27 March 2025

AIREA plc

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

Final Results for the year ended 31 December 2024

Strong sales growth in the second half, business transformation nearing completion

AIREA plc (AIM: AIEA), the UK design-led specialist flooring company, supplying both the UK and international markets, is pleased to announce its final results for the twelve months ended 31 December 2024.

Financial highlights

·    Strong sales growth of 6.0% in the second half, recovering from 5.6% shortfall in first half

·    Full year revenue increased by 0.6% to £21.2m (2023: £21.1m)

·    Underlying operating profit of £1.6m, excluding non-recurring costs

·    Operating profit before valuation gain decreased to £0.7m (2023: £1.8m), impacted by non-recurring costs of £0.9m

·    EBITDA decreased to £1.1m (2023: £2.6m)

·    Cash and cash equivalents at £2.1m (2023: £5.8m)

·    Coronavirus Business Interruption Loan of £0.9m fully settled in December 2024

·    Final dividend increased by 9.1% to 0.60p per ordinary share (2023: 0.55p)

Operational highlights

·    Excellent progress on the strategic investment in the Group's manufacturing facility

·    Business transformation completion in third quarter 2025, with enhanced Group capabilities and market profile

·    Increased focus on innovation and sustainability, highlighted by the successful launch of two carbon-neutral products, snowfall® and standing stones® and refresh of balance collection®

·    Refresh of low-carbon products in alaska®, academy® and tivoli®

·    Strategic review and successful implementation of stockholding policy, £2.8m stock reduction in second half

Post period end

·    Opening of new Dubai sales showroom in January 2025

·    Winner at the Yorkshire Business of the Year awards 2025 in Sustainability category

·    Winner at the Made in Yorkshire awards 2025 in the Manufacturer of the Year (under £25m) category

Médéric Payne, Chief Executive Officer of AIREA plc, commented:

"AIREA had another year of progress in 2024 as the strategic investment in the manufacturing facility began to take shape, with production expected to come online in the third quarter 2025. This investment will enable the Group to increase production, capitalise on efficiencies, and improve quality and enhance margins, whilst bringing new, more innovative and sustainable products to the market.

"Following an unforeseen slowdown in the second quarter of the year due to the global economic and geopolitical challenges, the second half recovered strongly and delivered 6.0% growth year on year. Full year sales were 0.6% ahead of prior year, with the UK and ROI outperforming the overall market in sales volume according to recent market research.

"Our primary focus is the Group's future long-term profitable growth and during the year we continued to invest in the business with this objective in mind. Reported operating profit was impacted by non-recurring costs as well as the programme of investment, however we are satisfied with the underlying performance of the business during 2024.

"Throughout the year, we also continued to transform the business with a more focused approach to quality, design, innovation, sustainability and working closer with our customers. The last twelve months have seen an improvement in the Group's capabilities and market profile which will leave us well-positioned to deliver our growth strategy for the business."

- Ends -

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This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (EU) 596/2014 as amended by regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310. With the publication of this announcement, this information is now considered to be in the public domain.

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/.

Chairman's Statement

Overview

The year started well, with strong demand for our carbon-neutral 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 the ongoing economic and geopolitical turbulence. The second half saw a strong recovery with the UK and ROI delivering 4.5% growth and international markets growing by 11.8%.

Our focus on innovation and sustainability increased in the year, reflected in the successful launch of several carbon-neutral products. The Group also refreshed and relaunched several popular low-carbon ranges.

Results

Following the positive momentum in the second half of the year, the Group delivered year on year sales growth of 0.6%. As expected, the continued investment in the Group resulted in a lower operating profit of £0.7m. Profitability was impacted by certain non-recurring costs associated with the new manufacturing facility and ongoing investment in people and other resources to support future profitable growth. Further commentary on these items is included in the Chief Financial Officer's review.

Significant progress was made in the review and successful implementation of the Group's stockholding policy, with inventory levels at the end of the year £2.8m below half year-end and £0.9m lower for the year overall. This was delivered without impacting customer service and testament to the decisive action taken by management.

Dividends

The Group prioritised cash management in the year to assist with the funding of its strategic investment. We continue to believe in rewarding our loyal shareholder base and therefore propose a final dividend of £0.2m or 0.60p per share for the year (2023: £0.2m or 0.55p per share), which is the total dividend for the year as no interim dividend was paid. This is a fourth consecutive year of dividend growth and is aligned with the Group's progressive dividend policy. The final dividend will be paid on 21 May 2025 to shareholders on the register on 22 April 2025. This proposal is subject to shareholder approval at the Group's Annual General Meeting to be held on 7 May 2025.

Sustainability

Sustainability is central to our strategy and fundamental to delivering future commercial success for the Group. We continue to believe that what we do matters. Our sustainability principles, eco₂matters®, now fully embedded across the Group, remain key to how we manage all aspects of our business. We are focused on driving commercial value from our position as a leader of providing sustainable products to the markets we serve. Our portfolio is supported by product specific Environmental Product Declarations (EPDs) that are verified by an independent third party. This enables our customers to quantify the positive impact our products have on the carbon footprint of their projects.

