TIDMEPWN
RNS Number : 3906H
Epwin Group PLC
06 April 2022
6(th) April 2022
This announcement contains inside information for the purposes
of Regulation 11 of the Market Abuse (Amendment) (EU Exit)
Regulations 2019/310 (as amended). Upon the publication of this
announcement via a Regulatory Information Service, this inside
information is now considered to be in the public domain.
Epwin Group Plc
Final results for the year ended 31 December 2021
Strong performance and continued strategic progress
Epwin Group Plc (AIM: EPWN) ("Epwin" or the "Group"), the
leading manufacturer of low maintenance building products,
supplying the Repair, Maintenance and Improvement ("RMI"), new
build and social housing sectors, announces its audited full year
results for the year ended 31 December 2021.
2021 Financial highlights
GBPm 2021 2020 2019
-------------------------------------- ------ ------ ------
Revenue 329.6 241.0 282.1
Underlying operating profi t (1) 18.5 9.4 21.2
Underlying operating margin (1) 5.6% 3.9% 7.5%
Statutory operating profit 17.7 6.3 17.2
Adjusted profit before tax (1) 13. 7 5.0 16.4
Profit before tax 12. 9 1.9 12.4
Basic EPS 8.61p 1.82p 7.49p
Dividend per share for the year 4.10p 1.00p 1.75p
Pre-tax operating cash flow 34.9 23.7 34.8
Covenant net debt (2) 9.4 18.5 16.4
Covenant net debt to adjusted EBITDA
(2) 0.4x 1.3x 0.6x
Underlying operating cash conversion
(3) 189% 252% 164%
-------------------------------------- ------ ------ ------
(1) Adjusted for amortisation of acquired other intangible
assets, share-based payments expense and other non-underlying
items.
(2) Covenant net debt and covenant net debt to adjusted EBITDA
represent pre-IFRS 16 measures.
(3) Underlying operating cash conversion is pre-tax operating
cash flow as a percentage of underlying operating profit.
Financial headlines
-- Strong trading performance:
o Record revenues of GBP329.6 million, 37% ahead of 2020 and 17%
ahead of 2019
o Underlying operating profit of GBP18.5 million (2020: GBP9.4
million, 2019: GBP21.2 million)
o Strong cash generation with pre-tax operating cash inflow of
GBP34.9 million (2020: GBP23.7 million, 2019: GBP34.8 million) and
underlying operating cash conversion of 189%
o Continued resilience of Group's core markets, with high RMI
demand throughout 2021
-- Financial position strengthened:
o Covenant net debt significantly reduced to GBP9.4 million
(2020: GBP18.5 million)
o Covenant net debt 0.4x adjusted EBITDA, after GBP5.3 million
cash cost of acquisitions
o Significant headroom on banking facilities, in excess of GBP65
million, to support growth strategy
-- Proposed final dividend of 2.35 pence per share, resulting in
total dividend for 2021 of 4.10 pence per share (2020: 1.00 pence
per share)
Operational and strategic headlines
-- Active management of pandemic-related operational and inflationary challenges
o Significant inflationary and availability pressure on material
and labour costs
o Successful and continued implementation of price increases and
surcharges, albeit with a lag to cost inflation
-- Good progress delivering on our strategy:
o Operational improvement:
-- Construction completed on new Telford distribution and
finishing facility
-- Full relocation of inventories to the new facility to be
completed in 2022
o Value enhancing acquisitions:
-- Acquired three well-established regional independent
distributors of plastic building products
-- Adds 13 trade counters in Cumbria, Northumberland, Southern
Scotland, Lancashire and Norfolk
o New product development:
-- Aluminium window system and PVC decking sales continue to see
strong growth, with demand levels for these products well ahead of
management's expectations
o Continued market share gains
o ESG framework and targets, building on inherent environmental
and sustainability benefits of the Group's products
Current trading and outlook
-- Strong RMI demand expected to continue in 2022, albeit at slower growth rate than last year
-- Continued focus on actively managing ongoing supply chain and inflationary pressures
-- Healthy pipeline of further M&A opportunities
-- Positive medium and long-term RMI market drivers
-- Current trading is in line with the Board's expectations,
with 2022 revenue to date ahead of 2021. The Group is well
positioned for the rest of the year
Jon Bednall, CEO of Epwin, commented:
"I am pleased to report that our trading performance for the
year as a whole was strong, despite the well-reported supply chain
and inflationary pressures that presented a particular challenge to
our fenestration businesses. This is testament to the hard work of
our people in a year which has seen many challenges for businesses
and individuals.
We are optimistic for the Group's trading prospects in 2022 and
expect to make further gains in market share, whilst continuing to
manage the challenges that the current environment presents. We
remain confident in the strength of the medium and long-term
drivers of our markets."
Contact information
Epwin Group Plc
Jon Bednall, Chief Executive
Chris Empson, Group Finance Director 0203 128 8168
Shore Capital (Nominated Adviser and
Joint Broker)
Corporate Advisory 0207 408 4090
Daniel Bush / Iain Sexton
Corporate Broking
Fiona Conroy
Zeus Capital Limited (Joint Broker)
John Goold / Dominic King 0203 829 5000
MHP Communications 0203 128 8168
Reg Hoare / Charlie Barker / Pauline epwin@mhpc.com
Guenot
Forthcoming dates:
Ex-dividend date 12 May 2022
Dividend record date 13 May 2022
Annual General Meeting 24 May 2022
Dividend payment date 6 June 2022
About Epwin
Epwin is the leading manufacturer of low maintenance building
products with significant market shares, supplying the Repair,
Maintenance and Improvement (" RMI"), new build and social housing
sectors.
