Last checked at 26 Feb 2016 07:00
AIREA PLC
Interim report for the six months ended 31 December 2015
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 broadly in line with the corresponding period last year, despite the adverse impact on international sales due to the strength of sterling against the Euro in the first half of the financial year.
The first half of the current financial year has seen major progress across a number of strategic objectives. Most significant has been the recently announced consolidation of manufacturing operations from four locations onto two existing sites occupied by the company at Ossett and Wakefield. The move not only delivers significant cost savings and efficiency improvements, but enhances our operational capability, reducing lead-times and thereby improving customer service.
Inevitably there have been one-off costs incurred as a consequence of the move, i.e. rationalisation of finished inventories, redundancy payments to staff who were not able to transfer, and the relocation of equipment and inventory. These exceptional costs have been highlighted in the income statement.
On-going costs will be significantly reduced going forward. These include cost savings following the expiry of the lease of one of the properties vacated. In addition, Airea has agreed to lease to a third party its freehold property in Bury, which is no longer required for group operations as set out above, once it has been fully vacated by the company in the third quarter of this financial year.
The first six months also saw a reduction in the pension deficit arising from the completion of a Pension Increase Exchange exercise. The initiative allowed pensioners to opt for an income stream more aligned to their personal circumstances and preferences, whilst at the same time reducing the cost of past service benefits to the scheme. The gain to profit is highlighted as exceptional in the income statement.
Group results
Revenue for the period was £12.7m (2014 restated: £13.4m). The operating profit before exceptional items was £730,000 (2014: £700,000). The exceptional charge of £1.3m related to the costs associated with the consolidation of manufacturing operations, and the exceptional income of £1.3m related to the Pension Increase Exchange. The operating profit after exceptional items was £759,000 (2014: £700,000). After charging pension related finance costs of £246,000 (2014:£215,000) and incorporating the appropriate tax charge the net profit for the period was £372,000 (2014: £371,000). Basic earnings per share were 0.86p (2014: 0.80p).
Operating cash flows before exceptional items and movements in working capital were £1.1m (2014: £1.1m). The exceptional costs incurred a cash outflow of £0.5m (2014: £0.1m). Working capital decreased by £1.1m (2014: increase £0.4m) due to reductions in inventories. Contributions to the defined benefit pension scheme were £200,000 (2014: £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 £518,000 (2014: £136,000) was focussed on supporting new product launches. Overall the cash balance increased by £678,000 to £2.6m.
Outlook
The Board does not detect any fundamental changes in the outlook for the markets that we serve, and competition for business is likely to remain intense. However, the business enters the second half of the year with a reduced cost base, simplified operation and a healthy new product pipeline. In line with its recent policy, the board has resolved to determine the level of dividend at the year end, and there will not be a dividend payment at the interim stage.
Martin Toogood
Chairman
26th February 2016
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 2015 | ||||||||
Unaudited | Unaudited | Audited | ||||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
restated | ||||||||
2015 | 2014 | 2015 | ||||||
£000 | £000 | £000 | ||||||
Revenue | 12,674 | 13,379 | 25,538 | |||||
Operating costs | (11,915) | (12,679) | (24,440) | |||||
Operating profit before exceptional items | 730 | 700 | 1,212 | |||||
Exceptional items: | ||||||||
Pension credit | 1,300 | - | - | |||||
Restructure of operations | (1,271) | - | - | |||||
Property dispute | - | - | (15) | |||||
Share repurchase expenses | - | - | (99) | |||||
Operating profit | 759 | 700 | 1,098 | |||||
Finance income | - | 1 | 1 | |||||
Finance costs | (246) | (215) | (449) | |||||
Profit before taxation | 513 | 486 | 650 | |||||
Taxation | (141) | (115) | (69) | |||||
Profit attributable to shareholders of the group | 372 | 371 | 581 | |||||
Earnings per share (basic and diluted) | 0.86p | 0.80p | 1.29p | |||||
All amounts relate to continuing operations | ||||||||
Consolidated Statement of Comprehensive Income | ||||||||
6 months ended 31st December 2015 | ||||||||
Unaudited | Unaudited | Audited | ||||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
2015 | 2014 | 2015 | ||||||
£000 | £000 | £000 | ||||||
Profit attributable to shareholders of the group | 372 | 371 | 581 | |||||
Actuarial loss recognised in the pension scheme | (218) | - | (1,635) | |||||
Related deferred taxation | 44 | - | 267 | |||||
