RNS Number : 9882G
Airea PLC
30 July 2021
 

AIREA PLC

(the "Group")

 

Interim report for the 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

 

 

Consolidated Income Statement

 

6 months ended 30th June 2021

 

 

Unaudited 6 months ended 30th June

2021

 

Unaudited 6 months ended 30th June

2020

 

Audited 12 months

ended  31st December

2020

 

£000

£000

£000

Revenue

7,431

7,100

14,554

Operating costs

(6,997)

(7,103)

(14,090)

Other operating income

140

140

280

Operating profit before valuation gain

574

137

744

Unrealised valuation gain

-

-

125

Operating profit

574

137

869

Finance income

4

2

7

Finance costs

(114)

(193)

(376)

Profit/(loss) before taxation

464

(54)

500

Taxation

(24)

11

(109)

Profit/(loss) attributable to shareholders of the group

440

(43)

391

Earnings per share (basic and diluted) for the group

1.14p

0.11p

1.00p

 

 

 

 

       Consolidated Statement of Comprehensive Income

6 months ended 30th June 2021

 

 

 

Unaudited 6 months ended 30th June

Unaudited 6 months ended 30th June

Audited 12 months

ended

31st December

2021

2020

2020

£000

£000

£000

Profit/(loss) attributable to shareholders of the group

440

(43)

391

Items that will not be reclassified to profit or loss

Actuarial gain/(loss) recognised in the pension scheme

 

3,997

 

(3,448)

 

(389)

Related deferred taxation

(797)

655

74

 

3,200

(2,793)

(315)

Items that will be reclassified subsequently to profit or loss when specific conditions are met

Revaluation of property

 

 

-

 

 

12

 

 

37

Related deferred taxation

-

(2)

(4)

 

-

10

33

Total other comprehensive income/(loss)

3,200

(2,783)

(282)

Total comprehensive income/(loss) attributable to shareholders of the group

 

3,640

 

(2,826)

 

109

 

 

Consolidated Balance Sheet

 

as at 30th June 2021

 

 

Unaudited 30th June

2021

 

Unaudited 30th June

2020

 

Audited 31st December

2020

 

£000

£000

£000

Non-current assets

 

 

 

Property, plant and equipment

5,279

4,282

4,271

Intangible assets

62

67

54

Investment property

3,725

3,600

3,725

Right-of-use asset

1,011

1,126

1,086

Pension Surplus

2,310

-

-

Deferred tax asset

733

1,563

920

 

13,120

10,638

10,056

Current assets

 

 

 

Inventories

5,877

4,728

5,622

Trade and other receivables

2,093

1,915

1,712

Cash and cash equivalents

6,226

6,451

6,555

 

14,196

13,094

13,889

Total assets

27,316

23,732

23,945

Current liabilities

 

 

 

Trade and other payables

(3,679)

(2,482)

(2,895)

Provisions

(138)

(320)

(465)

Lease liabilities

(145)

(213)

(243)

Loans and borrowings

(1,359)

(580)

(1,071)

 

(5,321)

(3,595)

(4,674)

Non-current liabilities

 

 

 

Pension deficit

-

(4,888)

(1,789)

Deferred tax

(1,206)

(526)

(609)

Lease liabilities

(174)

(297)

(188)

Loans and borrowings

(2,911)

(3,317)

(2,641)

 

(4,291)

(9,028)

(5,227)

Total liabilities

(9,612)

(12,623)

(9,901)

Net assets

17,704

11,109

14,044

Equity

 

 

 

Called up share capital

10,339

10,339

10,339

Share premium account

504

504

504

Own Shares

(876)

(1,518)

(1,197)

Share-based payment reserve

161

141

141

Capital redemption reserve

3,617

3,617

3,617

Revaluation reserve

3,014

3,058

3,014

Retained earnings

945

(5,032)

(2,374)

Total equity

17,704

11,109

14,044

 

 

Consolidated Cash Flow Statement

 

6 months ended 30th June 2021

 

 

Unaudited 6 months ended 30th June

2021

 

Unaudited 6 months ended 30th June

2020

 

Audited 12 months

ended  31st December

2020

 

£000

£000

£000

Cash flow from operating activities

 

 

 

Profit/(loss) for the period

440

(43)