The Company is incorporated, domiciled and operates principally
in the United Kingdom.
Information for investors can be accessed
www.epwin.co.uk/investors/
Chairman's Statement
Encouraging performance
The performance of the Group during 2021 has been encouraging
with the strong demand levels seen in the RMI market during the
second half of 2020 continuing throughout the year, as revenues and
EPS exceeded 2019 pre-pandemic levels. The Group has made good
strategic progress during the year, in particular completing three
bolt on acquisitions and achieving significant growth with the new
products launched in recent periods.
On behalf of the Board and our shareholders, I would again like
to thank all our employees and their families for their efforts and
the commitment they have continued to demonstrate during the
Covid-19 pandemic.
Inflationary headwinds
Consistent with other industries, raw materials cost inflation
has been one of the main challenges for the building products
sector in 2021 and into 2022. The ongoing implications of the
Covid-19 pandemic, as well as the high levels of demand from the
RMI market, continue to put pressure on operations and supply
chains. Increases in raw material costs, in particular PVC resin,
and the ability of the Group to pass these costs on to customers
have been the dominant factors during 2021. The Group is
successfully passing on the increase in costs to its customer base
through a mixture of price increases and surcharges, albeit with a
natural timing lag and not yet recovering the full margin impact,
as the Group has been cognisant that the level of increase needs to
be managed in an equitable manner with customers.
As well as raw material cost inflation, further emerging themes
during the course of the year have been wage inflation and staff
retention, as a result of both the Covid-19 pandemic and Brexit.
Our employees are critical to the performance of the Group, their
expertise and commitment are what makes Epwin a market-leading
business and will drive its future success. Measures have been
introduced to improve both staff retention and recruitment, to
manage the near-term impacts of labour availability and increasing
market pay rates.
Strategic progress
The Group has made pleasing progress with its strategy of
operational improvement, broadening the product portfolio and
materials capabilities, selective acquisitions, cross-selling and
market-share growth.
Product development
The PVC decking products and aluminium window systems continue
to see significant growth with demand ahead of management's
expectations, following the delay of their launch as a result of
the pandemic. Stellar, our aluminium window system, has achieved
good traction with both new customers and within our existing
fabricator customer base. Dekboard, the Group's PVC decking system,
has also seen strong growth as it has established and reinforced
its routes to market.
With PVC prices at historical highs and potential future cost
and supply volatility, the Group has also commenced projects to
further increase the use of recycled PVC resin within its
products.
Value enhancing acquisitions
The Group completed three bolt on acquisitions during the year
to further extend its network of trade counters, now in excess of
100.
On 5 January 2021, the Group acquired the trade and related
assets of SBS (Cumbria) Limited ("SBS"), a well-established
regional distributor of plastic building products operating across
eight branches in Cumbria and Southern Scotland.
On 30 June 2021, the Group acquired the trade counter activities
and related assets of Plastic Building Supplies Limited ("PBS"), an
established distributor of plastic building products with four
branches across Norfolk.
On 11 November 2021, the Group acquired Accrington Plastics
Limited a single branch distributor of plastic building products
based in the North West of England.
Total consideration for these acquisitions was GBP5.4 million,
net of cash acquired, comprising GBP5.3 million paid in cash and
GBP0.1 million deferred. These acquisitions further increase the
geographical coverage of the Group's plastic distribution business
and offer the opportunity for synergies and wider expansion over
time alongside the Group's partnerships with its key independent
distribution partners.
Progress with site consolidation and rationalisation
programme
Construction work on the purpose-built facilities in Telford, to
consolidate our Window Systems warehousing and finishing
operations, completed in the first half of 2021.
The Covid-19 pandemic and the continuation of the exceptionally
high demand levels seen post lockdown and throughout 2021 has
required the Window Systems operation to continue operating across
its existing sites in order to maintain service levels for
customers. It is now anticipated that the relocation of inventories
and logistics operations to the new facility will take place in
2022 which will then allow the Group to start realising the
consolidation and synergistic benefits of the new facility.
ESG
The Group continued to make progress with developing its ESG
framework and targets, having aligned its operations with the
United Nations Sustainable Development Goals ("UN SDGs"). Notable
progress during the period included:
-- Commissioning of carbon balance sheet to establish a baseline for its carbon footprint
-- Commencing investment to develop and increase recycling capabilities
-- 87% of revenue from recyclable products
-- Achieving the Fair Tax Mark
-- Appointment of an additional non-executive director
-- Reduced GHG emissions per GBPm of gross revenue by 20% from prior year
-- Gender pay gap in 2021 - women paid on average more than men
The Group has strong inherent sustainability credentials with
its energy efficient and low maintenance building products and has
already taken meaningful actions to reduce the Group's carbon
footprint such as increasingly switching to sustainable raw
materials and making improvements to energy and resource
efficiency.
Board changes
We were pleased to welcome Shaun Smith to the board at the
beginning of January 2022. Shaun has significant and broad finance
and commercial experience, having been most recently Chief
Financial Officer at Norcros plc, and he will add significant
insight and value to our board.
Unfortunately, Mike O'Leary, who joined the board shortly after
the IPO, stepped down in March 2022 for health reasons. Mike made a
terrific contribution to the board, and we will miss his wise
counsel. We wish Mike a full recovery. We will be seeking to
appoint another non-executive director during the year.
Corporate governance and AGM
The Board of Directors, including myself as Chairman,
acknowledges the importance of the ten principles set out in the
QCA Code and details of our compliance with the Code can be found
in the Corporate Governance section of the 2021 Annual Report as
well as on the corporate website.
