Last checked at 26 Mar 2024 07:00
26 March 2024
AIREA plc
("AIREA", the "Group" or the "Company")
Final Results for the year ended 31 December 2023
Strong growth in challenging market conditions
AIREA plc (AIM: AIEA), the UK design-led specialist flooring company, supplying both the UK and international markets, is pleased to announce its final results for the twelve months ended 31 December 2023.
Financial summary
· Group revenue increased by 14.1% to £21.1m (2022: £18.5m)
· Operating profit before valuation gain increased by 9.2% to £1.8m (2022: £1.7m)
· EBITDA increased by 13.0% to £2.6m (2022: £2.3m)
· Cash and cash equivalents at £5.8m (2022: £5.8m)
· Net cash increased by 21.4% to £3.4m (2022: £2.8m)
· Final dividend increased by 10.0% to 0.55p per ordinary share (2022: 0.50p)
Operational highlights
· The successful launch of two carbon-neutral products, arctic® and osaka®, and the refresh of two low-carbon products, infinity and go-to® helped to drive sales growth.
· Implementation of the Group's sustainability principles, eco2matters® across all business operations.
· Appointment of Tanya Ashton as Non-Executive Director in May 2023.
· Appointment of Conleth Campbell as Chief Financial Officer and Executive Director in October 2023.
Post-period end
· As announced on 24 January 2024, a £5.0m investment in the Company's manufacturing facility in Ossett, West Yorkshire to substantially increase capacity and include the automation of certain processes using the latest cutting-edge Artificial Intelligence imagery and inspection technology.
Médéric Payne, Chief Executive Officer of AIREA plc, commented:
"I am pleased to report on the Group's final results for the twelve months ended 31 December 2023.
"AIREA made excellent progress in 2023 and has maintained a high standard of service to our customers, with revenue growth of 14.1% over the period. The growth was driven by an increase in demand for our more sustainable product ranges, with limited cost increases as raw material inflation eased through the second half of the year. We have firmly re-established our presence within the UK and ROI, outperforming the market. This has given the Group confidence to achieve greater growth scalability in the wider European and other key international markets.
"We more closely aligned our key products to the Group's ten market sectors throughout 2023, resulting in an increased rate of sales growth. We continue to work closely with our customers to meet their needs and provide a market-leading service.
"With the launch of the Group's eco2matters® sustainability principles in December 2022 defining the scope of the direction for 2023, this accelerated the launch of two carbon-neutral products and refreshing two low-carbon products in the year. This is a significant step change in the business, and we intend to continue to invest for future sales growth, incorporating the eco2matters® principles and the journey towards net zero. We continue to transform the business with a more focused growth strategy centred on sustainability.
"The £5.0m investment in the manufacturing facility will enable the Group to increase production and capitalise on efficiencies, whilst bringing new, exciting, and more innovative products to the market. We are optimistic about these opportunities as we continue to build a strong platform for growth and delivering increased value to AIREA shareholders.
"Despite the current challenging economic conditions, we are pleased to report the Group has experienced a good start to the year. Demand remains high for our carbon-neutral and low-carbon products, and we are confident of continuing to outperform the market through 2024."
- Ends -
For further information please contact:
AIREA plc Médéric Payne, Chief Executive Officer Conleth Campbell, Chief Financial Officer | Tel: +44 (0) 192 426 6561 |
Singer Capital Markets(Nominated Adviser and Sole Broker) Peter Steel / Sam Butcher | Tel: +44 (0) 20 7496 3000 |
Yellow Jersey PR(Financial media and PR) Sarah Hollins / Shivantha Thambirajah / Soraya Jackson | Tel: +44 (0) 20 3004 9512 |
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/.
Chairman's Statement
Overview
AIREA is pleased to report another year of progress, both financially and operationally. The strong sales growth reported in the first half of the year continued throughout the second half, with further wins achieved in the UK and key export markets.
During the first half of the year, the challenging economic conditions continued to put a strain on the cost of labour, energy, and raw materials. We took action to manage these risks, including the installation and commissioning of solar panels to reduce our exposure to energy price volatility.
