AIREA PLC

Earnings Release • Sep 26, 2024

National Storage Mechanism | Additional information

RNS Number : 6945F

Airea PLC

26 September 2024

26 September 202 4

AIREA plc

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

Interim results for the six months ended 30 June 2024

Solid trading in challenging market conditions, business transformation progressing well

AIREA plc (AIM: AIEA), the UK design-led specialist flooring company, supplying both the UK and international markets , today announces its interim results for the six months ended 30 June 2024.

Financial summary

·    Group revenue decreased by 5.6% to £9.3m (2023: £9.8m)

·    Operating profit decreased to £0.2m (2023: £0.8m), heavily impacted by;

o  sales slowdown in second quarter

o  non-recurring costs associated with new investment

o  ongoing strategic investment for future growth

·    EBITDA decreased to £0.6m (2023: £1.1m)

·    Cash and cash equivalents at £2.8m (2023: £4.9m)

Operational highlights

·    Sales performance slightly ahead of market

·    Business transformation progressing well, in line with plan

·    Major investment in manufacturing facility on track for completion in early 2025

·    Review of Group's stockholding policy underway

·    Successful launch of new carbon-neutral products

·    The Group's sustainability principles eco2matters® fully embedded

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

"The year started well, with strong demand for our carbon-zero and low-carbon product ranges in the first quarter. The Group then experienced an unforeseen slowdown in the second quarter, with international sales impacted by ongoing economic and geopolitical concerns. UK and ROI sales were less impacted, performing slightly ahead of the overall market trend.

"The Group had an encouraging start to the third quarter, with positive trading in July and August finishing with a strong order book. We anticipate continued improvement in trading during the second half with several new product launches scheduled and the Group is trading in line with the Board's recently revised expectations for the full year.

"The Board remains confident in the Group's long-term prospects as we focus on successfully delivering the investment in our manufacturing facility in early 2025 and the ongoing transformation of the business, positioning it for profitable future growth."

- Ends -

For further information please contact:

AIREA plc Médéric Payne, Chief Executive Officer Conleth Campbell, 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
Northstar Communications (Financial Media and PR) Sarah Hollins	Tel: +44 (0) 113 730 3896

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 2024. Following a strong start to the year, there was an unexpected slowdown in the second quarter. Sales in our international markets were impacted by ongoing economic and geopolitical concerns, including the Middle East. Sales in the UK and ROI delivered a solid performance in challenging market conditions .

We remain focused on successfully delivering the investment in our manufacturing facility in early 2025 and the ongoing transformation of the business.

Results

Revenue for the period was 5.6% down year on year at £9.3m (2023: £9.8m). In the UK and ROI, sales were 0.3% down year on year. International sales were 21.9% behind the prior year.

The weaker than expected performance in the second quarter, due to the uncertainty around the UK general election, impacted operating profit which declined to £0.2m (2023: £0.8m). The Group's operating profit was also impacted by non-recurring costs associated with the major investment and the ongoing strategic investment in resources to deliver more profitable future growth. After charging net finance costs of £0.3m (2023: £0.3m) and tax of £0.1m (2023: £0.1m), the Group reported a loss of £0.2m (2023: profit of £0.5m). Basic earnings per share were (0.56p) (2023: 1.27p).

Operating cash flows before movements in working capital were £0.7m (2023: £1.2m). Working capital movements increased in the period to £1.6m (2023: £0.5m) predominantly due to an increase in inventory as a result of the sales shortfall in the second quarter. Appropriate action is being taken to reduce inventory levels through the course of the second half of the year with the aim of introducing a more efficient and cash generative strategy. Capital expenditure increased to £1.3m (2023: £0.9m) as the major investment in the Group's manufacturing facility commenced.

Net cash (cash less loans and borrowings) decreased to £1.3m (2023: £2.7m). The Group has access to further liquidity of £1.0m via its unutilised overdraft facility (2023: £1.0m). The Group has also taken the decision to divest its investment property, which has a carrying value of £4.1m.

Following the triennial valuation of the defined benefit pension scheme as at 1 July 2023, the Company and the trustees of the pension scheme have agreed in principle to a reasonable and affordable recovery plan to address the scheme's current deficit. At the end of July 2024, the Company made an initial contribution of £0.3m to the scheme.