The Annual General Meeting ("AGM") will be held at 1B Stratford
Court, Cranmore Boulevard, Solihull, B90 4QT on Tuesday 24 May 2022
at 11.00 am .
Current public health guidance and legislation issued by the UK
Government in relation to the Covid-19 pandemic would permit public
gatherings and travel at the date of the AGM. The AGM has been
arranged assuming the Company will be able to hold a physical
in-person meeting. However, due to the ongoing Covid-19 situation,
the Board considers it appropriate to minimise physical attendances
at the AGM. Shareholders are therefore encouraged to vote by proxy.
Whilst all shareholders are still legally entitled physically to
attend the AGM, please consider carefully before doing so.
Results
Revenues were significantly higher than both their Covid-19
impacted 2020 comparatives, as well as the 2019 comparative, the
last year unaffected by the Covid-19 pandemic. The increase in
revenues to a record GBP 329. 6 million (2020: GBP241.0 million,
2019: GBP282.1 million) was driven by high levels of demand as well
as the selling price increases and surcharges implemented as a
result of cost inflation. Underlying operating profit increased to
GBP 18.5 million compared to GBP9.4 million in 2020, but remained
behind the 2019 underlying operating profit of GBP21.2 million
mainly as a result of material cost inflation and the lag in
passing on cost increases to customers. Statutory operating profit
was GBP 17.7 million (2020: GBP6.3 million, 2019: GBP17.2
million).
Cash generation continued to be strong with pre-tax operating
cash flow of GBP34.9 million, returning to 2019 levels (2020:
GBP23.7 million, 2019: GBP34.8 million). The Group finished the
year with significantly reduced covenant net debt of GBP9.4 million
(2020: GBP18.5 million, 2019: GBP16.4 million), representing 0.4x
adjusted EBITDA and well within covenant levels.
Dividends
The Board is recommending a final dividend of 2.35 pence per
share (2020: 1.00 pence per share) to be paid on 6 June 2022 to
shareholders on the register on 13 May 2022 . Along with the
interim dividend of 1.75 pence per ordinary share, paid in October
2021, this takes the full year dividend to 4.10 pence per ordinary
share (2020: 1.00 pence per share).
Summary and outlook
The Group's trading performance during 2021 has been encouraging
and it has continued to make good strategic progress in a trading
environment that has been buoyant since the second half of 2020.
Customer demand, particularly from the RMI sector, remains strong.
Trading in 2022 to date is in line with the Board's expectations
with revenue ahead of the same period in 2021.
Supply chains remain under pressure and raw material costs
continue to increase as a result of the continuing impact of the
Covid-19 pandemic and, more recently, the tragic events in Ukraine.
The Group's strong relationships with its PVC resin suppliers have
ensured it has been able to secure material supply; albeit the
market price of PVC resin has doubled since the end of 2019. The
Group is passing on these increased costs to its customers in an
equitable manner through price increases and surcharges and remains
confident of its ability to continue to work with its customers to
manage further cost inflation fairly.
Our strategy continues to be based on operational improvement,
broadening the product portfolio and capabilities, value enhancing
acquisitions, cross-selling and market share growth in key sectors
to build a sustainable, resilient business, delivering further
growth as market conditions continue to improve.
The medium to long-term drivers for the market remain positive,
with an ageing and underinvested housing stock, as well as
environmental and safety concerns driving new legislation and
initiatives that will require improvements to homes, including in
respect of energy efficiency, on a larger scale than simply
essential maintenance. The pandemic has also stimulated demand for
home, garden and leisure space spending, with lockdowns
highlighting the need for improvements, addressing maintenance and
creating workspace.
We are optimistic for the Group's trading prospects in 2022 and
expect to make further gains in market share, whilst continuing to
manage the challenges that the current environment presents.
Andrew Eastgate
Chairman
6 April 2022
Business review
Strategic and operational review
The strong trading conditions seen in the second half of 2020
continued throughout 2021, still predominantly driven by the RMI
sector.
Whilst positive from a volume and selling price perspective,
this high market demand combined with raw materials shortages from
global events and supplier issues placed significant pressure on
supply chains. This consequently resulted in inflationary
headwinds. Through its strong relationships with suppliers the
Group has been able to ensure continuity in its requirements for
raw materials, however, the cost of these materials has risen
significantly throughout the year. The price of PVC, the Group's
main input material, is now at twice the price it was at the start
of the pandemic in March 2020 and over 75% higher than at the end
of 2020. The Group has consequently increased selling prices and
introduced surcharges to recover input cost inflation in a fair and
equitable manner.
The Group has also introduced measures to improve both staff
retention and recruitment to manage labour availability and
increased market pay rates, which will have an impact in the near
term, as a result of both the Covid-19 pandemic and Brexit.
The pandemic, and resulting supply chain and inflationary
pressures, have impacted the Group's business units in different
ways. This has determined the approach each has taken, and
continues to take, to mitigate the cost inflation in an equitable
manner through selling price increases, surcharges and other
measures.
The operations within the Extrusion and Moulding segment have
been particularly impacted by raw material cost inflation. Our
market leading position in cellular extrusions, as well as the
decision to maintain high stock holdings and a strong operational
performance, have enabled the cellular businesses to ensure
continuity of supply and service to our customers. We believe, as a
result, that our cellular businesses have been able to take market
share whilst increasing selling prices to recover the material cost
inflation, albeit not yet to a level that recovers the full
margin.
