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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Airea Plc | LSE:AIEA | London | Ordinary Share | GB0008123027 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 32.00 | 31.00 | 33.00 | 32.00 | 32.00 | 32.00 | 0.00 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Misc Homefurnishings Stores | 18.76M | 1.3M | 0.0313 | 10.22 | 13.23M |
From Apr 2019 to Apr 2024
TIDMAIEA
RNS Number : 3624I
Airea PLC
21 March 2018
AIREA plc
Preliminary results for the 18 month period ended 31st December 2017
HIGHLIGHTS
-- Commercial Floorcoverings business Operating Profit before exceptional items of GBP4.3m
-- Export sales growth of 58 % over last six months following entry into new geographical markets, strengthening of international dealer network, and successful launch of new products
-- Broader product range of new products based on new technology investment in 2017 has opened up new markets & opportunities as planned
-- Closure of loss making residential carpet business (Ryalux) will be cash generative with receipts from stock realisation & sale of plant and machinery exceeding closure costs
-- The Group's simplification and focus on its core Burmatex business is expected to deliver considerable and sustainable free cash generation in the mid-term, creating considerable shareholder value.
-- At the AGM on 10(th) May 2018 the board will be seeking authority to return some value to shareholders through a buy-back of up to 6m shares (14.5% of current share capital)
-- Pension deficit reduced by GBP4.5m to GBP2.2m with, statutory funding position deficit reduced to zero
-- Strong cash generation and closure of Ryalux businesses supports a 5p special final dividend -- Total dividend payment (inclusive of the interim dividend) for the financial period of 6.75p
Strategic Report
Principal activity and strategy
The group remains focused on the manufacture, marketing and distribution of floor coverings. Our approach to strategy is uncomplicated; to develop products that sell, exploit the strength of our combined manufacturing and distribution operation, and deliver robust cash flows to support a progressive dividend policy.
Overview
As recently announced the Company has entered into a formal consultation period with employees concerning the proposed closure of the residential carpets business. Operating as Ryalux Carpets Limited ("Ryalux"), the residential carpets business offers high quality standard and custom broad loom carpets available through carpet retail outlets. The Company has proposed the closure of Ryalux Carpets Limited as the business has been loss making for a number of years. Airea has implemented a range of initiatives in recent years to improve the business, including new product development, rationalisation of sites and strict cost controls. Despite this, the trading environment for residential carpets has worsened and the ongoing trend to cheaper synthetic products has led to further declines in demand for high quality tufted woollen carpets. In the 18 months to 31 December 2017 Ryalux Carpets Limited generated an operating loss before exceptional items of GBP3.1m on revenue of GBP9.9 million. The Company has incurred exceptional costs of GBP1.7m, inclusive of GBP1.1m of asset impairment and provisions, associated largely with a reduction in working capital and impairment of assets. Overall, the closure is likely to be cash generative, with receipts from the realisation of assets being greater than closure costs.
Going forward the increase in free cash generation arising from the proposed elimination of losses previously incurred by Ryalux will enable increased investment in the highly profitable commercial flooring business operated under the Burmatex brand ("Burmatex"). In the eighteen months to 31 December 2017 the commercial floorcoverings division generated an operating profit before exceptional items of GBP4.3m on sales of GBP26.9m. The investment in new technology made earlier in the period is now coming to fruition with the launch of a series of new products, which will open up new higher value markets. This adds to the successful launch of a competitively priced entry product, which has already established a significant market share in its own right as well as opening up new opportunities for the rest of the product range. Burmatex now has a range of products to profitably compete across the broad spectrum of price points. We are already seeing the benefit in sales growth both in the UK and internationally.
It is pleasing to report that the improved management of liabilities and a refocussed investment strategy has seen a considerable improvement in the funding position of the legacy defined benefits pension scheme. The accounting deficit reduced by GBP4.5m to GBP2.2m.
We also saw an increase in valuation of the investment property to GBP3.2m from GBP2.7m. The gain, which is highlighted separately in the income statement, results from the increased rent potential following extensive refurbished carried out in the period.
As previously announced, the company's accounting reference date has been changed to the 31st December, necessitating an eighteen month reporting period. The comparative figures cover a twelve month period, which means they are not directly comparable. However, moving forward the new reporting period will be more closely aligned to the company's business cycle.
