Final Results for the year ended 31 December 2022

RNS Number : 4497V

Airea PLC

05 April 2023

 

5 April 2023

AIREA plc

("AIREA", the "Group" or the "Company")

Final Results

AIREA plc (AIM: AIEA), the UK design-led specialist flooring company, supplying both the UK and international markets, is pleased to announce its final results for the twelve months ended 31 December 2022.

Financial summary

· Group revenue increased by 16.5% to £18.5m ( 2021: £15.9m )

· Operating profit before valuation gain increased by 25.8% to £1.7m ( 2021: £1.3m )

· Profit before tax up 11.0% to £1.4m ( 2021: £1.3m )

· Cash and cash equivalents increased to £5.8m ( 2021: £5.7m )

· Net cash increased by 53.0% to £2.8m (2021: £1.9m)

· Final dividend of 0.5p per ordinary share (2021: 0.4p)

Operational highlights

· Appointment of Médéric Payne, Chief Executive Officer, in August 2022.

·   Launch of   sustainability principles, eco2matters to focus on improving all aspects of the Group's impact on the environment and society.

· Employee Share Scheme relaunched to a wider employee pool to help drive long-term performance.

Post-period end

· First carbon neutral flooring range arctic was launched in early 2023.

Médéric Payne, Chief Executive Officer of AIREA plc, commented:

" I am pleased to report on the Group's final results for the twelve months ended 31 December 2022.

" AIREA has made continued progress and maintained a high standard of service to our customers, with improved revenue growth of 16.5%, even in the face of economic challenges. Despite the inflationary cost pressures the Group experienced throughout the financial year, we maintained our margins and balance sheet strength.

"The launch of our sustainability principles, eco2matters, along with our product range and carbon-neutral flooring, focuses on the way we will improve the Group's impact on the environment and society. These principles play an important role in driving the inherent long-term values of the Group and we are confident in our commitment to our ESG strategy.

"We have made progress in our energy efficiency and the Group will continue to explore alternative methods to improve that further.

"Demand is starting to recover to pre-pandemic levels, as we have identified further export growth opportunities.

"With our focused strategy, whilst leveraging the Burmatex ® brand , we are building a strong platform for growth to deliver continued progress for AIREA and returns to its shareholders."

- Ends -

For further information please contact:

AIREA plc Médéric Payne, Chief Executive Officer Ryan Thomas, Chief Financial Officer	Tel: [phone]
Singer Capital Markets (Nominated Adviser and Sole Broker) Peter Steel / Sam Butcher	Tel: [phone]
Yellow Jersey PR (Financial media and PR) Sarah Hollins / Shivantha Thambirajah / Jazmine Clemens	Tel: [phone]

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/.

Chairman's Statement

Overview

The Group is pleased to report the continued progress from the impacts of the COVID-19 pandemic, where there has been a recovery in demand both in our home and export markets. We do, however, have some key markets that continue to be negatively impacted by the ongoing conflict in Ukraine.

Our continued efforts to enhance our operational and supply chain processes have helped manage the impact of the unprecedented increases in the prices of raw materials, energy and availability of labour. Where possible, increased costs have been mitigated through cost-saving initiatives, consumption reduction actions or increased onward pricing.

The Group continues to maintain its cash reserves and strong balance sheet position to enable us to invest in the future of the business and manage the impact of the continued economic uncertainty and related risks.

Results

AIREA has delivered good revenue growth in the year following the recovery from the COVID-19 pandemic. Underlying volumes remain below pre-pandemic levels with price increases and sales mix being the major contributory factors of the 16.5% revenue growth. The Group's operating profit margins have been maintained despite the increases in raw materials, labour and energy costs.

Dividends

The Group has been cash generative in the period and plans to continue to invest in the future of the business. We also believe in rewarding our loyal shareholder base and therefore propose a final dividend of £0.2m or 0.5p per share for FY22, also representing the total dividend for the year as no interim dividend was paid (2021: £0.2m or 0.4p per share). The final dividend will be paid on 18 May 2023 to shareholders on the register on 21 April 2023. This proposal is subject to shareholder approval at the Group's Annual General Meeting to be held on 10 May 2023.

Environmental, Social and Governance (ESG)

ESG is fundamental to the continued commercial success of AIREA, as evidenced in our values, our actions and our products. We have made excellent progress in 2022 through the launch of our sustainability principles, eco2matters, which have been laid out to highlight our ongoing commitment in anchoring our business to a sustainable ethos. The Group's focus is, and will continue to be, the promotion of trade responsibility and the active pursuit of achieving a Net Zero business.

