Interim report

Released : 21 Feb 2017 07:00

RNS Number : 3748X
Airea PLC
21 February 2017
 

 

AIREA PLC

 

Interim report for the six months ended 31 December 2016

 

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 significantly ahead of the corresponding period.

-    Operating profit up 51%

-    Basic earnings per share up 76%

-    EBITDA up 28%

New product launches targeted at the residential market have driven growth in this sector.  On the contract side however, delays in projects led to a slow down in growth and as indicated in the annual report sales in the Euro zone took some time to recover.  Exports grew steadily in the period and we are seeing sales ahead of last year as we enter the second six months of the accounting period.

Investment in new technology during the second half of the last financial year will facilitate the further extension of our product range with several new designs currently being finalised for launch.

The site consolidation exercise is largely complete with discussions concerning our last leasehold operation in Wakefield reaching an advanced stage. The business continues to reap the benefits of shorter lead times, cost synergies and reduced waste. 

Group Results

Revenue for the period was £12.8m (2015: £12.7m).  The operating profit was £1,149,000 (2015: £759,000).   After charging pension related finance costs of £305,000 (2015: £246,000) and incorporating the appropriate tax charge the net profit for the period was £696,000 (2015:  £372,000). Basic earnings per share were 1.51p (2015: 0.86p)

Operating cash flows before exceptional items and movements in working capital were £1.5m (2015: £1.1m).  Working capital increased in the period by £1.2m mainly as a result of timing of payments to trade creditors. Contributions to the defined benefit pension scheme were £200,000 (2015: £200,000) in line with the agreement reached with the scheme trustees following the last triennial valuation as at 1st July 2014.  Capital expenditure of £1,009,000 (2015: £518,000) was made in renewing and enhancing manufacturing plant and equipment. 

The increase in the pension deficit of £579,000 resulted from a deterioration in corporate bond yields.  It is an accounting standards requirement that the reported pension valuation is based on corporate bond yields even though this does not reflect the investment strategy of the plan.  In reality the plan is now largely hedged against interest rate movements and inflation, which, combined with a diversified growth asset base, has produced an improved underlying position.   

Outlook

Recent experience suggests that current exchange rate conditions will, in overall terms, prove to be beneficial for the company but in recent months there has been significant input price pressure resulting from commodity price rises. It is therefore difficult at this point in time to predict the longer term effect on our competitive position. As ever our margins remain the subject of careful management as we look to exploit any advantage.

Of far greater concern is the medium to long term impact of economic uncertainty on market demand.  Our position is not unique of course but there has been a notable increase in volatility in an already cyclical market.

The Board intends to maintain the recent pattern of dividend payments, and taking into consideration the changes in accounting period announced in December, will determine the level of interim dividend on the basis of the twelve month period ended 30 June 2017.  Therefore there will not be a dividend payment at this interim stage.

Martin Toogood

Chairman

20th February 2017  

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 2016












Unaudited 

Unaudited 

Audited








6 months ended

6 months ended

year ended








31st December

31st December

30th June








2016

2015

2016








£000

£000

£000
















Revenue


12,771

12,674

24,577






Operating costs


(11,622)

(11,915)

(22,535)






Operating profit before exceptional items


1,149

730

2,013






Exceptional items:










Exceptional costs


-

(1,271)

(1,271)






Pension credit


-

1,300

1,300






Operating profit


1,149

759

2,042






Finance income


-

-

-






Finance costs


(305)

(246)

(651)






Profit before taxation


844

513

1,391






Taxation


(148)

(141)

(114)






Profit attributable to shareholders of the group


696

372

1,277
















Earnings per share (basic and diluted)


1.68p

0.86p

3.01p
















All amounts relate to continuing operations




















Consolidated Statement of Comprehensive Income








6 months ended 31st December 2016












Unaudited 

Unaudited 

Audited








6 months ended

6 months ended

year ended








31st December

31st December

30th June








2016

2015

2016








£000

£000

£000






Profit attributable to shareholders of the group


696

372

1,277






Actuarial loss recognised in the pension scheme


(480)

(218)

(291)






Related deferred taxation


96

44

(83)








(384)

(174)

(374)






Unrealised valuation gain


-

-

3,009






Related deferred taxation


-

-

(240)