There continues to be an ever-increasing interest in our low-carbon products. We successfully launched two carbon-neutral products which were well-received in the market and continue to work closely with our customers to ensure we meet their needs.
Results
The Group's Burmatex® business delivered record sales of £21.1m, an increase of 14.1% on the prior year, with sales now exceeding 2019 pre-pandemic levels by 10%. Operating profit before valuation gain increased to £1.8m (2022: £1.7m).
Looking to the future, the Group has developed a plan of investment in certain areas that will form a platform on which to build a more sustainable growth-focused business. In this regard, we were delighted to announce in January 2024 that we would be investing £5.0m in our manufacturing facility. This investment will substantially increase capacity and improve operational efficiencies whilst at the same time improving the Group's sustainability credentials.
Dividends
The Group maintained its net cash position in the period and will continue to prioritise investment in the business. We also believe in rewarding our loyal shareholder base and therefore propose a final dividend of £0.2m or 0.55p per share for the year (2022: £0.2m or 0.50p per share), which is the total dividend for the year as no interim dividend was paid. The final dividend will be paid on 20 May 2024 to shareholders on the register on 19 April 2024. This proposal is subject to shareholder approval at the Group's Annual General Meeting to be held on 8 May 2024.
Environmental, Social and Governance
Sustainability is at the heart of how we manage our business. We are committed to helping deliver a more sustainable future because we believe that what we do matters. Our sustainability principles, eco2matters®, introduced in 2022, are now fully embedded across the Group. The development of our more sustainable products indicates the transformational change the Group is focused on to enable it to be more innovative, competitive, and agile. The installation of solar panels on the roof of our manufacturing facility was completed during the year and will help to mitigate against energy price volatility, whilst contributing to our sustainability goals.
Our Board
The Board appointed Tanya Ashton as an Independent Non-Executive Director and member of the Board of Directors on 10 May 2023. Tanya is an experienced board director with extensive expertise in increasing sustainability in consumer products.
Conleth Campbell was appointed as Chief Financial Officer, Company Secretary, and a member of the Board of Directors on 2 October 2023. Conleth is an experienced finance professional with over 25 years of experience in public company environments.
With these recent appointments, the Board has the experience to provide effective oversight and guidance as AIREA enters its next phase of growth.
Our People
We recognise the role our people play in helping the Group achieve its success and would like to sincerely thank them for their valuable contribution. In the year, we appointed a Head of Human Resources to assist us in embedding our values throughout the Group and ensure we invest in the training and development of our people.
In 2022, the long-term share incentive scheme was relaunched to a wider employee pool as the Board recognised the need to retain and reward members of staff for long-term performance. The scheme incentivises employees through nil cost share awards. Awards will vest with beneficiaries over a three-year period ending 31 December 2025 after the achievement of both Group and individual performance conditions.
Outlook
We are now working much closer with our existing customers, whilst expanding our reach both in the UK and in our key target overseas markets.
We have increased our resources and focus on our design and marketing functions to support the development and launch of new products. Demand for our new sustainable products and the ongoing refresh of existing products, supported by a forward-looking product pipeline, is providing optimism for future profitable growth.
Summary
The Group made further progress in the year, with increased sales volumes and operating profits as demand for our low-carbon and carbon-neutral products increased.
The Board is confident that our fully embedded eco2matters® sustainability principles and continued investment in the business will deliver further growth in 2024.
Martin Toogood
Chairman
25 March 2024
Chief Executive Officer's Statement
Introduction
2023 was another year of progress for AIREA, with a continued focus on sales growth in existing and new territories. The year also saw the successful launch of carbon-neutral products in line with market trends and increasing demand for low-carbon products.
An increase in sales volume, higher demand for our more sustainable products, and a widening customer base were the driving factors in the double-digit increase in turnover. The Group's £5.0m investment in its manufacturing facility in Ossett, West Yorkshire will significantly increase capacity and further improve operational efficiency. The investment is expected to be completed in early 2025.
In May 2023, the Company exhibited at the renowned Clerkenwell Design Week. This provided a platform to showcase its exciting new ranges, 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.
