TIDMAIEA
RNS Number : 5207U
Airea PLC
30 July 2020
AIREA PLC
(the "Group")
Interim report for the six months ended 30 June 2020
The principal activity of the group is the manufacturing,
marketing and distribution of commercial floor coverings.
Chairman's Statement
The group's performance in the six months ended 30th June 2020
was significantly affected by the COVID-19 pandemic and the
subsequent nationwide lockdown. The year had started well with Q1
2020 pre-lockdown delivering sales in line with prior year and a
6.6% increase in operating profit.
In our trading update of 26th March 2020, we informed
shareholders that we expected a post lockdown decrease in demand.
The impact of COVID-19 was at its most significant during April and
May with demand reduced by 51% against the prior year; however, we
were pleased to see an improvement during June and, although still
behind prior year, the reduction had improved to 9%. The group
remained open for business throughout the lockdown period and we
were able to support our customers whilst also looking to
prioritise the well-being of our employees
During this period the group focused on cash and overhead
management with all non-critical expenditure halted and our supply
chain requirements re-phased to help achieve these priorities. We
are pleased we successfully achieved these objectives in
preparation for the challenges of H2 2020.
The group was able to take advantage of several of the COVID-19
support packages made available by the UK government and our
banking partner including:
- A six year term CBILS loan of GBP2.75m with no fees, interest
and repayments for the initial 12 month period
- Capital repayment holiday for 6 months on existing long-term loan
- Extended overdraft to GBP1m (not yet utilised)
- Q1 2020 VAT payment deferred
- Furloughed employees during Q2 2020
These actions as well as continued tight credit control and
resilient customer cash collection procedures has enabled the group
to increase its cash reserves to GBP6.5m (GBP3.7m excluding the
CBILS loan) (2019: GBP1.4m) to help mitigate the unprecedented and
unpredictable market conditions the group continues to operate
within.
Group Results
Revenue for the period was GBP7.1m (2019: GBP8.9m). The
operating profit was GBP137,000 (2019: GBP1,085,000) with
underlying product margins in line with the prior year; however,
actual operating profit was adversely impacted by the inventory
reduction during April and May. Profitability is expected to
improve during H2 2020 as inventory levels increase. After charging
pension, lease and loan related finance costs of GBP193,000 (2019:
GBP143,000) and incorporating the appropriate tax credit the net
loss for the period was GBP43,000 (2019: GBP935,000 profit). Basic
loss per share was 0.11p (2019: EPS of 2.26p).
Operating cash flows before exceptional items and movements in
working capital were GBP0.5m (2019: GBP1.3m). Working capital
decreased in the period by GBP1.0m (2019: GBP0.8m increase) through
reduced manufacturing output whilst employees were furloughed.
Contributions to the defined benefit pension scheme were GBP0.2m
(2019: GBP0.2m) in line with the agreement reached with the scheme
trustees following the last triennial valuation as at 1st July
2017. Capital expenditure of GBP0.2m (2019: GBP0.2m) was spent
renewing and enhancing manufacturing plant and equipment and
supporting new product development.
The pension scheme deficit increased to GBP4.9m (2019: GBP3.6m)
due to the COVID-19 impact on the equity markets and reduced
corporate bond yields that lowered the discount rate used and
increased the value placed on the scheme liabilities. The schemes
investments are continuously under review and at this stage, there
is no expectation that the group's contributions to the scheme will
change.
Outlook
Demand, although improving, remains lower than previous years as
the impact of COVID-19 continues and therefore it is very difficult
for the group to forecast the performance in the second half.
However, with strong liquidity and the continued development of new
products we believe the group is positioned well to take advantage
of any opportunities that arise and is hopeful that the second half
should deliver a modest profit whilst carefully managing cash
reserves.
At this point, we must make a special reference to the
magnificent efforts of all our employees who have worked in very
difficult circumstances to support the business and its customers
throughout.
Dividend
Given the financial performance of the group and the continued
levels of uncertainty in the market and economy the group will
continue to prioritise cash to ensure medium to long term stability
and therefore will not be proposing an interim dividend (2019:
0.8p).
