (1,439)
Pension deficit (3,509) (1,000) (4,972)
Lease liabilities (292) (140) (287)
Loans and borrowings (747) (1,489) (1,119)
(6,201) (3,773) (7,817)
Total liabilities (10,568) (8,696) (12,534)
Net assets 15,875 17,206 14,945
Equity
Called up share capital 10,339 10,339 10,339
Share premium account 504 504 504
Own Shares (1,454) (1,805) (1,636)
Share-based payment reserve 225 --80 150
Capital redemption reserve 3,617 3,617 3,617
Revaluation reserve 3,376 3,096 3,376
Retained earnings (732) 1,375 (1,405)
Total equity 15,875 17,206 14,945
Consolidated Cash Flow Statement
6 months ended 30 June 2024
Unaudited 6 months ended 30 June Unaudited 6 months ended Audited 12 months
2024 30 June ended 31 December
2023 2023
£'000 £'000 £'000
Cash flow from operating activities
(Loss)/Profit for the period (215) 490 769
Depreciation 221 165 374
Depreciation of right-of-use assets 168 124 279
Amortisation 18 15 33
Movement in provision - (3) (77)
Share-based payment expense 75 80 150
Net finance costs 283 216 451
Unrealised valuation gain - - (60)
Tax charge 147 130 644
Operating cash flows before movements in working capital 697 1,217 2,563
(Increase)/decrease in inventory (1,867) (665) 142
Decrease/(increase) in trade and other receivables 591 (520) (807)
(Decrease)/increase in trade and other payables (349) 670 479
Net cash generated from operating activities (928) 702 2,377
Cash flows from investing activities
Payments to acquire intangible fixed assets (14) (4) (27)
Payments to acquire tangible fixed assets (1,279) (868) (1,166)
Net cash used in investing activities (1,293) (872) (1,193)
Cash flows from financing activities
Interest paid on lease liabilities (14) (5) (17)
Interest paid on borrowings (65) (82) (160)
Interest received 42 39 72
Principal paid on lease liabilities (105) (66) (156)
Equity dividends paid (212) (193) (193)
Repayment of loans (369) (366) (734)
Net cash used in financing activities (723) (673) (1,188)
Net decrease in cash and cash equivalents (2,944) (843) (4)
Cash and cash equivalents at start of the period 5,758 5,762 5,762
Cash and cash equivalents at end of the period 2,814 4,919 5,758
Consolidated Statement of Changes in Equity
6 months ended 30 June 2024
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 2023 10,339 504 (2,000) - 3,617 3,096 888 16,444
Comprehensive income
for the year
Profit for the year - - - - - - 769 769
Remeasurement of the net
defined benefit liability - - - - - - (2,461) (2,461)
Revaluation of property - - - - - 315 (79) 236
Total comprehensive
income for the year - - - - - 315 (1,771) (1,456)
Contributions by and distributions to owners
Dividend paid - - - - - (193)
- (193)
Share-based payment - - - 150 - 150
- -
Own share transfer Revaluation reverse - - 364 - - -
- (364)
transfer
- - -
-
- -
(35) 35
Total contributions by and distributions to owners
- - 364 150 - (35) (522) (43)
At 31 December 2023
and 1 January 2024 10,339 504 (1,636) 150 3,617 3,376 (1,405) 14,945
Comprehensive income for the period
Loss for the period -
Remeasurement of the net - - - - - (215) (215)
defined benefit liability -
- - - - - 1,282 1,282
Total comprehensive
income for the period - - - - - - 1,067 1,067
Contributions by and distributions to owners
Dividend paid - - - - - - (212) (212)
Share-based payment - - - 75 - - - 75
Own shares transfer - - 182 - - - (182) -
Total contributions by and distributions to
owners
-
- 182 75 - - (394) (137)
At 30 June 2024 10,339 504 (1,454) 225 3,617 3,376 (732) 15,875
Notes to the Financial Statements
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The financial information for the six months ended 30 June 2024 and the six
months ended 30 June 2023 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 2023 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 2023. These policies are
set out in the annual report and accounts for the period ended 31 December
2023 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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