(AIEA.L) AIREA PLC Buy/Sell

RNS Number : 8040Z
  Airea PLC
  29 September 2009
   

AIREA plc

Preliminary results for the year ended 30th June 2009

Review of Operations

Introduction

In our Interim Report we described the difficult trading conditions facing our floor coverings businesses as a consequence of the global economic downturn. In response we initiated a fundamental overhaul of our manufacturing footprint and a far reaching companywide cost reduction programme. Our interim report included the consequent provisions for impairment of property, plant and equipment, surplus inventory and onerous leases. At the same time we have invested heavily in new products for both businesses and we are encouraged by initial market reaction as these new products are progressively introduced.

It is therefore pleasing to report that after incurring a loss in the first half, the group returned to profitability and positive cash generation at the operating level in the final six months of the period. We have made excellent progress against our key objective of stabilising our residential business which was close to break even in the second half of the financial year.

Group results

Within continuing operations, sales of floor covering products reduced by 15.8% to £41.0m (2008: £48.7m). The operating loss was £8.8m (2008 profit: £1.9m). This result was after exceptional operating costs of £4.3m (2008:£0.4m) and goodwill impairment of £4.0m (2008: £8.0m). The exceptional operating costs arose out of a critical review of our asset base and relate to significant provisions for impairment of property, plant and equipment, surplus inventories and onerous leases. The goodwill impairment completes the write-off of the goodwill relating to the residential floor coverings business. The operating result before these exceptional items was a loss of £0.5m (2008: profit £0.5m). It was pleasing to note that the operating result before exceptional items in the second half of the year was a profit of £0.4m (2008: loss £0.1m) demonstrating the effectiveness of our cost reduction measures in stemming the losses within the residential floor coverings business.

After accounting for modest levels of finance income and finance costs, minor adjustments in connection with discontinued activities and incorporating the appropriate tax credit the result for the year was a loss of £9.0m (2008: £3.6m). However, it should be noted that the results to 30th June 2008 included an exceptional profit on sale of fixed assets of £9.9m and a loss on disposal of discontinued operations of £2.7m.

Net cash used in operating activities in the year amounted to £2.4m (2008: £4.1m). Working capital reduced by £1.7m (2008 increase £1.9m) as a result of the focus on inventory reduction and receivables management. Capital expenditure was reduced from £2.3m to £0.9m, and was largely focussed on the range renewal projects. Contributions of £2.5m (2008: £3.7m) were made to the defined benefit pension scheme. The pension deficit reduced to £5.4m (2008: £5.5m), and the group is in discussions with the trustees to agree an appropriate level of future contributions based on the July 2008 actuarial review.  

The progression in results is illustrated in the following table:.  
 Half year ended:                   December 07  June 08  December 08  June 09
                                        £m         £m         £m         £m

 Cash generated from (used in)         (4.3)       0.2       (2.9)       0.5
 continuing operations
 Operating (loss) / profit before       0.6       (0.1)      (0.9)       0.4
 exceptional items from continuing
 operations

The loss per share was 19.40p (2008: 7.81p). No interim dividend was paid (2008: 0.80p per share) and the directors do not recommend the payment of a final dividend (2008: 1.60p per share).

Key performance indicators

As part of its internal financial control procedures the board monitors certain financial ratios. For the year to 30th June 2009 sales per employee amounted to £115,000 (2008: £122,000), operating return on sales was 1.2% negative (2008: 1.3% positive), return on average net operating assets was 2.7% negative (2008: 2.2% positive) and working capital to sales percentage was 18.0% (2008: 16.1%). The decline in the ratios reflects the difficult trading conditions, and the management action taken during the year addressed these issues. The working capital ratio suffered from a reduction in trade and other payables due to the tightening trade credit environment, and outweighed the improved performance in inventory management and trade receivables control.

Management and personnel

Carolyn Tobin stepped down from the board on 31st December 2008 and Kevin Henry stepped down from the board on 8th June 2009. Carolyn served the company for over ten years as a non-executive director and Kevin served the company for over 25 years, most recently as group finance director and company secretary. We would like to thank Carolyn and Kevin for their service and wish them well for the future.

Martin Toogood joined the group as a non-executive director on 1st April 2009. Martin has considerable experience at executive and non-executive level with a number of major retailers in the UK and Europe and his knowledge of retail markets will be of great assistance in these challenging times.  

Roger Salt was appointed company secretary of the company on 8th June 2009. Roger has been with the group for over five years and continues to act as finance director - operations in addition to his new role.

At the completion of his second term of office, Tim Vernon will be retiring from the board at the AGM on November 6th. He will be succeeded as non-executive chairman by Martin Toogood.

There have been a number of changes in key personnel during the year and we would like to thank all our team members throughout the group for their dedication and commitment and for helping the group face the current challenges.

Current trading and future prospects

Market conditions are extremely challenging and our plans do not assume that there will be any improvement at least for the next twelve months. However as a consequence of the actions taken during the period both of our businesses are well placed to withstand further economic uncertainty and take advantage of any improvement in business and consumer confidence as and when this happens.

Our Residential business has undergone a period of major change. We are already benefitting from the streamlined manufacturing footprint, but just as important are the changes made to the product portfolio with the vast majority of products having been redesigned and repackaged in recent months and we are greatly encouraged by the positive reaction they have received so far from both the independent and multiple retail sector.

Our Commercial floor coverings business continues to demonstrate notable resilience to the uncertainty of market conditions, and has undoubtedly benefitted from its strength in the public sector. In anticipation of expected weakening of public sector spending the business has successfully targeted additional non public sector opportunities and broadened its product range.

We are confident we are pursuing the right strategy for the business, but market conditions remain uncertain, and will probably remain so for some time to come, therefore we will remain highly focussed on preserving and improving our cash resources.  