391

Depreciation

123

114

228

Depreciation of right-of-use assets

128

140

270

Amortisation

16

25

38

Movement in Provision

(327)

-

145

Share-based payment expense

20

56

56

Net Finance costs

110

191

369

Tax charge/(credit)

24

(11)

109

Unrealised valuation gain

-

-

(125)

Operating cash flows before movements in working capital

534

472

1,481

(Increase)/decrease in inventory

(255)

733

(161)

(Increase)/decrease in trade and other receivables

(417)

197

456

Increase in trade and other payables

784

70

467

Cash generated from operations

646

1,472

2,243

Contributions to defined benefit pension scheme

(200)

(200)

(400)

Net cash generated from operating activities

446

1,272

1,843

Cash flows from investing activities

 

 

 

Payments to acquire intangible fixed assets

(24)

(33)

(53)

Payments to acquire tangible fixed assets

(1,131)

(156)

(233)

 

(1,155)

(189)

(286)

Cash flows from financing activities

 

 

 

Interest paid on lease liabilities

(6)

(8)

(15)

Interest paid on borrowings

(11)

(18)

(33)

Interest received

4

2

7

Proceeds from new loans and borrowings

934

2,750

2,750

Principal paid on lease liabilities

(166)

(177)

(344)

Repayment of loans and borrowings

(375)

(138)

(324)

Net cash generated from financing activities

380

2,411

2,041

Net (decrease)/increase in cash and cash equivalents

(329)

3,494

3,598

Cash and cash equivalents at start of the period

6,555

2,957

2,957

Cash and cash equivalents at end of the period

6,226

6,451

6,555

 

 

        Consolidated Statement of Changes in Equity

6 months ended 30th June 2021

 

 

 

Share capital

Share premium account

 

Own Shares

Capital redemption

reserve

 

Revaluation

reserve

Profit and loss account

 

Total equity

 

£000

£000

£000

£000

£000

£000

£000

£000

 

At 1st January 2020

10,339

504

(1,839)

85

3,617

3,048

(1,875)

13,879

 

Comprehensive income

 

 

 

 

 

 

 

 

 

for the year

 

 

 

Profit for the year

-                 -                 -                 -                 -                 -

391

391

Actuarial loss recognised

 

 

 

on the pension scheme

-                 -                 -                 -                 -                 -

(315)

(315)

Impairment of property

-                 -                 -                 -                 -                 -

33

33

Total comprehensive

 

 

 

income for the year                   -

-

-

-

-

-

109

109

 

Contributions by and

 

 

 

 

 

 

 

 

distributions to

 

 

 

 

 

 

 

 

owners

 

 

 

 

 

 

 

 

Dividend paid                                -

-

-

-

-

-

-

-

 

Share-based payment                     -

-

-

56

-

-

-

56

 

Own share transfer                        -

-

642

-

-

-

(642)

-

 

Revaluation Reverse

 

 

 

 

 

 

 

 

Transfer                                     -

-

-

-

-

(34)

34

-

 

Total contributions by and distributions

to owners                                   -

 

 

-

 

 

642

 

 

56

 

 

-

 

 

(34)

 

 

(608)

 

 

56

 

At 31st December 2020

and 1st January 2021   10,339

 

504

 

(1,197)

 

141

 

3,617

 

3,014

 

(2,374)

 

14,044

 

Comprehensive income for the period

 

 

 

Profit for the period

-                 -                 -                 -                 -                 -

440

440

Actuarial gain recognised

 

 

 

on the pension scheme

-                 -                 -                 -                 -                 -

3,200

3,200

Revaluation of property

-

-

-

-

-

-

-

-

 

Total comprehensive

 

 

 

 

 

 

 

 

 

income for the period                -

-

-

-

-

-

3,640

3,640

 

Contributions by and

 

 

 

 

 

 

 

 

distributions to

 

 

 

 

 

 

 

 

owners

 

 

 

 

 

 

 

 

Share-based payment                     -

-

-

20

-

-

-

20

 

Own Shares Transfer                    -

-

321

-

-

-

(321)

-

 

Total contributions by and distributions to

owners                                       -

 

 

-

 

 

321

 

 

20

 

 

-

 

 

-

 

 

(321)

 

 

20

 

At 30th June 2021              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

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
IR SEMFWUEFSELW