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Airea (AIEA)

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dealtn
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Airea (AIEA)

#392794

Postby dealtn » March 5th, 2021, 3:47 pm

Firstly this is a small cap, less liquid than many, and I own (and not ramping).

Full year results released to the market yesterday.

https://www.investegate.co.uk/airea-plc ... 30061584R/

Like most companies the last year has been one affected by Covid. The share price tumbled, like many, in this case from the mid-40s, to a 20pish low, before making some recovery to about 30p ish today.

The company is a specialist flooring company mainly in the commercial space, with clients such as schools, leisure centres, as well as offices. It transverses the product from design, to manufacture to supply. Demand fell as companies and developers held off expenditure, but that appears to be coming back now as confidence both returns, and capital expenditures for repair and replacement can't be postponed indefinately. (Plus schools, hospitals etc. in the public sector aren't as budget constrained as private sector enterprises).

Revenue for the year was down 24% on the year before, and profits down 68% (operational gearing playing a part). The company is cashflow positive (and taking advantage of Covid measures), and has been in previous, profitable years (profit is real and turns to cash).

New products have been launched over the course of the year and I would hope to see traction as demand returns. Assets provide a degree of support to the share price with property on the Balance Sheet. Demand growth and operational gearing should provide a boost to profits going forward which suggests a low forward looking P/E

There is also a potential for takeover, James Halstead, a well run company in the sector looked a couple of years ago, which didn't lead to an offer

https://www.investegate.co.uk/airea-plc ... 05329357O/

With the share price around mid 60p at the time.

WickedLester
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Re: Airea (AIEA)

#393282

Postby WickedLester » March 7th, 2021, 10:51 am

I quite like Airea. They have a strong balance sheet and are trading at a discount to NTAV with freehold property and cash on the balance sheet.

I guess it depends on how long it is before people return to the office before there'll be a clearer picture on future trading.

FWIW I sold my HEAD and SDG as both seem to have benefitted from people working from home and spending more on home improvements and I wouldn't be surprised to see that trend reverse somewhat this year as people spend on holidays instead.

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Re: Airea (AIEA)

#401128

Postby jaizan » April 2nd, 2021, 2:56 pm

The following extracts are from two RNS issued in 2019:

05 April 2019: Director/PDMR Shareholding. The Company announces that Neil Rylance, Chief Executive Officer of the Company, has today sold 2,510,630 ordinary 25p shares in the Company ('Ordinary Shares') at a price of 72 pence per share to the recently created Airea Employee Benefit Trust ('EBT'). As a result of this transaction Neil Rylance no longer has a beneficial interest in the issued share capital of the Company.

27 June 2019: Trading update. Airea plc (LSE: AIEA), the manufacturer, marketer and distributor of floor coverings, announces the following trading update for the six months ending 30 June 2019. Trading update. Despite a very strong order book and first quarter and with continued growth from our export markets we will announce revenue slightly down and a lower operating profit for the half year compared with the corresponding period in 2018. This is due to significantly tougher conditions during the second quarter.


So I conclude that:
1 The CEO was content to own 2510630 shares, then zero afterwards.
2 83 days later they issued a profit warning, which caused the share price to fall.

So the CEO sale was very lucky.
Whether he had any sight of the trading decline at the time of the sale would be speculation.
The trading warning covers the second quarter, so a quarter starting on April 1 2019.
I don't understand the carpet tile business in detail, but imagine they have so many different colour and style combinations that perhaps a good percentage of product is made to order, with a lead time ?
In which case, a CEO might understand the outlook a few weeks in advance ? I am unable to rule out this possibility.

Additionally, this "lucky" sale involved palming all the shares off to the Employee Benefit Trust. Thanks to this "luck" the CEO has done rather well at the expense of the EBT.

I prefer to invest in companies where I trust the management and the CEO is invested alongside me, with "skin in the game".

dealtn
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Re: Airea (AIEA)

#401204

Postby dealtn » April 2nd, 2021, 7:31 pm

jaizan wrote:
I prefer to invest in companies where I trust the management and the CEO is invested alongside me, with "skin in the game".


So do I.

The first is difficult to measure, but there are certainly potential black marks here, and the large shareholding for a non-exec with limited days contracted isn't great either.

On the second I would find it hard to believe the CEO doesn't have an equity holding via the Employee Trust, or the LTIP, but Note 23 to the accounts provides no additional information.

jaizan
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Re: Airea (AIEA)

#401494

Postby jaizan » April 3rd, 2021, 9:04 pm

dealtn wrote:On the second I would find it hard to believe the CEO doesn't have an equity holding via the Employee Trust, or the LTIP, but Note 23 to the accounts provides no additional information.


The CEO has no holding, or he would have to declare it.
He may have options via an LTIP, but I've already decided this is uninvestable based on the issues above & don't consider free shares via an LTIP as something that would change my opinion.
What would make me sit up and take notice is if the CEO were to buy 2.5 million shares with his own money. With his record for timing trades, I'd be all over it. ;)

Thankfully there are hundreds of companies in the stock market. I don't need to be in every one.

dealtn
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Re: Airea (AIEA)

#406139

Postby dealtn » April 22nd, 2021, 1:21 pm

jaizan wrote:
I prefer to invest in companies where I trust the management and the CEO is invested alongside me, with "skin in the game".


None of the above but an interesting RNS nevertheless today

https://www.investegate.co.uk/airea-plc ... 39281871W/

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Re: Airea (AIEA)

#431487

Postby WickedLester » July 30th, 2021, 2:17 pm

The interims are out today and they are not too bad but the outlook statement is very uncertain.

https://www.investegate.co.uk/airea-plc ... 00059882G/

eps of 1.14p and the balance sheet remains very strong. Interestingly enough the pension fund has moved into a surplus position, I don't know if this is likely to persist but I think they have been paying about £400k a year into it for some time in deficit payments so if this stops it should give a boost to cashflow. They also invested quite a lot in new equipment which will hopefully help with efficiencies going forward.

If they can remain profitable then I think you could do worse than hold these for recovery.

Despite the strong cash position there is no dividend.

I sold mine for a small profit but I will keep an eye on them.


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