Our Window Systems business has faced a number of operational
challenges following the initial pandemic lockdown in 2020. As the
business manufactures components for a window system, the balance
of stock holding is critical. The initial lockdown hit at a crucial
time, as stock levels were being built in the first half of the
year and as the business was preparing to relocate its warehousing
operations to the new Telford facility. The unprecedented levels of
demand following lockdown, which continued through 2021, combined
with supply chain pressures on key raw materials, saw longer lead
times for customers. The material cost inflation has been passed on
to a point, through a combination of selling price increases and
surcharges, but this has been done in an equitable manner, often
with a natural lag to the cost inflation impact, recognising our
service levels and other market challenges faced by our
longstanding customers. The level of service improved over the
course of 2021 and continues to normalise in 2022.
The Fabrication and Distribution segment has performed
particularly well during 2021 as a result of strong demand and a
good operational performance. The result also reflects the
strategic progress of the Group in recent years having made a
number of acquisitions to further extend the geographical coverage
of the Group's distribution network and the rationalisation
programme undertaken to streamline the fabrication operations. The
segment has achieved record revenues, operating profit and margins
in the year.
We believe that demand in our new build facing operations was
influenced by the end of the Government's temporary extension to
the nil rate stamp duty band. The nil rate band increase was
initially set to reduce from GBP500,000 on the 31 March 2021 but
was extended through to 30 June 2021. As a result of this, the
Group's new build facing operations saw the high levels of demand
from the housebuilders initially seen in Q4 2020 continue
throughout Q1 2021. Subsequently, demand levels remained robust but
not at the levels seen earlier in the year and slightly behind 2019
levels. As a consequence of their more labour-intensive
manufacturing processes, the output of our new build facing
operations has also been impacted by the widely reported labour
challenges, particularly in the second half of the year. As
described above, we have taken actions to support staff retention
and recruitment initiatives.
Demand from the social housing sector has been slower to return
from the initial lockdown in March 2020 with contract start dates
continuing to be delayed. However, demand is recovering to 2019
levels and order books continue to build.
Strategic progress
Value enhancing acquisitions
The Group completed three bolt on acquisitions during the year
to further extend its network of trade counters.
On 5 January 2021, the Group acquired the business of SBS
(Cumbria) Limited ("SBS"), a well-established regional distributor
of plastic building products operating across eight branches in
Cumbria and Southern Scotland. Including synergistic benefits, we
anticipate achieving an EBITDA multiple of four times, with the
full benefits of the acquisition being realised from the end of
2021.
On 30 June 2021, the Group acquired the trade counter business
of Plastic Building Supplies Limited ("PBS"), an established
distributor of plastic building products from four branches across
Norfolk. We anticipate achieving an EBITDA multiple, including
synergies, of three times from the end of 2021.
On 11 November 2021, the Group acquired Accrington Plastics
Limited, a single branch distributor of plastic building
products.
Total consideration for these acquisitions was GBP5.4 million,
net of cash acquired, comprising GBP5.3 million paid in cash and
GBP0.1 million deferred. These acquisitions further increase the
geographical coverage of the Group's plastic distribution business
and offer the opportunity for synergies and wider expansion over
time alongside the Group's partnerships with its key independent
distribution partners.
New product development
The Group has seen strong demand for the new products launched
during 2019 and 2020, in particular the aluminium window system,
Stellar, and the PVC decking product, Dekboard, which have seen
demand well ahead of management's expectations. This is
particularly pleasing given the impact the Covid-19 lockdown had on
the initial phase of their launch.
Reflecting both the continual need to operate in an ever more
environmentally sustainable manner, as well as the current highly
inflated cost of raw materials, the Group has commenced investment
to increase the utilisation of recycled materials in its PVC
extrusion operations. Due to the long lead times for plant and
tooling this is anticipated to come on stream in the second half of
2022.
Progress with site consolidation and rationalisation
programme
Construction work on the purpose-built facilities in Telford, to
consolidate Window Systems warehousing and finishing operations,
has been successfully completed on time and on budget.
The Covid-19 pandemic and the continuation of the exceptionally
high demand levels seen post lockdown and throughout H1 2021 has
required the Window Systems business to continue operating across
its existing sites. It is now anticipated that the relocation of
inventories and logistics operations to the new facility will be
completed in 2022 which will allow the Group to start realising the
consolidation and synergistic benefits of the new facility.
Health and safety
As a manufacturing business the Group is committed to ensuring a
safe, clean and healthy working environment for all its employees
and promotes continuous improvement in health and safety standards
across all operations. Our operational KPIs, include health and
safety metrics. There has been a slight increase in accident
frequency and reportable injuries during the period. This was
primarily due to increased operational activity and staffing
challenges, both leading to an increase in use of temporary labour,
which can present challenges resulting from a lack of familiarity
with the Group's safe operating procedures when compared to more
experienced permanent members of staff. An exercise has been
undertaken to reduce the reliance on temporary labour and to
reinforce the importance of adherence to established operating
procedures. The KPIs continue to be monitored closely by the main
and divisional Boards to ensure that appropriate and timely action
is taken to maintain a safe operating environment.
Throughout the Covid-19 pandemic, the health, safety and
wellbeing of our employees, as well as their families, has remained
the primary concern. Our overriding principle has been to follow
the Government's guidance whilst ensuring that the Group is
protected and can continue trading in order to secure employment
for our committed workforce.
Covid-19 safe and compliant working practices have remained in
place throughout 2021 and into 2022, as well as work from home
measures when Government guidance has advised and where feasible
for the employee and business.