Group results
Revenue for the period was GBP36.7m (2016: GBP24.6m). Operating profit before exceptional items was GBP1,156,000 (2016: GBP2,013,000). The reduction in profitability resulted from the accelerating losses in the residential carpets business. The exceptional costs of GBP2.2m (2016: GBP1.3m) relate in the main to the rationalisation of the residential carpets business and the associated impairment of assets. The exceptional income of GBP0.4m arises from the revaluation of the investment property. The operating loss after exceptional items was GBP578,000 (2016: profit GBP2,042,000). Other finance costs relating in the main to the defined benefit pension scheme were GBP932,000 (2016: GBP651,000). After a tax credit of GBP140,000 (2016: charge GBP114,000), the loss for the year was GBP1,370,000 (2016: profit GBP1,277,000).
Basic loss per share was 3.31p (2016: earnings 3.01p), and basic adjusted earnings per share(1) were 1.97p (2016: 2.96p).
Operating cash flows before movements in working capital and other payables were GBP1,007,000 (2016: GBP2,041,000). Working capital decreased by GBP2,201,000 (2016: GBP1,009,000) due in the main to the run down of inventories in the residential carpets business. Contributions of GBP600,000 (2016: GBP400,000) were made to the defined benefit pension scheme in line with the agreement reached with the trustees based on the 2014 actuarial valuation. Capital expenditure gross of asset finance of GBP1,313,000 (2016: GBP704,000) and investment in intangible assets of GBP163,000 (2016: GBPnil) related in the main to the introduction of new technology.
The reduction of GBP4.5m in the pension deficit to GBP2.2m (2016 GBP6.7m) stemmed principally from strong investment returns on scheme assets.
Key performance indicators
As part of its internal financial control procedures the board monitors certain financial ratios. To enable meaningful comparison where figures cover an eighteen month period, they have been reduced to a twelve month equivalent on a simple time apportionment basis. For the eighteen months to 31(st) December 2018, adjusted to a twelve month equivalent, value added per employee (the ratio of sales less material costs to average employee numbers) amounted to GBP69,000 (2016: GBP70,000), operating return on sales (the ratio of operating profit before exceptional items to revenue) was 3.1% (2016: 8.2%), return on average net operating assets (the ratio of operating profit before exceptional items to average operating assets) was 4.2% (2016: 11.0%) and working capital to sales percentage was 24.8% (2016: 34.3%). The reduction in the performance indicators is as a result of the deterioration of the residential carpet business. The directors are confident that the actions taken will drive significant improvement in the future.
Principal risks and uncertainties
The Board has responsibility for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives, and ensuring that risks are managed effectively across the group. Risks are identified as being principally based on the likelihood of occurrence and potential impact on the group. The group's principal risks, which remain consistent with the prior year, are identified below, together with a description of how the group mitigates those risks.
The key operational risk facing the business continues to be the competitive nature of the markets for the group's products. To mitigate this risk the group seeks to improve existing products, introduce new products and achieve high levels of customer service and efficiency.
The majority of the group's revenue arises from trade with flooring contractors and independent retailers. The activity levels within this customer base are determined by consumer demand created through a wide range of commercial refurbishment and building projects and activity in the housing market. The general level of activity in these underlying markets has the potential to affect the demand for products supplied by the group. The group mitigates these factors by closely monitoring sales trends and taking appropriate action early, along with strengthening the product range and developing new channels to market, both at home and abroad, to grow demand across a wider range of markets.
The group operates a defined benefit pension scheme. At present, in aggregate, there is an actuarial accounting deficit between the value of the projected liabilities of this scheme and the assets they hold. The amount of the deficit may be adversely affected by changes in a number of factors, including investment returns, long-term interest rate and price inflation expectations, and anticipated members' longevity. Further increases in pension scheme deficit may require the group to increase the amount of cash contributions payable to the scheme, thereby reducing cash available to meet the group's other operating, investing and financing requirements. The performance and risk management of the group's pension scheme and deficit recovery plan are regularly reviewed by both the group and the trustees of the scheme, taking actuarial and investment advice as appropriate. The results of these reviews are discussed with the Board and appropriate action taken. Following the triennial funding valuation of the group's pension scheme as at 1(st) July 2017, a revised deficit recovery plan was agreed. Under the plan the company will continue to make annual contributions of GBP400,000, even though the statutory funding deficit has been eliminated. This is to allow a gradual reduction in investment risk.