Enquiries:

Neil Rylance                                       01924 266561

Chief executive officer    

Andrew Kitchingman                        0845 270 8610

Managing Director - Corporate Finance

Brewin Dolphin

The financial information set out in the announcement does not constitute the group's statutory accounts for the years ended 30 June 2009 or 30 June 2008. The financial information for the year ended 30 June 2008 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 contain a statement under s237(2) or (3) of the Companies Act 1985. The consolidated balance sheet at 30th June 2009 and the consolidated income statement, the statement of recognised income and expense and the consolidated cash flow statement for the year then ended have been extracted from the Group's 2009 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.

 Consolidated Income Statement
 year ended 30th June 2009
                                                                      2009         2008
                                                                      £000         £000
 CONTINUING OPERATIONS
 Revenue                                                           40,970       48,713 
 Operating costs                                                  (45,792)     (48,648)
 Impairment of goodwill                                            (4,000)      (8,012)
 Exceptional profit on sale of property                                -         9,858 
 Operating (loss)/profit after exceptional                         (8,822)       1,911 
 items
 Analysed between:
 Operating (loss)/profit before exceptional                          (496)         484 
 items
 Exceptional operating costs                                       (4,326)        (419)
 Impairment of goodwill                                            (4,000)      (8,012)
 Exceptional profit on sale of property                                -         9,858 
 Finance income                                                        97          383 
 Finance costs                                                       (340)        (237)
 (Loss)/profit before taxation                                     (9,065)       2,057 
 Taxation                                                             103       (1,623)
 (Loss)/profit from continuing operations                          (8,962)         434 
 Loss from discontinued operations                                    (10)      (4,047)
 Loss for the year                                                 (8,972)      (3,613)
 Loss per share
  (basic and diluted)                                             (19.40)p      (7.81)p
 (Loss)/earnings per share from continuing operations
  (basic and diluted)                                             (19.38)p        0.94p

 Consolidated Balance Sheet        
 as at 30th June 2009              
                                           2009                2008
                                        £000      £000      £000      £000
 Non-current assets                
 Property, plant and equipment                  7,938               8,865 
 Goodwill                                          -                4,000 
 Deferred tax asset                             2,217               1,540 
 Loan notes                                        -                  300 
                                               10,155              14,705 
 Current assets                    
 Loan notes                             150                    -
 Inventories                          6,995              10,970 
 Trade and other receivables          5,622               8,793 
 Income tax receivable                  121                 448 
 Cash and cash equivalents            3,242               6,063 
                                               16,130              26,274 
 Non-current assets held for sale                  -                  452 
 Total assets                                  26,285              41,431 
 Current liabilities               
 Trade and other payables            (5,391)            (10,891)
 Provisions                            (722)                 -  
                                               (6,113)            (10,891)
 Non-current liabilities           
 Provisions                          (1,038)                 -  
 Pension deficit                     (5,440)             (5,500)
 Deferred tax                          (159)               (252)
                                               (6,637)             (5,752)
 Total liabilities                            (12,750)            (16,643)
                                               13,535              24,788 
 Equity                            
 Called up share capital                       11,561              11,561 
 Share premium account                            504                 504 
 Capital redemption reserve                     2,395               2,395 
 Retained earnings                               (925)             10,328 
                                               13,535              24,788 

 Consolidated Cash Flow Statement
 year ended 30th June 2009
                                                                 2009            2008
                                                                 £000            £000
 Operating activities
 Cash used in operations                                      (2,401)         (4,148)
 Interest received                                                64             187 
 Income tax received                                             435               5 
                                                              (1,902)         (3,956)
 Investing activities
 Purchase of property, plant and                                (878)         (2,323)
 equipment
 Proceeds on disposal of property, plant                         549          16,261 
 and equipment
 Disposal of subsidiary undertaking                               -            2,409 
                                                                (329)         16,347 
 Financing activities
 Equity dividends paid                                          (740)         (1,110)
 Redemption of loan notes                                        150             (88)
 Repayment of bank loans                                          -           (3,652)
                                                                (590)         (4,850)
 Net (decrease)/ increase in cash and                         (2,821)          7,541 
 cash equivalents
 Cash and cash equivalents at start of                         6,063          (1,478)
 the year
 Cash and cash equivalents at end of the                       3,242           6,063 
 year
 Statement of Recognised Income and Expense
 year ended 30th June 2009
                                                          2009              2008
                                                       £000      £000   £000     £000
 Loss attributable to shareholders of                         (8,972)         (3,613)
 the group
 Actuarial losses recognised in the                 (2,140)            (920)
 pension scheme
 Related deferred taxation                             599              276 
                                                              (1,541)           (644)
 Total recognised income and expense                         (10,513)         (4,257)
 relating to the year

Notes:

In accordance with Rule 20 of the AIM Rules, Airea confirms that the annual report and accounts for the year ended 30th June 2009 will be posted to shareholders and will be available to view on the Company's website at www.aireaplc.co.uk.

This information is provided by RNS
The company news service from the London Stock Exchange
 
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RNS Number : 4171V Airea PLC 09 July 2009 AIREA plc ('the Company') Director Shareholding The Company was notified today that on 7 July 2009, Martin Toogood, a non-executive director of the Company, purchased 25,000 ordinary 25p shares in the Company ('Ordinary Shares') at a price of 16.5 pence per share. As a result of this transaction Martin Toogood has a beneficial interest in the Company of 725,000 Ordinary Shares representing 1.57% of the issued share capital of the Company. For further information please contact: AIREA plc - 01924-266561
Neil Rylance Chief Executive Officer

Brewin Dolphin Investment Banking - 0845-2134730 Andrew Kitchingman Sean Wyndham-Quin

This information is provided by RNS The company news service from the London Stock Exchange

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