ESG
ESG is a core part of the Group's strategy. As the Group's
energy efficient and low maintenance products have inherent
sustainability credentials, a key element of our strategy is based
on innovation to maximise the environmental benefit of our
products. As a manufacturing business of scale, we are energy and
resource intensive. Therefore, another key part of our
sustainability strategy is a focus on optimising the efficiency of
our production processes and wider operations and increasing the
use of recycled resources in our manufacturing plants. During the
year the Group has approved a capital expenditure programme to
facilitate the increased use of recycled material in its PVC
extrusion operations and has undertaken initiatives to improve
fleet efficiency and reduce plant energy and water consumption. The
Group continues to develop its reporting in relation to ESG, noting
it is a matter of increasing importance to investors and other key
stakeholders, and will present an integrated Sustainability Report,
bringing together all reporting relevant to ESG issues, as part of
the 2021 Annual Report and Accounts.
Market overview
The strong trading conditions seen in the second half of 2020
continued throughout 2021, still predominantly driven by the RMI
sector. Households that had saved through lockdown continued to
prioritise expenditure on home improvements whilst other big ticket
spending options such as holidays and motor vehicles remained
limited.
Private housing RMI
The strong RMI demand seen throughout 2021 is expected to
continue through the first half of 2022. This is a result of
historical underinvestment in both home repair and maintenance, as
well as the continuing desire for home improvement, driven by the
increase in working from home and supported by strong household
finances as a consequence of the pandemic. However, the impact of
inflation, including this month's increases in energy costs and
National Insurance Contributions, will lead to a rise in the cost
of living and potentially lower disposable incomes, which could
moderate RMI spend in the second half of 2022 and into 2023.
Social housing RMI and new build
Having been slower to recover following the initial pandemic
lockdown, social housing RMI and new build are expected to grow in
2022, with the Construction Products Association ("CPA")
forecasting 7% growth in 2022 for social housing RMI, followed by
5% growth in 2023, and 3% growth in 2022 and 2023 for social
housing new build. However, local authority and housing association
funding is expected to remain focused on remediating legacy safety
issues such as cladding on high-rise buildings, at the expense of
other maintenance and new public housing. This may be to the
short-term detriment of the Group's products, with our social
facing window fabrication business in particular continuing to see
the deferment of some contract start dates.
Private new build housing
New build demand was strong during the first half of 2021,
supported by the Government's stamp duty holiday and Help to Buy
scheme. Whilst there are some headwinds in the form of supply chain
and inflationary pressures, as well as the rising cost of living
and interest rates, which will impact the affordability of homes,
demand for private new build housing is expected to continue during
2022, supported by an underlying shortage of suitable housing
particularly for first time buyers.
Outlook
Demand levels are expected to remain strong through most of
2022, but the Group is cognisant of the headwinds in the form of
continuing supply chain challenges, inflationary pressures and the
rising cost of living, as well as continuing uncertainty around the
emergence of new Covid-19 variants and the impact of the tragic
events in Ukraine. These headwinds mean that while demand is
expected to remain strong, high growth rates like those seen in the
second half of 2020 and throughout 2021 are unlikely to continue at
the same pace in 2022.
The medium to long-term underlying market drivers remain
strong:
-- The UK's existing housing stock is ageing and underinvested
in recent years, resulting in an increasing backlog of properties
that will require essential repairs and maintenance.
-- An increasing UK population and shortage of suitable new housing.
-- Environmental and safety concerns that will continue to drive
legislation and initiatives that will require improvements,
including in respect of energy efficiency, to homes on a larger
scale than just essential maintenance.
-- Changing structural trends with an increase in time spent at
home, including working from home, will lead to continued
investment in home improvement.
Jonathan Bednall
Chief Executive Officer
6 April 2022
Financial Review
Total revenue for the year ended 31 December 2021 was a record
GBP329.6 million (2020: GBP241.0 million, 2019: GBP282.1 million).
The increase in revenue over 2020 was in part as a consequence of
the pandemic related business closure at the end of March 2020, but
also the strong levels of RMI demand seen since the second half of
2020 and throughout 2021, as well as the impact of selling price
increases and surcharges required to combat the significant raw
material and other cost inflation experienced since Q4 2020. The
increase in revenue over 2019 is predominantly as a result of
strong RMI demand and selling price increases and surcharges in
response to material cost inflation. The three acquisitions
completed in 2021 contributed GBP9.5 million of revenue.
Underlying operating profit increased significantly to GBP18.5
million in the period (2020: GBP9.4 million) as a result of a full
year of trading and strong demand from the RMI sector. Underlying
operating profit remains slightly below 2019 levels, as a
consequence of unprecedented material cost inflation, in particular
in relation to PVC resin which has increased in price by 75% during
the course of 2021 and is now more than double the prevailing
pre-pandemic price. Underlying operating margin trails 2019 by 1.9%
as the Group has sought to pass on the material price increases in
an equitable manner to its customers, albeit with an unavoidable
lag. As at December 2021, the business has communicated and
implemented selling price increases and surcharges that recover the
material cost increases, but these do not yet recover the full
margin impact. Operating profit for the year was GBP17.7 million
(2020: GBP6.3 million, 2019: GBP17.2 million) driven by strong
trading and lower non-underlying costs than in previous years.
Key financials Year ended Year ended Year ended
31 December 31 December 31 December
2021 2020 2019
GBPm GBPm GBPm
------------------------------------------- ------------- ------------- -------------
Revenue 329.6 241.0 282.1
------------------------------------------- ------------- ------------- -------------
Underlying operating profit (*) 18.5 9.4 21.2
Amortisation of acquired other intangible
assets (0.3) (0.3) (0.3)
Other non-underlying items (0.1) (2.8) (2.3)
Share-based payments expense (0.4) - (1.4)
Operating profit 17.7 6.3 17.2
------------------------------------------- ------------- ------------- -------------
Underlying operating margin (*) 5.6% 3.9% 7.5%
Operating margin 5.4% 2.6% 6.1%
------------------------------------------- ------------- ------------- -------------
(*) Stated before amortisation of acquired other intangible
assets, share-based payments and other non-underlying items.