Other risks
Raw material costs are a significant constituent of overall product cost, and are impacted by global commodity markets. Significant fluctuations in raw material costs can have a material impact on profitability. The group continuously seeks out opportunities to develop a robust and competitive supply base, substitute new materials and closely monitors selling prices and margins.
The global nature of the group's business means it is exposed to volatility in currency exchange rates in respect of foreign currency denominated transactions, the most significant being the euro. In order to protect itself against currency fluctuations the group has taken advantage of the opportunity to naturally hedge euro revenue with euro payments. This is done in combination with foreign currency bank accounts and forward exchange contracts. No transactions of a speculative nature are undertaken.
Other risks include the availability of necessary materials, business interruption and the duty of care to our employees, customers and the wider public. These risks are managed through the combination of quality assurance and health and safety procedures, and insurance cover.
The long term impact of the Brexit Referendum is not yet clear in respect of the degree in respect of its impact on future economic growth in the UK market, or on any additional tariffs that may apply to UK businesses trading with the European Union. The group monitors this position and adjusts its forward plans where appropriate. It is believed that the group's strength in refurbishment markets, its position as a UK manufacturer with a strong presence in the UK market and strategies of developing new sales channels will act to mitigate the impact of adverse changes and provide opportunities for growth.
Management and personnel
We recognise the hard work and dedication our staff have applied in trying to recover the fortunes of the residential carpets business. We thank them for the dedication they have continued to show during the most challenging of times.
Current trading and future prospects
The changes we are making to the business and the increased investment in our successful commercial flooring business provides significant opportunities for profitable growth. Given our confidence in the future prospects of the business, the ongoing improvement in the performance of the commercial floorcoverings business, and the cash surplus arising from the actions taken in the residential carpets operation we will be proposing a special dividend payment. If approved, a final dividend of 5.0p per share will be paid on 23rd May 2018 to shareholders on the register at close of business on 13th April 2018, with an ex dividend date of 12(th) April 2018.
MARTIN TOOGOOD NEIL RYLANCE
Chairman Chief Executive Officer 20th March 2018
(1) Adjusted earnings are earnings adjusted for exceptional operating items (net of tax)
Enquiries:
Neil Rylance 01924 266561
Chief Executive Officer
Roger Salt 01924 266561
Group Finance Director
Richard Lindley 020 7496 3000
N+1 Singer
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
The financial information set out in the announcement does not constitute the group's statutory accounts for the 18 month period ended 31 December 2017 or the year ended 30 June 2016. The financial information for the year ended 30 June 2016 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not include any statement under s498(2) or s498(3) of the Companies Act 2006. The consolidated balance sheet at 31 December 2017, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated cash flow statement, the consolidated statement of changes in equity and the segmental reporting for the 18 month period then ended have been extracted from the Group's 2017 statutory financial statements upon which the auditor's opinion is unqualified and does not include any statement under s498(2) or s498(3) of the Companies Act 2006.
The announcement has been agreed with the company's auditor for release.