We have begun work on the installation of solar panels on the roof of our factory and warehouse as the implementation of this investment is believed to help protect us against energy price volatility, whilst contributing to our sustainable goals.

Our Board

The Board appointed Médéric Payne as Chief Executive Officer and as a member of the Board of Directors on 25 August 2022. Médéric brings his extensive leadership, commercial, supply chain and marketing expertise to the role with a passion for developing people.

The Board's composition continues to evolve based on the required level of skills and experience alongside ensuring the business operates efficiently and is able to react quickly to any issues that may arise.

Our People

We recognise the hard work and dedication of our staff throughout the year and sincerely thank them for the continued contribution they make towards the future of AIREA.

The employee share scheme that was launched in 2019 has lapsed, with none of the 2.8 million shares being held in the employee benefit trust ("EBT") vesting.  The scheme has been re-launched to a wider employee pool as the Board recognises the need to retain and reward members of staff for long-term performance. The scheme incentivises employees through nil cost share awards. Awards will vest with beneficiaries over a three-year period ending 31 December 2025 after the achievement of the Group and individual performance conditions.

Outlook

The development of our product ranges is exciting with the launches of new sustainable products and the refresh of existing products with a drive towards sustainability whilst refreshing the colour and design including as appropriate switching to a better more sustainable yarn.

We launched our first carbon neutral range arctic, which has been well received in the market and thus fulfilling the demands of our existing customers.

Even though the Ukrainian conflict has adversely impacted some of our key export markets, the Group has been able to recover in both our UK and export market, along with identifying further export growth opportunities.

We are pleased that cost pressures are beginning to ease and stabilise, however, it should be noted that the cost increases experienced during 2022 will be felt in 2023. In managing these cost pressures, we have taken mitigating actions including the installation of solar panels, increased onward pricing and a continued focus on waste reduction.

Summary

We are optimistic that the Group has been able to minimise our cost pressures and inflationary headwinds in 2022 to ensure margins and profitability are maintained. The Group made significant progress in our ESG ambitions through creating a point of distinction and competitive advantage through the launch of our eco2matters principle as this will be the foundation to help drive AIREA shareholder growth for FY23 and beyond.

Martin Toogood

Chairman

4 April 2023

Chief Executive Officer's Statement

Introduction

2022 for AIREA started off with the sad passing of Neil Rylance, former Chief Executive Officer, in March 2022. Whilst the situation may have caused some initial uncertainty, a recruitment process was put in place and I feel privileged to have taken the role in August 2022 to continue the legacy that Neil achieved.

AIREA has faced many price pressures throughout the year, not least the increase in energy prices which triggered a focused response in trying to address the opportunities available in reducing energy usage across our business. We have made progress towards improving our energy efficiency and the Group is looking to explore alternative methods to improve that further. I am confident that the team will rise to those challenges.

The increasing cost pressures have resulted in us passing on some price increases to customers.  However, we have sought to do this in keeping with our value of principles in being honest, transparent and providing notice as early as possible of forthcoming price changes.

As noted in the Chairman's statement, demand is beginning to recover to pre-pandemic levels, with further opportunities in our export markets which we have identified as being key areas of growth.

Products and Planet

Our product offering continues to develop with sustainability, design and quality being key to our success, we have developed our first Carbon neutral range arctic which launched at the beginning of 2023, with more yet to come. Our eco2matters sustainability principles were launched as we focus on improving all aspects of the way we impact the environment and society.

Our efforts in this area have been well received in the market, particularly by the specifier and architect communities.

People

2022 saw the launch of our new values across the organisation as part of our transformation project of putting our people at the heart of our business, empowering, encouraging and inspiring them to deliver the products to our customers whilst contributing to protecting our planet. These are the fundamentals for us to succeed as a team, driving sustainable shareholder value.

Summary and Outlook

The results for FY22 have shown AIREA is able to continuously provide a high standard of service to our customers, even in the face of economic challenges.  As referred to in the Chairman's statement, we have maintained our margins and stable balance sheet.

The Group has a number of opportunities that we are looking to explore, notably on products that are commercially more sustainable, a more customer-orientated business, new markets and appropriate investment to improve manufacturing capabilities.

We are confident in our commitment to our ESG strategy which will deliver shareholder returns in due course. With our focused strategy, we are building a strong platform for growth within the commercial flooring market and will leverage the value of the Burmatex® brand.

