TIDMAIEA
RNS Number : 0969S
Airea PLC
07 March 2019
AIREA plc
Preliminary results for the 12 month period ended 31st December
2018
HIGHLIGHTS
-- Profit attributable to shareholders increased GBP3.4m to GBP2.0m (2017: GBP1.4m loss)
-- Operating profit before exceptional items increased 7.1% to
GBP3.0m over last year's corresponding 12 month period of
GBP2.8m
-- Revenue increased 8.4% to GBP19.3m over last year's corresponding 12 month period of GBP17.8m
-- Export sales growth of 15.7% continued the upward trend of 2017
-- A stronger and broader product range following investment in
new technology continues to open up new markets and
opportunities
-- The closure of the Ryalux business was successfully completed
during the first half of the year in line with expectations with
focus now solely on the profit making Burmatex flooring business
and opportunities
-- There were no exceptional costs during the year
-- Basic Earnings per share increased 36.6% to 8.21p over last
year's corresponding 12 month period of 6.01p
-- A progressive dividend policy continues with final dividend
increased 14.3% to 2.0p from the interim dividend of 1.75p
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
Airea plc is pleased to report significant growth in revenue and
operating profit before exceptional items compared to the
corresponding 12 month period. The decision to close the Ryalux
business has increased free cash generation within the business
supporting a progressive dividend policy. The group profit
attributable to shareholders increased significantly compared to
the prior year as the group enjoyed the benefits of sales growth
and the closure of Ryalux.
Successful launches of higher added value products and sales
growth in UK and International markets has driven the improved
performance in the year.
As previously announced the Ryalux closure was completed and the
operating premises in Wakefield have been vacated bringing the
operational footprint down to one site in Ossett. This has brought
about considerable cost savings to the group highlighted in the
turnaround from a loss making period in the prior period to a
significant growth in profit during the year ended 31 December
2018.
Volatility in global equity markets in the second half of 2018
increased the pension deficit from GBP2.2m to GBP3.7m despite the
improved management of liabilities and investment strategy.
A High Court judgment reached on 26 October 2018 in relation to
Lloyds Banking Group's defined benefit pension schemes concluded
that schemes should equalise pension benefits for men and women in
relation to guaranteed minimum pension benefits (GMP). Following
consultation and a review with both our actuarial and legal
advisers, it was calculated that the judgment will crystallise
additional liabilities for our pension scheme of GBP0.3m equivalent
to 0.6% of the liabilities as at 31 December 2018. This has been
charged through the finance costs within the income statement. We
are pleased that these increased liabilities will have no cash
impact on the group's contributions or any significant impact on
the current investment strategy.
The value of the investment property increased from GBP3.15m to
GBP3.4m. The gain is highlighted separately in the income
statement.
We changed our accounting reference date for the prior period
from 30 June to 31 December. This report therefore includes audited
figures for the 18 months period to December 2017 as comparatives.
However, for clarity, we are also providing unaudited financial
information for the year to 31 December 2017 as part of this
strategic review.
Group results
Revenue for the year increased to GBP19.3m (12 months 2017:
GBP17.8m, 18 months 2017: GBP26.9m) following full year sales of
new products and the growth in our UK and Export business.
Operating profit before exceptional items increased to GBP3.0m (12
months 2017: GBP2.8m, 18 months 2017: GBP4.3m).
There were no exceptional costs during the year (2017: GBP0.2m).
There was an unrealised valuation gain on the investment property
of GBP0.3m (2017: GBP0.4m). Operating profit after exceptional
items was GBP3.3m (12 months 2017: GBP3.1m, 18 months 2017:
GBP4.5m).
Other finance costs relating in the main to the defined benefit
pension scheme were GBP0.4m (12 months 2017: GBP0.7m, 18 months
2017: GBP0.9m). There were finance costs relating to GMP
equalisation (as noted in the overview) in the defined benefit
scheme of GBP0.3m (2017: GBPnil).
The losses incurred from discontinued operations totalled
GBP1.4m (12 months 2017: GBP3.1m, 18 months 2017: GBP5.2m).
After a tax credit of GBP0.8m related to the recognition of a
deferred tax asset on group losses carried forward (12 months 2017:
GBP0.1m, 18 months 2017: GBP0.2m) profit attributable to
shareholders of the group for the year was GBP2.0m (12 months 2017:
GBP0.7m loss, 18 months 2017: GBP1.4m loss).
Basic earnings per share were 8.21p (12 months 2017: 6.01p, 18
months 2017: 9.16p), and basic adjusted earnings per share were
8.21p (12 months 2017: 6.42p, 2017: 9.57p). Group basic earnings
per share were 4.86p (12 months 2017: 1.56p loss, 2017: 3.31p
loss)
Operating cash flows before movements in working capital and
other payables were GBP1.8m (2017: GBP1.0m). Working capital
decreased by GBP0.6m (2017: GBP2.2m) following the rundown of
inventories in the residential carpets business. Contributions of
GBP0.4m (2017: GBP0.6m) were made to the defined benefit pension
scheme in line with the agreement reached with the trustees based
on the 2017 actuarial valuation. Capital expenditure of GBP0.4m
(2017: GBP1.3m) and investment in intangible assets of GBP0.1m
(2017: GBP0.2m) related in the main to the introduction of new
technology.
