Last checked at 8 Mar 2013 07:00
AIREA plc
Interim Results for the Six Months Ended 31 December 2012
Review of Operations
Introduction
Airea plc has delivered an increase in profitability and a healthy improvement in its cash position during the first six months of the current financial year, despite the challenging market conditions that persisted in all of its major markets. In addition, good progress continues to be made in strengthening our strategic position with a number of successful product launches completed in the period.
Residential sector sales were once again adversely affected by fragile customer demand. However, contract volumes held up well due to significant progress in a number of overseas markets, and the success of new product introductions. Improved sales margins have been driven by tight management of pricing policy, along with a strengthening of the sales mix through investment in new products with higher added value and the substitution of out-sourced products by in-house manufacture. The relentless drive for cost reduction and efficiency improvements has added significantly to profitability, and we are now benefiting from the property footprint reduction and factory reorganisation completed last year.
Group results
Revenue for the period was £13.5m (2011: £13.9m). The operating profit before exceptional items was £404,000 (2011: £156,000). The operating profit after charging exceptional operating costs of £45,000 (2011: £17,000) was £359,000 (2011: £139,000). After charging pension related finance costs of £89,000 (2011: income £16,000) and incorporating the appropriate tax charge the net profit for the period was £176,000 (2011: £114,000). Basic adjusted earnings per share were 0.45p (2011: 0.28p) and basic earnings per share were 0.38p (2011: 0.25p).
Operating profit benefited from improved sales margins and cost reduction. The increase in pension related finance costs arose from the reassessment of the pension deficit as disclosed in the last annual report.
Operating cash flows before movements in working capital were £929,000 (2011: £716,000). Working capital reduced by £1,317,000 (2011: increase £580,000) due to tight control of inventory. Expenditure on onerous leases was negligible (2011: outflow £645,000) and contributions to the defined benefit pension scheme reduced to £217,000 (2011: £300,000) in line with the agreement reached with the scheme trustees following the last triennial valuation as at 1st July 2011. Capital expenditure of £134,000 (2011: £566,000) was focussed on essential replacements and productivity improvements.
Current trading and future prospects
Whilst we can foresee little change in the trading environment in the near future, we are well placed to make further progress in the second half of our financial year based on the ongoing development of our product offer, the continuing strengthening of our trading network, particularly overseas, and ongoing cost reduction programmes. Whereas we are encouraged by the prospects for the business, and the improvement in the cash position, we feel it is right to maintain a prudent approach. As a result the board has decided that any dividend payment should be judged in the light of the financial performance for the year as a whole, and consequently we will not be making a dividend payment at the interim stage.
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 2012 | ||||||||
Unaudited | Unaudited | Audited | ||||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
2012 | 2011 | 2012 | ||||||
Note | £000 | £000 | £000 | |||||
Revenue | 13,521 | 13,918 | 26,276 | |||||
Operating costs | (13,162) | (13,779) | (25,925) | |||||
Operating profit after exceptional items | 359 | 139 | 351 | |||||
Analysed between: | ||||||||
Operating profit before exceptional items | 404 | 156 | 423 | |||||
Exceptional operating costs | 1 | (45) | (17) | (72) | ||||
Finance income | - | 16 | 32 | |||||
Finance costs | (89) | - | - | |||||
Profit before taxation | 270 | 155 | 383 | |||||
Taxation | (94) | (41) | (114) | |||||
Profit for the period | 176 | 114 | 269 | |||||
Earnings per share (basic and diluted) | 2 | 0.38p | 0.25p | 0.58p | ||||
All amounts relate to continuing operations | ||||||||
Consolidated Statement of Comprehensive Income | ||||||||
6 months ended 31st December 2012 | ||||||||
Unaudited | Unaudited | Audited | ||||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
2012 | 2011 | 2012 | ||||||
£000 | £000 | £000 | ||||||
Profit attributable to shareholders of the group | 176 | 114 | 269 | |||||
Actuarial losses recognised in the pension scheme | - | - | (7,572) | |||||
Related deferred taxation | - | - | 1,931 | |||||
Total comprehensive income/(loss) for the period | 176 | 114 | (5,372) | |||||
Consolidated Balance Sheet | ||||||||
as at 31st December 2012 | Unaudited | Unaudited | Audited | |||||
31st December | 31st December | 30th June | ||||||
2012 | 2011 | 2012 | ||||||
£000 | £000 | £000 | ||||||
