RNS Number : 3225HAirea PLC27 July 2023

27 July 2023

AIREA plc

("AIREA", the "Group" or the "Company")

Interim results for the six months ended 30 June 2023

AIREA plc (AIM: AIEA), the UK design-led specialist flooring company, supplying both the UK and international markets, is pleased to announce its interim results for the six months ended 30 June 2023.

Financial highlights

30 June 2023

(£)

30 June 2022

(£)

Change

(%)

Group revenue

9,825k

8,551k

14.9

Operating profit before valuation

836k

756k

10.5

Profit before tax

620k

656k

(5.4)

EBITDA (Earnings before interest tax depreciation and amortisation)

1,010k

1,016k

(0.1)

Cash and cash equivalents

4,919k

5,450k

(9.7)

Net cash

2,694k

2,493k

8.1

Operational highlights

·    Continued focus on sales growth in existing and new territories, with key wins in export markets.

·    Successful launch of carbon-neutral products in line with market trends and demand for low-carbon products.

·    Installation and commissioning of solar panels, reducing exposure to energy price volatility.

·    Appointment of Tanya Ashton, Non-Executive Director, in May 2023.

Martin Toogood, Non-Executive Chairman of AIREA plc, commented:

"The first half of 2023 has seen continued growth in our sales fuelled by a focus on refreshing our product offering and taking advantage of new markets. The current economic environment continues to put a strain on the cost of labour, energy, and raw materials. We do however continue to take actions to manage these risks with investments for the future such as the installation of our renewable energy solutions, all with a view to capitalising on the opportunities in our markets as and when wider macro conditions improve."

- Ends -

For further information please contact:

AIREA plc

Médéric Payne, Chief Executive Officer

Ryan Thomas, Chief Financial Officer

Tel: +44 (0) 192 426 6561

Singer Capital Markets
(Nominated Adviser and Sole Broker)

Peter Steel / Sam Butcher

Tel: +44 (0) 20 7496 3000

Yellow Jersey PR
(Financial media and PR)

Sarah Hollins / Shivantha Thambirajah / Jazmine Clemens

Tel: +44 (0) 20 3004 9512

This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication of this announcement, this information is now considered to be in the public domain.

Notes to Editors

AIREA plc is a UK design-led specialist flooring company, supplying both UK and international markets.  Since 2007, the Group has been focused solely on floor coverings and enjoys a strong and growing brand position within the commercial flooring market.

The Group's core brand Burmatex® is one of the UK's leading designers and manufacturers of commercial carpet tiles and planks. Burmatex® focuses on the design and creation of sustainable innovative flooring solutions to meet the needs of architects, specifiers and contractors with a continuously developing range to suit the education, leisure, commercial, hospitality and public sectors. The brand was acquired by AIREA in 1984.

The Group was admitted to trading on AIM of the London Stock Exchange on 12 December 2007.

For further information, please visit: https://aireaplc.com/.

Chief Executive Officer's Statement

Introduction

I am pleased to report the Group's interim results for the six months ended 30 June 2023. During this period, AIREA has made good progress and maintained momentum in both its home and export markets. We have made a positive start to the year and the Group's performance during the period is in line with management expectations.

In May 2023, the Company seized the opportunity to exhibit at the renowned Clerkenwell Design Week, which gave us the platform to showcase our new ranges and promote the Burmatex® brand to the market and engage with our target customer audience in this setting for the first time in over ten years.  

Results

Revenuefortheperiod increased by 15% to£9.8m(2022:£8.6m). In the UK, our sales were 9.8% ahead of the prior six-month comparative period, largely driven by a combination of cost increases being passed onto customers combined with an improved sales mix. Export sales were up 36% compared to the comparative period as demand recovered in most of our target export markets, with good progress being made in new markets. The UK market remains challenging given the economic backdrop, however, performance is encouraging as our sales mix moves towards more design-led products.

The Group's operatingprofitwas£0.8m(2022:£0.8m). Our underlying product margins faced downward pressures due to increased energy, raw materials, and labour costs.  We were restricted in passing on these cost increases in a price-sensitive market. Net finance costs increased by £0.1m largely because of the increased pension interest charge. After charging net finance costs of £0.2m (2022: £0.1m) and incorporating the appropriate tax charge, the net profit for the period was £0.5m (2022: £0.6m). Basic earnings per share were 1.18p (2022: 1.58p).

Operatingcashflowsbeforemovementsinworkingcapitalwere£1.2m(2022:£0.8m).Working capital increased in the period to £0.5m due to an increase in inventory for new lines and higher receivables from customers (2022: £0.0m). Contributions to the defined benefit pension scheme were £0.0m (2022: £0.0m) in line with the agreement reached with the scheme trustees following the last triennial valuation as of 1 July 2023. Capital expenditure of £0.9m (2022: £0.2m) was spent renewing and enhancing the manufacturing plant and equipment, with an important investment in our new solar panels.