Export sales were 43% ahead of the prior year as demand recovered in most of our target export markets, with good progress being made in new markets. The UK market remained challenging given the economic backdrop, however, performance is encouraging as we achieved sales growth, with our mix moving towards the more design-led products at higher margins.
Products and Planet
The Group is focused on sustainability, design and quality being essential to new product development and running through everything we do. Driven by our eco2matters® principles, AIREA developed a carbon-neutral product range offering for customers. In 2023, both arctic® and osaka® were launched within this carbon-neutral range, along with infinity and go-to® in the low-carbon range.
AIREA is fully committed to making sustainability at the forefront of our principles. The carbon-neutral products have had a positive environmental impact, with our products being 100% certified renewable. The Company operates a zero-landfill policy, along with a recovery take-back service. This drives the Group's actions to maintain a sustainable responsibility as we continue the journey to net zero.
People
In 2023, the Group firmly embedded its values across the organisation as part of its focus on putting its people at the heart of its business and continuing to empower, encourage and inspire them to develop products that meet the needs of its customers whilst contributing to protecting our planet. I would like to take this opportunity to thank our people for their continued contribution to the success of the Group.
During the year, we invested further in people across several departments. The Group now has the expertise in place to deliver our current and anticipated growth targets.
Summary and Outlook
AIREA's strong performance in 2023 was testimony to its strategy which will form the basis for further progress in 2024.
The Group's £5.0m investment in its manufacturing facility will substantially increase capacity and include the automation of certain processes using the latest cutting-edge Artificial Intelligence imagery and inspection technology. This investment will provide greater stability to the Group and help to deliver a period of sustained profitable growth.
Médéric Payne
Chief Executive Officer
25 March 2024
Chief Financial Officer's Review
Group Results
Revenue increased 14.1% to £21.1m (2022: £18.5m). This increase was driven by higher sales volumes and an increase in demand for our carbon-neutral and low-carbon product ranges. UK home sales maintained their good momentum and ended the year above the prior year. Following the impact of the Ukraine conflict in 2022, and despite the political unrest in the Middle East, overseas sales were strong with key wins in several markets.
Operating profit before property valuation gain increased to £1.8m (2022: £1.7m).
There was an unrealised valuation gain of £0.1m on the investment property in the year (2022: £nil gain/loss), with the Group recording an operating profit after the valuation gain of £1.9m (2022: £1.7m).
The transformational change in the Group continued in 2023 with further investment in resources to deliver more profitable future growth. This has had a short-term impact on operating margin which declined to 8.5% (2022: 8.9%).
Finance costs of £0.5m (2022: £0.2m) increased on the prior year due mainly to higher costs relating to the pension scheme.
Taxation increased to £0.6m (2022: £0.1m) due to the change in tax rate to 25% and brought forward losses fully utilised in the prior year.
Profit attributable to shareholders of the Group for the year was £0.8m (2022: £1.3m). Earnings per share were 2.0p (2022: 3.4p).
Operating cash flows before movements in working capital and other payables were £2.6m (2022: £1.8m). Working capital increased by £0.2m (2022: £0.1m increase) following an increase in trade and other receivables, partially offset by a decrease in inventories coupled with an increase in trade and other payables. Capital expenditure of £1.2m (2022: £0.4m) included the purchase and installation of solar panels and the Group's ongoing investment in maintaining its manufacturing facility.
The Group had £5.8m of cash on hand as of 31 December 2023 (2022: £5.8m). In 2021, the Group borrowed £2.75m under the government Coronavirus Business Interruption Loan Scheme, as of 31 December 2023, the amount outstanding was £1.4m (2022: £1.9m). The Group has access to further liquidity of £1.0m via our unutilised banking facility (2022: £1.0m).
The deficit on the defined benefit pension scheme increased from £1.3m to £5.0m. The Group's contributions to the scheme were £nil (2022: £nil). There continues to be volatility in global equity markets with the scheme's investment strategy constantly under review to mitigate its long-term risk profile as much as possible. The Company will engage with the scheme's trustees to agree on a reasonable and affordable recovery plan. A further update will be provided at the announcement of the interim results.
