Last checked at 27 Sep 2017 07:00
AIREA PLC
Interim report for the twelve months ended 30 June 2017
The principal activity of the group is the manufacturing, marketing and distribution of floor coverings.
Chairman's Statement
It is pleasing to report improved earnings for the twelve months ending 30th June 2017 and continuing strengthening of our competitive position despite challenging trading conditions.
- Profit before tax up 8.3%
- Basic earnings per share up 14.3%
- Interim dividend introduced
As indicated in the six month review in February, we were seeing signs of increases in commodity prices. The second six months of the current accounting period has seen further margin pressure in both the contract and residential flooring market, and we are working hard to manage margins.
New product launches were well received in the UK contract sector, however market conditions worsened through the period as a combination of further public sector cut backs and ongoing economic and political uncertainty weighed on demand.
Recent product launches and new routes to market led to sales growth in the residential sector.
Exports continued to grow steadily in the period as the improved exchange rate restored competitiveness and new markets came on stream.
The site consolidation is now fully complete and delivering both significant cost savings as well as improved service levels and reduced waste. We remain in negotiations over our remaining leasehold property.
Group Results
Revenue for the period was £23.9m (2016: £24.6m). The operating profit was £2,121,000 (2016: £2,042,000). After charging pension related finance costs of £614,000 (2016: £651,000) and incorporating the appropriate tax charge the net profit for the period was £1,423,000 (2016 £1,277,000). Basic earnings per share were 3.44p (2016 3.01p)
Operating cash flows before exceptional items and movements in working capital were £2.8m (2016: £2.8m). Working capital increased in the period by £2.0m as a result of stock build for successful product launches. Contributions to the defined benefit pension scheme were £400,000 (2016: £400,000) in line with the agreement reached with the scheme trustees following the last triennial valuation as at 1st July 2014. Capital expenditure of £1,280,000 (2016: £704,000) was made in renewing and enhancing manufacturing plant and equipment.
The increase in the pension deficit of £277,000 resulted from a deterioration in corporate bond yields. It is an accounting standards requirement that the reported pension valuation is based on corporate bond yields even though this does not reflect the investment strategy of the plan. In reality the plan is now largely hedged against interest rate movements and inflation, which, combined with a diversified growth asset base, continues to produce an improved underlying position.
Outlook
We are encouraged by the reaction to our new products from both domestic and overseas customers, continue to benefit from our reduced cost base and remain committed to bringing competitively priced products with high design content to market. This will hold us in good stead as we anticipate ongoing uncertainty of demand in all the markets that we serve.
As previously announced we are in an eighteen month accounting period and this second interim report is unusual in covering a twelve month period. We stated in our last announcement that we would look to introduce an interim dividend, which is particularly relevant in the transition to our new accounting period end. Given the ongoing improvement in the financial performance of the group and a robust cash flow we are able to declare an interim dividend of 1.75p to be paid on the 23rd of November 2017 to shareholders on the register at close of business on 13th October 2017. The ex dividend date is 12th October 2017.
Martin Toogood
Chairman
26th September 2017
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 |
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12 months ended 30th June 2017 |
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Unaudited | Audited |
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12 months ended | year ended |
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30th June | 30th June |
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2017 | 2016 |
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£000 | £000 |
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Revenue | 23,894 | 24,577 |
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Operating costs | (21,773) | (22,535) |
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Operating profit before exceptional items | 2,121 | 2,013 |
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Exceptional items: |
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Exceptional costs | - | (1,271) |
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Pension credit | - | 1,300 |
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Operating profit | 2,121 | 2,042 |
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Finance income | - | - |
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Finance costs | (614) | (651) |
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Profit before taxation | 1,507 | 1,391 |
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Taxation | (84) | (114) |
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Profit attributable to shareholders of the group | 1,423 | 1,277 |
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Earnings per share (basic and diluted) | 3.44p | 3.01p |
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All amounts relate to continuing operations |
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Consolidated Statement of Comprehensive Income |
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12 months ended 30th June 2017 |
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Unaudited | Audited |
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12 months ended | year ended |
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30th June | 30th June |
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2017 | 2016 |
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£000 | £000 |
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Profit attributable to shareholders of the group | 1,423 | 1,277 |
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Actuarial loss recognised in the pension scheme | (79) | (291) |
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Related deferred taxation | 16 | (83) |
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(63) | (374) |
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Unrealised valuation gain | - | 3,009 |
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Related deferred taxation | - | (240) |
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- | 2,769 |
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Total comprehensive income attributable to shareholders of the group | 1,360 | 3,672 |
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Consolidated Balance Sheet |
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as at 30th June 2017 | Unaudited | Audited |
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30th June | 30th June |
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2017 | 2016 |
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£000 | £000 |
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Non-current assets |
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Property, plant and equipment | 6,101 | 5,489 |
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Investment property | 2,701 | 2,701 |
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Deferred tax asset | 1,281 | 1,264 |
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10,083 | 9,454 |
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Current assets |
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Inventories | 11,146 | 9,338 |
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Trade and other receivables | 4,704 | 4,601 |
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Cash and cash equivalents | 2,302 | 3,114 |