Net cash (cash less loans and borrowings) decreased by £0.5m in the six-month period to £2.7m as of 30 June 2023, from £3.2m as of 31 December 2022. We continue to have further liquidity available of £1.0m via our unutilised overdraft facility (2022: £1.0m unutilised). Our cash reserves and strong balance sheet enable us to invest in the future of the business and manage the impact of the continued economic uncertainty and related risks.

Update on Board composition

The Board appointed Tanya Ashton as Non-Executive Director to the Board on 10 May 2023. Tanya's appointment signals the importance that we attach to good standards of corporate governance at AIREA. 

We have commenced the selection process for our new Chief Financial Officer following the resignation of Ryan Thomas on 4 July 2023. We have made good progress and expect to be in a position to make an announcement in the coming months.

We acknowledge the importance of reviewing Board composition on an ongoing basis to ensure that the Group has the required level of skills and experience to enable the business to operate efficiently and react quickly to any issues that may arise.

Outlook

The development of our sustainable products indicates the transformational change the Group is focused on to enable AIREA to be more competitive, innovative, and agile. Our marketing and sales strategy is not only UK-focused but also on growing our international sales in both existing and new territories.

As the cost pressures persist, we continue to adapt our processes and procedures to mitigate and manage the impact on the business. In some areas, this has and will continue with the need to invest in our facilities such that we reduce waste, improve productivity, and utilise energy efficiently.

Given the plans to continue to invest in the future of the business coupled with the continued levels of uncertainty in the market and the wider economy, the Group will continue to prioritise the preservation of cash. We will therefore not be proposing an interim dividend at this time (2022: £nil). We were pleased to have been able to declare and pay a final dividend following the 2022 results and we cautiously expect to be in the position to do similar once our 2023 results are finalised.

Finally, we would like to thank everyone associated with the AIREA Group for their support during the period.

Médéric Payne

Chief Executive Officer

26 July 2023

Consolidated Income Statement

6 months ended 30 June 2023

Unaudited6 months ended 30 June

2023

Unaudited6 months ended 30 June

2022

Audited12 months

ended31 December

2022

£000

£000

£000

Revenue

9,825

8,551

18,483

Operating costs

(9,301)

(7,935)

(17,111)

Other operating income

312

140

280

Operating profit before valuation gain

836

756

1,652

Unrealised valuation gain

-

-

--

Operating profit

836

756

1,652

Finance income

39

8

32

Finance costs

(255)

(108)

(251)

Profit before taxation

620

656

1,433

Taxation

(130)

(45)

(138)

Profit attributable to shareholders of the Group

490

611

1,295

Earnings per share (basic and diluted) for the Group

1.18p

1.58p

3.36p

Consolidated Statement of Comprehensive Income

6 months ended 30 June 2023

Unaudited

Unaudited

Audited

6 months

6 months

12 months

ended

ended

ended

30 June

30 June

31 December

2023

2022

2022

£000

£000

£000

Profit attributable to shareholders of the Group

490

611

1,295

Items that will not be reclassified to profit or loss

Actuarial gain/(loss) recognised in the pension scheme

513

35

(1,247)

Related deferred taxation

(128)

(7)

318

385

28

(929)

Items that will be reclassified subsequently to profit or loss when specific conditions are met

Revaluation of property

-

-

(25)

Related deferred taxation

-

-

5

-

-

(20)

Total other comprehensive income/(loss)

385

28

(949)

Total comprehensive income attributable to shareholders of the Group

875

639

346

Consolidated Balance Sheet

as at 30 June 2023

Unaudited30 June

2023

Unaudited30 June

2022

Audited31 December

2022

£000

£000

£000

Non-current assets

Property, plant and equipment

5,976

5,307

5,272

Intangible assets

59

51

71

Investment property

4,000

4,000

4,000

Right-of-use asset

754

943

917

Deferred tax asset

763

682

879

11,552

10,983

11,139

Current assets

Inventories

6,560

6,132

5,895

Trade and other receivables

2,871

2,370

2,351

Cash and cash equivalents

4,919

5,450

5,762

14,350

13,952

14,008

Total assets

25,902

24,935

25,147

Current liabilities

Trade and other payables

(3,986)

(3,683)

(3,316)

Provisions

(74)

(175)

(77)

Lease liabilities

(127)

(124)

(131)

Loans and borrowings

(736)

(731)

(734)

(4,923)

(4,713)

(4,258)

Non-current liabilities

Deferred tax

(1,144)

(1,047)

(1,040)

Pension deficit

(1,000)

-

(1,345)

Lease liabilities

(140)

(212)

(202)

Loans and borrowings

(1,489)

(2,226)

(1,858)

(3,773)

(3,485)

(4,445)

Total liabilities

(8,696)

(8,198)

(8,703)