MARTIN TOOGOOD
Chairman 30th July 2020
Consolidated Income Statement
6 months ended 30th June 2020
Unaudited 6 Unaudited Audited
months ended 6 months 12 months
30th June ended ended 31st
2020 30th June December
2019 2019
GBP000 GBP000 GBP000
-------------------------------------------- --------------------------- --------------- ---------------------
Revenue 7,100 8,890 19,183
Operating costs (7,103) (7,945) (17,297)
Other operating income 140 140 280
-------------------------------------------- --------------------------- --------------- ---------------------
Operating profit before valuation
gain 137 1,085 2,166
Unrealised valuation gain - - 200
-------------------------------------------- --------------------------- --------------- ---------------------
Operating profit 137 1,085 2,366
Finance income 2 3 6
Finance costs (193) (143) (411)
-------------------------------------------- --------------------------- --------------- ---------------------
(Loss)/profit before taxation (54) 945 1,961
Taxation 11 (10) (403)
-------------------------------------------- --------------------------- --------------- ---------------------
(Loss)/profit attributable to shareholders
of the group (43) 935 1,558
-------------------------------------------- --------------------------- --------------- ---------------------
(Loss)/earnings per share (basic
and diluted) for the group (0.11p) 2.26p 3.97p
Consolidated Statement of Comprehensive Income
6 months ended 30th June 2020
Unaudited Unaudited Audited
6 months 6 months 12 months
ended 30th ended ended
June 30th June 31st December
---------------------------------------------
2020 2019 2019
---------------------------------------------
GBP000 GBP000 GBP000
--------------------------------------------- -------------------- -------------- ----------------------
(Loss)/profit attributable to shareholders
of the group (43) 935 1,558
Items that will not be reclassified
to profit or loss
Actuarial (loss)/gain recognised in
the pension scheme (3,448) - 2,172
Related deferred taxation 655 - (369)
--------------------------------------------- -------------------- -------------- ----------------------
(2,793) - 1,803
--------------------------------------------- -------------------- -------------- ----------------------
Items that will be reclassified subsequently
to profit or loss when specific conditions
are met
Revaluation/(impairment) of property 12 - (17)
Related deferred taxation (2) - 3
--------------------------------------------- -------------------- -------------- ----------------------
10 - (14)
--------------------------------------------- -------------------- -------------- ----------------------
Total other comprehensive (loss)/income (2,783) - 1,789
--------------------------------------------- -------------------- -------------- ----------------------
Total comprehensive (loss)/income
attributable to shareholders of the
group (2,826) 935 3,347
--------------------------------------------- -------------------- -------------- ----------------------
Consolidated Balance Sheet
as at 30th June 2020
Unaudited 30th Unaudited Audited
June 30th June 31st December
2020 2019 2019
GBP000 GBP000 GBP000
------------------------------ ---------------------------------- --------------- -----------------------
Non-current assets
Property, plant and equipment 4,282 5,182 4,229
Intangible assets 67 69 39
Investment property 3,600 3,400 3,600
Right-of-use asset 1,126 - 1,233
Deferred tax asset 1,563 1,457 847
------------------------------ ---------------------------------- --------------- -----------------------
10,638 10,108 9,948
Current assets
Inventories 4,728 7,363 5,461
Trade and other receivables 1,915 4,621 2,112
Cash and cash equivalents 6,451 1,436 2,957
------------------------------ ---------------------------------- --------------- -----------------------
13,094 13,420 10,530
------------------------------ ---------------------------------- --------------- -----------------------
Total assets 23,732 23,528 20,478
------------------------------ ---------------------------------- --------------- -----------------------
Current liabilities
Trade and other payables (2,482) (3,614) (2,412)
Provisions (320) (320) (320)
Lease liabilities (213) (190) (329)
Loans and borrowings (580) - (562)
------------------------------ ---------------------------------- --------------- -----------------------
(3,595) (4,124) (3,623)
Non-current liabilities
Pension deficit (4,888) (3,625) (1,472)
Deferred tax (526) (304) (457)
Lease liabilities (297) (227) (323)
Loans and borrowings (3,317) (1,551) (724)
------------------------------ ---------------------------------- --------------- -----------------------
(9,028) (5,707) (2,976)
------------------------------ ---------------------------------- --------------- -----------------------
Total liabilities (12,623) (9,831) (6,599)
------------------------------ ---------------------------------- --------------- -----------------------
Net assets 11,109 13,697 13,879
------------------------------ ---------------------------------- --------------- -----------------------
Equity
Called up share capital 10,339 10,339 10,339
Share premium account 504 504 504
Own shares (1,518) - (1,839)
Share-based payment reserve 141 - 85
Capital redemption reserve 3,617 3,617 3,617
Revaluation reserve 3,058 3,096 3,048
Retained earnings (5,032) (3,859) (1,875)
------------------------------ ---------------------------------- --------------- -----------------------
Total Equity 11,109 13,697 13,879
------------------------------ ---------------------------------- --------------- -----------------------
Consolidated Cash Flow Statement
6 months ended 30th June 2020
Unaudited Unaudited Audited
6 months 6 months 12 months
ended 30th ended ended 31st
June 30th June December
2020 2019 2019
GBP000 GBP000 GBP000
-------------------------------------- ---------------------- --------------- ---------------------
Cash flow from operating activities
(Loss)/profit for the period (43) 935 1,558
Depreciation 114 157 206
