RNS Number : 6693X
Airsprung Furniture Group PLC
27 June 2008
AIRSPRUNG FURNITURE GROUP PLC
Preliminary Results for the year ended 31 March 2008
Chairman's Statement
Results
Profit before tax on ordinary activities for the year ended 31 March 2008 rose to �1.464 million compared with the previous year's
�847,000. Profit after tax attributable to equity holders reflected a tax charge of �42,000, compared with the prior year's partial release
of deferred taxation. Shareholders' equity increased to �11.4 million from �7.2 million one year earlier.
Group turnover rose to �49.9 million against the previous year's �45.3 million, the second consecutive annual increase of more than 10%.
Although gross margins fell by one percentage point to 28.5% of sales, operating profit before financing increased to �1.52 million compared
with �991,000. Operating profit before finance and adjustments relating to the pension scheme rose to �1.07 million compared to the
previous year's �853,000, an increase of 25%. Net cash at the year-end stood at �1.67 million against �1.99 million.
Shortly before the year-end, the Group announced it would be resuming interest payments to holders of its 655,000 cumulative 10%
preference shares.
Operating review
Airsprung Beds, the Group's largest business by volume, had another creditable performance in challenging market conditions. Sales rose
strongly for the second successive year in spite of intense price competition in the marketplace. Trading margins came under further
pressure as the business had to contend with sharp increases in the prices of steel, foam and diesel fuel, which it was initially unable to
pass on to customers. Nevertheless, the continuing sales growth and improved manufacturing, distribution and buying efficiencies brought
about a further rise in operating profits for the year.
Over recent years, the Group has made significant progress in outsourcing from overseas, which has helped contain prices and maintain
competitiveness, but lead times for such programmes are longer, giving rise to greater pressure on working capital. Group inventories rose
over the year to �4.3 million compared with the prior year's �3.5 million, reflecting this factor and the increased sales level.
After Gainsborough's strong performance the previous year, when it was fulfilling start-up orders for a major department store group,
this division just failed to maintain its sales, and operating profits fell slightly. The business is continuing to invest in innovative
products and a new range of foam-based mattresses was well received by the trade towards the year-end.
Cavendish Upholstery, based in Chorley, had a poor year. This business supplies independent furniture retailers, a sector which has
found itself under increasing pressures in the marketplace. The division suffered an operating loss in deteriorating market conditions.
Towards the end of the year, Cavendish won floor space for a new designer range of upholstered furniture with a national department store
group, but this came too late in the year to have a material effect on profitability.
Airofreem, the Group's foam conversion business, again produced a good result, due to the high volumes going through Group businesses
and growing demand from external customers. The division invested in a new computerised cutting system which is now operational, and will
provide greater flexibility and lower unit costs.
In order to improve the return on the Chorley site, a new foam processing facility has been established there to make more productive
use of space and provide competitively priced foam components for the Cavendish business. Airsprung Beds also took over part of the same
facility to provide forward assembly of mattresses at a reduced distribution cost. These initiatives are now operational.
Arena Design Associates, which supplies high quality graphic design and marketing support services to both Group businesses and external
companies, made an improved contribution to group profits.
Property
The Group's application for outline planning consent for the 2.9 hectare Brick Lane Business Park was successful. A raw materials store
is now available for external letting and some enquiries have been received. However, in view of the current weakness in the industrial
property market, no further expenditure has been authorised on any refurbishment or building works on the site.
During the year, the Group discussed with the Trustees of the Airsprung Retirement and Death Benefits Plan various changes in management
and investment policy, which were then implemented. The actuarial deficit fell at the end of the year to �2.9 million from the previous
year's �6.2 million, partly due to the favourable impact of corporate bond rates. Some of these improvements are purely technical and may be
reversed in later periods. Nevertheless, the general progress in reducing the deficit is encouraging.
Directors and staff
I would like to express my thanks and that of the board to Tony Lisanti, Chief Executive, and Tean Dallaway, Finance Director, for
leading the management teams to another positive result, and to the executives and staff who have contributed with energy and commitment to
the year's outturn. I would also like to thank our two non-executive directors John Newman and Stephen Yates for their helpful and wise
advice during the year.
Outlook
During the past three months, there has been a serious deterioration in the market sectors in which the Group is involved. The negative
impacts of the sub-prime mortgage crisis and the subsequent credit squeeze have led to a fall in consumer spending and marked weakness in
the residential property market, both of which affect the sales of beds, mattresses and furniture. Meanwhile, the prices of raw materials
and fuel have increased sharply. Price rises announced over the period include cumulative increases for steel of 80%, petrochemical-derived
foam of 25% and diesel fuel of 25%. It is essential for the stability of the manufacturing industry on which they depend that major
retailers recognise commodity prices on this scale cannot be absorbed by their suppliers and must be reflected in their own pricing to
consumers.
Group sales for the first quarter will be significantly down on 2008, with falls in volumes and average selling prices. Sales and
profits for the first half-year are likely to be well down on the previous year's comparable period. For the year as a whole, sales will be
dependent on the restoration of disposable incomes, consumer confidence and housing activity. Every effort is being made by our management
teams to secure price increases, but gross margins will remain under pressure.
The Group's restructuring over recent years has given it greater flexibility and improved control over operational efficiencies. This
has enabled it to respond to current market pressures by reducing controllable costs. The board believes the present difficulties will be
temporary and that the Group will emerge from them satisfactorily, but there are no grounds for believing the current year's trading results
will match the progress of the recent past.