Reportable segments Year ended Year ended Year ended
31 December 31 December 31 December
2021 2020 2019
GBPm GBPm GBPm
------------------------------------------- ------------- ------------- -------------
Revenue
------------------------------------------- ------------- ------------- -------------
Extrusion and Moulding 202.3 154.3 177.6
Fabrication and Distribution 127.3 86.7 104.5
------------------------------------------- ------------- ------------- -------------
Total 329.6 241.0 282.1
------------------------------------------- ------------- ------------- -------------
Underlying segmental operating profit
Extrusion and Moulding 12.2 8.3 18.7
Fabrication and Distribution 8.4 3.2 4.6
------------------------------------------- ------------- ------------- -------------
Underlying segmental operating profit
before corporate costs 20.6 11.5 23.3
Corporate costs (2.1) (2.1) (2.1)
------------------------------------------- ------------- ------------- -------------
Underlying operating profit 18.5 9.4 21.2
Amortisation of acquired other intangible
assets (0.3) (0.3) (0.3)
Other non-underlying items (0.1) (2.8) (2.3)
Share-based payments expense (0.4) - (1.4)
------------------------------------------- ------------- ------------- -------------
Operating profit 17.7 6.3 17.2
------------------------------------------- ------------- ------------- -------------
Extrusion and Moulding
-- Revenue increased by 31% in comparison to 2020, to a record
GBP202.3 million, as a result of the bounce back following the
lockdown in March 2020 and the heightened RMI demand levels seen in
H2 2020 that have continued throughout 2021, as well as selling
price increases and surcharges
-- In comparison to 2019, revenues increased by 14% as a result
of strong customer demand and the selling price increases and
surcharges required to combat material cost inflation, particularly
in relation to PVC resin
-- Supply chain disruption and increases in raw material costs
have impacted margins. By the nature of its activities, the
Extrusion and Moulding segment has borne the majority of the impact
of the supply chain issues and raw material cost increases. The
business has taken, and continues to take, steps to mitigate these
equitably through price increases, surcharges and other measures;
albeit this process naturally lags the continuing increase in input
costs
Fabrication and Distribution
-- Revenue increased by 47% in comparison to 2020, to a record
GBP127.3 million, mainly as a result of the bounce back following
the lockdown in March 2020 in addition to selling prices and the
contribution of acquisitions during the year
-- In comparison to 2019, revenues have increased by 22%, of
which 13% is through increased volumes and selling price increases,
with the balance due to acquisitions
-- Underlying Fabrication and Distribution segmental operating profit increased by 83% from 2019
-- The improvement in profitability and margin, to record
levels, reflects increased volumes, successful passing on of price
increases and the benefits from the site consolidation and
rationalisation activities over recent years
Non-underlying items
To assist users of the financial statements, the Group reports
certain performance measures as underlying as it believes they
provide better information on the ongoing trading performance of
the business. Items excluded from operating profit in arriving at
underlying operating profit are non-cash items such as amortisation
of acquired other intangible assets and share-based payments
expense as well as significant one-off incomes or costs that are
not part of the underlying trading performance of the business.
Non-underlying items that have been excluded from operating
profit in arriving at underlying operating profit include:
i. Amortisation of acquired other intangible assets
Amortisation of GBP0.3 million was charged during the year
(2020: GBP0.3 million), relating to the brand and customer
relationship intangible assets recognised on acquisitions.
ii. Other non-underlying items
Other non-underlying items relate to legal and professional fees
associated with the purchase of the trade and assets of SBS
(Cumbria) Limited ("SBS") and Plastic Building Supplies ("PBS") as
well as the acquisition of Accrington Plastics Limited.
In 2020, other non-underlying items include business
reorganisation costs as a result of Covid-19 and the consolidation
of Window Systems warehousing and finishing operations into the new
Telford development. These costs are partially offset by a further
profit on the sale and leaseback transaction undertaken in 2019,
which completed in 2020.
Year ended Year ended Year ended
31 December 31 December 31 December
2021 2020 2019
GBPm GBPm GBPm
----------------------------------- ------------- ------------- -------------
Acquisition costs (0.1) - (0.1)
Profit on sale and leaseback - 1.1 0.6
Site consolidation and redundancy - (3.9) (2.8)
----------------------------------- ------------- ------------- -------------
Other non-underlying items (0.1) (2.8) (2.3)
----------------------------------- ------------- ------------- -------------
iii. Share-based payments expense
Share-based payments include the IFRS 2: Share-based payments
charge in respect of the Long-Term Incentive Plan ("LTIP") and Save
As You Earn ("SAYE") scheme. A new LTIP scheme was launched in May
2021 for the Executive Directors and certain senior employees, and
there was also a further issue of options under the Group's SAYE
scheme during the period. The charge for 2020 was GBPnil as a
result of the expiry of the previous LTIP scheme in 2019.
