TIDMAIEA
RNS Number : 6763S
Airea PLC
26 September 2014
AIREA plc
Preliminary results for the year ended 30th June 2014
Strategic Review
Principal activity
The principal activity of the group is the manufacturing,
marketing and distribution of floor coverings.
Overview
Airea plc is pleased to report an improvement in trading in the
second half of the financial year following a difficult first six
months, resulting in increased underlying profitability for the
year as a whole. Successful product launches reported at the
interim stage, backed up by a restructured sales force provided the
platform for the recovery in sales performance. However, the long
anticipated recovery in the residential carpet market is still
awaited.
Although there were some indications of a modest general
improvement in market sentiment, the ongoing squeeze in disposable
incomes, continuing austerity in the public sector, and problems in
the euro zone combined to give a mixed picture. Competition for
business remained fierce throughout the year.
We have been able to invest in working capital to support the
new products and sales recovery whilst at the same time maintaining
the financial headroom to operate debt free. We continue to improve
the reliability and flexibility of our manufacturing base, and as a
result have been able to maintain high levels of customer service
despite raw material supply issues caused by further concentration
of the European yarn manufacturing industry. The cost base remains
under constant review and once again significant overall savings
have been achieved through efficiency gains in operations, which
exceeded the further investment in sales resources.
Group results
Revenue for the period was GBP23.3m (2013: GBP25.0m) reflecting
the difficult trading performance in the first half of the year.
The operating profit before exceptional items was GBP721,000 (2013:
GBP709,000). An exceptional charge of GBP115,000 has been made in
respect of final settlement of a dilapidations dispute concerning
leasehold properties exited in 2011, which was settled after the
year end. The operating profit after exceptional items was
GBP606,000 (2013: GBP709,000). After accounting for pension related
finance costs and incorporating the appropriate tax charge the
profit for the year was GBP301,000 (2013 restated(1) :
GBP80,000).
Basic earnings per share were 0.65p (2013 restated(1) : 0.17p),
and basic adjusted earnings per share were 0.90p (2013 restated(1)
: 0.17p)
Operating cash flows before exceptional items and movements in
working capital were GBP1,598,000 (2013: GBP1,846,000). Working
capital increased by GBP1,633,000 (2013: decrease GBP416,000) as a
result of investment in inventories to support new product launches
and increased levels of demand. Contributions of GBP375,000 (2013:
GBP415,000) were made to the defined benefit pension scheme in line
with the agreement reached with the trustees based on the 2011
actuarial valuation. Capital expenditure of GBP157,000 (2013
GBP257,000) was focussed on supporting the continuous improvement
in flexibility, reliability and productivity of the manufacturing
process.
The pension deficit increased marginally to GBP5.8m (2013:
GBP5.7m).
Key performance indicators
As part of its internal financial control procedures the board
monitors certain financial ratios. For the year to 30th June 2014
value added per employee amounted to GBP67,000 (2013: GBP69,000),
operating return on sales was 3.1% (2013: 2.8%), return on average
net operating assets was 4.2% (2013: 5.1%) and working capital to
sales percentage was 40.0% (2013: 30.3%). The ratios were affected
by the difficult trading in the first half and are expected to
improve as the efficiency gains implemented in the second half come
through.
Principal risks and uncertainties
The Board has responsibility for determining the nature and
extent of the significant risks it is willing to take in achieving
its strategic objectives, and ensuring that risks are managed
effectively across the group. Risks are identified as being
principal based on the likelihood of occurrence and potential
impact on the group. The group's principal risks are identified
below, together with a description of how the group mitigates those
risks.
The key operational risk facing the business continues to be the
competitive nature of the markets for the group's products. To
mitigate this risk the group seeks to improve existing products,
introduce new products and achieve high levels of customer service
and efficiency.
The majority of the group's revenue arises from trade with
flooring contractors and independent retailers. The activity levels
within this customer base are determined by consumer demand created
through a wide range of commercial refurbishment and building
projects and activity in the housing market. The general level of
activity in these underlying markets has the potential to affect
the demand for products supplied by the group. The group mitigates
these factors by closely monitoring sales trends and taking
appropriate action early, along with strengthening the product
range and developing new channels to market, both at home and
abroad, to grow demand across a wider range of markets.
