Interim Results

Airea PLC

27 July 2023

 

27 July 2023

AIREA plc

("AIREA", the "Group" or the "Company")

Interim results for the six months ended 30 June 2023

AIREA plc (AIM: AIEA), the UK design-led specialist flooring company, supplying both the UK and international markets, is pleased to announce its interim results for the six months ended 30 June 2023.

Financial highlights

	30 June 2023 (£)	30 June 2022 (£)	Change (%)
Group revenue	9,825k	8,551k	14.9
Operating profit before valuation	836k	756k	10.5
Profit before tax	620k	656k	(5.4)
EBITDA (Earnings before interest tax depreciation and amortisation)	1,010k	1,016k	(0.1)
Cash and cash equivalents	4,919k	5,450k	(9.7)
Net cash	2,694k	2,493k	8.1

Operational highlights

·    Continued focus on sales growth in existing and new territories, with key wins in export markets.

·    Successful launch of carbon-neutral products in line with market trends and demand for low-carbon products.

·    Installation and commissioning of solar panels, reducing exposure to energy price volatility.

·    Appointment of Tanya Ashton, Non-Executive Director, in May 2023.

Martin Toogood, Non-Executive Chairman of AIREA plc, commented:

"The first half of 2023 has seen continued growth in our sales fuelled by a focus on refreshing our product offering and taking advantage of new markets. The current economic environment continues to put a strain on the cost of labour, energy, and raw materials. We do however continue to take actions to manage these risks with investments for the future such as the installation of our renewable energy solutions, all with a view to capitalising on the opportunities in our markets as and when wider macro conditions improve."

- Ends -

For further information please contact:

AIREA plc Médéric Payne, Chief Executive Officer Ryan Thomas, Chief Financial Officer	Tel: [phone]
Singer Capital Markets (Nominated Adviser and Sole Broker) Peter Steel / Sam Butcher	Tel: [phone]
Yellow Jersey PR (Financial media and PR) Sarah Hollins / Shivantha Thambirajah / Jazmine Clemens	Tel: [phone]

This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication of this announcement, this information is now considered to be in the public domain.

Notes to Editors

AIREA plc is a UK design-led specialist flooring company, supplying both UK and international markets.  Since 2007, the Group has been focused solely on floor coverings and enjoys a strong and growing brand position within the commercial flooring market.

The Group's core brand Burmatex® is one of the UK's leading designers and manufacturers of commercial carpet tiles and planks. Burmatex® focuses on the design and creation of sustainable innovative flooring solutions to meet the needs of architects, specifiers and contractors with a continuously developing range to suit the education, leisure, commercial, hospitality and public sectors. The brand was acquired by AIREA in 1984.

The Group was admitted to trading on AIM of the London Stock Exchange on 12 December 2007.

For further information, please visit: https://aireaplc.com/.

Chief Executive Officer's Statement

Introduction

I am pleased to report the Group's interim results for the six months ended 30 June 2023. During this period, AIREA has made good progress and maintained momentum in both its home and export markets. We have made a positive start to the year and the Group's performance during the period is in line with management expectations.

In May 2023, the Company seized the opportunity to exhibit at the renowned Clerkenwell Design Week, which gave us the platform to showcase our new ranges and promote the Burmatex® brand to the market and engage with our target customer audience in this setting for the first time in over ten years.  

Results

Revenue for the period increased by 15% to £9.8m (2022: £8.6m). In the UK, our sales were 9.8% ahead of the prior six-month comparative period, largely driven by a combination of cost increases being passed onto customers combined with an improved sales mix. Export sales were up 36% compared to the comparative period as demand recovered in most of our target export markets, with good progress being made in new markets. The UK market remains challenging given the economic backdrop, however, performance is encouraging as our sales mix moves towards more design-led products.

The Group's operating profit was £0.8m (2022: £0.8m). Our underlying product margins faced downward pressures due to increased energy, raw materials, and labour costs.  We were restricted in passing on these cost increases in a price-sensitive market. Net finance costs increased by £0.1m largely because of the increased pension interest charge. After charging net finance costs of £0.2m (2022: £0.1m) and incorporating the appropriate tax charge, the net profit for the period was £0.5m (2022: £0.6m). Basic earnings per share were 1.18p (2022: 1.58p).

Operating cash flows before movements in working capital were £1.2m (2022: £0.8m). Working capital increased in the period to £0.5m due to an increase in inventory for new lines and higher receivables from customers (2022: £0.0m). Contributions to the defined benefit pension scheme were £0.0m (2022: £0.0m) in line with the agreement reached with the scheme trustees following the last triennial valuation as of 1 July 2023. Capital expenditure of £0.9m (2022: £0.2m) was spent renewing and enhancing the manufacturing plant and equipment, with an important investment in our new solar panels.

