TIDMAPG
RNS Number : 7567J
Airsprung Group PLC
05 July 2011
AIRSPRUNG GROUP PLC
Unaudited Preliminary Results for the year ended 31 March
2011
Financial and operational highlights
Airsprung Group PLC is a leading UK manufacturer of beds,
mattresses and sofa beds selling under the Airsprung, Gainsborough,
Hush and Hush-a-Bye brands. The Group's upholstery businesses
manufacture and sell upholstery under the Collins & Hayes and
Cavendish brands. In addition, the Group runs Airofreem foam
conversion and Arena graphic design businesses. The Group supplies
catalogue and internet retailers, multiple and independent
retailers, and contract customers.
- Group sales GBP45 million
- Profit before tax and before exceptional items GBP0.9
million
- Profit before tax GBP0.5 million
- Dividend of 0.6p recommended
- Acquisition of Collins and Hayes Furniture Limited
- Pension deficit reduced by GBP1.2 million to GBP2.5
million
- Cash balance GBP1.7 million at year end
Stuart Lyons, Chairman, referring to financial year 2011/12
said:
"The outturn for the year as a whole will be dependent on the
timing and pace of any economic recovery. In the meantime,
management are continuing to take steps to maintain gross margins
while reducing costs through operating efficiencies and internal
restructuring. The directors regard the current trading challenges
as short term and remain confident in the prospects for the
Group."
For further information please contact:
Airsprung
Tony Lisanti, Chief Executive 01225 779114
finnCap
Marc Young (Corporate Finance) 0207 600 1658
Simon Starr (Corporate Broking) 0207 600 1658
AIRSPRUNG GROUP PLC
Preliminary Results for the year ended 31 March 2011
Chairman's Statement
Results and dividend
Sales for the year ended 31 March 2011 were GBP44.9 million,
compared with the prior year's GBP46.5 million, a 4% reduction
following the previous year's 9% increase. Underlying profit before
tax and after crediting net finance income for the Group fell to
GBP0.9 million compared with GBP1.0 million in 2010 as a result of
the continued challenging trading conditions experienced by the
Group as a whole. Reported profit on ordinary activities before
taxation was GBP0.5 million reflecting three factors which are
discussed in the course of this statement: market conditions, the
restructuring of the Group's upholstered furniture interests and
the expenses associated with the acquisition of Collins and Hayes.
The directors recommend a maintained dividend of 0.6p per share
payable on 19 October 2011 to shareholders on the register at 23
September 2011. The corresponding ex-dividend date is 21 September
2011.
Sector performance
The board considers that the Group operates in two market
sectors; beds and other activities, and the accounts show the
performance of each sector.
Group sales on a like for like basis fell by nearly 10% in the
year and showed a sharp deterioration in trading conditions in the
final quarter, with a rise in VAT accompanied by appalling winter
weather conditions, and further pressures on disposable incomes
which came into focus as the Chancellor's March Budget statement
approached. Our sector suffered worse than many, as the purchase of
beds and furniture is easily deferred and the squeeze on spending
was felt particularly severely by middle and lower income
families.
Beds
The economic difficulties hit different sub-sectors in different
ways. Our Gainsborough business performed creditably in the middle
and upper parts of the bed and sofa-bed markets. Airsprung Beds,
however, had a mixed performance; much of its business remained
solid and it continued to find new opportunities, but it
experienced a very sharp fall in demand from a single major
customer, which more than offset its successes.
Management took vigorous action to reduce labour costs in the
bed companies in line with demand. The policy of using temporary
labour for less skilled work allowed Airsprung Beds to reduce its
workforce at little cost. Raw material and fuel prices were
relatively stable compared with the prior year, and any increases
were offset by the use of substitute materials and price increases
to customers. Consequently, Group gross margins were satisfactorily
maintained as a percentage of turnover.
Despite the temporary setbacks, Airsprung Beds continued to
expand its reach. It won important business from major new entrants
into the bed market, which augurs well for the future, and
successfully launched a new range of Airsprung branded pillows and
duvets in the UK market. The licensing agreement for bed and
mattress manufacture and distribution in the USA was renewed by our
client for a further three years from September 2011 on
satisfactory terms.
Other activities
The Group has four business activities outside the bed sector.
These are Airofreem, Arena Design, Collins & Hayes and
Cavendish Upholstery.
The same reduction in demand seen by the Beds sector also
affected Airofreem, the Group's foam conversion business, which did
well to hold up its business overall. Our design group Arena
performed well, winning new accounts and increasing its earnings on
sales which were appreciably ahead of the previous year.
In December 2010, the Group acquired Collins and Hayes Furniture
Limited and its trading brand Collins & Hayes, whose origins go
back more than 130 years. This business is a manufacturer and
distributor of high-quality upholstered furniture, based in St
Leonards--on--Sea near Hastings in East Sussex. It produces
beautifully designed upholstered furniture, and its customers
include some of the most respected departmental and multiple stores
in the UK.