Net assets

17,206

16,737

16,444

Equity

Called up share capital

10,339

10,339

10,339

Share premium account

504

504

504

Own Shares

(1,805)

(2,000)

(2,000)

Share-based payment reserve

--80

-

---

Capital redemption reserve

3,617

3,617

3,617

Revaluation reserve

3,096

3,150

3,096

Retained earnings

1,375

1,127

888

Total equity

17,206

16,737

16,444

Consolidated Cash Flow Statement

6 months ended 30 June 2023

Unaudited6 months ended 30 June

2023

Unaudited6 months ended 30 June

2022

Audited12 months

ended31 December

2022

£000

£000

£000

Cash flow from operating activities

Profit for the period

490

611

1,295

Depreciation

165

165

309

Depreciation of right-of-use assets

124

126

260

Amortisation

15

14

29

Movement in Provision

(3)

(70)

(168)

Share-based payment expense/(credit)

80

(157)

(157)

Net Finance costs

216

100

219

Profit on disposal of property, plant and equipment

-

(77)

(77)

Tax charge

130

45

138

Operating cash flows before movements in working capital

1,217

757

1,848

(Increase)/decrease in inventory

(665)

18

255

Increase in trade and other receivables

(520)

(483)

(464)

Increase in trade and other payables

670

425

66

Cash generated from operations

702

717

1,705

Contributions to defined benefit pension scheme

-

-

---

Net cash generated from operating activities

702

717

1,705

Cash flows from investing activities

Payments to acquire intangible fixed assets

(4)

(10)

(45)

Payments to acquire tangible fixed assets

(868)

(167)

(312)

Receipts from sales of tangible fixed assets

-

77

77

Net cash used in investing activities

(872)

(100)

(280)

Cash flows from financing activities

Interest paid on lease liabilities

(5)

(4)

(11)

Interest paid on borrowings

(82)

(69)

(142)

Interest received

39

8

32

Principal paid on lease liabilities

(66)

(67)

(141)

Repayment of loans and borrowings

(366)

(569)

(935)

Equity dividends paid

(193)

(154)

(154)

Net cash used in financing activities

(673)

(855)

(1,351)

Net (decrease)/increase in cash and cash equivalents

(843)

(238)

74

Cash and cash equivalents at start of the period

5,762

5,688

5,688

Cash and cash equivalents at end of the period

4,919

5,450

5,762

Consolidated Statement of Changes in Equity

6 months ended 30 June 2023

Sharecapital

Sharepremiumaccount

OwnShares

Share-based

paymentreserve

Capitalredemption

reserve

Revaluation

reserve

Profitand loss account

Totalequity

£000

£000

£000

£000

£000

£000

£000

£000

At 1 January 202210,339

504

(555)

157

3,617

3,150

(803)

16,409

Comprehensive income

for the year

Profit for the year-

-

-

-

-

-

1,295

1,295

Actuarial loss recognised

on the pension scheme-

-

-

-

-

-

(929)

(929)

Revaluation of property-

-

-

-

-

(25)

5

(20)

Total comprehensive

income for the year-

-

-

-

-

(25)

371

346

Contributions by and

distributions to owners

Dividend paid

---

---                (154)

(154)

Share-based payment

---

(157)---

(157)

Own share transfer Revaluation Reverse

Transfer

--(1,445)

---

---1,445

--(29)29

-

-

Total contributions by and distributions to owners

-

-

(1,445)

(157)

-

(29)

1,320

(311)

At 31 December 2022

and 1 January 202310,339

504

(2,000)

-

3,617

3,096

888

16,444

Comprehensive income for the period

Profit for the period-

Actuarial gain recognised

on the pension scheme-

-

-

-

-

-

-

-

-

-

-

490

385

490

385

Revaluation of property-

-

-

-

-

-

-

-

Total comprehensive

income for the period-

-

-

-

-

-

875

875

Contributions by and distributions to owners

Dividend paid-

-

-

-

-

-

(193)

(193)

Share-based payment-

-

-

80

-

-

-

80

Own Shares Transfer-

-

195

-

-

-

(195)

-

Total contributions by and distributions to

owners-

-

195

80

-

-

(388)

(113)

At 30 June 202310,339

504

(1,805)

80

3,617

3,096

1,375

17,206

Notes to the Financial Statements

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

The financial information for the six months ended 30 June 2023 and the six months ended 30 June 2022 have not been audited and do not constitute full financial statements within the meaning of Section 434 of the Companies Act 2006.

The financial information relating to the year ended 31 December 2022 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 UK adopted International Accounting Standards 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 UK adopted International Accounting Standards. The accounting policies used are the same as those used in preparing the financial statements for the period ended 31 December 2022. These policies are set out in the annual report and accounts for the period ended 31 December 2022 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 and are also available, along with this announcement, on the company's website at www.aireaplc.co.uk.

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