The solar panels installed on the roof of the Group's manufacturing facility are helping to mitigate against energy price volatility, whilst contributing to our sustainability goals.

Our Board

With the successful appointments over the last few years, the Board has the experience to provide effective oversight and guidance as AIREA continues its transformation. The Board remains committed to creating value for shareholders.

Our People

People are another key element to our strategy. We again recognise the role our people play in helping the Group achieve its success. Throughout 2024, with the ongoing disruption of transforming the business, our team again demonstrated its resilience, adaptability and commitment, and I would like to share my thanks and appreciation with them all.

The Board recognises the need for continued investment in the training and development of our people. This is aligned with our commitment to embedding our values throughout the Group.

In 2022, the long-term share incentive scheme was relaunched to a wider employee pool as the Board recognised the need to retain and reward members of staff for long-term performance. The scheme incentivises employees through nil cost share awards. Awards will vest with beneficiaries over a three-year period ending 31 December 2025 subject to the achievement of both Group and individual performance conditions.

Summary and Outlook

The Group was pleased with the positive momentum in the second half of the year. This encouraging performance was delivered despite the ongoing global economic and geopolitical challenges.

We made further progress in expanding our sustainable portfolio with the launch of several carbon-neutral products both in the UK and in our key target overseas markets.

The opening of the Group's new showroom in Dubai in January 2025 is another example of our investment for future growth. This will operate as a strategic hub to drive sales across the GCC, MEA regions and India.

The investment in our manufacturing facility is nearing completion and along with the ongoing transformation of the business, the Group is well placed for profitable future growth.

These are exciting times for the Group and the Board remains confident in delivering long-term value for our shareholders.

Martin Toogood

Chairman

26 March 2025

Chief Executive Officer's Statement

Introduction

The business transformation gained momentum as the year progressed. We continued to invest for future growth and successfully managed the strategic investment at our manufacturing facility whilst delivering both sales value and volume growth against a challenging economic and geopolitical backdrop.

The Group experienced strong growth in the second half of the year with sales 6.0% above the prior year, resulting in the full year being 0.6% ahead of prior year at £21.2m (2023: £21.1m). The UK and ROI delivered 4.5% sales growth in the second half, finishing the full year 2.4% above the prior year, compared to a deficit of 0.3% at the half year.

Sales in our international markets grew by 11.8% in the second half, finishing the full year 5.7% below the prior year, a large improvement on the shortfall of 21.9% at the half year.

In May 2024, the Group exhibited at the renowned Clerkenwell Design Week. This was another opportunity to showcase its new innovative and sustainable product ranges, further strengthen the Burmatex® brand in the market and engage with our existing and potential new customers. The Group also selectively promoted its new ranges at overseas exhibitions dedicated to architects, specifiers and interior designers.

Strong sustainability fundamentals

Over the last few years we have developed our sustainability credentials, driven by our eco₂matters® principles.

The renewed focus on design and quality has resulted in a step change in our product portfolio. The Group's range of carbon-neutral and low-carbon products has expanded to meet the growing demand from our customers as they quantify the positive impact these products have on the carbon footprint of their projects.

In 2024, both snowfall® and standing stones® were launched and balance collection® refreshed within the carbon-neutral range. In addition, alaska®, academy® and tivoli® were all refreshed and relaunched in the low-carbon range.

Sustainability is a key pillar of our strategy and is at the heart of the Group's growth agenda. We will continue to focus on providing more sustainable and innovative products to meet our customers' needs.

People

We rely on the commitment, expertise and creativity of our people. Our values are now firmly embedded across the organisation and are the catalyst for working as One Team. 2024 saw the introduction of a newly revamped formal performance appraisal process with annual personal objectives that align with our values and financial targets.

The Group recognises that the key to future success lies in the skills and abilities of its people. The continuous development and training of our people is key to meeting the future demands of our customers, especially in relation to creativity, innovation and sustainability.

I would like to take this opportunity to thank all of our people for their continued contribution to the ongoing business transformation and continued future success of the Group.

Summary and Outlook

Following an unforeseen slowdown in the second quarter, sales recovered strongly in the second half in both the UK and overseas markets. The Group has a well-established business model in the UK and is now developing its routes to market in certain key overseas territories, including Eastern Europe and the GCC.

As expected, operating profit was lower than the prior year due to the level of investment in resources to deliver future growth and the impact of non-recurring costs associated with the transformation. We are excited and optimistic about the opportunities that the strategic investment in our manufacturing facility will generate. The new investment will drive production efficiencies and contribute to future profitable growth.

Médéric Payne

Chief Executive Officer

26 March 2025

Chief Financial Officer's Review

Group Results

One of our main objectives at the beginning of the year was to strengthen the balance sheet. In this regard, several key initiatives were successfully executed in the second half of the year. Inventory levels were reduced by £2.8m to end the year £0.9m lower than December 2023. The outstanding balance on the Coronavirus Business Interruption Loan of £0.9m was fully settled in December 2024 and the investment property with a carrying value of £4.1m is currently being marketed for sale.