The directors approved an initial cash payment for the
acquisition of GBP2.1 million, plus a sum of up to GBP250,000 held
in escrow to deal with any post acquisition warranty claims. The
consideration has been funded by a new four-year revolving credit
facility of GBP2.5 million at 2.5% over LIBOR. The board is
confident that the acquisition will strengthen our presence in the
furniture sector and create valuable synergies with other
businesses within the Group.
The board has been concerned for some time at the performance of
the Group's upholstered furniture business Cavendish, which
operates from Chorley in Lancashire. The upholstered furniture
sector should in theory provide a natural extension of Airsprung's
business and provide a sensible and profitable diversification. The
fashion element in upholstery fabrics and the short lines of supply
and distribution mean that there should always be a solid position
in the UK market for domestic manufacturers. However, Cavendish has
underperformed in its traditional independent market and not made
profitable headway in its mass-market initiatives.
Following the acquisition of Collins & Hayes, the Group has
now embarked on a major restructuring of the Cavendish operations
in Lancashire, with a view to reducing its cost base and increasing
its efficiency, quality and productivity. Three directors of
Cavendish are leaving the business, as well as about 24 staff and
operatives from a total of 66. I would like to thank all of them
for their past service.
Provided Cavendish is restored as a viable business, its
financial administration will be integrated with the Group
headquarters in Trowbridge, while operations, sales and marketing
will be linked with Collins & Hayes. This programme will be
kept under close review, and other business models may be used if
necessary.
Financial impacts
From the acquisition date to the March year end, Collins &
Hayes achieved sales of GBP2.9 million. The difficult trading
conditions, already referred to, resulted in an operating profit of
GBP15,000 before a bad debt write-off of GBP20,000 as a result of
an unexpected retailer insolvency; these goods were sold under
retention of title and recovered after the year end. The costs
relating to the acquisition at GBP200,000 were as budgeted and have
been charged to the profit and loss account.
The total costs of the Cavendish restructuring are approximately
GBP200,000 all of which has been expensed in the profit and loss
account as operating costs for the year under review.
The impact of these charges on the Group's consolidated accounts
has been somewhat softened by a credit of GBP173,000 as finance
income compared with a charge of GBP76,000 in the previous year.
This has arisen as a consequence of the assumptions used by the
Group pension scheme actuary which also impact the Group's pension
deficit, which fell from GBP3.6 million to GBP2.5 million. It is
important to remember that this, essentially theoretical, credit
reflects a notional assessment of a fluctuating long-term
liability.
Prior to exceptional costs and finance adjustments, the
underlying operating profit for the Group was GBP0.8 million
compared with GBP1.1 million in 2010.
Shareholders will note that the Group's cash position at the end
of March was GBP1.7 million compared with GBP2.4 million in 2010.
This reduction does not arise from the acquisition, but reflects
new terms of trading with a major customer. The 2009 comparative
was just under GBP1.5 million.
Directors and staff
I would like to thank all the Group's employees for their
efforts in an exceptionally challenging year and, particularly, to
welcome the management, staff and workforce of Collins & Hayes
to the Airsprung Group. I thank our executive board members Tony
Lisanti and Tean Dallaway for their considerable efforts on behalf
of the shareholders, and our non-executives John Newman and Stephen
Yates for their support and counsel.
Outlook
The current year has started slowly with weak consumer spending
for the reasons outlined earlier in this statement. Our retail
customers have experienced a difficult first quarter which has been
followed by further weakness in the second quarter. This has
impacted all of the Airsprung Group businesses. Our smaller
business units are performing creditably in tough conditions;
Airsprung Beds, however, has suffered a further downturn in sales
attributable to continued poor trading by a major customer. Against
this the Group has benefited from the sales of the newly acquired
Collins & Hayes. Consequently, Group sales at the half year are
expected to be ahead of the prior year.
Profits to date in the first half year have been level with
those of 2010, thanks to vigorous actions taken by management.
However, profits for the rest of the first half are likely to fall
short, reflecting the deteriorating demand at Airsprung Beds. The
outturn for the year as a whole will be dependent on the timing and
pace of any economic recovery. In the meantime, management are
continuing to take steps to maintain gross margins while reducing
costs through operating efficiencies and internal restructuring.
The directors regard the current trading challenges as short term
and remain confident in the prospects for the Group.