Finally, we would like to thank everyone associated with the AIREA Group for their support during the period.

Médéric Payne

Chief Executive Officer

4 April 2023

Chief Financial Officer's Review

Group Results

Revenue increased 16.5% year on year to £18.5m (2021: £15.9m) with home sales recovering to pre-pandemic levels. Our access to some export markets has been impacted by the Ukraine conflict. We are, however, seeing recovery in markets outside this region . Operating profit before property valuation gain nevertheless increased to £1.7m (2021: £1.3m). Gross profit margins increased marginally year on year despite the cost pressures experienced.

There was no unrealised valuation gain /(loss) on the investment property in the year (2021: £0.3m gain), with the Group recording an operating profit after valuation gains of £1.7m (2021: £1.6m).

Other finance costs relating largely to borrowing costs were £0.2m (2021: £0.3m).

After a tax charge of £0.1m primarily due to deferred tax on property, plant and equipment and changes in the tax rate at which deferred tax is recognised (2021: £0.2m), profit attributable to shareholders of the Group for the year was £1.3m (2021: £1.0m). Earnings per share were 3.36p (2021: 2.70p).

Operating cash flows before movements in working capital and other payables were £1.8m (2021: £1.7m). Working capital increased by £0.1m (2021: £0.3m increase) following an increase in trade and other receivables partially offset by a decrease in inventories coupled with an increase in trade and other payables. Capital expenditure of £0.4m (2021: £1.3m) related to the Group's investment in maintaining the site, plant and machinery.

The Group had £5.8m of cash on hand as of 31 December 2022 (2021: £5.7m). In 2021 the Group borrowed £2.75m under the government Coronavirus Business Interruption Loan Scheme, as of 31 December 2022 the amount outstanding was £1.9m (2021: £2.4m). The Group fully repaid the long-term loan which was taken out to acquire shares for the Employee Benefit Trust. The Group has access to further liquidity of £1.0m via our unutilised banking facility (2021: £1.0m unutilised).

The Group has £2.8m of net cash as of 31 December 2022 (2021: £1.9m). 

The value of our investment property was maintained in the year.

The defined benefit pension scheme deficit increased from an unrecognised surplus of £5.1m to a deficit of £1.3m. The Group's contributions to the scheme were £nil (2021: £0.4m) based on the latest agreed schedule of contributions between the Group and the scheme's trustees. There continues to be volatility in global equity markets with the scheme's investment strategy constantly under review to mitigate the scheme's long-term risk profile as much as possible.

Key performance indicators

As part of its internal financial control procedures the Board monitors the key financial metrics of revenue, operating profit, gross margin, working capital (debtor and creditor days), inventory turns and cash. These KPIs are reviewed in comparison to the previous year and the budget and analysis undertaken to establish trends and variances. For the year ended 31 December 2022, operating profit return on sales was 8.9% (2021: 8.3%), return on net operating assets was 8.3% (2021: 6.7%) and working capital to sales percentage was 52.8% (2021: 57.7%).

Ryan Thomas

Chief Financial Officer

4 April 2023

Consolidated Income Statement
for the year ended 31 December 2022
		Year ended 31 December 2022 £000	Year ended 31 December 2021 £000
Continuing Operations
Revenue		18,483	15,865
Operating costs		(17,111)	(14,832)
Other operating income		280	280
Operating profit before valuation gain		1,652	1,313
Unrealised valuation gain		-	275
Operating profit		1,652	1,588
Finance income		32	8
Finance costs		(251)	(305)
Profit before taxation		1,433	1,291
Taxation		(138)	(249)
Profit attributable to shareholders of the Group		1,295	1,042
Basic and diluted earnings per share for the Group		3.36p	2.70p

Consolidated Statement of Comprehensive Income for the year ended 31 December 2022
	2022 £000	2022 £000	2021 £000	2021 £000
Profit attributable to shareholders of the Group		1,295		1,042
Items that will not be classified to profit or loss
Actuarial (loss)/gain recognised in the pension scheme	(1,247)		1,599
Related deferred taxation	318		(380)
Revaluation of Property	(25)		166
Related deferred taxation	5		(32)
Total other comprehensive		(949)		1,353
(loss)/income
Total comprehensive income attributable to shareholders of the Group		346		2,395

