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Airea PLC  -  AIEA   

Half-year Report

Released 07:00 17-Aug-2018

RNS Number : 0905Y
Airea PLC
17 August 2018
 

AIREA PLC 

Interim report for the six months ended 30 June 2018

The principal activity of the group is the manufacturing, marketing and distribution of commercial floor coverings.

Chairman's Statement

The six months ending 30 June 2018 was another period of strategic progress. Following the completion of the closure of the residential carpets business, we are now in a position to focus on our ongoing commercial operation, which delivered an encouraging advance in financial performance:   

-               Sales up 13%

-               Profit attributable to shareholders up 31%

-               Basic earnings per share from continuing operations up 10.0%

-               Interim dividend maintained

Following the closure of Ryalux the business is positioned to generate improved shareholder returns. To illustrate this; in the 6 months ended 30 June 2018 the business generated profit after tax of £1.3m on a continuing basis (i.e. excluding Ryalux) in the 6 months ended 30 June 2017 the business (including Ryalux) generated profit after tax of £0.7m.

Strong growth in the order book and increased sales both in the UK and internationally was largely driven by the success of new product introductions.  The launch of further new products is transforming our offer in the medium and premium price sectors and our sales force has a growing portfolio of attractive complementary products to grow our share within this market sector.

Our international sales grew by 30% in the period, driven by the new products, increased penetration of existing markets and the ongoing development of the distribution network.

Group Results

Continuing operations:

Comparative financial results for the six months to 30 June 2017 and the eighteen months ended 31 December 2017 have been restated to take account of the closure of the residential carpets business1. Revenue for the period was £9.1m (2017: £8.1m).  The operating profit was £1,481,000 (2017: £1,457,000). After charging pension related finance costs of £158,000 (2017: £309,000) and incorporating the appropriate tax charge the net profit for the period was £1,314,000 (2017: £1,194,000). Basic earnings per share for the continuing operation were 3.18p (2017: 2.89p). 

Operating cash flows before exceptional items and movements in working capital were £1.7m (2017: £1.6m). Working capital increased in the period by £0.4m (2017: £1.2m) mainly as a result of the timing of stock build. Contributions to the defined benefit pension scheme were £200,000 (2017: £200,000) in line with the agreement reached with the scheme trustees following the last triennial valuation as at 1 July 2017. Capital expenditure of £61,000 (2017: £233,000) was made in renewing and enhancing manufacturing plant and equipment and supporting product launches. 

Discontinued operation

Running and closure costs net of tax amounted to £359,000. The disposal of inventory, collection of trade receivables and settlement of outstanding payables resulted in a cash inflow of £1,135,000 giving an overall net modest outflow of cash for the residential carpets business of £93,000 in the period. As indicated in the last annual report, over the total period of run down and closure, there was significant cash generation, which was returned to shareholders as part of the special dividend paid on 23 May 2018. 

Board Changes

I am pleased to welcome Paul Stevenson to the board following his recently announced appointment as Group Finance Director and Company Secretary. He takes over from Roger Salt who is retiring. We would like to extend our thanks to Roger for his hard work and dedication over the last 14 years.

Outlook

We are pleased by the progress we have made in driving sales growth in the ongoing commercial flooring operation with a strengthening portfolio of products.  Sales growth in our markets requires hard work and commitment over a sustained period of time, and we remain determined to build on the progress made. Uncertainties remain, including the outcome of Brexit negotiations; however, as a UK manufacturer with a strengthening position in the UK and internationally, we are well placed to mitigate risks and take advantage of growth opportunities. 

Given the ongoing progress in the financial performance of the group and a robust cash flow we are able to maintain the policy introduced last year of paying an interim dividend.  The board is please to declare an interim dividend of 1.75p (2017: 1.75p) to be paid on the 25 October 2018 to shareholders on the register at close of business on 21 September 2018.  The ex dividend date is 20 September 2018.

 

Martin Toogood 

17 August 2018

Chairman

 

1 The unaudited results for the six months ended 30 June 2017 and the audited results for the eighteen months ended 31 December 2017 have been restated to reclassify the residential carpets business as discontinued.  Details of the discontinued operation are included in note 2.

  

 

Consolidated Income Statement

 

 

 

 

 

 

 

 

 

6 months ended 30 June 2018

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

(Restated) unaudited

 

(Restated) Audited

 

 

 

 

6 months     ended

 

18 months ended

 

 

 

 

30 June

 

30 June

 

 

31 December

 

 

 

 

2018

 

2017

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

£000

 

£000

 

 

£000

 

 

 

 

 

 

 

 

 

 

 

CONTINUING OPERATIONS

 

 

 

 

 

 

 

 

 

Revenue

 

 

9,132

 

8,073

 

 

26,890

 

Operating costs

 

 

(7,651)

 

(6,616)

 

 

(22,658)

 

Operating profit before exceptional items

 

 

1,481

 

1,457

 

 

4,255

 

Exceptional items:

 

 

 

 

 

 

 

 

 

Exceptional costs

 