Cash flow Year ended Year ended Year ended
31 December 31 December 31 December
2021 2020 2019
GBPm GBPm GBPm
---------------------------------------- ------------- ------------- -------------
Pre-tax operating cash flow 34.9 23.7 34.8
Tax paid (0.5) (0.8) (3.3)
Acquisitions (5.3) - (2.2)
Net capital expenditure (5.4) (3.2) (8.6)
Net site development cash flow 4.8 (4.8) 10.1
Interest on borrowings (1.5) (1.4) (1.6)
Net (repayment)/drawdown of borrowings (2.1) (15.1) 1.3
Lease payments (13.4) (13.4) (12.3)
Issue/purchase of shares 0.1 - -
Dividends (4.0) - (7.1)
Increase/(decrease) in cash and
cash equivalents 7.6 (15.0) 11.1
---------------------------------------- ------------- ------------- -------------
Opening cash and cash equivalents 2.2 17.2 6.1
Closing cash and cash equivalents 9.8 2.2 17.2
Borrowings (15.1) (17.3) (32.3)
Lease assets 2.2 2.4 5.7
Lease liabilities (81.6) (84.2) (71.0)
---------------------------------------- ------------- ------------- -------------
Closing net debt (84.7) (96.9) (80.4)
---------------------------------------- ------------- ------------- -------------
Covenant net debt* (9.4) (18.5) (16.4)
---------------------------------------- ------------- ------------- -------------
(*) Covenant net debt represents a pre-IFRS 16 measure
Covenant net debt reduced to GBP9.4 million at 31 December 2021
(2020: GBP18.5 million, 2019: GBP16.4 million), representing a
covenant net debt to adjusted EBITDA ratio of 0.4x, as a result of
strong cash generation during the period. Pre-tax operating cash
flow recovered to pre-pandemic levels at GBP34.9 million (2020:
GBP23.7 million, 2019: GBP34.8 million) through improved
profitability. Working capital remained relatively consistent,
increasing by GBP1.4 million as a result of a significant increase
in the value of inventories, as a consequence of higher stock
holding and material price inflation, offset by a corresponding
increase in trade payables.
Tax paid
Tax payments during the year of GBP0.5 million (2020: GBP0.8m,
2019: GBP3.3m) were lower than previous years due to lower profits
in 2020 as a result of the pandemic.
Net capital expenditure
Net capital expenditure of GBP5.4 million represents ongoing
replacement expenditure as well as investment in plant, fixtures
and fittings.
Site development
The net site development cash inflow of GBP4.8 million
represents the receipt in 2021 of the final GBP5.2 million due from
the landlord on completion of the Telford development, net of final
retention payments related to construction. The GBP4.8 million cash
outflow in 2020 represented costs of construction.
Financing
The Group has banking facilities on a two bank, syndicated basis
with Barclays and HSBC through to June 2024. The facilities
comprise a revolving credit facility of GBP65.0 million and an
overdraft of GBP10.0 million. The Group has in excess of GBP65
million headroom at 31 December 2021 providing the Group with the
facilities to pursue its strategy.
Net interest paid for the period comprises GBP1.5 million
interest payments on borrowings and arrangement fees relating to
the extension of facilities through to June 2024 (2020: GBP1.4
million).
Christopher Empson
Group Finance Director
6 April 2022
Consolidated Income Statement and Other Comprehensive Income
for the year ended 31 December 2021
2021 2020
Note GBPm GBPm
-------------------------------- ----- -------- --------
Revenue 2 329.6 241.0
--------------------------------- ----- -------- --------
Cost of sales (236.9) (168.8)
--------------------------------- ----- -------- --------
Gross profit 92.7 72.2
Distribution expenses (38.7) (30.7)
Administrative expenses (36.3) (35.2)
Underlying operating profit 18.5 9.4
Amortisation of acquired other
intangible assets 4 (0.3) (0.3)
Other non-underlying items 4 (0.1) (2.8)
Share-based payments expense 4 (0.4) -
--------------------------------- ----- -------- --------
Operating profit 17.7 6.3
Finance costs 5 (4.8) (4.4)
--------------------------------- ----- -------- --------
Profit before tax 12.9 1.9
Taxation 6 (0.4) 0.7
--------------------------------- ----- -------- --------
Profit for the year and total
comprehensive income 12.5 2.6
--------------------------------- ----- -------- --------
Earnings per share pence pence
-------------------------------- ----- -------- --------
Basic 7 8. 61 1.82
Diluted 7 8. 52 1.82
--------------------------------- ----- -------- --------
Consolidated Balance Sheet
as at 31 December 2021
2020
2021 as restated*
GBPm GBPm
-------------------------------------- ------ --------------
Assets
Non-current assets
Goodwill 75.5 72.2
Other intangible assets 2.4 2.8
Property, plant and equipment 28.5 29.5
Right of use assets 64.0 66.4
Lease assets 2.0 2.2
Deferred tax 4.6 3.8
--------------------------------------- ------ --------------
177.0 176.9
Current assets
Inventories 41.0 29.6
Trade and other receivables 43.6 44.3
Lease assets 0.2 0.2
Income tax receivable - 0.5
Cash and cash equivalents (excluding
bank overdrafts)* 9.8 13.1
--------------------------------------- ------ --------------
94.6 87.7
Total assets 271.6 264.6
--------------------------------------- ------ --------------
Liabilities
Current liabilities
Bank overdraft* - 10.9
Other interest-bearing loans and 0.5
borrowings -
Lease liabilities 9.4 9.3
Trade and other payables 71.5 57.6
Income tax payable 0.4 -
Provisions 1.2 1.2
--------------------------------------- ------ --------------
83.0 79.0
Non-current liabilities
Other interest-bearing loans and
borrowings 14.6 17.3
Lease liabilities 72.2 74.9
Contingent consideration 1.1 1.0
Provisions 2.4 3.1
--------------------------------------- ------ --------------
90.3 96.3
Total liabilities 173.3 175.3
--------------------------------------- ------ --------------
Net assets 98.3 89.3
--------------------------------------- ------ --------------
Equity
Ordinary share capital 0.1 0.1
Share premium 13.0 12.5
Merger reserve 25.5 25.5
Retained earnings 59.7 51.2