Stuart Lyons CBE
Chairman
27 June 2008
For further information, please contact:
Tony Lisanti, Chief Executive of Airsprung Furniture Group PLC 01225 754411
Mike Coe, Blue Oar Securities Plc 0117 933 0020
Consolidated income statement
for the year ended 31 March 2008
12 months 12 months
to to
31.03.08 31.03.07
�000 �000
Revenue 49,920 45,252
Cost of sales (35,705) (31,912)
Gross profit 14,215 13,340
Operating costs (13,145) (12,487)
IAS 19 pension movement 450 138
Operating profit before financing 1,520 991
Finance income 18 36
Finance costs (74) (180)
Profit before tax 1,464 847
Income tax (42) 620
Profit attributable to equity holders of the parent 1,422 1,467
Basic earnings per share 6.0p 6.1p
Diluted earnings per share 5.6p 5.8p
All the above figures relate to continuing operations.
Consolidated balance sheet
At 31 March 2008
31.03.08 31.03.07
�000 �000
Property, plant and equipment 8,754 8,689
Deferred tax 578 620
Total non-current assets 9,332 9,309
Inventories 4,349 3,507
Trade and other receivables 7,723 7,916
Cash and cash equivalents 1,672 1,986
Total current assets 13,744 13,409
Total assets 23,076 22,718
Called up share capital 2,389 2,389
Share premium account 2,348 2,348
Reserves 2,399 2,380
Retained earnings 4,301 65
Total equity 11,437 7,182
Obligations under finance leases 145 22
Shares classed as financial liabilities - 655
Pension scheme deficit 2,927 6,207
Total non-current liabilities 3,072 6,884
Trade and other payables 7,912 8,652
Shares classed as financial liabilities 655 -
Total current liabilities 8,567 8,652
Total liabilities 11,639 15,536
Total equity and liabilities 23,076 22,718
Consolidated cash flow statement
For the year ended 31 March 2008
2007/2008 2006/2007
�000 �000
Profit before tax 1,464 847
Adjustments for:
Depreciation 542 643
Interest expense 56 144
Contributions to defined benefit pension scheme (450) (138)
Charge for share based payments 19 21
Profit on sale of tangible fixed assets - (4)
Operating cash flows before movements in working 1,631 1,513
capital
(Increase) in inventories (842) (2)
Decrease/(increase) in receivables 193 (866)
(Decrease)/increase in payables (599) 1,451
Cash generated from operations 383 2,096
Non-equity dividends and appropriations paid (198) -
Interest paid (8) (22)
Net cash from operating activities 177 2,074
Investing activities
Interest received 2 36
Proceeds on disposal of property, plant and equipment - 7
Purchase of property, plant and equipment (607) (173)
Repayment of loan - 112
Net cash inflow/(outflow) from investing activities (605) (18)
Financing activities
Increase in borrowing 197 -
Payment of finance lease liabilities (83) (96)
Net cash outflow from financing activities 114 (96)
Net (decrease)/increase in cash and cash equivalents (314) 1,960
Cash and cash equivalents at beginning of period 1,986 26
Cash and cash equivalents at end of period 1,672 1,986
Consolidated statement of recognised income and expense
For the year ended 31 March 2008
2007/2008 2006/2007
�000 �000
Profit for the period 1,422 1,467
Actuarial gain on defined benefit pension scheme 2,814 649
Total recognised income and expense for the period 4,236 2,116
Notes for the year ended 31 March 2008
1 The financial information has been prepared using the accounting policies
set out in the Interim Report.
2 This summary of results does not constitute the statutory financial
statements for the year ended 31 March 2008. 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 2008 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 2007 has been extracted from the full report and
statements which were prepared under UK GAAP and converted to
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 s.237 (2) or (3) Companies Act 1985.
3 Transition to IFRS - the board have closely reviewed the financial
statements and do not believe there to be any effect on the income
statement or balance sheet items from the point of transition (1 April
2006) to the balance sheet date of the transition to IFRS. The board have
identified two areas where the treatment under IFRS will be different to
the policy previously employed:
- Freehold land and buildings were held at a 1997 valuation under the
transitional provision of FRS 15 "Tangible fixed assets". This revalued
amount has been deemed to be the cost under the transitional provisions of
IFRS 1. As a result there has been no adjustment to the carrying value of
the amount previously reported under FRS 15 "Tangible fixed assets". The
revaluation reserve has been transferred into the profit and loss reserve.
- The Group uses foreign currency swaps to manage its foreign currency
exposure. These instruments should be recognised at fair value under IAS
39. There were no instruments in effect at the transition date, or at 31
March 2007. At 31 March 2008 the fair value of these swaps was �13,000.
This was considered immaterial by the directors and has not been reflected
in the financial statements.
4 Total continuing turnover includes turnover generated in the United
Kingdom of �49.3 million (2007: �44.7 million) and export sales of
�0.6.million (2007: �0.6 million). All profit is generated from activities
located in the United Kingdom.
5 The profit per ordinary share has been calculated on 23,889,000 ordinary
shares (2007: 23,889,000) being the weighted average number of shares in
issue during the period. The diluted earnings per share has been
calculated on 25,425,000 ordinary shares (2007: 25,427,000) after
adjusting the weighted average number of shares in issue during the period
by the shares options in existence during the period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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