Interim Report

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

2022

 

Unaudited 6 months ended 30th June

2021

 

Audited 12 months

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

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

2022

 

Unaudited 30th June

2021

 

Audited 31st December

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

2022

 

Unaudited 6 months ended 30th June

2021

 

Audited 12 months

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 capital

Share premium account

 

Own Shares

Share-based

payment reserve

Capital redemption

reserve

 

Revaluation

reserve

Profit and loss account

 

Total equity

£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

Transfer

-   -  642

 

-   -  -

-   -  -  (642)

 

-   -  (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

on the pension scheme  -

 

 

-

 

-

 

 

-

 

-

 

 

-

 

-

 

 

-

 

-

 

 

-

 

-

 

 

611

 

28

 

 

611

 

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.

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.

 

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