Current Trading and Outlook

There has been an encouraging start to the third quarter, with positive trading in both July and August coupled with a strong order book. The Group's commitment to innovation and sustainability remains steadfast, with several new product launches scheduled for the second half of the year.

The Group's short term priority is the installation and commissioning of the new equipment at its manufacturing facility, which is pivotal to the transformation of the business. The Group will maintain its focus on cash preservation and will therefore not be proposing an interim dividend at this time (2023: £nil).

The Board anticipates a continued improvement in trading during the second half and the Group is trading in line with the Board's recently revised expectations for the full year.

The Board remains confident in the Group's long-term trading and growth prospects.

Médéric Payne

Chief Executive Officer

26 September 2024

Consolidated Income Statement
6 months ended 30 June 2024
	Unaudited 6 months ended   30 June 2024		Unaudited 6 months ended 30 June 2023	Audited 12 months ended 31 December 2023
	£'000		£'000	£'000
Revenue	9,276		9,825	21,102
Operating costs	(9,239)		(9,301)	(19,788)
Other operating income	178		312	490
Operating profit before valuation gain	215		836	1,804
Unrealised valuation gain	-		-	60
Operating profit	215		836	1,864
Finance income	42		39	72
Finance costs	(325)		(255)	(523)
(Loss)/Profit before taxation	(68)		620	1,413
Taxation	(147)		(130)	(644)
(Loss)/Profit attributable to shareholders of the Group	(215)		490	769
Earnings per share (basic and diluted) for the Group	(0.56p)		1.27p	1.99p

Consolidated Statement of Comprehensive Income

6 months ended 30 June 2024

	Unaudited	Unaudited	Audited
6 months	6 months	12 months
ended	ended	ended
30 June	30 June	31 December
2024	2023	2023
£'000	£'000	£'000
(Loss)/Profit attributable to shareholders of the Group	(215)	490	769
Items that will not be reclassified to profit or loss Actuarial gain/(loss) recognised in the pension scheme	1,709	513	(3,281)
Related deferred taxation	(427)	(128)	820
	1,282	385	(2,461)
Items that will be reclassified subsequently to profit or loss when specific conditions are met Revaluation of property	-	-	315
Related deferred taxation	-	-	(79)
	-	-	236
Total other comprehensive income/(loss)	1,282	385	(2,225)
Total comprehensive income/(loss) attributable to shareholders of the Group	1,067	875	(1,456)

Consolidated Balance Sheet
as at 30 June 2024
	Unaudited 30 June 2024		Unaudited 30 June 2023	Audited 31 December 2023
	£'000		£'000	£'000
Non-current assets
Property, plant and equipment	7,429		5,976	6,379
Intangible assets	61		59	65
Investment property	4,060		4,000	4,060
Right-of-use asset	1,053		754	1,413
Deferred tax asset	841		763	895
	13,444		11,552	12,812
Current assets
Inventories	7,620		6,560	5,753
Trade and other receivables	2,565		2,871	3,156
Cash and cash equivalents	2,814		4,919	5,758
	12,999		14,350	14,667
Total assets	26,443		25,902	27,479
Current liabilities
Trade and other payables	(3,438)		(3,986)	(3,795)
Provisions	-		(74)	-
Lease liabilities	(187)		(127)	(183)
Loans and borrowings	(742)		(736)	(739)
	(4,367)		(4,923)	(4,717)
Non-current liabilities
Deferred tax	(1,653)		(1,144)	(1,439)
Pension deficit	(3,509)		(1,000)	(4,972)
Lease liabilities	(292)		(140)	(287)
Loans and borrowings	(747)		(1,489)	(1,119)
	(6,201)		(3,773)	(7,817)
Total liabilities	(10,568)		(8,696)	(12,534)
Net assets	15,875		17,206	14,945
Equity
Called up share capital	10,339		10,339	10,339
Share premium account	504		504	504
Own Shares	(1,454)		(1,805)	(1,636)
Share-based payment reserve	225		--80	150
Capital redemption reserve	3,617		3,617	3,617
Revaluation reserve	3,376		3,096	3,376
Retained earnings	(732)		1,375	(1,405)
Total equity	15,875		17,206	14,945

