Airea PLC Half Yearly Report (2200Q)

TIDMAIEA

RNS Number : 2200Q

Airea PLC

26 February 2016

AIREA PLC

Interim report for the six months ended 31 December 2015

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

Chairman's statement

Airea is pleased to report earnings are broadly in line with the corresponding period last year, despite the adverse impact on international sales due to the strength of sterling against the Euro in the first half of the financial year.

The first half of the current financial year has seen major progress across a number of strategic objectives. Most significant has been the recently announced consolidation of manufacturing operations from four locations onto two existing sites occupied by the company at Ossett and Wakefield. The move not only delivers significant cost savings and efficiency improvements, but enhances our operational capability, reducing lead-times and thereby improving customer service.

Inevitably there have been one-off costs incurred as a consequence of the move, i.e. rationalisation of finished inventories, redundancy payments to staff who were not able to transfer, and the relocation of equipment and inventory. These exceptional costs have been highlighted in the income statement.

On-going costs will be significantly reduced going forward. These include cost savings following the expiry of the lease of one of the properties vacated. In addition, Airea has agreed to lease to a third party its freehold property in Bury, which is no longer required for group operations as set out above, once it has been fully vacated by the company in the third quarter of this financial year.

The first six months also saw a reduction in the pension deficit arising from the completion of a Pension Increase Exchange exercise. The initiative allowed pensioners to opt for an income stream more aligned to their personal circumstances and preferences, whilst at the same time reducing the cost of past service benefits to the scheme. The gain to profit is highlighted as exceptional in the income statement.

Group results

Revenue for the period was GBP12.7m (2014 restated: GBP13.4m). The operating profit before exceptional items was GBP730,000 (2014: GBP700,000). The exceptional charge of GBP1.3m related to the costs associated with the consolidation of manufacturing operations, and the exceptional income of GBP1.3m related to the Pension Increase Exchange. The operating profit after exceptional items was GBP759,000 (2014: GBP700,000). After charging pension related finance costs of GBP246,000 (2014:GBP215,000) and incorporating the appropriate tax charge the net profit for the period was GBP372,000 (2014: GBP371,000). Basic earnings per share were 0.86p (2014: 0.80p).

Operating cash flows before exceptional items and movements in working capital were GBP1.1m (2014: GBP1.1m). The exceptional costs incurred a cash outflow of GBP0.5m (2014: GBP0.1m). Working capital decreased by GBP1.1m (2014: increase GBP0.4m) due to reductions in inventories. Contributions to the defined benefit pension scheme were GBP200,000 (2014: GBP200,000) in line with the agreement reached with the scheme trustees following the last triennial valuation as at 1(st) July 2014. Capital expenditure of GBP518,000 (2014: GBP136,000) was focussed on supporting new product launches. Overall the cash balance increased by GBP678,000 to GBP2.6m.

Outlook

The Board does not detect any fundamental changes in the outlook for the markets that we serve, and competition for business is likely to remain intense. However, the business enters the second half of the year with a reduced cost base, simplified operation and a healthy new product pipeline. In line with its recent policy, the board has resolved to determine the level of dividend at the year end, and there will not be a dividend payment at the interim stage.

Martin Toogood

Chairman

26(th) February 2016

Enquiries:

Neil Rylance 01924 266561

Chief Executive Officer

Roger Salt 01924 266561

Group Finance Director

Richard Lindley 0113 388 4789

N+1 Singer

 
  Consolidated Income 
   Statement 
  6 months ended 31st 
   December 2015 
                                  Unaudited   Unaudited       Audited 
                                   6 months    6 months          year 
                                      ended       ended         ended 
                                       31st        31st          30th 
                                   December    December          June 
                                               restated 
                                       2015        2014          2015 
                                     GBP000      GBP000        GBP000 
 
  Revenue                            12,674      13,379        25,538 
  Operating costs                  (11,915)    (12,679)      (24,440) 
 ------------------------------  ----------  ----------  ------------ 
  Operating profit 
   before exceptional 
   items                                730         700         1,212 
  Exceptional items: 
  Pension credit                      1,300           -             - 
  Restructure of operations         (1,271)           -             - 
  Property dispute                        -           -          (15) 
  Share repurchase 
   expenses                               -           -          (99) 
 ------------------------------  ----------  ----------  ------------ 
  Operating profit                      759         700         1,098 
  Finance income                          -           1             1 
  Finance costs                       (246)       (215)         (449) 
                                 ----------  ----------  ------------ 
  Profit before taxation                513         486           650 
  Taxation                            (141)       (115)          (69) 
                                 ---------- 
  Profit attributable 
   to shareholders of 
   the group                            372         371           581 
                                 ==========  ==========  ============ 
 
  Earnings per share 
   (basic and diluted)                0.86p       0.80p         1.29p 
 
  All amounts relate 
   to continuing operations 
 
  Consolidated Statement of 
   Comprehensive Income 
  6 months ended 31st 
   December 2015 
                                  Unaudited   Unaudited       Audited 
                                   6 months    6 months          year 
                                      ended       ended         ended 
                                       31st        31st          30th 
                                   December    December          June 
                                       2015        2014          2015 
                                     GBP000      GBP000        GBP000 
  Profit attributable 
   to shareholders of 
   the group                            372         371           581 
  Actuarial loss recognised 
   in the pension scheme              (218)           -       (1,635) 
  Related deferred 
   taxation                              44           -           267 
  Total comprehensive 
   income attributable 
   to shareholders of 
   the group                            198         371         (787) 
                                 ==========  ==========  ============ 
 
 
  Consolidated Balance 
   Sheet 
  as at 31st December             Unaudited   Unaudited       Audited 
   2015 
                                       31st        31st          30th 
                                   December    December          June 
                                       2015        2014          2015 
                                     GBP000      GBP000        GBP000 
  Non-current assets 
  Property, plant and 
   equipment                          5,447       5,427         5,333 
  Deferred tax asset                  1,350       1,288         1,557 
                                      6,797       6,715         6,890 
                                 ----------  ----------  ------------ 
  Current assets 
  Inventories                         8.313      10,358        10,647 
  Trade and other receivables         3,451       3,832         4,412 
  Cash and cash equivalents           2,561       1,915         1,883 
                                 ----------  ----------  ------------ 
                                     14,325      16,105        16,942 
                                 ----------  ----------  ------------ 
  Total assets                       21,122      22,820        23,832 
                                 ----------  ----------  ------------ 
  Current liabilities 
  Trade and other payables          (3,503)     (4,457)       (5,308) 
  Provisions                          (325)           -             - 
                                 ----------  ----------  ------------ 
                                    (3,828)     (4,457)       (5,308) 
                                 ----------  ----------  ------------ 
  Non-current liabilities 
  Pension deficit                   (6,406)     (5,776)       (7,443) 
  Deferred tax                          (1)         (1)           (1) 
                                    (6,407)     (5,777)       (7,444) 
                                 ----------  ----------  ------------ 
  Total liabilities                (10,235)    (10,234)      (12,752) 
                                 ----------  ----------  ------------ 
                                     10,887      12,586        11,080 
                                 ==========  ==========  ============ 
  Equity 
  Called up share capital            10,851      11,561        10,851 

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February 26, 2016 02:00 ET (07:00 GMT)