Key Performance Indicators
As part of its internal financial control procedures, the Board monitors the key financial metrics of revenue, operating profit, gross margin, working capital (debtor and creditor days), inventory turns and cash.
These KPIs are reviewed in comparison to the previous year and the budget and analysis undertaken to establish trends and variances. For the year ended 31 December 2023, operating profit return on sales was 8.5% (2022: 8.9%), return on net operating assets was 8.5% (2022: 8.3%) and working capital to sales percentage was 24.2% (2022: 26.7%).
Conleth Campbell
Chief Financial Officer
25 March 2024
Consolidated Income Statement | |||
for the year ended 31 December 2023 | |||
Year ended 31 December 2023 £000 |
Year ended 31 December 2022 £000 | ||
Continuing Operations | |||
Revenue | 21,102 | 18,483 | |
Operating costs | (19,788) | (17,111) | |
Other operating income | 490 | 280 | |
Operating profit before valuation gain | 1,804 | 1,652 | |
Unrealised valuation gain | 60 | - | |
Operating profit | 1,864 | 1,652 | |
Finance income | 72 | 32 | |
Finance costs | (523) | (251) | |
Profit before taxation | 1,413 | 1,433 | |
Taxation | (644) | (138) | |
Profit attributable to shareholders of the Group | 769 | 1,295 | |
Basic and diluted earnings per share for the Group | 1.99p | 3.36p | |
Consolidated Statement of Comprehensive Income for the year ended 31 December 2023 |
|
|
|
|
2023 £000 | 2023 £000 | 2022 £000 | 2022 £000 | |
Profit attributable to shareholders of the Group |
| 769 |
| 1,295 |
Items that will not be classified to profit or loss |
|
| ||
Remeasurement of the net defined benefit liability | (3,281) | (1,247) | ||
Related deferred taxation | 820 | 318 | ||
Revaluation of Property | 315 | (25) | ||
Related deferred taxation | (79) | 5 | ||
Total other comprehensive | (2,225) | (949) | ||
(loss)/income | ||||
Total comprehensive (loss) / income attributable to shareholders of the Group |
| (1,456) |
| 346 |
Consolidated Balance Sheet | |||||
as at 31 December 2023 | |||||
2023 £000 | 2023 £000 | 2022 £000 | 2022 £000 | ||
Non-current assets | |||||
Property, plant and equipment | 6,379 | 5,272 | |||
Intangible assets | 65 | 71 | |||
Investment property | 4,060 | 4,000 | |||
Deferred tax asset | 1,413 | 917 | |||
Right-of-use-asset | 895 | 879 | |||
12,812 | 11,139 | ||||
Current assets | |||||
Inventories | 5,753 | 5,895 | |||
Trade and other receivables | 3,156 | 2,351 | |||
Cash and cash equivalents | 5,758 | 5,762 | |||
14,667 | 14,008 | ||||
Total assets | 27,479 |
| 25,147 | ||
Current liabilities | |||||
Trade and other payables | (3,795) | (3,316) | |||
Provisions | - | (77) | |||
Lease liabilities | (183) | (131) | |||
Loans and borrowings | (739) | (734) | |||
(4,717) | (4,258) | ||||
Non-current liabilities | |||||
Deferred tax | (1,439) | (1,040) | |||
Pension deficit | (4,972) | (1,345) | |||
Lease liabilities | (287) | (202) | |||
Loans and borrowings | (1,119) | (1,858) | |||
(7,817) | (4,445) | ||||
Total liabilities | (12,534) |
| (8,703) | ||
Net assets | 14,945 |
| 16,444 | ||
Equity | |||||
Called up share capital | 10,339 | 10,339 | |||
Share premium account | 504 | 504 | |||
Own Shares | (1,636) | (2,000) | |||
Share-based payment reserve | 150 | - | |||
Capital redemption reserve | 3,617 | 3,617 | |||
Revaluation reserve | 3,376 | 3,096 | |||
Retained earnings | (1,405) | 888 | |||
Total equity | 14,945 |
| 16,444 |
Consolidated Statement of Cash Flows | ||
For the year ended 31 December 2023 | ||
Year ended 31 December 2023 £000 | Year ended 31 December 2022 £000 | |