Consolidated Cash Flow Statement
6 months ended 30 June 2024
	Unaudited 6 months ended 30 June 2024		Unaudited 6 months ended 30 June 2023	Audited 12 months ended 31 December 2023
	£'000		£'000	£'000
Cash flow from operating activities
(Loss)/Profit for the period	(215)		490	769
Depreciation	221		165	374
Depreciation of right-of-use assets	168		124	279
Amortisation	18		15	33
Movement in p rovision	-		(3)	(77)
Share-based payment expense	75		80	150
Net finance costs	283		216	451
Unrealised valuation gain	-		-	(60)
Tax charge	147		130	644
Operating cash flows before movements in working capital	697		1,217	2,563
(Increase)/decrease in inventory	(1,867)		(665)	142
Decrease/(increase) in trade and other receivables	591		(520)	(807)
(Decrease)/increase in trade and other payables	(349)		670	479
Net cash generated from operating activities	(928)		702	2,377
Cash flows from investing activities
Payments to acquire intangible fixed assets	(14)		(4)	(27)
Payments to acquire tangible fixed assets	(1,279)		(868)	(1,166)
Net cash used in investing activities	(1,293)		(872)	(1,193)
Cash flows from financing activities
Interest paid on lease liabilities	(14)		(5)	(17)
Interest paid on borrowings	(65)		(82)	(160)
Interest received	42		39	72
Principal paid on lease liabilities	(105)		(66)	(156)
Equity dividends paid	(212)		(193)	(193)
Repayment of loans	(369)		(366)	(734)
Net cash used in financing activities	(723)		(673)	(1,188)
Net decrease in cash and cash equivalents	(2,944)		(843)	(4)
Cash and cash equivalents at start of the period	5,758		5,762	5,762
Cash and cash equivalents at end of the period	2,814		4,919	5,758

Consolidated Statement of Changes in Equity

6 months ended 30 June 2024

Share capital	Share premium account	Own Shares	Share-based payment reserve	Capital redemption reserve	Revaluation reserve	Profit and loss account	Total equity
£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2023              10,339	504	(2,000)	-	3,617	3,096	888	16,444
Comprehensive income
for the year
Profit for the year                         -	-	-	-	-	-	769	769
Remeasurement of the net
defined benefit liability             -	-	-	-	-	-	(2,461)	(2,461)
Revaluation of property                -	-	-	-	-	315	(79)	236
Total comprehensive income for the year                  -	-	-	-	-	315	(1,771)	(1,456)

Contributions by and distributions to owners

Dividend paid	-                  -                 -			-                  -                 -                (193)				(193)
Share-based payment	-                  -                 -			150                -                 -                 -				150
Own share transfer Revaluation reverse transfer	-                  -             364 -                  -                 -			-                  -                 -           (364) -                  -             (35)              35				- -
Total contributions by and distributions to owners	-	-	364	150	-	(35)	(522)	(43)
At 31 December 2023
and 1 January 2024       10,339		504	(1,636)	150	3,617	3,376	(1,405)	14,945
Comprehensive income for the period Loss for the period                        - Remeasurement of the net defined benefit liability              -		- -	- -	- -	- -	- -	(215) 1,282		(215) 1,282
Total comprehensive income for the period              -		-	-	-	-	-	1,067	1,067
Contributions by and distributions to owners
Dividend paid                                -		-	-	-	-	-	(212)	(212)
Share-based payment                   -		-	-	75	-	-	-	75
Own shares t ransfer                    -		-	182	-	-	-	(182)	-
Total contributions by and distributions to owners                                        -		-	182	75	-	-	(394)	(137)
At 30 June 2024                  10,339		504	(1,454)	225	3,617	3,376	(732)	15,875

Notes to the Financial Statements

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES

The financial information for the six months ended 30 June 2024 and the six months ended 30 June 2023 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 2023 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 2023. These policies are set out in the annual report and accounts for the period ended 31 December 2023 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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