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20 Mar 2012 07:00
Review of Operations
Introduction
The company has again faced challenging market conditions in the first six months of the current financial year. However, good progress has been made on a number of strategic objectives including the ongoing rationalisation of surplus leased properties, the launch of new Burmatex branding and product ranges and an improvement in earnings per share.
Residential sector sales continue to be affected by fragile customer demand and a depressed high street. Contract volumes held up well, despite severe cut-backs in retail refurbishment programmes, due to the successful launch of new products and a positive reaction to the new branding. The relocation of Ryalux backing operations to facilitate the vacation of leasehold properties at Heywood, Lancashire has been successfully completed, but the associated cost along with dilapidation commitments led to a short term depletion of cash resources.
Group results
Revenue for the period was £13.9m (2010:£15.1m). The operating profit was £139,000 (2010: £349,000) and the profit after tax was £114,000 (2010: £94,000). Basic earnings per share were 0.25p (2010: 0.20p).
Operating profit came under pressure as raw material inflation worked through into margin; an improvement in pension related finance costs led to an increase in profit after tax and growth in earnings per share.
Operating cash flows before movements in working capital were £716,000 (2010: £941,000). Working capital increased by £580,000 (2010: £1,186,000) due to seasonal timing issues. Outflows relating to items already provided for totalled £645,000 (2010: £401,000) and largely related to costs associated with the exit from leasehold properties at Heywood. Contributions to the defined benefit pension scheme totalled £300,000 (2010: £300,000) and capital expenditure of £566,000 (2010: £396,000) was focussed on the investment required to complete the move out of the Heywood properties along with the enhancement of tufting capability.
Current trading and future prospects
There is little sign of an improvement in the trading environment. The second half should see the benefit of an improved market share and a number of sales and operational initiatives. However, based on the results of the first half and ongoing uncertainty in the markets we serve, the board have decided that it would be imprudent to make a dividend payment at the interim stage. As stated in the last annual report, the board will keep the dividend policy under review and future dividends will be based upon future levels of profitability and cash flow.
Enquiries:
Neil Rylance 01924 266561
Chief Executive Officer
Roger Salt 01924 266561
Group Finance Director
Robert Beenstock 0203 201 3526
Richard Lindley 0113 241 0148
N+1 Brewin
Consolidated Income Statement | ||||||||
6 months ended 31st December 2011 | ||||||||
Unaudited | Unaudited | Audited | ||||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
2011 | 2010 | 2011 | ||||||
Note | £000 | £000 | £000 | |||||
Revenue | 13,918 | 15,080 | 28,904 | |||||
Operating costs | (13,779) | (14,731) | (28,396) | |||||
Operating profit after exceptional items | 139 | 349 | 508 | |||||
Analysed between: | ||||||||
Operating profit before exceptional items | 156 | 514 | 805 | |||||
Exceptional operating costs | 1 | (17) | (165) | (297) | ||||
Finance income | 16 | - | - | |||||
Finance costs | - | (160) | (316) | |||||
Profit before taxation | 155 | 189 | 192 | |||||
Taxation | (41) | (95) | (111) | |||||
Profit for the period | 114 | 94 | 81 | |||||
Earnings per share (basic and diluted) | 2 | 0.25p | 0.20p | 0.18p | ||||
All amounts relate to continuing operations | ||||||||
Consolidated Statement of Comprehensive Income | ||||||||
6 months ended 31st December 2011 | ||||||||
Unaudited | Unaudited | Audited | ||||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
2011 | 2010 | 2011 | ||||||
£000 | £000 | £000 | ||||||
Profit attributable to shareholders of the group | 114 | 94 | 81 | |||||
Actuarial gains recognised in the pension scheme | - | - | 3,968 | |||||
Related deferred taxation | - | - | (1,091) | |||||
Total comprehensive income for the period | 114 | 94 | 2,958 | |||||
Consolidated Balance Sheet | ||||||||
as at 31st December 2011 | Unaudited | Unaudited | Audited | |||||
31st December | 31st December | 30th June | ||||||
2011 | 2010 | 2011 | ||||||
£000 | £000 | £000 | ||||||
Non-current assets | ||||||||
Property, plant and equipment | 7,653 | 7,862 | 7,482 | |||||
Deferred tax asset | 839 | 2,001 | 876 | |||||
8,492 | 9,863 | 8,358 | ||||||
Current assets | ||||||||
Inventories | 8,148 | 7,024 | 8,723 | |||||
Trade and other receivables | 3,915 | 4,308 | 4,475 | |||||
Cash and cash equivalents | 1,542 | 2,430 | 3,048 | |||||
13,605 | 13,762 | 16,246 | ||||||
Total assets | 22,097 | 23,625 | 24,604 | |||||
Current liabilities | ||||||||
Trade and other payables | (4,442) | (3,518) | (6,157) | |||||
Provisions | (173) | (830) | (482) | |||||
(4,615) | (4,348) | (6,639) | ||||||