The volatile performance in equity markets in the second half of
the year and the increased liabilities following the adjustment for
GMP equalisation increased the pension deficit GBP1.5m to GBP3.7m
(2017: GBP2.2m).
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 year ended 31 December 2018, value added per
employee amounted to GBP0.1m (2017: GBP0.1m), operating return on
sales was 15.7% (2017: 13.7%), return on net operating assets was
18.5% (2017: 13.8%) and working capital to sales percentage was
60.4% (2017: 77.7%).
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. The board and the management team
meet regularly to discuss the business and the risks that it faces.
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 groups
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 fit out companies. The activity levels
within this customer base are determined by consumer demand which
is created through a wide range of commercial refurbishment and new
build projects. The general level of activity in these underlying
markets has the potential to affect the demand for products
supplied by the group and is subject to seasonal variations. 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 and
negate the impact of seasonality.
The group operates a defined benefit pension scheme. At present,
in aggregate, there is an actuarial 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 July 2017, a
revised deficit recovery plan was agreed. Under the plan the
company will continue to make annual contributions of GBP0.4m 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, agree forward pricing where possible and
closely monitors selling prices and margins making adjustments when
necessary.
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 when
necessary. 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 short and long-term impact of the Brexit Referendum
continues to be unclear in respect of the degree 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 particularly in relation to its supply
chain and working capital requirements. 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 continue to provide opportunities for
growth.
Management and personnel
We continue to recognise the hard work and dedication our staff
have applied in both trying to recover the fortunes of the
residential carpets business and also the professional manner with
which the closure was finalised. We thank them for the dedication
they have continued to show during the most challenging of times
and look forward to the contribution they can make going forward in
the future of the company.
As part of its ongoing review of our staff incentivisation
policy the Board has considered various options to implement a
reward structure which encourages, recognises and rewards high
performance and long term delivery.
The group recognises the need to retain and reward members of
staff for long term outperformance, and has decided to establish an
employee share scheme. The purpose of the scheme is to incentivise
employees through nil cost share awards.
The Board is creating an employee benefit trust ("EBT") managed
by independent trustees to operate the scheme. The EBT will buy
existing shares to satisfy any awards under the scheme, thereby
ensuring existing shareholders will not be diluted upon exercise.
The Company will advance a loan to the EBT which will be funded by
an unsecured bank loan. Initially the EBT will be able to buy up to
3.5m shares, and any awards will vest with beneficiaries over a
three to five year period and after the achievement of Group and
individual performance conditions.
Current trading and future prospects
The changes made to the business and the increased investment in
our successful commercial flooring business provides significant
opportunities for profitable growth. Further investment in new
products will continue throughout 2019 maintaining our confidence
in the future prospects of the business, the ongoing improvement in
the performance of the commercial floorcoverings business, and the
cash this business continues to generate. If approved, a final
dividend of 2.0p per share will be paid on 22 May 2019 to
shareholders on the register at close of business on 12 April 2019,
with an ex-dividend date of 11 April 2019.
MARTIN TOOGOOD NEIL RYLANCE
Chairman Chief Executive Officer 7th March 2019
(1) Adjusted earnings are earnings adjusted for exceptional
operating items (net of tax)
Enquiries:
Neil Rylance 01924 266561
Chief Executive Officer
Paul Stevenson 01924 266561
Group Finance Director
Peter Steel 020 7496 3061
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 12 month period
ended 31 December 2018 or the 18 month period ended 31 December
2017. The financial information for the 18 month period ended 31
December 2017 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
2018, 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 12 month period then ended have been extracted
from the Group's 2018 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.