Stuart Lyons CBE
Chairman
5 July 2011
Consolidated income statement for the year ended 31 March
2011
12 months 12 months
to 31.3.11 to 31.3.10
GBP000 GBP000
-------------------------------------------------- ------------ ------------
Revenue 44,861 46,532
-------------------------------------------------- ------------ ------------
Cost of sales (31,778) (33,129)
-------------------------------------------------- ------------ ------------
Gross profit 13,083 13,403
-------------------------------------------------- ------------ ------------
Operating costs (12,710) (12,329)
-------------------------------------------------- ------------ ------------
Operating profit before financing 373 1,074
-------------------------------------------------- ------------ ------------
Operating profit is analysed as:
Before depreciation, amortisation and
exceptional items Depreciation and 1,377 1,691
amortisation (604) (617)
Operating profit before exceptional items 773 1,074
Exceptional operating items (400) -
-------------------------------------------------- ------------ ------------
Finance income 173 -
-------------------------------------------------- ------------ ------------
Finance costs (62) (96)
-------------------------------------------------- ------------ ------------
Profit before tax 484 978
-------------------------------------------------- ------------ ------------
Income tax (125) (218)
-------------------------------------------------- ------------ ------------
Profit attributable to equity holders of
the parent 359 760
-------------------------------------------------- ------------ ------------
Basic earnings per share 1.5p 3.2p
-------------------------------------------------- ------------ ------------
Diluted earnings per share 1.4p 3.0p
-------------------------------------------------- ------------ ------------
All the above figures relate to continuing operations.
Consolidated statement of comprehensive income for the year
ended 31 March 2011
2010/2011 2009/2010
GBP000 GBP000
------------------------------------------------ ---------- ----------
Profit for the period 359 760
------------------------------------------------ ---------- ----------
Other comprehensive income:
------------------------------------------------ ---------- ----------
Actuarial gain/(loss) on defined benefit
pension scheme 709 (1,946)
------------------------------------------------ ---------- ----------
Total comprehensive income/(expense) for
the period attributable to equity shareholders 1,068 (1,186)
------------------------------------------------ ---------- ----------
All the above figures relate to continuing operations
Consolidated balance sheet at 31 March 2011
31.03.11 31.03.10
GBP000 GBP000
------------------------------ --------- ---------
Intangible assets 1,776 236
------------------------------ --------- ---------
Property, plant and equipment 7,943 7,856
------------------------------ --------- ---------
Deferred tax 99 295
------------------------------ --------- ---------
Total non-current assets 9,818 8,387
------------------------------ --------- ---------
Inventories 4,333 3,293
------------------------------ --------- ---------
Trade and other receivables 9,358 7,776
------------------------------ --------- ---------
Cash and cash equivalents 1,735 2,405
------------------------------ --------- ---------
Total current assets 15,426 13,474
------------------------------ --------- ---------
Total assets 25,244 21,861
------------------------------ --------- ---------
Called up share capital 2,389 2,389
------------------------------ --------- ---------
Share premium account 2,348 2,348
------------------------------ --------- ---------
Reserves 3,066 3,065
------------------------------ --------- ---------
Retained earnings 3,120 2,195
------------------------------ --------- ---------
Total equity 10,923 9,997
------------------------------ --------- ---------
Financial liabilities 2,557 153
------------------------------ --------- ---------
Pension scheme deficit 2,451 3,683
------------------------------ --------- ---------
Total non-current liabilities 5,008 3,836
------------------------------ --------- ---------
Trade and other payables 7,693 7,764
------------------------------ --------- ---------
Financial liabilities 1,620 264
------------------------------ --------- ---------
Total current liabilities 9,313 8,028
------------------------------ --------- ---------
Total liabilities 14,321 11,864
------------------------------ --------- ---------
Total equity and liabilities 25,244 21,861
------------------------------ --------- ---------
Consolidated cash flow statement for the year ended 31 March
2011
2010/2011 2009/2010
GBP000 GBP000
----------------------------------------------------- ---------- ----------
Profit before tax 484 978
----------------------------------------------------- ---------- ----------
Adjustments for:
----------------------------------------------------- ---------- ----------
Depreciation 543 583
----------------------------------------------------- ---------- ----------
Amortisation 61 34
----------------------------------------------------- ---------- ----------
Interest (income)/expense (111) 96
----------------------------------------------------- ---------- ----------
Contributions to defined benefit pension scheme (350) (366)
----------------------------------------------------- ---------- ----------
Charge for share based payments 1 -
----------------------------------------------------- ---------- ----------
Profit on sale of property, plant and equipment (7) (23)
----------------------------------------------------- ---------- ----------
Operating cash flows before movements in working
capital 621 1,302
----------------------------------------------------- ---------- ----------
Decrease/(increase) in inventories 35 (136)
----------------------------------------------------- ---------- ----------
Decrease/(increase) in receivables 202 (1,040)
----------------------------------------------------- ---------- ----------