Hot Features
Premium
Consolidated Income
Statement
18 month period ended
31st December 2017
18 months 12 months
ended 31st ended 30th
December June
2017 2016
GBP000 GBP000
Revenue 36,749 24,577
Operating costs (37,327) (22,535)
-------------------------------- ------------ -------- ------------
Operating profit before
exceptional items 1,156 2,013
Exceptional costs (2,183) (1,271)
Pension credit - 1,300
Unrealised valuation 449 -
gain
------------------------------ ------------ -------- ------------
Operating (loss) / profit (578) 2,042
Finance costs (932) (651)
------------ ------------
(Loss) / profit before
taxation (1,510) 1,391
Taxation 140 (114)
------------ ------------
(Loss) / profit attributable
to shareholders of the
group (1,370) 1,277
============ ============
(Loss) / earnings per
share (basic and diluted) (3.31)p 3.01 p
All amounts relate to
continuing operations
Consolidated Statement of Comprehensive
Income
18 months ended 31st
December 2017
18 months ended 12 months ended
31st December 30th June
2017 2016
GBP000 GBP000 GBP000 GBP000
(Loss) / profit attributable
to shareholders of the
group (1,370) 1,277
Actuarial gain / (loss)
recognised in the pension
scheme 4,827 (291)
Related deferred taxation (862) (83)
------------ ------------
3,965 (374)
Unrealised valuation
gain 117 3,009
Related deferred taxation - (240)
------------ ------------
117 2,769
-------- -------
Total other comprehensive
income 4,082 2,395
-------- -------
Total comprehensive
income attributable
to shareholders of the
group 2,712 3,672
======== =======
Consolidated Balance
Sheet
as at 31st December
2017
31st December 30th June
2017 2016
GBP000 GBP000 GBP000 GBP000
Non-current assets
Property, plant and
equipment 5,294 5,489
Intangible assets 124 -
Investment property 3,150 2,701
Deferred tax asset 389 1,264
-------- ---------
8,957 9,454
Current assets
Inventories 6,937 9,338
Trade and other receivables 2,893 4,601
Cash and cash equivalents 3,702 3,114
-------- --------
13,532 17,053
-------- ---------
Total assets 22,489 26,507
-------- ---------
Current liabilities
Trade and other payables (3,745) (5,505)
Provisions (300) (125)
Obligations under finance (183) -
leases
-------- --------
(4,228) (5,630)
Non-current liabilities
Pension deficit (2,164) (6,685)
Deferred tax (268) (241)
Obligations under finance (510) -
leases
-------- --------
(2,942) (6,926)
-------- ---------
Total liabilities (7,170) (12,556)
-------- ---------
15,319 13,951
======== =========
Equity
Called up share capital 10,339 10,339
Share premium account 504 504
Capital redemption reserve 3,617 3,617
Revaluation reserve 3,126 3,009
Retained earnings (2,267) (3,518)
-------- ---------
15,319 13,951
======== =========
Consolidated Cash Flow Statement
18 month period ended 31st December 2017
18 Months ended 31st December 12 Months ended 30th June
2017 2016
GBP000 GBP000
Cash flows from operating activities
(Loss) / profit for the year (1,370) 1,277
Depreciation 927 837
Amortisation 39
Finance costs 932 651
Profit on disposal of property, plant and equipment - (6)
Tax (credit) / expense (140) 114
Pension credit - (1,300)
Tangible fixed assets impairment 708 -
Inventory impairment 289 468
Trade receivables impairment 71 -
Unrealised valuation gain (449) -
------------------------------ --------------------------
Operating cash flows before movements in working
capital 1,007 2,041
Decrease in inventories 2,112 841
Decrease / (Increase) in trade and other
receivables 1,674 (189)
(Decrease) / Increase in trade and other payables (1,760) 232
Increase in provisions for liabilities and charges 175 125
------------------------------ --------------------------
Cash generated from operations 3,208 3,050
Income tax received 143 61
Contributions to defined benefit pension scheme (600) (400)
------------------------------ --------------------------
Net cash generated from operating activities 2,751 2,711
Cash flows from investing activities
Payments to acquire tangible fixed assets (392) (704)
Payments to acquire intangible fixed assets (163) -
Receipts fro sales of tangible fixed assets - 25
------------------------------ --------------------------
Net cash used in investing activities (555) (679)
------------------------------ --------------------------
Cash flows from financing activities
Interest paid (26) -
Finance lease repayments (238) -
Share repurchase - (410)
Equity dividends paid (1,344) (391)
------------------------------ --------------------------
Net cash used in financing activities (1,608) (801)
------------------------------ --------------------------
Net increase in cash and cash equivalents 588 1,231
Cash and cash equivalents at start of the year 3,114 1,883
------------------------------ --------------------------
Cash and cash equivalents at end of the year 3,702 3,114
============================== ==========================
Consolidated Statement
of Changes in Equity
18 month period ended
31st December 2017
Share Share Capital Revaluation Profit Total
capital premium redemption reserve and equity
account reserve loss
account
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1st July 2015 10,851 504 3,105 - (3,380) 11,080
