Interim Report

RNS Number : 9882G

Airea PLC

30 July 2021

 

AIREA PLC

(the "Group")

Interim report for t he six months ended 30 June 2021

The principal activity of the group is the design, manufacture, marketing and distribution of floor coverings.

Chairman's Statement

The group's performance in the six months ended 30th June 2021 has continued to be impacted by the COVID-19 pandemic and the related lockdown restrictions which continue to suppress activity in our key markets. Our export business has been most severely impacted by lockdown restrictions in target markets and the additional costs of administration and freight following the post Brexit transition period. Availability of labour and raw materials have been a major challenge with unprecedented increases in raw material prices. H1 delivered improved sales and operating profit versus the prior year as demand in the market continued to recover albeit at a slower pace than expected.

Throughout H1 the group has remained open for business and continues to support customers whilst also looking to prioritise the well-being of employees. The board recognises and values the tremendous efforts of our employees throughout the period.

With reference to COVID-19 support packages deferred VAT repayments have commenced, our loan balance repayments have recommenced and the level of furlough support has reduced significantly in the first half.

As at 30th June 2021 our cash reserves were £6.2m (2020: £6.5m), excluding the CBILS loans our cash position was

£3.5m (2020: £3.7m), with further liquidity available of £1.0m via our unutilised overdraft facility (2020: £1.0m unutilised). Our cash reserves and strong balance sheet enable us to manage the impact of the pandemic and related risks.

Group Results

Revenue for the period was £0.3m above the prior year, £7.4m (2020: £7.1m). In the UK our sales were 18.5% ahead of the prior six month comparative period as home sales began to recover. Export sales were down 35.5% compared to the comparative period, largely due to the effect of COVID-19 on all our target export markets and the significant disruption caused by differing interpretations of import regulations post Brexit.

The operating profit was £574,000 (2020: £137,000). Excluding inventory absorption impacts, underlying product margins are broadly in line with prior year, however product margins are facing significant pressure due to significant raw material inflation and our ability to pass on these price increases. After charging pension, lease and loan related finance costs of £114,000 (2020: £193,000) and incorporating the appropriate tax charge the net profit for the period was £440,000 (2020: £43,000 loss). Basic earnings per share were 1.14p (2020:loss 0.11p).

Operating cash flows before movements in working capital were £0.5m (2020: £0.5m). Working capital increased in the period by £0.1m (2020: £1.0m decrease).  Contributions to the defined benefit pension scheme were £0.2m (2020: £0.2m) in line with the agreement reached with the scheme trustees following the last triennial valuation as at 1st July 2017.  Capital expenditure of £1.2m (2020: £0.2m) was spent renewing and enhancing manufacturing plant and equipment, with major spend on new equipment to continue to support our new exciting product development programme.

Outlook

The UK sales recovery is expected to continue with a strong order book, however the impact of lifting lockdown restrictions is unknown and so forecasting sales performance in the second half is particularly difficult. Market activity in our European Markets is expected to improve but relatively slowly. Difficulties exporting to Europe are now well documented, with significant increases in cost and additional complexity in exporting to Europe Post-Brexit.

Of greatest concern is the level of raw material price inflation and supply chain tensions putting a strain on the availability of materials and the costs of obtaining them, the increases experienced to date are relentless and unprecedented. Key to our success will be our ability to pass on these price increases and a halt or reversal of current pricing trends.

We have however continued to invest in development of our product range with investment in new equipment and the launches of new products ongoing throughout 2021 based upon our confidence in the future prospects of the business and our secure financial position.

Given the financial performance of the group and the continued levels of uncertainty in the market and wider economy the group will continue to prioritise cash to ensure medium to long-term stability and therefore will not be proposing an interim dividend (2020: nil).