Consolidated Balance Sheet
as at 31 December 2022
		2022 £000	2022   £000	2021    £000	2021    £000
Non-current assets
Property, plant and equipment			5,272		5,305
Intangible assets			71		55
Investment property			4,000		4,000
Deferred tax asset			917		720
Right-of-use-asset			879		972
			11,139		11,052
Current assets
Inventories		5,895		6,150
Trade and other receivables		2,351		1,887
Cash and cash equivalents		5,762		5,688
			14,008		13,725
Total assets			25,147		24,777
Current liabilities
Trade and other payables		(3,316)		(3,258)
Provisions		(77)		(245)
Lease liabilities		(131)		(124)
Loans and borrowings		(734)		(935)
			(4,258)		(4,562)
Non-current liabilities
Deferred tax		(1,040)		(1,031)
Pension deficit		(1,345)		-
Lease liabilities		(202)		(183)
Loans and borrowings		(1,858)		(2,592)
			(4,445)		(3,806)
Total liabilities			(8,703)		(8,368)
Net assets			16,444		16,409
Equity
Called up share capital			10,339		10,339
Share premium account			504		504
Own Shares			(2,000)		(555)
Share-based payment reserve			-		157
Capital redemption reserve			3,617		3,617
Revaluation reserve			3,096		3,150
Retained earnings			888		(803)
Total equity			16,444		16,409

Consolidated Statement of Cash Flows
as at 31 December 2022
		Year ended 31 December 2022 £000	Year ended 31 December 2021 £000
Cash flows from operating activities
Profit for the year		1,295	1,042
Depreciation		309	276
Depreciation of right-of-use assets		260	250
Amortisation		29	30
Movement in provisions		(168)	(220)
Share-based payment expense		(157)	16
Net Finance costs		219	297
Tax charge		138	249
Profit on disposal of tangible fixed asset		(77)	-
Unrealised valuation gain		-	(275)
Operating cash flows before movements in working capital		1,848	1,665
Decrease / (Increase) in inventories		255	(528)
Increase in trade and other receivables		(464)	(152)
Increase in trade and other payables		66	347
Cash generated from operations		1,705	1,332
Contributions to defined benefit pension scheme		-	(400)
Net cash generated from operating activities		1,705	932
Cash flows from investing activities
Payments to acquire intangible fixed assets		(45)	(31)
Payments to acquire tangible fixed assets		(312)	(1,236)
Receipt from the sale of tangible fixed assets		77	-
Net cash used in investing activities		(280)	(1,267)
Cash flows from financing activities
Interest paid on lease liabilities		(11)	(12)
Interest paid on borrowings		(142)	(83)
Interest received		32	8
Proceeds from asset financing		-	934
Principal paid on lease liabilities		(141)	(260)
Equity dividend paid		(154)	-
Repayment of loans		(935)	(1,119)
Net cash used in financing activities		(1,351)	(532)
Net increase/(decrease) in cash and cash equivalents		74	(867)
Cash and cash equivalents at start of the year		5,688	6,555
Cash and cash equivalents at end of the year		5,762	5,688

 

Consolidated Statement of Changes in Equity

as at 31 December 2022

	Share capital	Share premium account	Own Shares	Share based payment reserve	Capital redemption reserve	Revaluation reserve	Retained earnings	Total equity
	£000	£000	£000	£000	£000	£000	£000	£000
As 1 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 gain 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
Share-based payment	-	-	-	16	-	-	-	16
Own Share Transfer	-	-	642	-	-	-	(642)	-
Revaluation Reserve Transfer	-	-	-	-	-	(30)	30	-
Total contributions by and distributions to owners	-	-	642	16	-	(30)	(612)	16
At 31 December 2021 And 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	-	-	(1,445)	-	-	-	1,445	-
Revaluation Reserve Transfer	-	-	-	-	-	(29)	29	-
Total contributions by and  distributions to owners	-	-	(1,445)	(157)	-	(29)	1,320	(311)
At 31 December 2022	10,339	504	(2,000)	-	3,617	3,096	888	16,444

In accordance with Rule 20 of the AIM Rules, AIREA confirms that the annual report and accounts for the year ended 31 December 2022 and notice of Annual General Meeting ("AGM") and related proxy form will be available to view on the Company's website at : www.aireaplc.co.uk   on 5 April 2023 and will be posted to shareholders by 18 April 2023. The AGM will be held on 10 May 2023, at 2.00 p.m. at Victoria Mills, The Green, Ossett, West Yorkshire, WF5 0AN. Further details are set out in the notice of the AGM available within the financial statements which can be viewed on the Group's website.

 

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