TIDMAIEA
RNS Number : 9882G
Airea PLC
30 July 2021
AIREA PLC
(the "Group")
Interim report for t he 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 GBP6.2m (2020:
GBP6.5m), excluding the CBILS loans our cash position was
GBP3.5m (2020: GBP3.7m), with further liquidity available of
GBP1.0m via our unutilised overdraft facility (2020: GBP1.0m
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 GBP0.3m above the prior year, GBP7.4m
(2020: GBP7.1m). 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 GBP574,000 (2020: GBP137,000).
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
GBP114,000 (2020: GBP193,000) and incorporating the appropriate tax
charge the net profit for the period was GBP440,000 (2020:
GBP43,000 loss). Basic earnings per share were 1.14p (2020:loss
0.11p).
Operating cash flows before movements in working capital were
GBP0.5m (2020: GBP0.5m). Working capital increased in the period by
GBP0.1m (2020: GBP1.0m decrease). Contributions to the defined
benefit pension scheme were GBP0.2m (2020: GBP0.2m) in line with
the agreement reached with the scheme trustees following the last
triennial valuation as at 1st July 2017. Capital expenditure of
GBP1.2m (2020: GBP0.2m) 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 Unaudited Audited
months ended 6 months 12 months
30th June ended ended 31st
2021 30th June December
2020 2020
GBP000 GBP000 GBP000
-------------------------------------------- --------------------------- --------------- ---------------------
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 Unaudited Audited
6 months 6 months 12 months
ended 30th ended ended
June 30th June 31st December
---------------------------------------------
2021 2020 2020
---------------------------------------------
GBP000 GBP000 GBP000
--------------------------------------------- -------------------- -------------- ---------------------
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 Unaudited Audited
June 30th June 31st December
2021 2020 2020
GBP000 GBP000 GBP000
------------------------------ ---------------------------------- --------------- -----------------------
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 30(th) June 2021
Unaudited Unaudited Audited
6 months 6 months 12 months
ended 30(th) ended ended 31(st)
June 30(th) December
2021 June 2020
2020
GBP000 GBP000 GBP000
--------------------------------------- ------------------------ --------------- -----------------------
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 Share-based Capital Profit
Share premium Own payment redemption Revaluation and Total
capital account Shares reserve reserve reserve loss equity
account
--------------
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- ------------ ------------ ------------- --------------- --------------- ------------- ----------- ------------
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
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END
IR SEMFWUEFSELW
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July 30, 2021 02:00 ET (06:00 GMT)
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