Cash flows from operating activities | ||
Profit for the year | 769 | 1,295 |
Depreciation | 374 | 309 |
Depreciation of right-of-use assets | 279 | 260 |
Amortisation | 33 | 29 |
Movement in provisions | (77) | (168) |
Share-based payment expense | 150 | (157) |
Net Finance costs | 451 | 219 |
Tax charge | 644 | 138 |
Profit on disposal of tangible fixed asset | - | (77) |
Unrealised valuation gain | (60) | - |
Operating cash flows before movements in working capital | 2,563 | 1,848 |
Decrease in inventories | 142 | 255 |
Increase in trade and other receivables | (807) | (464) |
Increase in trade and other payables | 479 | 66 |
Cash generated from operations | 2,377 | 1,705 |
Contributions to defined benefit pension scheme | - | - |
Net cash generated from operating activities | 2,377 | 1,705 |
Cash flows from investing activities | ||
Payments to acquire intangible fixed assets | (27) | (45) |
Payments to acquire tangible fixed assets | (1,166) | (312) |
Receipt from the sale of tangible fixed assets | - | 77 |
Net cash used in investing activities | (1,193) | (280) |
Cash flows from financing activities | ||
Interest paid on lease liabilities | (17) | (11) |
Interest paid on borrowings | (160) | (142) |
Interest received | 72 | 32 |
Proceeds from asset financing | - | - |
Principal paid on lease liabilities | (156) | (141) |
Equity dividend paid | (193) | (154) |
Repayment of loans | (734) | (935) |
Net cash used in financing activities | (1,188) | (1,351) |
Net (decrease)/increase in cash and cash equivalents | (4) | 74 |
Cash and cash equivalents at start of the year | 5,762 | 5,688 |
Cash and cash equivalents at end of the year | 5,758 | 5,762 |
Consolidated Statement of Changes in Equity
as at 31 December 2023
|
Share capital |
Share premium account |
Own Shares | Share based payment reserve |
Capital redemption reserve |
Revaluation reserve |
Retained earnings |
Total equity |
£000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
As 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 | - | - | (1,445) | - | - | - | 1,445 | - |
Revaluation Reserve Transfer | - | - | - | - | - | (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 year |
|
|
|
|
|
|
|
|
Profit for the year | - | - | - | - | - | - | 769 | 769 |
Actuarial loss recognised |
| |||||||
on the pension scheme | - | - | - | - | - | - | (2,461) | (2,461) |
Revaluation of property | - | - | - | - | - | 315 | (79) | 236 |
Total comprehensive income for the year | - |
- |
- |
- |
- |
315 |
(1,771) |
(1,456) |
Contributions by and |
|
|
|
|
|
|
|
|
distributions to owners |
|
|
|
|
|
|
|
|
Dividend Paid | - | - | - | - | - | - | (193) | (193) |
Share-based payment | - | - | - | 150 | - | - | - | 150 |
Own Share Transfer | - | - | 364 | - | - | - | (364) | - |
Revaluation Reserve Transfer | - | - | - | - | - | (35) | 35 | - |
Total contributions by and distributions to owners | - |
- |
364 |
150 |
- |
(35) |
(522) |
(43) |
At 31 December 2023 | 10,339 | 504 | (1,636) | 150 | 3,617 | 3,376 | (1,405) | 14,945 |
In accordance with Rule 20 of the AIM Rules, AIREA confirms that the annual report and accounts for the year ended 31 December 2023 and notice of Annual General Meeting ("AGM") and related proxy form will be available to view on the Company's website at www.aireaplc.co.uk on 26 March 2024 and will be posted to shareholders by 12 April 2024. The AGM will be held on 8 May 2024, at 2.00 p.m. at Victoria Mills, The Green, Ossett, West Yorkshire, WF5 0AN. Further details are set out in the notice of the AGM available within the financial statements which can be viewed on the Group's website.