-

-

2,769






Total comprehensive income attributable to shareholders of the group


312

198

3,672






Consolidated Balance Sheet










as at 31st December 2016


Unaudited

Unaudited

Audited








31st December

31st December

30th June








2016

2015

2016








£000

£000

£000






Non-current assets










Property, plant and equipment


6,164

5,447

5,489






Investment property


2,701

-

2,701






Deferred tax asset


1,326

1,350

1,264








10,191

6,797

9,454






Current assets










Inventories


9,017

8.313

9,338






Trade and other receivables


4,076

3,451

4,601






Cash and cash equivalents


2,499

2,561

3,114








15,592

14,325

17,053






Total assets


25,783

21,122

26,507






Current liabilities










Trade and other payables


(3,656)

(3,503)

(5,505)






Provisions


(125)

(325)

(125)








(3,781)

(3,828)

(5,630)






Non-current liabilities










Obligation under finance leases


(854)

-

-






Pension deficit


(7,264)

(6,406)

(6,685)






Deferred tax


(241)

(1)

(241)








(8,359)

(6,407)

(6,926)






Total liabilities


(12,140)

(10,235)

(12,556)








13,643

10,887

13,951






Equity










Called up share capital


10,339

10,851

10,339






Share premium account


504

504

504






Capital redemption reserve


3,617

3,105

3,617






Revaluation reserve


3,009

-

3,009






Retained earnings


(3,826)

(3,573)

(3,518)








13,643

10,887

13,951














































Consolidated Cash Flow Statement










6 months ended 31st December 2016


Unaudited 

Unaudited 

Audited








6 months ended

6 months ended

year ended








31st December

31st December

30th June








2016

2015

2016








£000

£000

£000






Cash flow from operating activities










Profit attributable to shareholders of the group


696

372

1,277






Tax charged


148

141

114






Finance costs


305

246

651






Depreciation


334

404

837






Profit on disposal of property plant and equipment


-

-

(6)






Pension credit


-

(1,300)

(1,300)






Inventory impairment


-

468

468






Operating cash flows before exceptional items & movements in working capital


1,483

331

2,041






Decrease in inventories


321

1,866

841






Decrease / (increase) in trade and other receivables


525

961

(189)






(Decrease) / increase in trade and other payables


(2,015)

(1,696)

232






Increase in provisions for liabilities and charges


-

325

125






Cash generated from operations


314

1,787

3,050






Income tax received


52

-

61






Contributions to defined benefit pension scheme


(200)

(200)

(400)






Net cash generated from operations


166

1,587

2,711
















Investing activities










Purchase of property, plant and equipment


(1,009)

(518)

(704)






Proceeds on disposal of property, plant and equipment


-

-

25








(1,009)

(518)

(679)






Financing activities










Interest


(6)

-

-






Obligations under finance leases


854

-

-






Share repurchase


-

-

(410)






Equity dividends paid


(620)

(391)

(391)








228

(391)

(801)






Net increase/(decrease) in cash and cash equivalents


(615)

678

1,231






Cash and cash equivalents at start of period


3,114

1,883

1,883






Cash and cash equivalents at end of period


2,499

2,561

3,114














































Consolidated Statement of Changes in Equity








6 months ended 31st December 2016












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 2015


10,851

504

3,105

-

(3,380)

11,080



Comprehensive income for the period










Profit for the period


-

-

-

-

372

372



Other comprehensive income for the period


-

-

-

-

(174)

(174)





-

-

-

-

198

198



Contributions by and distributions to owners










Dividend Paid


-

-

-

-

(391)

(391)



At 31st December 2015


10,851

504

3,150

-

(3,573)

10,887



Comprehensive income for the period










Profit for the period


-

-

-

-

905

905



Other comprehensive income for the period


-

-

-

3,009

(440)

2,569





-

-

-

3,009

465

3,474



Contributions by and distributions to owners










Share repurchase


(512)

-

512

-

-

-



Consideration paid on share purchase


-

-

-

-

(410)

(410)





(512)

-

512

-

(410)

(410)



At 30th June 2016


10,339

504

3,617

3,009

(3,518)

13,951



Comprehensive income for the period










Profit for the year


-

-

-

-

696

696



Other comprehensive income for the year


-

-

-

-

(384)

(384)





-

-

-

-

312

312



Contributions by and distributions to owners










Dividend Paid


-

-

-

-

(620)

(620)



At 31st December 2016


10,339

504

3,617

3,009

(3,826)

13,643





















































Note










BASIS OF PREPARATION AND ACCOUNTING POLICIES












The financial information for the six month periods ended 31st December 2016 and 31st December 2015 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 year ended 30th June 2016 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 year ended 30th June 2016.  These policies are set out in the annual report and accounts for the year ended 30th June 2016 which is available on the company's website 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.

 
















 

 


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