Net cash (cash less loans and borrowings) decreased by £0.5m in the six-month period to £2.7m as of 30 June 2023, from £3.2m as of 31 December 2022. We continue to have further liquidity available of £1.0m via our unutilised overdraft facility (2022: £1.0m unutilised). Our cash reserves and strong balance sheet enable us to invest in the future of the business and manage the impact of the continued economic uncertainty and related risks.

Update on Board composition

The Board appointed Tanya Ashton as Non-Executive Director to the Board on 10 May 2023. Tanya's appointment signals the importance that we attach to good standards of corporate governance at AIREA. 

We have commenced the selection process for our new Chief Financial Officer following the resignation of Ryan Thomas on 4 July 2023. We have made good progress and expect to be in a position to make an announcement in the coming months.

We acknowledge the importance of reviewing Board composition on an ongoing basis to ensure that the Group has the required level of skills and experience to enable the business to operate efficiently and react quickly to any issues that may arise.

Outlook

The development of our sustainable products indicates the transformational change the Group is focused on to enable AIREA to be more competitive, innovative, and agile. Our marketing and sales strategy is not only UK-focused but also on growing our international sales in both existing and new territories.

As the cost pressures persist, we continue to adapt our processes and procedures to mitigate and manage the impact on the business. In some areas, this has and will continue with the need to invest in our facilities such that we reduce waste, improve productivity, and utilise energy efficiently.

Given the plans to continue to invest in the future of the business coupled with the continued levels of uncertainty in the market and the wider economy, the Group will continue to prioritise the preservation of cash. We will therefore not be proposing an interim dividend at this time (2022: £nil). We were pleased to have been able to declare and pay a final dividend following the 2022 results and we cautiously expect to be in the position to do similar once our 2023 results are finalised.

Finally, we would like to thank everyone associated with the AIREA Group for their support during the period.

Médéric Payne

Chief Executive Officer

26 July 2023

Consolidated Income Statement
6 months ended 30 June 2023
	Unaudited 6 months ended 30 June 2023	Unaudited 6 months ended 30 June 2022	Audited 12 months ended 31 December 2022
	£000	£000	£000
Revenue	9,825	8,551	18,483
Operating costs	(9,301)	(7,935)	(17,111)
Other operating income	312	140	280
Operating profit before valuation gain	836	756	1,652
Unrealised valuation gain	-	-	--
Operating profit	836	756	1,652
Finance income	39	8	32
Finance costs	(255)	(108)	(251)
Profit before taxation	620	656	1,433
Taxation	(130)	(45)	(138)
Profit attributable to shareholders of the Group	490	611	1,295
Earnings per share (basic and diluted) for the Group	1.18p	1.58p	3.36p

Consolidated Statement of Comprehensive Income
6 months ended 30 June 2023
	Unaudited	Unaudited	Audited
	6 months	6 months	12 months
	ended	ended	ended
	30 June	30 June	31 December
	2023	2022	2022
	£000	£000	£000
Profit attributable to shareholders of the Group	490	611	1,295
Items that will not be reclassified to profit or loss Actuarial gain/(loss) recognised in the pension scheme	513	35	(1,247)
Related deferred taxation	(128)	(7)	318
	385	28	(929)
Items that will be reclassified subsequently to profit or loss when specific conditions are met Revaluation of property	-	-	(25)
Related deferred taxation	-	-	5
	-	-	(20)
Total other comprehensive income/(loss)	385	28	(949)
Total comprehensive income attributable to shareholders of the Group	875	639	346

Consolidated Balance Sheet
as at 30 June 2023
	Unaudited 30 June 2023	Unaudited 30 June 2022	Audited 31 December 2022
	£000	£000	£000
Non-current assets
Property, plant and equipment	5,976	5,307	5,272
Intangible assets	59	51	71
Investment property	4,000	4,000	4,000
Right-of-use asset	754	943	917
Deferred tax asset	763	682	879
	11,552	10,983	11,139
Current assets
Inventories	6,560	6,132	5,895
Trade and other receivables	2,871	2,370	2,351
Cash and cash equivalents	4,919	5,450	5,762
	14,350	13,952	14,008
Total assets	25,902	24,935	25,147
Current liabilities
Trade and other payables	(3,986)	(3,683)	(3,316)
Provisions	(74)	(175)	(77)
Lease liabilities	(127)	(124)	(131)
Loans and borrowings	(736)	(731)	(734)
	(4,923)	(4,713)	(4,258)
Non-current liabilities
Deferred tax	(1,144)	(1,047)	(1,040)
Pension deficit	(1,000)	-	(1,345)
Lease liabilities	(140)	(212)	(202)
Loans and borrowings	(1,489)	(2,226)	(1,858)
	(3,773)	(3,485)	(4,445)
Total liabilities	(8,696)	(8,198)	(8,703)
Net assets	17,206	16,737	16,444
Equity
Called up share capital	10,339	10,339	10,339
Share premium account	504	504	504
Own Shares	(1,805)	(2,000)	(2,000)
Share-based payment reserve	--80	-	---
Capital redemption reserve	3,617	3,617	3,617
Revaluation reserve	3,096	3,150	3,096
Retained earnings	1,375	1,127	888
Total equity	17,206	16,737	16,444

