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AIREA 21 February 2014




 The company behind the Burmatex and Ryalux carpet brands delivered something of a downbeat Interim report this morning which saw the shares registered as one of the biggest losers.


Not the sort of news I wanted to see first thing as a holder, particularly as it was out of the blue.

However, as I pointed out in my last mention on this one, shareholders here are denied the luxury of a trading update, or for that matter much in the way of communication.


The company appears to only deliver news as and when required.

So onto those results, which saw revenue for the six months, to

31 December 2013 reduced to £11.6m, against the previous £13.5m.


Operating profit was also lower at £222k against £359k which was the culmination of reduced sales volumes, improved margins and a lower cost base.

There were also pension payments in the mix, regarding the deficit, which stood at £5.6m for the period end against the corresponding £8.1m.

While the board here are perhaps not renowned for their exuberance, phrases such as- challenging period- hostile market conditions and the ongoing need to husband financial resources, hardly inspires confidence.


Little wonder then, that at one point the shares were down to 10.25p, with some investors happy to apparently get whatever they could as a number rushed for the exit door.


From a personal perspective the shares were effectively back to where they were when I first covered them last year and the offer was also more or less in line with my entry point.

My conclusion as disappointed as I was to see profit evaporate, was to hold, as my original reasons for buying remain largely intact, other than I am perhaps a bit more wary of the board here.


Both brands are, from what I can see and have picked up from talking to those that lay the stuff, pretty decent and should be able to recover.

The fact that the company has not yet seen any marked improvement comes as a bit of a surprise to me, as other players in the same or similar areas have improved.

Whether there is a marked improvement by the time of the next update, most likely to be the Preliminary’s is anyone’s guess.

It will also be interesting to see whether a full year dividend is paid as they passed the Interim today which is par for the course.

On the positive side and why I am still here, there remains recovery potential within its offerings, while total assets sit at just short of £22m against the liabilities of £12.4m.


The last stated net asset value stood at 27p per share, which all things considered still suggests to me that there is potential on a risk/reward basis, albeit with a certain speculative element.


 It would seem that I am not alone in that thinking as the shares although well down on the day closed at 11.25p.


That said I can't help wondering what major holder Lowland, part of Henderson makes of the current situation and performance or 

for that matter how the board would cope should an activist investor appear on the register, now there's a thought.


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