TIDMAIEA
RNS Number : 2200Q
Airea PLC
26 February 2016
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 GBP12.7m (2014 restated: GBP13.4m).
The operating profit before exceptional items was GBP730,000 (2014:
GBP700,000). The exceptional charge of GBP1.3m related to the costs
associated with the consolidation of manufacturing operations, and
the exceptional income of GBP1.3m related to the Pension Increase
Exchange. The operating profit after exceptional items was
GBP759,000 (2014: GBP700,000). After charging pension related
finance costs of GBP246,000 (2014:GBP215,000) and incorporating the
appropriate tax charge the net profit for the period was GBP372,000
(2014: GBP371,000). Basic earnings per share were 0.86p (2014:
0.80p).
Operating cash flows before exceptional items and movements in
working capital were GBP1.1m (2014: GBP1.1m). The exceptional costs
incurred a cash outflow of GBP0.5m (2014: GBP0.1m). Working capital
decreased by GBP1.1m (2014: increase GBP0.4m) due to reductions in
inventories. Contributions to the defined benefit pension scheme
were GBP200,000 (2014: GBP200,000) in line with the agreement
reached with the scheme trustees following the last triennial
valuation as at 1(st) July 2014. Capital expenditure of GBP518,000
(2014: GBP136,000) was focussed on supporting new product launches.
Overall the cash balance increased by GBP678,000 to GBP2.6m.
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
26(th) 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 6 months year
ended ended ended
31st 31st 30th
December December June
restated
2015 2014 2015
GBP000 GBP000 GBP000
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 6 months year
ended ended ended
31st 31st 30th
December December June
2015 2014 2015
GBP000 GBP000 GBP000
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 Unaudited Unaudited Audited
2015
31st 31st 30th
December December June
2015 2014 2015
GBP000 GBP000 GBP000
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
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