Comprehensive income
for the year
Profit for the year - - - - 1,277 1,277
Other comprehensive
income for the year - - - 3,009 (614) 2,395
--------- --------- ------------ ------------ --------- --------
Total comprehensive
income for the year - - - 3,009 663 3,672
Contributions by and
distributions to owners
Share repurchase (512) - 512 - - -
Consideration paid
on share purchase - - - - (410) (410)
Dividend paid - - - - (391) (391)
--------- --------- ------------ ------------ --------- --------
Total contributions
by and distributions
to owners (512) - 512 - (801) (801)
--------- --------- ------------ ------------ --------- --------
At 30th June and 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 period - - - 117 2,595 2,712
Contributions by and
distributions to owners
Dividend paid - - - - (1,344) (1,344)
--------- --------- ------------ ------------ --------- --------
Total contributions
by and distributions
to owners - - - - (1,344) (1,344)
--------- --------- ------------ ------------ --------- --------
At 31st December 2017 10,339 504 3,617 3,126 (2,267) 15,319
========= ========= ============ ============ ========= ========
Notes to the Financial Statements
1 SEGMENTAL REPORTING
The group presents its results in accordance with
internal management reporting information which means
that the group is reported as two segments. The residential
carpets business was separated out during the period,
assets revenues and cost allocated accordingly and
the segment monitored separately during the period
as a result of increasing losses. The commercial floorcoverings
segment focusses on the design and manufacture of
floorcoverings to meet the needs of architects, specifiers
and contractors for the education, leisure, commercial,
healthcare and public sectors. The residential carpets
segment produces standard and bespoke carpets distributed
through independent carpet retail outlets. The performance
of the group is monitored and measured and strategic
decisions made by the Chief Operating Decision Maker,
which is deemed to be the board, on the basis of the
group's results. The group's results include all items
presented under IFRS. This management information
therefore accords with group financial information
presented in the consolidated income statement and
consolidated balance sheet.
Revenue is reported by geographical location of customers,
and by market sector.
All revenue is generated by operations within the
United Kingdom and all assets are located in the United
Kingdom.
18 month period ended 31st
December 2017
Commercial Residential Total
Floorcoverings Carpets
GBP000 GBP000 GBP000
Revenue 26,890 9,859 36,749
Operating costs (22,658) (14,669) (37,327)
----------------------------- --------------- --------------------- ---------
Operating profit / (Loss)
before exceptional items 4,255 (3,099) 1,156
Exceptional costs (472) (1,711) (2,183)
Unrealised valuation
gain 449 - 449
----------------------------- --------------- --------------------- ---------
Operating profit / (Loss) 4,232 (4,810) (578)
Finance costs (932) - (932)
--------------- --------------------- ---------
Profit /(Loss) before
taxation 3,300 (4,810) (1,510)
Taxation 186 (46) 140
--------------- --------------------- ---------
3,486 (4,856) (1,370)
=============== ===================== =========
Depreciation charge 291 636 927
Amortisation charge 39 - 39
Capital expenditure 1,428 58 1,486
Segment assets 14,286 1,033 15,319
Year ended 30th June
2016 (Restated)
Commercial Residential Total
Floorcoverings Carpets
GBP000 GBP000 GBP000
Revenue 18,066 6,511 24,577
Operating costs (13,424) (9,111) (22,535)
----------------------------- --------------- --------------------- ---------
Operating profit / (loss)
before exceptional items 3,342 (1,329) 2,013
Exceptional costs - (1,271) (1,271)
Pension credit 1,300 - 1,300
----------------------------- --------------- --------------------- ---------
Operating profit / (loss) 4,642 (2,600) 2,042
Finance costs (651) - (651)
--------------- --------------------- ---------
Profit / (Loss) before
taxation 3,991 (2,600) 1,391
Taxation (114) - (114)
--------------- --------------------- ---------
3,877 (2,600) 1,277
=============== ===================== =========
Depreciation charge 214 623 837
Capital expenditure 248 456 704
Segment assets 10,722 3,229 13,951
Analysis of revenue
by destination
18 months 12 months
ended ended
31st 30th
December June
2017 2016
GBP000 GBP000
United Kingdom 28,717 20,246
Republic of Ireland 2,050 960
Rest of Europe 5,215 2,866
North America 42 91
Rest of the World 725 414
--------------- ---------------------
36,749 24,577
=============== =====================
In accordance with Rule 20 of the AIM Rules, Airea confirms that the annual report and accounts for the period ended 31(st) December 2017 will be available to view on the Company's website at www.aireaplc.co.uk on 21(st) March 2018, and will be posted to shareholders by 28(th) March 2018.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FKKDBCBKDQNB
(END) Dow Jones Newswires
March 21, 2018 03:00 ET (07:00 GMT)
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