Depreciation of right-of-use assets 140 - 274
Amortisation 25 32 65
Net finance costs 191 137 405
Loss on disposal of property, plant
and equipment - - (12)
Tax (credit)/charge (11) 10 403
Share-based payment expense 56 - -
Unrealised valuation gain - - (200)
-------------------------------------- ---------------------- --------------- ---------------------
Operating cash flows before movements
in working capital 472 1,271 2,699
Decrease/(increase) in inventory 733 (566) 1,336
Decrease/(increase) in trade and
other receivables 197 (291) 221
Increase/(decrease) in trade and
other payables 70 43 (1,159)
-------------------------------------- ---------------------- --------------- ---------------------
Cash generated from operations 1,472 457 3,097
Contributions to defined benefit
pension scheme (200) (200) (400)
-------------------------------------- ---------------------- --------------- ---------------------
Net cash generated from operating
activities 1,272 257 2,697
-------------------------------------- ---------------------- --------------- ---------------------
Investing activities
Payments to acquire intangible fixed
assets (33) (6) (9)
Payments to acquire tangible fixed
assets (156) (230) (378)
Receipts from sales of tangible fixed
assets - - 136
-------------------------------------- ---------------------- --------------- ---------------------
(189) (236) (251)
-------------------------------------- ---------------------- --------------- ---------------------
Financing activities
Interest paid on lease liabilities (8) (6) (21)
Interest paid on borrowings (18) - (34)
Interest received 2 3 6
Proceeds from loan 2,750 1,700 1,700
Purchase of own shares by the EBT - (2,000) (2,000)
Principal paid on lease liabilities (177) (93) (343)
Repayment of loan (138) (149) (448)
Equity dividends paid - (772) (1,081)
-------------------------------------- ---------------------- --------------- ---------------------
Net cash used in financing activities 2,411 (1,317) (2,221)
-------------------------------------- ---------------------- --------------- ---------------------
Net increase/(decrease) in cash and
cash equivalents 3,494 (1,296) 225
Cash and cash equivalents at start
of the period 2,957 2,732 2,732
-------------------------------------- ---------------------- --------------- ---------------------
Cash and cash equivalents at end
of the period 6,451 1,436 2,957
-------------------------------------- ---------------------- --------------- ---------------------
Consolidated Statement of Changes in Equity
6 months ended 30th June 2020
Share Share-based Capital Profit
Share premium Own payment redemption Revaluation and Total
capital account Shares reserve reserve reserve loss equity
account
--------------
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- ------------ ------------ ------------- --------------- --------------- ------------- ----------- -------------
At 1st January
2019 10,339 504 - - 3,617 3,096 (4,028) 13,528
Comprehensive
income
for the year
Profit for the
year - - - - - - 1,558 1,558
Actuarial gain
recognised
on the pension
scheme - - - - - - 1,803 1,803
Impairment of
property - - - - - (14) - (14)
-------------- ------------------------------------------------------------------------------------------ ----------- ---------------
Total
comprehensive
income for the year
- - - - - (14) 3,361 3,347
Contributions by and
distributions to
owners
Dividend paid - - - - - - (1,081) (1,081)
Purchase of own shares
by EBT - - (2,000) - - - - (2,000)
Share-based payment
- - - 85 - - - 85
Own share transfer
- - 161 - - - (161) -
Revaluation Reverse
Transfer - - - - - (34) 34 -
---------------------------- ------------ ------------- --------------- --------------- ------------- ----------- ---------------
Total contributions
by and distributions
to owners - - (1,839) 85 - (34) (1,208) (2,996)
---------------------------- ------------ ------------- --------------- --------------- ------------- ----------- ---------------
At 31st December 2019
and 1st January 2020
10,339 504 (1,839) 85 3,617 3,048 (1,875) 13,879
---------------------------- ------------ ------------- --------------- --------------- ------------- ----------- ---------------
Comprehensive
income for the
year
Loss for the
year - - - - - - (43) (43)
Actuarial loss
recognised
on the pension
scheme - - - - - - (2,793) (2,793)
Revaluation
of property - - - - - 10 - 10
-------------- ------------------------------------------------------------------------------------------ ----------- ---------------
Total
comprehensive
income for the year
- - - - - 10 (2,836) (2,826)
Contributions by and
distributions to
owners
Share-based payment
- - - 56 - - - 56
Own Shares Transfer
- - 321 - - - (321) -
---------------------------- ------------ ------------- --------------- --------------- ------------- ----------- ---------------
Total contributions
by and distributions
to
owners - - 321 56 - - (321) 56
---------------------------- ------------ ------------- --------------- --------------- ------------- ----------- ---------------
At 30th June 2020
10,339 504 (1,518) 141 3,617 3,058 (5,032) 11,109
---------------------------- ------------ ------------- --------------- --------------- ------------- ----------- ---------------
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The financial information for the six months ended 30th June
2020 and the six months ended 30th June 2019 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 31st
December 2019 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 period ended 31st December 2019.
These policies are set out in the annual report and accounts for
the period ended 31st December 2019 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.
Enquiries:
Neil Rylance 01924 266561
Chief Executive Officer
Paul Stevenson 01924 266561
Group Finance Director
Peter Steel / Ben Farrow 020 7496 3000
N+1 Singer
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END
IR SEMFIUESSEEW
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