Consolidated Cash Flow Statement
6 months ended 30 June 2023
	Unaudited 6 months ended 30 June 2023	Unaudited 6 months ended 30 June 2022	Audited 12 months ended 31 December 2022
	£000	£000	£000
Cash flow from operating activities
Profit for the period	490	611	1,295
Depreciation	165	165	309
Depreciation of right-of-use assets	124	126	260
Amortisation	15	14	29
Movement in Provision	(3)	(70)	(168)
Share-based payment expense/(credit)	80	(157)	(157)
Net Finance costs	216	100	219
Profit on disposal of property, plant and equipment	-	(77)	(77)
Tax charge	130	45	138
Operating cash flows before movements in working capital	1,217	757	1,848
(Increase)/decrease in inventory	(665)	18	255
Increase in trade and other receivables	(520)	(483)	(464)
Increase in trade and other payables	670	425	66
Cash generated from operations	702	717	1,705
Contributions to defined benefit pension scheme	-	-	---
Net cash generated from operating activities	702	717	1,705
Cash flows from investing activities
Payments to acquire intangible fixed assets	(4)	(10)	(45)
Payments to acquire tangible fixed assets	(868)	(167)	(312)
Receipts from sales of tangible fixed assets	-	77	77
Net cash used in investing activities	(872)	(100)	(280)
Cash flows from financing activities
Interest paid on lease liabilities	(5)	(4)	(11)
Interest paid on borrowings	(82)	(69)	(142)
Interest received	39	8	32
Principal paid on lease liabilities	(66)	(67)	(141)
Repayment of loans and borrowings	(366)	(569)	(935)
Equity dividends paid	(193)	(154)	(154)
Net cash used in financing activities	(673)	(855)	(1,351)
Net (decrease)/increase in cash and cash equivalents	(843)	(238)	74
Cash and cash equivalents at start of the period	5,762	5,688	5,688
Cash and cash equivalents at end of the period	4,919	5,450	5,762

Consolidated Statement of Changes in Equity
6 months ended 30 June 2023
Share capital	Share premium account	Own Shares	Share-based payment reserve	Capital redemption reserve	Revaluation reserve	Profit and loss account	Total equity
£000	£000	£000	£000	£000	£000	£000	£000
At 1 January 2022              10,339	504	(555)	157	3,617	3,150	(803)	16,409
Comprehensive income
for the year
Profit for the year                         -	-	-	-	-	-	1,295	1,295
Actuarial loss recognised
on the pension scheme            -	-	-	-	-	-	(929)	(929)
Revaluation of property                -	-	-	-	-	(25)	5	(20)
Total comprehensive income for the year                  -	-	-	-	-	(25)	371	346

Contributions by and

distributions to owners

Dividend paid	-                 -                 -			-                 -                 -                (154)				(154)
Share-based payment	-                 -                 -			(157)             -                 -                 -				(157)
Own share transfer Revaluation Reverse Transfer	-                 -             (1,445) -                 -                 -			-                 -                 -           1,445 -                 -             (29)              29				- -
Total contributions by and distributions to owners	-	-	(1,445)	(157)	-	(29)	1,320	(311)
At 31 December 2022
and 1 January 2023      10,339		504	(2,000)	-	3,617	3,096	888	16,444
Comprehensive income for the period Profit for the period                      - Actuarial gain recognised on the pension scheme            -		- -	- -	- -	- -	- -	490 385	490 385
Revaluation of property                -		-	-	-	-	-	-	-
Total comprehensive income for the period              -		-	-	-	-	-	875	875
Contributions by and distributions to owners
Dividend paid                                -		-	-	-	-	-	(193)	(193)
Share-based payment                   -		-	-	80	-	-	-	80
Own Shares Transfer                    -		-	195	-	-	-	(195)	-
Total contributions by and distributions to owners                                       -		-	195	80	-	-	(388)	(113)
At 30 June 2023                  10,339		504	(1,805)	80	3,617	3,096	1,375	17,206

Notes to the Financial Statements

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

The financial information for the six months ended 30 June 2023 and the six months ended 30 June 2022 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 31 December 2022 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 UK adopted International Accounting Standards 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 UK adopted International Accounting Standards. The accounting policies used are the same as those used in preparing the financial statements for the period ended 31 December 2022. These policies are set out in the annual report and accounts for the period ended 31 December 2022 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.

 

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