Revenue increased 0.6% to £21.2m (2023: £21.1m). There was another strong performance in the UK and ROI with sales 2.4% ahead of prior year. Following a disappointing first half, international sales recovered strongly in the second half and ended the year 5.7% down on the prior year.  Demand for our carbon-neutral and low-carbon products was again strong.

Operating profit before property valuation gain decreased to £0.7m (2023: £1.8m) due to the impact of certain non-recurring costs and the ongoing cost of investing for future growth. Excluding these costs, underlying profit was £1.6m. There was also the impact of product mix on margin as the Group looks to increase volume by selectively targeting routes to new markets.

The non-recurring costs of £0.9m included;

·    an increase in labour and production overheads of £0.6m following the strategic review and successful implementation of the Group's stockholding policy

·    investment in the new tiling line which resulted in the temporary use of third-party storage at a cost of £0.1m

·    legal expenses of £0.1m in defending a trademark challenge

·    professional costs of £0.1m associated with investment in intellectual property

Additional costs included the investment in a new sales showroom in Dubai, United Arab Emirates at a cost of £0.2m. In the UK, the sales team was expanded with a greater focus on architect and design specification projects at a cost of £0.1m. Investment in other areas included £0.1m in supply chain and quality which contributed to achieving ISO 14001 and ISO 9001 accreditation. This programme of investment in the business will support the Group's long-term future profitable growth.

A decision was taken to extend the depreciation period for certain plant and equipment from ten to fifteen years, which had a £0.4m positive impact on profit. The new investment will be depreciated over this more appropriate period of fifteen years. This item has been adjusted for in the calculation of underlying operating profit.

Net finance costs of £0.6m (2023: £0.5m) increased on the prior year due to higher costs relating to the pension scheme. The additional costs related to administration expenses incurred in completing work on the triennial valuation and subsequent recovery plan, and interest on the net defined benefit liability.

Taxation decreased to £0.3m (2023: £0.6m) due to a reduction in taxable profits and deferred taxation. The R&D tax credit claim of £0.1m was in line with prior year.

The loss attributable to shareholders of the Group for the year was £0.3m (2023: £0.8m profit). Earnings per share were (0.73p) (2023: 2.0p).

Operating cash flows before movements in working capital and other payables were £1.2m (2023: £2.6m). Working capital increased by £1.0m (2023: £0.2m increase) following an increase in trade and other receivables which included £1.0m in relation to deposits paid to suppliers of key components for the new manufacturing facility. The strategic review and implementation of the Group's stockholding policy delivered an inventory reduction of £0.9m on the prior year. Capital expenditure of £2.2m (2023: £1.2m) predominantly related to the Group's strategic investment in its manufacturing facility.

The Group had £2.1m of cash on hand as of 31 December 2024 (2023: £5.8m). In 2020, the Group borrowed £2.75m under the government Coronavirus Business Interruption Loan Scheme. The outstanding balance of £0.9m was settled in full in December 2024.

In November 2024, the Group secured short-term funding in the form of a trade finance facility to the value of £3.2m. This funding had not been utilised as at 31 December 2024. Interest is payable at 2.1% above the Bank of England base rate. The Group has access to further liquidity of £1.0m via our unutilised banking facility (2023: £1.0m).

The Group took the decision to divest its investment property, which has a current carrying value of £4.1m. The property is currently being marketed for sale.

The deficit on the defined benefit pension scheme reduced by £1.0m to £4.0m. Following the triennial valuation of the scheme as at 1 July 2023, the Group and the scheme's trustees agreed a reasonable and affordable recovery plan to address the scheme's deficit. This was submitted to The Pensions Regulator in September 2024. The plan included an initial contribution of £0.3m from the Group to the scheme and this was paid in July 2024. An experienced professional independent trustee was appointed in July 2024 to assist in managing the scheme. The trustees are currently in the process of updating the scheme's investment strategy to further mitigate its long-term risk profile as much as possible.

Key Performance Indicators

As part of its internal financial control procedures, the Board monitors the key financial metrics of revenue, underlying operating profit, gross margin, working capital (debtor and creditor days), inventory turns and cash.

These KPIs are reviewed in comparison to the previous year and the budget and analysis undertaken to establish trends and variances. For the year ended 31 December 2024, underlying operating profit return on sales was 7.4% (2023: 8.5%), return on net operating assets was 3.1% (2023: 8.5%) and working capital to sales percentage was 28.7% (2023: 24.2%).

Conleth Campbell

Chief Financial Officer

26 March 2025

Consolidated Statement of Changes in Equity

as at 31 December 2024

In accordance with Rule 20 of the AIM Rules, AIREA confirms that the annual report and accounts for the year ended 31 December 2024 and notice of Annual General Meeting ("AGM") and related proxy form will be available to view on the Company's website at www.aireaplc.co.uk on 27 March 2025 and will be posted to shareholders by 2 April 2025. The AGM will be held on 7 May 2025, at 2.00 p.m. at Victoria Mills, The Green, Ossett, West Yorkshire, WF5 0AN. Further details are set out in the notice of the AGM available within the financial statements which can be viewed on the Group's website.