Total comprehensive income attributable to shareholders of the group | 198 | 371 | (787) | |||||
Consolidated Balance Sheet | ||||||||
as at 31st December 2015 | Unaudited | Unaudited | Audited | |||||
31st December | 31st December | 30th June | ||||||
2015 | 2014 | 2015 | ||||||
£000 | £000 | £000 | ||||||
Non-current assets | ||||||||
Property, plant and equipment | 5,447 | 5,427 | 5,333 | |||||
Deferred tax asset | 1,350 | 1,288 | 1,557 | |||||
6,797 | 6,715 | 6,890 | ||||||
Current assets | ||||||||
Inventories | 8.313 | 10,358 | 10,647 | |||||
Trade and other receivables | 3,451 | 3,832 | 4,412 | |||||
Cash and cash equivalents | 2,561 | 1,915 | 1,883 | |||||
14,325 | 16,105 | 16,942 | ||||||
Total assets | 21,122 | 22,820 | 23,832 | |||||
Current liabilities | ||||||||
Trade and other payables | (3,503) | (4,457) | (5,308) | |||||
Provisions | (325) | - | - | |||||
(3,828) | (4,457) | (5,308) | ||||||
Non-current liabilities | ||||||||
Pension deficit | (6,406) | (5,776) | (7,443) | |||||
Deferred tax | (1) | (1) | (1) | |||||
(6,407) | (5,777) | (7,444) | ||||||
Total liabilities | (10,235) | (10,234) | (12,752) | |||||
10,887 | 12,586 | 11,080 | ||||||
Equity | ||||||||
Called up share capital | 10,851 | 11,561 | 10,851 | |||||
Share premium account | 504 | 504 | 504 | |||||
Capital redemption reserve | 3,105 | 2,395 | 3,105 | |||||
Retained earnings | (3,573) | (1,874) | (3,380) | |||||
10,887 | 12,586 | 11,080 | ||||||
Consolidated Cash Flow Statement | ||||||||
6 months ended 31st December 2015 | Unaudited | Unaudited | Audited | |||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
2015 | 2014 | 2015 | ||||||
£000 | £000 | £000 | ||||||
Cash flow from operating activities | ||||||||
Profit attributable to shareholders of the group | 372 | 371 | 581 | |||||
Tax charged | 141 | 115 | 69 | |||||
Finance costs | 246 | 214 | 448 | |||||
Pension credit | (1,300) | - | - | |||||
Exceptional costs | 1,271 | - | 114 | |||||
Depreciation | 404 | 413 | 830 | |||||
Operating cash flows before exceptional items & movements in working capital | 1,134 | 1,113 | 2,042 | |||||
Exceptional costs | (1,271) | - | (114) | |||||
Increase/(decrease) in provisions for liabilities and charges | 325 | (115) | (115) | |||||
Inventory impairment | 468 | - | - | |||||
Operating cash flows after exceptional items & movements in working capital | 656 | 998 | 1,813 | |||||
Decrease/(increase) in working capital | 1,131 | (400) | (375) | |||||
Cash generated from operations | 1,787 | 598 | 1,438 | |||||
Contributions to defined benefit pension scheme | (200) | (200) | (400) | |||||
Net cash generated from operations | 1,587 | 398 | 1,038 | |||||
Investing activities | ||||||||
Purchase of property, plant and equipment | (518) | (136) | (459) | |||||
Financing activities | ||||||||
Interest | - | - | (1) | |||||
Share repurchase | - | - | (348) | |||||
Equity dividends paid | (391) | (277) | (277) | |||||
(391) | (277) | (626) | ||||||
Net increase/(decrease) in cash and cash equivalents | 678 | (15) | (47) | |||||
Cash and cash equivalents at start of period | 1,883 | 1,930 | 1,930 | |||||
Cash and cash equivalents at end of period | 2,561 | 1,915 | 1,883 | |||||
Consolidated Statement of Changes in Equity | ||||||||
6 months ended 31st December 2015 | ||||||||
Share capital | Share premium account | Capital redemption reserve | Retained Earnings | Total equity | ||||
£000 | £000 | £000 | £000 | £000 | ||||
At 1st July 2014 | 11,561 | 504 | 2,395 | (1,968) | 12,492 | |||
Profit attributable to shareholders of the group | - | - | - | 371 | 371 | |||
Dividend paid | - | - | - | (277) | (277) | |||
At 1st January 2015 | 11,561 | 504 | 2,395 | (1,874) | 12,586 | |||
Profit attributable to shareholders of the group | - | - | - | 210 | 210 | |||
Other comprehensive income for the period | - | - | - | (1,368) | (1,368) | |||
Share repurchase | (710) | - | 710 | - | - | |||
Consideration paid on share repurchase | - | - | - | (348) | (348) | |||
At 1st July 2015 | 10,851 | 504 | 3,105 | (3,380) | 11,080 | |||
Profit attributable to shareholders of the group | - | - | - | 372 | 372 | |||
Other comprehensive income for the period | - | - | - | (174) | (174) | |||
Dividend paid | - | - | - | (391) | (391) | |||
At 31st December 2015 | 10,851 | 504 | 3,105 | (3,573) | 10,887 | |||
Note | ||||||||
BASIS OF PREPARATION AND ACCOUNTING POLICIES | ||||||||
The financial information for the six month periods ended 31st December 2015 and 31st December 2014 has not been audited and does not constitute full financial statements within the meaning of Section 434 of the Companies Act 2006. The revenue and operating costs for the six month period ended 31st December 2014 have been restated due to the reclassification of settlement discount as required by IAS 18, Revenue Recognition.The financial information relating to the year ended 30th June 2015 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 2015. These policies are set out in the annual report and accounts for the year ended 30th June 2015. The interim and annual reports, and this announcement are available on the company's website at www.aireaplc.co.uk. | ||||||||