 

 

 

 

(472)

 

Unrealised valuation gain

 

 

 

 

 

449

 

Operating profit

 

 

1,481

 

1,457

 

 

4,232

 

Finance costs

 

 

(158)

 

(309)

 

 

(932)

 

Profit before taxation

 

 

1,323

 

1,148

 

 

3,300

 

Taxation

 

 

(9)

 

46

 

 

186

 

Profit attributable to shareholders of the group from continuing operations

1,314

 

1,194

 

 

3,486

 

 

 

 

 

 

 

 

 

 

 

DISCONTINUED OPERATIONS

 

 

 

 

 

 

 

 

 

Loss attributable to shareholders of the group from discontinued operations

(359)

 

(467)

 

 

(4,856)

 

 

 

 

 

 

 

 

 

 

 

Profit / (loss) attributable to shareholders of the group for the period

955

 

727

 

 

(1,370)

 

 

 

 

 

 

 

 

 

 

 

Earnings/(loss) per share (basic and diluted)

 

 

2.31 p

 

1.76 p

 

 

(3.31)p

 

Earnings per share (basic and diluted) from continuing operations

3.18 p

 

2.89 p

 

 

8.43 p

 

Loss per share (basic and diluted) from discontinued operations

(0.87)p

 

(1.13)p

 

 

(11.74)p

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Comprehensive Income

 

 

 

 

 

 

 

 

 

6 months ended 30 June 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

(Restated) unaudited

 

(Restated) Audited

 

 

 

 

6 months     ended

6 months

ended

 

18 months ended

 

 

 

 

30 June

 

30 June

 

 

31 December

 

 

 

 

2018

 

2017

 

 

2017

 

 

 

 

£000

 

£000

 

 

£000

 

 

 

 

 

 

 

 

 

 

 

Profit / (loss) attributable to shareholders of the group

 

955

 

727

 

 

(1,370)

 

Actuarial gain recognised in the pension scheme

 

 

 

401

 

 

4,827

 

Related deferred taxation

 

 

 

(80)

 

 

(862)

 

 

 

 

 

321

 

 

3,965

 

Unrealised valuation gain

 

 

39

 

 

 

117

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income attributable to shareholders of the group

994

 

1,048

 

 

2,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The unaudited results for the six months ended 30 June 2017 and the audited results for the eighteen months ended 31 December 2017 have been restated to reclassify the residential carpets business as discontinued.  Details of the discontinued operation are included in note 2.

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheet

 

 

 

 

 

 

 

as at 30 June 2018

 

 

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

30 June

 

30 June

 

30 December

 

 

 

2018

 

2017

 

2017

 

 

 

£000

 

£000

 

£000

Non-current assets

 

 

 

 

 

 

 

Property, plant and equipment

 

 

5,107

 

6,101

 

5,294

Intangible assets

 

 

114

 

 

 

124

Investment property

 

 

3,150

 

2,701

 

3,150

Deferred tax asset

 

 

1,415

 

1,281

 

389

 

 

 

9,786

 

10,083

 

8,957

Current assets

 

 

 

 

 

 

 

Inventories

 

 

6,918

 

11,146

 

6,937

Trade and other receivables

 

 

2,870

 

4,704

 

2,893

Cash and cash equivalents

 

 

2,448

 

2,302

 

3,702

 

 

 

12,236

 

18,152

 

13,532

Total assets

 

 

22,022

 

28,235

 

22,489

Current liabilities

 

 

 

 

 

 

 

Trade and other payables

 

 

(4,793)

 

(5,574)

 

(4,045)

Obligations under finance leases

 

 

(185)

 

 

(183)

 

 

 

(4,978)

 

(5,574)

 

(4,228)

Non-current liabilities

 

 

 

 

 

 

 

Pension deficit

 

 

(2,114)

 

(6,962)

 

(2,164)

Deferred tax

 

 

(268)

 

(241)

 

(268)

Obligation under finance leases

 

 

(417)

 

(767)

 

(510)

 

 

 

(2,799)

 

(7,970)

 

(2,942)

Total liabilities

 

 

(7,777)

 

(13,544)

 

(7,170)

 

 

 

14,245

 

14,691

 

15,319

Equity

 

 

 

 

 

 

 

Called up share capital

 

 

10,339

 

10,339

 

10,339

Share premium account

 

 

504

 

504

 

504

Capital redemption reserve

 

 

3,617

 

3,617

 

3,617

Revaluation reserve

 

 

3,165

 

3,009

 

3,126

Retained earnings

 

 

(3,380)

 

(2,778)

 

(2,267)

 

 

 

14,245

 

14,691

 

15,319

 

 

 

 

 

 

 

 

                           

 

  

Consolidated Cash Flow Statement

 

 

 

 

 

 

6 months ended 30 June 2018

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

6 months ended

 

6 months ended

 

18 months ended

 

 

30 June 

 

30 June 

 

31 December

 

 

2018

 

2017

 

2017

 

 

£000

 

£000

 

£000

Cash flow from continuing operations

 