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18,152 | 17,053 |
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Total assets | 28,235 | 26,507 |
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Current liabilities |
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Trade and other payables | (5,574) | (5,505) |
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Provisions | - | (125) |
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(5,574) | (5,630) |
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Non-current liabilities |
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Obligation under finance leases | (767) | - |
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Pension deficit | (6,962) | (6,685) |
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Deferred tax | (241) | (241) |
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(7,970) | (6,926) |
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Total liabilities | (13,544) | (12,556) |
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14,691 | 13,951 |
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Equity |
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Called up share capital | 10,339 | 10,339 |
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Share premium account | 504 | 504 |
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Capital redemption reserve | 3,617 | 3,617 |
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Revaluation reserve | 3,009 | 3,009 |
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Retained earnings | (2,778) | (3,518) |
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14,691 | 13,951 |
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Consolidated Cash Flow Statement |
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12 months ended 30th June 2017 | Unaudited | Audited |
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12 months ended | year ended |
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30th June | 30th June |
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2017 | 2016 |
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£000 | £000 |
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Cash flow from operating activities |
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Profit attributable to shareholders of the group | 1,423 | 1,277 |
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Tax charged | 84 | 114 |
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Finance costs | 614 | 651 |
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Depreciation | 668 | 837 |
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Profit on disposal of property plant and equipment | - | (6) |
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Pension credit | - | (1,300) |
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Inventory impairment | - | 468 |
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Operating cash flows before exceptional items & movements in working capital | 2,789 | 2,041 |
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(Increase) / Decrease in inventories | (1,808) | 841 |
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Increase in trade and other receivables | (103) | (189) |
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(Decrease) / increase in trade and other payables | (68) | 232 |
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(Decrease) / Increase in provisions for liabilities and charges | (125) | 125 |
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Cash generated from operations | 685 | 3,050 |
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Income tax received | 52 | 61 |
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Contributions to defined benefit pension scheme | (400) | (400) |
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Net cash generated from operations | 337 | 2,711 |
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Investing activities |
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Purchase of property, plant and equipment | (1,280) | (704) |
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Proceeds on disposal of property, plant and equipment | - | 25 |
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(1,280) | (679) |
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Financing activities |
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Interest | (16) | - |
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Obligations under finance leases | 767 | - |
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Share repurchase | - | (410) |
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Equity dividends paid | (620) | (391) |
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131 | (801) |
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Net (decrease) / increase in cash and cash equivalents | (812) | 1,231 |
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Cash and cash equivalents at start of period | 3,114 | 1,883 |
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Cash and cash equivalents at end of period | 2,302 | 3,114 |
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Consolidated Statement of Changes in Equity |
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12 months ended 30th June 2017 |
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Share capital | Share premium account | Capital redemption reserve | Revaluation reserve | Profit and loss account | Total equity |
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£000 | £000 | £000 | £000 | £000 | £000 |
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At 1st July 2015 | 10,851 | 504 | 3,105 | - | (3,380) | 11,080 |
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Comprehensive income for the period |
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Profit for the period | - | - | - | - | 1,277 | 1,277 |
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Other comprehensive income for the period | - | - | - | 3,009 | (614) | 2,395 |
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- | - | - | 3,009 | 663 | 3,672 |
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Contributions by and distributions to owners |
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Share repurchase | (512) | 512 | - | - | - |
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Consideration paid on share purchase | - | - | - | - | (410) | (410) |
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Dividend Paid | - | - | - | - | (391) | (391) |
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At 30th June and 1st July 2016 | 10,339 | 504 | 3,617 | 3,009 | (3,518) | 13,951 |
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Comprehensive income for the period |
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Profit for the year | - | - | - | - | 1,423 | 1,423 |
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Other comprehensive income for the year | - | - | - | - | (63) | (63) |
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- | - | - | - | 1,360 | 1,360 |
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Contributions by and distributions to owners |
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Dividend Paid | - | - | - | - | (620) | (620) |
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At 30th June 2017 | 10,339 | 504 | 3,617 | 3,009 | (2,778) | 14,691 |
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Note |
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BASIS OF PREPARATION AND ACCOUNTING POLICIES |
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The financial information for the twelve month periods ended 30th June 2017 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 2016 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 2016. These policies are set out in the annual report and accounts for the year ended 30th June 2016 which is available on the company's website 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 and are also available, along with this announcement, on the company's website at www.aireaplc.co.uk |
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