The group operates a defined benefit pension scheme. At present,
in aggregate, there is an actuarial deficit between the value of
the projected liabilities of this scheme and the assets they hold.
The amount of the deficit may be adversely affected by changes in a
number of factors, including investment returns, long-term interest
rate and price inflation expectations, and anticipated members'
longevity. Further increases in pension scheme deficit may require
the group to increase the amount of cash contributions payable to
the scheme, thereby reducing cash available to meet the group's
other operating, investing and financing requirements. Following
the triennial funding valuation of the group's pension scheme in
2011, a revised deficit recovery plan was agreed. The performance
of the group's pension scheme and deficit recovery plan are
regularly reviewed by both the group and the trustees of the
scheme, taking actuarial and investment advice as appropriate. The
results of these reviews are discussed with the Board and
appropriate action taken.
Raw material costs are a significant constituent of overall
product cost, and are impacted by global commodity markets.
Significant fluctuations in raw material costs can have a material
impact on profitability. The group continuously seeks out
opportunities to develop a robust and competitive supply base,
substitute new materials and closely monitors selling prices and
margins.
The global nature of the group's business means it is exposed to
volatility in currency exchange rates in respect of foreign
currency denominated transactions, the most significant being the
euro. In order to protect itself against currency fluctuations the
group has taken advantage of the opportunity to naturally hedge
euro revenue with euro payments by switching European suppliers
from sterling to euro prices. This is done in combination with
foreign currency bank accounts and forward exchange contracts. No
transactions of a speculative nature are undertaken.
Other risks include the availability of necessary materials,
business interruption and the duty of care to our employees,
customers and the wider public. These risks are managed through the
combination of quality assurance and health and safety procedures,
and insurance cover.
Management and personnel
Our staff continue to rise to the challenges posed by the highly
competitive environment in which we operate and we once again thank
everyone in the business for the flexibility, hard work and
commitment they have shown.
Current trading and future prospects
Although there may be signs of improvement in trading conditions
in the UK, the outlook for the Eurozone continues to be fragile,
and we remain focused on improving our position in what remains a
highly competitive market. Our strategy of strengthening our
product offer, continuously improving customer service, our
relentless pursuit of efficiency gains and selective investment in
projects with a clear payback is starting to produce encouraging
results, and provides a solid base for the future. The enhancement
of our sales capability in the UK gives us real cause for optimism,
and international markets continue to provide growth opportunities
as we strengthen our presence in markets beyond the EU. The
business remains debt free and has the financial resources to
invest where there is a sound business case.
In summary, we approach the new year recognising that
competition will remain fierce, but with the confidence that the
development of our strategy continues to improve our competitive
position. We are encouraged by the progress we have delivered in
the second half of the year just ended. As a result, and given the
continuing health of our financial resources, the board is pleased
to declare a final dividend of 0.6p per share. If approved, the
dividend will be paid on 26th November 2014 to shareholders on the
register at close of business on 31st October 2014.
1 Restated on adoption of the revised IAS 19, Employee
Benefits
Enquiries:
Neil Rylance 01924 266561
Chief Executive Officer
Roger Salt 01924 266561
Group Finance Director
Richard Lindley 0113 388 4789
N+1 Singer
The financial information set out in the announcement does not
constitute the group's statutory accounts for the years ended 30
June 2014 or 30 June 2013. The financial information for the year
ended 30 June 2013 is derived from the statutory accounts for that
year which have been delivered to the Registrar of Companies. The
auditors reported on those accounts; their report was unqualified
and did not include any statement under s498(2) or s498(3) of the
Companies Act 2006. The consolidated balance sheet at 30th June
2014, the consolidated income statement, the consolidated statement
of comprehensive income, the consolidated cash flow statement and
the consolidated statement of changes in equity for the year then
ended have been extracted from the Group's 2014 statutory financial
statements upon which the auditor's opinion is unqualified and does
not include any statement under s498(2) or s498(3) of the Companies
Act 2006.
The announcement has been agreed with the company's auditor for
release.