Non-current liabilities | ||||||||
Provisions | - | (100) | (54) | |||||
Pension deficit | (951) | (5,379) | (1,267) | |||||
Deferred tax | (149) | (163) | (145) | |||||
(1,100) | (5,642) | (1,466) | ||||||
Total liabilities | (5,715) | (9,990) | (8,105) | |||||
16,382 | 13,635 | 16,499 | ||||||
Equity | ||||||||
Called up share capital | 11,561 | 11,561 | 11,561 | |||||
Share premium account | 504 | 504 | 504 | |||||
Capital redemption reserve | 2,395 | 2,395 | 2,395 | |||||
Share option reserve | 16 | 16 | 16 | |||||
Profit and loss account | 1,906 | (841) | 2,023 | |||||
16,382 | 13,635 | 16,499 | ||||||
Consolidated Cash Flow Statement | ||||||||
6 months ended 31st December 2011 | Unaudited | Unaudited | Audited | |||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
2011 | 2010 | 2011 | ||||||
Note | £000 | £000 | £000 | |||||
Operating activities | ||||||||
Cash used in operations | 3 | (809) | (946) | (144) | ||||
Investing activities | ||||||||
Purchase of property, plant and equipment | (566) | (396) | (605) | |||||
Proceeds on disposal of property, plant and equipment | 100 | - | 25 | |||||
(466) | (396) | (580) | ||||||
Financing activities | ||||||||
Equity dividends paid | (231) | - | - | |||||
Net decrease in cash and cash equivalents | (1,506) | (1,342) | (724) | |||||
Cash and cash equivalents at start of period | 3,048 | 3,772 | 3,772 | |||||
Cash and cash equivalents at end of period | 1,542 | 2,430 | 3,048 | |||||
Consolidated Statement of Changes in Equity | ||||||||
6 months ended 31st December 2011 | ||||||||
Share capital | Share premium account | Capital redemption reserve | Share option reserve | Profit and loss account | Total equity | |||
£000 | £000 | £000 | £000 | £000 | £000 | |||
At 1st July 2010 | 11,561 | 504 | 2,395 | 5 | (935) | 13,530 | ||
Total comprehensive income for the period | - | - | - | - | 94 | 94 | ||
Share based payment | - | - | - | 11 | - | 11 | ||
At 1st January 2011 | 11,561 | 504 | 2,395 | 16 | (841) | 13,635 | ||
Total comprehensive income for the period | - | - | - | - | 2,864 | 2,864 | ||
At 1st July 2011 | 11,561 | 504 | 2,395 | 16 | 2,023 | 16,499 | ||
Total comprehensive income for the period | - | - | - | - | 114 | 114 | ||
Dividend paid | - | - | - | - | (231) | (231) | ||
At 31st December 2011 | 11,561 | 504 | 2,395 | 16 | 1,906 | 16,382 | ||
Notes | ||||||||
1 | EXCEPTIONAL OPERATING COSTS | |||||||
The exceptional costs of £17,000 (6 months ended 31st December 2010: £165,000, year ended 30th June 2011: £297,000) are severance payments relating to the streamlining of the operating business. | ||||||||
2 | EARNINGS PER SHARE | |||||||
The calculation of basic and adjusted earnings per share is based on the following data: | ||||||||
Number of shares | ||||||||
Unaudited | Unaudited | Audited | ||||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
2011 | 2010 | 2011 | ||||||
Ordinary shares for the purpose of basic earnings per share | 46,242,455 | 46,242,455 | 46,242,455 | |||||
Earnings | ||||||||
Unaudited | Unaudited | Audited | ||||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
2011 | 2010 | 2011 | ||||||
£000 | £000 | £000 | ||||||
Group results: | ||||||||
Earnings | 114 | 94 | 81 | |||||
Exceptional operating costs (net of tax) | 17 | 119 | 215 | |||||
Adjusted earnings | 131 | 213 | 296 | |||||
Group earnings per share | ||||||||
Unaudited | Unaudited | Audited | ||||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
2011 | 2010 | 2011 | ||||||
Basic adjusted (pence per share) | 0.28 | 0.46 | 0.64 | |||||
Basic (pence per share) | 0.25 | 0.20 | 0.18 | |||||
Diluted EPS | ||||||||
All options in issue at 30 June 2011 and 31 December 2011 were non-dilutive. | ||||||||
3 | RECONCILIATION OF PROFIT FOR THE PERIOD TO NET CASH USED IN OPERATIONS | |||||||
Unaudited | Unaudited | Audited | ||||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
2011 | 2010 | 2011 | ||||||
£000 | £000 | £000 | ||||||
Profit for the period | 114 | 94 | 81 | |||||
Share based payment | - | 11 | 11 | |||||
Tax charged | 41 | 95 | 111 | |||||
Finance (income)/costs | (16) | 160 | 316 | |||||
Depreciation | 577 | 581 | 1,163 | |||||
Profit on disposal of property, plant and equipment | - | - | (18) | |||||
Operating cash flows before movements in working capital | 716 | 941 | 1,664 | |||||
Increase in working capital | (580) | (1,186) | (413) | |||||
Decrease in provisions | (645) | (401) | (795) | |||||
Contributions to defined benefit pension scheme | (300) | (300) | (600) | |||||
Net cash used in operations | (809) | (946) | (144) | |||||
4 | BASIS OF PREPARATION AND ACCOUNTING POLICIES | |||||||
The financial information for the six month periods ended 31st December 2011 and 31st December 2010 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 2011 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 2011. These policies are set out in the annual report and accounts for the year ended 30th June 2011 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. | ||||||||
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