MARTIN TOOGOOD

Chairman  30th July 2021

ConsolidatedIncomeStatement
6monthsended30thJune2021
	Unaudited6 monthsended30thJune 2021	Unaudited6 monthsended30thJune 2020	Audited12months ended 31stDecember 2020
	£000	£000	£000
Revenue	7,431	7,100	14,554
Operatingcosts	(6,997)	(7,103)	(14,090)
Otheroperatingincome	140	140	280
Operatingprofitbeforevaluation gain	574	137	744
Unrealisedvaluationgain	-	-	125
Operatingprofit	574	137	869
Financeincome	4	2	7
Financecosts	(114)	(193)	(376)
Profit/(loss)beforetaxation	464	(54)	500
Taxation	(24)	11	(109)
Profit/(loss)attributabletoshareholdersofthegroup	440	(43)	391
Earningspershare(basicanddiluted)forthegroup	1.14p	0.11p	1.00p

       Consolidated   Statement of Comprehensive Income

6 months ended 30th June 2021

	Unaudited6monthsended30thJune	Unaudited6monthsended30thJune	Audited12months ended 31stDecember
	2021	2020	2020
	£000	£000	£000
Profit/(loss)attributabletoshareholdersofthegroup	440	(43)	391
Itemsthatwillnotbereclassifiedtoprofitorloss Actuarialgain/(loss)recognisedinthepensionscheme	3,997	(3,448)	(389)
Relateddeferredtaxation	(797)	655	74
	3,200	(2,793)	(315)
Itemsthatwillbereclassifiedsubsequentlytoprofitorlosswhenspecificconditionsaremet Revaluationofproperty	-	12	37
Relateddeferredtaxation	-	(2)	(4)
	-	10	33
Totalothercomprehensiveincome/(loss)	3,200	(2,783)	(282)
Totalcomprehensiveincome/(loss)attributabletoshareholdersofthegroup	3,640	(2,826)	109

ConsolidatedBalanceSheet
asat30thJune2021
	Unaudited30thJune 2021	Unaudited30thJune 2020	Audited31stDecember 2020
	£000	£000	£000
Non-currentassets
Property,plantandequipment	5,279	4,282	4,271
Intangibleassets	62	67	54
Investmentproperty	3,725	3,600	3,725
Right-of-useasset	1,011	1,126	1,086
PensionSurplus	2,310	-	-
Deferredtaxasset	733	1,563	920
	13,120	10,638	10,056
Currentassets
Inventories	5,877	4,728	5,622
Tradeandotherreceivables	2,093	1,915	1,712
Cashandcashequivalents	6,226	6,451	6,555
	14,196	13,094	13,889
Totalassets	27,316	23,732	23,945
Currentliabilities
Tradeandotherpayables	(3,679)	(2,482)	(2,895)
Provisions	(138)	(320)	(465)
Leaseliabilities	(145)	(213)	(243)
Loansandborrowings	(1,359)	(580)	(1,071)
	(5,321)	(3,595)	(4,674)
Non-currentliabilities
Pensiondeficit	-	(4,888)	(1,789)
Deferredtax	(1,206)	(526)	(609)
Leaseliabilities	(174)	(297)	(188)
Loansandborrowings	(2,911)	(3,317)	(2,641)
	(4,291)	(9,028)	(5,227)
Totalliabilities	(9,612)	(12,623)	(9,901)
Net assets	17,704	11,109	14,044
Equity
Calledupsharecapital	10,339	10,339	10,339
Sharepremiumaccount	504	504	504
OwnShares	(876)	(1,518)	(1,197)
Share-basedpaymentreserve	161	141	141
Capitalredemptionreserve	3,617	3,617	3,617
Revaluationreserve	3,014	3,058	3,014
Retainedearnings	945	(5,032)	(2,374)
Total equity	17,704	11,109	14,044