Audited Consolidated Income Statement
Year ended 30th June 2014
2014 2013
Restated(1)
GBP000 GBP000
Revenue 23,342 25,049
Operating costs (22,736) (24,340)
--------------------------------------------- ------- --------- ------------
Operating profit before exceptional
items 721 709
Exceptional items (115) -
--------------------------------------------- ------- --------- ------------
Operating profit 606 709
Finance income 3 2
Finance costs (279) (541)
--------- ------------
Profit before taxation 330 170
Taxation (29) (90)
--------- ------------
Profit attributable to the shareholders
of the group 301 80
========= ============
0.65 0.17
Earnings per share (basic and diluted) p p
All amounts relate to continuing operations
(1) On adoption of the revised IAS
19, Employee Benefits
Audited Consolidated Statement of
Comprehensive Income
Year ended 30th June 2014
2014 2013
Restated(1)
GBP000 GBP000 GBP000 GBP000
Profit attributable to shareholders
of the group 301 80
Actuarial (loss)/gain recognised in
the pension scheme (189) 2,713
Related deferred taxation (73) (797)
------------
(262) 1,916
--------- -------
Total comprehensive income attributable
to the shareholders of the group 39 1,996
========= =======
(1) On adoption of the revised IAS
19, Employee Benefits
Audited Consolidated Balance Sheet
as at 30th June 2014
2014 2013
GBP000 GBP000 GBP000 GBP000
Non-current assets
Property, plant and equipment 5,704 6,428
Deferred tax asset 1,323 1,476
---------
7,027 7,904
Current assets
Inventories 10,220 8,874
Trade and other receivables 4,313 4,331
Cash and cash equivalents 1,930 2,747
-------- --------
16,463 15,952
---------
Total assets 23,490 23,856
--------- ---------
Current liabilities
Trade and other payables (5,121) (5,440)
Provisions (115) -
-------- --------
(5,236) (5,440)
Non-current liabilities
Pension deficit (5,761) (5,668)
Deferred tax (1) (41)
-------- --------
(5,762) (5,709)
--------- ---------
Total liabilities (10,998) (11,149)
---------
12,492 12,707
========= =========
Equity
Called up share capital 11,561 11,561
Share premium account 504 504
Capital redemption reserve 2,395 2,395
Retained earnings (1,968) (1,753)
---------
12,492 12,707
========= =========
Audited Consolidated Cash Flow Statement
Year ended 30th June 2014
2014 2013
GBP000 GBP000
Operating activities
Cash (used in)/generated from operations (410) 1,847
-------
Investing activities
Purchase of property, plant and equipment (157) (257)
Proceeds on disposal of property,
plant and equipment 4 -
-------
(153) (257)
------- -------
Financing activities
Equity dividends paid (254) (185)
-------
Net (decrease)/increase in cash and
cash equivalents (817) 1,405
Cash and cash equivalents at start
of the year 2,747 1,342
-------
Cash and cash equivalents at end of
the year 1,930 2,747
======= =======
Audited Consolidated Statement of
Changes in Equity
Year ended 30th June 2014
Share Share Capital Share Profit Total
capital premium redemption option and equity
account reserve reserve loss
account
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1st July 2012 11,561 504 2,395 16 (3,580) 10,896
Profit for the year (restated(1)
) - - - - 80 80
Other comprehensive income
for the year (restated(1)
) - - - - 1,916 1,916
Reserve transfer relating
to share based payment - - - (16) 16 -
Dividend paid - - - - (185) (185)
At 30th June and 1st July
2013 11,561 504 2,395 - (1,753) 12,707
Profit for the year - - - - 301 301
Other comprehensive income
for the year - - - - (262) (262)
Dividend paid - - - - (254) (254)
--------- --------- ------------ --------- --------- --------
At 30th June 2014 11,561 504 2,395 - (1,968) 12,492
========= ========= ============ ========= ========= ========
(1) On adoption of the revised
IAS 19, Employee Benefits
In accordance with Rule 20 of the AIM Rules, Airea confirms that
the annual report and accounts for the year ended 30th June 2014
will be posted to shareholders and will be available to view on the
Company's website at www.aireaplc.co.uk on 30th September 2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR QKPDBKBKBFCB
Airea (LSE:AIEA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Airea (LSE:AIEA)
Historical Stock Chart
From Apr 2023 to Apr 2024