Non-current assets | ||||||||
Property, plant and equipment | 6,872 | 7,653 | 7,308 | |||||
Deferred tax asset | 2,495 | 839 | 2,589 | |||||
9,367 | 8,492 | 9,897 | ||||||
Current assets | ||||||||
Inventories | 7,501 | 8,148 | 8,661 | |||||
Trade and other receivables | 3,467 | 3,915 | 4,659 | |||||
Cash and cash equivalents | 3,090 | 1,542 | 1,342 | |||||
14,058 | 13,605 | 14,662 | ||||||
Total assets | 23,425 | 22,097 | 24,559 | |||||
Current liabilities | ||||||||
Trade and other payables | (4,304) | (4,442) | (5,339) | |||||
Provisions | (64) | (173) | (26) | |||||
(4,368) | (4,615) | (5,365) | ||||||
Non-current liabilities | ||||||||
Pension deficit | (8,129) | (951) | (8,257) | |||||
Deferred tax | (41) | (149) | (41) | |||||
(8,170) | (1,100) | (8,298) | ||||||
Total liabilities | (12,538) | (5,715) | (13,663) | |||||
10,887 | 16,382 | 10,896 | ||||||
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 | |||||
Retained earnings | (3,589) | 1,906 | (3,580) | |||||
10,887 | 16,382 | 10,896 | ||||||
Consolidated Cash Flow Statement | ||||||||
6 months ended 31st December 2012 | Unaudited | Unaudited | Audited | |||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
2012 | 2011 | 2012 | ||||||
Note | £000 | £000 | £000 | |||||
Operating activities | ||||||||
Cash generated from/(used in) operations | 3 | 2,067 | (809) | (867) | ||||
Investing activities | ||||||||
Purchase of property, plant and equipment | (134) | (566) | (708) | |||||
Proceeds on disposal of property, plant and equipment | - | 100 | 100 | |||||
(134) | (466) | (608) | ||||||
Financing activities | ||||||||
Equity dividends paid | (185) | (231) | (231) | |||||
Net increase/(decrease) in cash and cash equivalents | 1,748 | (1,506) | (1,706) | |||||
Cash and cash equivalents at start of period | 1,342 | 3,048 | 3,048 | |||||
Cash and cash equivalents at end of period | 3,090 | 1,542 | 1,342 | |||||
Consolidated Statement of Changes in Equity | ||||||||
6 months ended 31st December 2012 | ||||||||
Share capital | Share premium account | Capital redemption reserve | Share option reserve | Retained Earnings | Total equity | |||
£000 | £000 | £000 | £000 | £000 | £000 | |||
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 1st January 2012 | 11,561 | 504 | 2,395 | 16 | 1,906 | 16,382 | ||
Total comprehensive income for the period | - | - | - | - | (5,486) | (5,486) | ||
At 1st July 2012 | 11,561 | 504 | 2,395 | 16 | (3,580) | 10,896 | ||
Total comprehensive income for the period | - | - | - | - | 176 | 176 | ||
Dividend paid | - | - | - | - | (185) | (185) | ||
At 31st December 2012 | 11,561 | 504 | 2,395 | 16 | (3,589) | 10,887 | ||
Notes | ||||||||
1 | EXCEPTIONAL OPERATING COSTS | |||||||
The exceptional costs of £45,000 (6 months ended 31st December 2011: £17,000, year ended 30th June 2012: £72,000) are severance payments relating to the ongoing streamlining of the 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 | ||||||
2012 | 2011 | 2012 | ||||||
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 | ||||||
2012 | 2011 | 2012 | ||||||
£000 | £000 | £000 | ||||||
Group results: | ||||||||
Earnings | 176 | 114 | 269 | |||||
Exceptional operating costs (net of tax) | 34 | 17 | 54 | |||||
Adjusted earnings | 210 | 131 | 323 | |||||
Group earnings per share | ||||||||
Unaudited | Unaudited | Audited | ||||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
2012 | 2011 | 2012 | ||||||
pence | pence | pence | ||||||
Basic adjusted | 0.45 | 0.28 | 0.70 | |||||
Basic | 0.38 | 0.25 | 0.58 | |||||
Diluted EPS | ||||||||
All options in issue at 30 June 2012 and 31 December 2012 were anti-dilutive. | ||||||||
3 | RECONCILIATION OF PROFIT FOR THE PERIOD TO NET CASH GENERATED FROM OPERATIONS | |||||||
Unaudited | Unaudited | Audited | ||||||
6 months ended | 6 months ended | year ended | ||||||
31st December | 31st December | 30th June | ||||||
2012 | 2011 | 2012 | ||||||
£000 | £000 | £000 | ||||||
Profit for the period | 176 | 114 | 269 | |||||
Tax charged | 94 | 41 | 114 | |||||
Finance costs /(income) | 89 | (16) | (32) | |||||
Depreciation | 570 | 577 | 1,140 | |||||
Loss on disposal of property, plant and equipment | - | - | 39 | |||||
Operating cash flows before movements in working capital | 929 | 716 | 1,530 | |||||
Decrease/(increase) in working capital | 1,317 | (580) | (940) | |||||
Increase/(decrease) in provisions | 38 | (645) | (907) | |||||
Contributions to defined benefit pension scheme | (217) | (300) | (550) | |||||
Net cash generated from/(used in) operations | 2,067 | (809) | (867) | |||||
4 | BASIS OF PREPARATION AND ACCOUNTING POLICIES | |||||||
The financial information for the six month period ended 31st December 2012 and 31st December 2011 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 2012 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 2012. These policies are set out in the annual report and accounts for the year ended 30th June 2012 which is available on the company's website at www.aireaplc.co.uk. | ||||||||