Consolidated Income Statement
Year ended 31 December 2018
18 months
Year ended ended
31 December 31 December
2018 2017
GBP'000 GBP'000
Continuing Operations
Revenue 19,260 26,890
Operating costs (16,536) (23,043)
Other Operating income 291 409
_______ _______
Operating profit before exceptional items 3,015 4,256
Exceptional costs - (172)
Unrealised valuation gain 250 449
----------------------------------------------- ------------ ------------
Operating profit 3,265 4,533
Finance income 1 -
Finance costs (355) (932)
Finance costs relating to GMP Equalisation (299) -
_______ _______
Profit before taxation 2,612 3,601
Taxation 785 185
_______ _______
Profit attributable to shareholders of the
group from continuing operations 3,397 3,786
_______ _______
Discontinued Operations
Loss attributable to shareholders of the
group from discontinued operations (1,389) (5,156)
_______ _______
Profit / (Loss) attributable to shareholders
of the group 2,008 (1,370)
_______ _______
Consolidated Statement of Comprehensive Income
Year ended 31 December 2018
2018 2018 2017 2017
GBP GBP GBP GBP
Profit / (Loss) attributable
to shareholders of the
group 2,008 (1,370)
Actuarial (loss) / gain
recognised in the pension
scheme (1,284) 4,827
Related deferred taxation 218 (862)
_______ _______
(1,066) 3,965
Revaluation of property 78 117
Related deferred taxation (13) -
_______ _______
65 117
_______ _______
Total other comprehensive
(loss) / income (1,001) 4,082
_______ _______
Total comprehensive
income attributable
to shareholders of the
group 1,007 2,712
_______ _______
Consolidated Balance Sheet
Year ended 31 December 2018
2018 2018 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and
equipment 5,108 5,294
Intangible assets 95 124
Investment property 3,400 3,150
Deferred tax asset 1,466 389
_______ _______
10,069 8,957
Current assets
Inventories 6,797 6,937
Trade and other receivables 2,330 2,893
Cash and cash equivalents 2,732 3,702
_______ _______
11,859 13,532
_______ _______
Total assets 21,928 22,489
_______ _______
Current liabilities
Trade and other payables (3,571) (3,745)
Provisions (320) (300)
Obligations under finance
leases (187) (183)
_______ _______
(4,078) (4,228)
Non-current liabilities
Pension deficit (3,688) (2,164)
Deferred tax (305) (268)
Obligations under finance
leases (323) (510)
_______ _______
(4,316) (2,942)
_______ _______
Total liabilities (8,394) (7,170)
_______ _______
Net assets 13,534 15,319
_______ _______
Equity
Called up share capital 10,339 10,339
Share premium account 504 504
Capital redemption reserve 3,617 3,617
Revaluation reserve 3,096 3,126
Retained earnings (4,022) (2,267)
_______ _______
Total equity 13,534 15,319
_______ _______
Consolidated Cash Flow Statement
Year ended 31 December 2018
18 months
Year ended ended
31 December 31 December
2018 2017
GBP'000 GBP'000
Cash flows from operating activities
Profit / (Loss) for the year 2,008 (1,370)
Depreciation 372 927
Amortisation 58 39
Finance costs 654 932
Profit on disposal of property, plant and (291)
equipment -
Tax credit (785) (140)
Tangible fixed assets impairment - 708
Inventory impairment - 289
Trade receivables impairment - 71
Unrealised valuation gain (250) (449)
_______ _______
Operating cash flows before movements in
working capital 1,766 1,007
Decrease in inventories 140 2,112
Decrease in trade and other receivables 581 1,674
Decrease in trade and other payables (174) (1,760)
Increase in provisions for liabilities
and charges 20 175
_______ _______
Cash generated from operations 2,333 3,208
Income tax received - 143
Contributions to defined benefit pension
scheme (400) (600)
_______ _______
Net cash generated from operating activities 1,933 2,751
Cash flows from investing activities
Payments to acquire tangible fixed assets (399) (392)
Payments to acquire intangible fixed assets (29) (163)
Receipts from sales of tangible fixed assets 513 -
_______ _______
Net cash generated from / (used in) investing
activities 85 (555)
_______ _______
Cash flows from financing activities
Interest paid (14) (26)
Interest received 1 -
Finance lease repayments (183) (238)
Equity dividends paid (2,792) (1,344)
_______ _______
Net cash used in financing activities (2,988) (1,608)
_______ _______
Net (decrease) / increase in cash and cash
equivalents (970) 588
Cash and cash equivalents at start of the
year 3,702 3,114
_______ _______
Cash and cash equivalents at end of the
year 2,732 3,702
_______ _______
Consolidated Statement of Changes in Equity
Year ended 31 December 2018
Share Capital
Share premium redemption Revaluation Retained Total
capital account reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 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)
Actuarial gain
recognised on the
pension scheme - - - - 3,965 3,965
Revaluation of
property - - - 117 - 117
_______ _______ _______ _______ _______ _______
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 31 December
2017 and 1 January
2018 10,339 504 3,617 3,126 (2,267) 15,319
Comprehensive income
for the year
Profit for the
year - - - - 2,008 2,008
Actuarial loss
recognised on the
pension scheme - - - (1,066) (1,066)
Revaluation of
property - - - 65 - 65
_______ _______ _______ _______ _______ _______
Total comprehensive
income for the
year - - - 65 942 1,007
Contributions by
and distributions
to owners
Dividend paid - - - - (2,792) (2,792)
Revaluation Reserve
Transfer - - - (95) 95 -
_______ _______ _______ _______ _______ _______
Total contributions
by and distributions
to owners - - - (95) (2,697) (2,792)
_______ _______ _______ _______ _______ _______
At 31 December
2018 10,339 504 3,617 3,096 (4,022) 13,534
_______ _______ _______ _______ _______ _______
In accordance with Rule 20 of the AIM Rules, Airea confirms that
the annual report and accounts for the year ended 31(st) December
2018 will be available to view on the Company's website at
www.aireaplc.co.uk on 7(th) March 2019, and will be posted to
shareholders by 19(th) March 2019.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UGUMUWUPBGBQ
(END) Dow Jones Newswires
March 07, 2019 02:00 ET (07:00 GMT)
Grafico Azioni Airea (AQSE:AIEA.GB)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Airea (AQSE:AIEA.GB)
Storico
Da Giu 2023 a Giu 2024