Increase/(decrease) in payables (1,428) 1,510
----------------------------------------------------- ---------- ----------
Cash (used in)/generated from operations (570) 1,636
----------------------------------------------------- ---------- ----------
Taxation paid (77) -
----------------------------------------------------- ---------- ----------
Interest paid (62) (20)
----------------------------------------------------- ---------- ----------
Net cash (used in)/generated from operating
activities (709) 1,616
----------------------------------------------------- ---------- ----------
Investing activities
----------------------------------------------------- ---------- ----------
Acquisition (2,243) (113)
----------------------------------------------------- ---------- ----------
Proceeds on disposal of property, plant and
equipment 9 46
----------------------------------------------------- ---------- ----------
Purchase of property, plant and equipment (349) (200)
----------------------------------------------------- ---------- ----------
Net cash outflow from investing activities (2,583) (267)
----------------------------------------------------- ---------- ----------
Financing activities
----------------------------------------------------- ---------- ----------
Dividends paid (143) (120)
----------------------------------------------------- ---------- ----------
Increase in borrowing 3,328 -
----------------------------------------------------- ---------- ----------
Repayment of loan (514) (244)
----------------------------------------------------- ---------- ----------
Payment of finance lease liabilities (49) (49)
----------------------------------------------------- ---------- ----------
Net cash inflow/(outflow) from financing activities 2,622 (413)
----------------------------------------------------- ---------- ----------
Net (decrease)/increase in cash and cash equivalents (670) 936
----------------------------------------------------- ---------- ----------
Cash and cash equivalents at beginning of
period 2,405 1,469
----------------------------------------------------- ---------- ----------
Cash and cash equivalents at end of period 1,735 2,405
----------------------------------------------------- ---------- ----------
Consolidated statement of changes in equity for the year ended
31 March 2011
Shares Capital
Share Share to be redemption Retained Total
capital premium issued reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------- -------- -------- -------- ----------- --------- --------
Balance 1
April 2009 2,389 2,348 65 3,000 3,501 11,303
-------------- -------- -------- -------- ----------- --------- --------
Dividends - - - - (120) (120)
-------------- -------- -------- -------- ----------- --------- --------
Transactions
with owners - - - - (120) (120)
-------------- -------- -------- -------- ----------- --------- --------
Profit for
the period - - - - 760 760
-------------- -------- -------- -------- ----------- --------- --------
Other
comprehensive
income:
-------------- -------- -------- -------- ----------- --------- --------
Actuarial loss
on defined
benefit
pension
scheme - - - - (1,946) (1,946)
-------------- -------- -------- -------- ----------- --------- --------
Total
comprehensive
income for
the period - - - - (1,186) (1,186)
-------------- -------- -------- -------- ----------- --------- --------
Balance 31
March 2010 2,389 2,348 65 3,000 2,195 9,997
-------------- -------- -------- -------- ----------- --------- --------
Balance 1
April 2010 2,389 2,348 65 3,000 2,195 9,997
-------------- -------- -------- -------- ----------- --------- --------
Dividends - - - - (143) (143)
-------------- -------- -------- -------- ----------- --------- --------
Employee
benefits - - 1 - - 1
-------------- -------- -------- -------- ----------- --------- --------
Transactions
with owners - - 1 - (143) (142)
-------------- -------- -------- -------- ----------- --------- --------
Profit for
the period - - - - 359 359
-------------- -------- -------- -------- ----------- --------- --------
Other
comprehensive
income
-------------- -------- -------- -------- ----------- --------- --------
Actuarial gain
on defined
benefit
pension
scheme - - - - 709 709
-------------- -------- -------- -------- ----------- --------- --------
Total
comprehensive
income for
the period - - - - 1,068 1,068
-------------- -------- -------- -------- ----------- --------- --------
Balance 31
March 2011 2,389 2,348 66 3,000 3,120 10,923
-------------- -------- -------- -------- ----------- --------- --------
Notes for the year ended 31 March 2011
1 This summary of results does not constitute the statutory
financial statements for the year ended 31 March 2011 within the
meaning of Section 434 of the Companies Act 2006. The financial
statements have not yet been delivered to the Registrar of
Companies, nor have the auditors yet reported on them. The
statutory accounts for the year ended 31 March 2011 will be
finalised on the basis of the financial information presented by
the directors in this preliminary announcement and will be
delivered to the Registrar of Companies. The financial information
for the year ended 31 March 2010 has been extracted from the full
report and statements which were prepared under International
Financial Reporting Standards (IFRS) as adopted by the European
Union. Those accounts were filed with the Registrar of Companies.
The auditors reported on those accounts; their report was
unqualified and did not contain a statement under s498 of the
Companies Act 2006.
2 Total continuing turnover includes turnover generated in the
United Kingdom of GBP44.3 million (2010: GBP46.0 million) and
export sales of GBP0.5 million (2010: GBP0.5 million).
3 The profit per ordinary share has been calculated on
23,889,000 ordinary shares (2010: 23,889,000) being the weighted
average number of shares in issue during the period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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