ConsolidatedCashFlowStatement
6monthsended30thJune2021
	Unaudited6monthsended30thJune 2021	Unaudited6monthsended30thJune 2020	Audited12months ended 31stDecember 2020
	£000	£000	£000
Cashflowfromoperatingactivities
Profit/(loss)fortheperiod	440	(43)	391
Depreciation	123	114	228
Depreciationofright-of-useassets	128	140	270
Amortisation	16	25	38
MovementinProvision	(327)	-	145
Share-basedpaymentexpense	20	56	56
NetFinancecosts	110	191	369
Taxcharge/(credit)	24	(11)	109
Unrealisedvaluationgain	-	-	(125)
Operatingcashflowsbeforemovementsinworkingcapital	534	472	1,481
(Increase)/decreaseininventory	(255)	733	(161)
(Increase)/decreaseintradeandotherreceivables	(417)	197	456
Increaseintradeandotherpayables	784	70	467
Cashgeneratedfromoperations	646	1,472	2,243
Contributionstodefinedbenefitpensionscheme	(200)	(200)	(400)
Netcashgeneratedfromoperatingactivities	446	1,272	1,843
Cash flows from investingactivities
Paymentstoacquireintangiblefixedassets	(24)	(33)	(53)
Paymentstoacquiretangiblefixedassets	(1,131)	(156)	(233)
	(1,155)	(189)	(286)
Cash flows from financingactivities
Interestpaidonleaseliabilities	(6)	(8)	(15)
Interestpaidonborrowings	(11)	(18)	(33)
Interestreceived	4	2	7
Proceedsfromnewloansandborrowings	934	2,750	2,750
Principalpaidonleaseliabilities	(166)	(177)	(344)
Repaymentofloans and borrowings	(375)	(138)	(324)
Netcash generated fromfinancingactivities	380	2,411	2,041
Net(decrease)/increaseincashandcashequivalents	(329)	3,494	3,598
Cashandcashequivalentsatstartoftheperiod	6,555	2,957	2,957
Cashandcashequivalentsatendoftheperiod	6,226	6,451	6,555

        Consolidated Statement of Changes in Equity

6 months ended 30th June 2021

	Sharecapital	Sharepremiumaccount	OwnShares	Share-based paymentreserve	Capitalredemption reserve	Revaluation reserve	Profitand lossaccount	Totalequity
	£000	£000	£000	£000	£000	£000	£000	£000
At1stJanuary2020	10,339	504	(1,839)	85	3,617	3,048	(1,875)	13,879
Comprehensiveincome
fortheyear
Profitfortheyear	-  -  -  -  -  -						391	391
Actuariallossrecognised
onthepensionscheme	-  -  -  -  -  -						(315)	(315)
Impairmentofproperty	-  -  -  -  -  -						33	33
Totalcomprehensive
incomefortheyear  -		-	-	-	-	-	109	109
Contributionsbyand
distributionsto
owners
Dividendpaid  -		-	-	-	-	-	-	-
Share-basedpayment  -		-	-	56	-	-	-	56
Ownsharetransfer  -		-	642	-	-	-	(642)	-
RevaluationReverse
Transfer  -		-	-	-	-	(34)	34	-
Totalcontributionsbyanddistributions toowners  -		-	642	56	-	(34)	(608)	56
At31stDecember2020 and1stJanuary2021    10,339		504	(1,197)	141	3,617	3,014	(2,374)	14,044
Comprehensive incomefortheperiod
Profitfortheperiod	-  -  -  -  -  -						440	440
Actuarialgainrecognised
onthepensionscheme	-  -  -  -  -  -						3,200	3,200
Revaluationofproperty	-	-	-	-	-	-	-	-
Totalcomprehensive
incomefortheperiod  -		-	-	-	-	-	3,640	3,640
Contributionsbyand
distributionsto
owners
Share-basedpayment  -		-	-	20	-	-	-	20
OwnSharesTransfer  -		-	321	-	-	-	(321)	-
Totalcontributionsbyanddistributionsto owners  -		-	321	20	-	-	(321)	20
At30thJune2021  10,339		504	(876)	161	3,617	3,014	945	17,704

Notes to the Financial Statements

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

The financial information for the six months ended 30th June 2021 and the six months ended 30th June 2020 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 2020 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 period ended 31st December 2020. These policies are set out in the annual report and accounts for the period ended 31st December 2020 which is available on the company's website at 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.

Enquiries:  

Neil Rylance    01924 266561

Chief Executive Officer 
 

Ryan Thomas     01924 266561

Group Finance Director 
 

Peter Steel     020 7496 3000

Singer Capital Markets

 

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