 

 

 

 

 

Profit for the period

 

1,314

 

1,194

 

3,486

Depreciation of tangible fixed assets

 

155

 

103

 

291

Amortisation of other intangible fixed assets

 

28

 

 

39

Finance costs

 

158

 

309

 

932

Taxation

 

9

 

(46)

 

(225)

Unrealised valuation gain

 

 

 

(449)

Operating cash flows before movements in working capital

1,664

 

1,560

 

4,074

 

 

 

 

 

 

 

Increase in inventories

 

(762)

 

(1,866)

 

(138)

(Increase) / decrease in trade and other receivables

(607)

 

(821)

 

1,046

Increase / (decrease) in trade and other payables

 

972

 

1,517

 

(874)

Cash generated from operations

 

1,267

 

390

 

4,108

Income tax received

 

 

                                          -  

 

                                      143

Contributions to defined benefit pension scheme

 

(200)

 

(200)

 

(600)

Net cash generated from operating activities in continuing operations

1,067

 

190

 

3,651

Net cash used in operating activities in discontinued operations

(93)

 

(19)

 

(900)

Net cash generated from operating activities

 

974

 

171

 

2,751

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Payments to acquire tangible fixed assets

 

(43)

 

(233)

 

(334)

Payments to acquire intangible fixed assets

 

(18)

 

 

 

(163)

Net cash used by investing activities on continuing operations

(61)

 

(233)

 

(497)

Net cash used by investing activities on discontinuing operations

 

(38)

 

(58)

 

 

(61)

 

(271)

 

(555)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Interest

 

(8)

 

(10)

 

(26)

Obligations under finance leases

 

(91)

 

(87)

 

(238)

Equity dividends paid

 

(2,068)

 

 

(1,344)

Net cash used in financing activities in continuing operations

(2,167)

 

(97)

 

(1,608)

Net cash used in financing activities in discontinued operations

 

                                          -  

 

                                          -  

Net cash used in financing activities

 

(2,167)

 

(97)

 

(1,608)

 

 

 

 

 

 

 

Net (decrease) / increase in cash and cash equivalents

(1,254)

 

(197)

 

588

Cash and cash equivalents at start of the period

 

3,702

 

2,499

 

3,114

Cash and cash equivalents at end of the period

 

2,448

 

2,302

 

3,702

 

 

 

 

 

 

 

 

  

Consolidated Statement of Changes in Equity

 

 

 

 

 

6 months ended 30 June 2018

 

 

 

 

 

 

 

Share capital

Share premium account

Capital redemption reserve

Revaluation reserve

Profit and loss account

Total equity

 

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

At 1st July 2016

10,339

504

3,617

3,009

(3,518)

13,951

 

 

 

 

 

 

 

Comprehensive income for the period

 

 

 

 

 

 

Loss for the period

(1,370)

(1,370)

Other comprehensive income for the period

117

3,965

4,082

Total comprehensive income for the year

117

2,595

2,712

Contributions by and distributions

to owners

 

 

 

 

 

Dividend paid

(1,344)

(1,344)

 

 

 

 

 

 

 

At 31st December 2017 and 1st January 2018

10,339

504

3,617

3,126

(2,267)

15,319

 

 

 

 

 

 

 

Comprehensive income for the period

 

 

 

 

 

 

Profit for the period

955

955

Other comprehensive income for the period

39

39

Total comprehensive income for the year

39

955

994

Contributions by and distributions

 to owners

 

 

 

 

 

Dividend paid

(2,068)

(2,068)

 

 

 

 

 

 

 

At 30th June 2018

10,339

504

3,617

3,165

(3,380)

14,245

 

 

 

 

 

 

 

 

 

 

1

BASIS OF PREPARATION AND ACCOUNTING POLICIES

 

 

 

 

 

The financial information for the six months ended 30 June 2018 and the six months ended 30 June 2017 has not been audited and does not constitute full financial statements within the meaning of Section 434 of the Companies Act 2006.

 

The financial information relating to the eighteen month period ended 31st December 2017 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 theperiod ended 31st December 2017.  These policies are set out in the annual report and accounts for theperiod ended 31st December 2017 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

DISCONTINUED OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

It was announced in the last annual report that the company had entered into a process concerning the closure of the residential carpets business.  This process has now been completed.  The analysis of the result of the discontinued business that has been included in the consolidated income statement including a deferred tax benefit following the closure of the residential carpets business is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

6 months ended

 

6 months ended

 

18 months ended

 

 

30 June

 

30 June

 

31 December

 

 

2018

 

2017

 

2017

 

 

 

 

 

 

 

 

 

£000

 

£000

 

£000

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

920

 

3,196

 

9,859

 

Operating costs

(2,313)

 

(3,681)

 

(14,669)

 

Loss before taxation

(1,393)

 

(485)

 

(4,810)

 

Taxation

1,034

 

18

 

(46)

 

Loss attributable to shareholders of the group from discontinued operations

(359)

 

(467)

 

(4,856)

 


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Half-year Report - RNS