======================================= ====== ==============
Total equity 98.3 89.3
--------------------------------------- ------ --------------
--
* see note 1
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
Share Share Merger Retained
capital premium reserve earnings Total
GBPm GBPm GBPm GBPm GBPm
-------------------------------- --------- --------- --------- ---------- ------
Balance as at 1 January
2020 0.1 12.5 25.5 50.7 88.8
--------------------------------- --------- --------- --------- ---------- ------
Comprehensive income:
Profit for the year - - - 2.6 2.6
--------------------------------- --------- --------- --------- ---------- ------
Total comprehensive income - - - 2.6 2.6
--------------------------------- --------- --------- --------- ---------- ------
Transactions with owners
recorded directly in equity:
Settlement of share-based
payments - - - (2.1) (2.1)
Share-based payments expense - - - - -
Dividends - - - - -
-------------------------------- --------- --------- --------- ---------- ------
Total transactions with
owners - - - (2.1) (2.1)
--------------------------------- --------- --------- --------- ---------- ------
Balance as at 31 December
2020 and 1 January 2021 0.1 12.5 25.5 51.2 89.3
--------------------------------- --------- --------- --------- ---------- ------
Comprehensive income:
Profit for the year - - - 12.5 12.5
--------------------------------- --------- --------- --------- ---------- ------
Total comprehensive income - - - 12.5 12.5
--------------------------------- --------- --------- --------- ---------- ------
Transactions with owners
recorded directly in equity:
Issue of shares - 0.5 - - 0.5
Acquisition of treasury
shares - - - (0.4) (0.4)
Share-based payments expense - - - 0.4 0.4
Dividends - - - (4.0) (4.0)
--------------------------------- --------- --------- --------- ---------- ------
Total transactions with
owners - 0.5 - (4.0) (3.5)
--------------------------------- --------- --------- --------- ---------- ------
Balance as at 31 December
2021 0.1 13.0 25.5 59.7 98.3
--------------------------------- --------- --------- --------- ---------- ------
Consolidated Cash Flow Statement
for the year ended 31 December 2021
2021 2020
GBPm GBPm
---------------------------------------------------- ------- -------
Cash flows from operating activities
Profit for the year 12.5 2.6
Adjustments for:
Depreciation, amortisation and impairment
of fixed assets 17.8 19.2
Loss on disposal of fixed assets 0.4 1.1
Gain on sale and leaseback - (1.1)
Net finance costs 4.8 4.4
Taxation 0.4 (0.7)
Share-based payments expense 0.4 -
---------------------------------------------------- ------- -------
Operating cash flow before movement in working
capital 36.3 25.5
(Increase)/decrease in inventories (10.0) 0.7
(Increase) in trade and other receivables (2.9) (0.7)
Increase/(decrease) in trade and other payables 12.4 (1.6)
(Decrease) in provisions (0.9) (0.2)
----------------------------------------------------- ------- -------
Pre-tax operating cash flow 34.9 23.7
Tax paid (0.5) (0.8)
----------------------------------------------------- ------- -------
Net cash inflow from operating activities 34.4 22.9
----------------------------------------------------- ------- -------
Cash flow from investing activities
Acquisition of subsidiary, net of cash acquired (5.3) -
Acquisition of property, plant and equipment (5.5) (3.0)
Acquisition of other intangible assets - (0.2)
Proceeds on sale and leaseback, net of development
costs 4.8 (4.8)
Proceeds on disposal of property, plant 0.1 -
and equipment
---------------------------------------------------- ------- -------
Net cash outflow from investing activities (5.9) (8.0)
----------------------------------------------------- ------- -------
Cash flow from financing activities
Interest on borrowings (1.5) (1.4)
Repayment of borrowings (15.1) (48.1)
Drawdown of borrowings 13.0 33.0
Interest on lease liabilities (3.5) (2.9)
Repayment of lease liabilities (9.9) (10.5)
Proceeds of share issue 0.5 -
Acquisition of treasury shares (0.4) -
Dividends paid (4.0) -
---------------------------------------------------- ------- -------
Net cash outflow from financing activities (20.9) (29.9)
----------------------------------------------------- ------- -------
Net increase/(decrease) in cash and cash
equivalents 7.6 (15.0)
Cash and cash equivalents at the beginning
of year 2.2 17.2
----------------------------------------------------- ------- -------
Cash and cash equivalents at end of year 9.8 2.2
----------------------------------------------------- ------- -------
Secured bank loans (15.1) (17.3)
Lease assets 2.2 2.4
Lease liabilities (81.6) (84.2)
----------------------------------------------------- ------- -------
Net debt at end of year (84.7) (96.9)
----------------------------------------------------- ------- -------
1. Basis of preparation
Whilst the financial information included in this Preliminary
Announcement has been prepared on the basis of UK-adopted
International Accounting Standards ("Adopted IFRSs"), this
announcement does not itself contain sufficient information to
comply with Adopted IFRSs.
The Group expects to publish full Consolidated Financial
Statements in April 2022. The financial information set out in this
Preliminary Announcement does not constitute the Group's
Consolidated Financial Statements for the years ended 31 December
2021 or 2020, but is derived from those Financial Statements which
were approved by the Board of Directors on 6 April 2022. The
auditor, RSM UK Audit LLP, has reported on the Group's Consolidated
Financial Statements and the report was unqualified and did not
contain a statement under section 498 (2) or 498 (3) of the
Companies Act 2006.
The statutory financial statements for the year ended 31
December 2021 have not yet been delivered to the Registrar of
Companies and will be delivered following the Company's Annual
General Meeting.
The Group financial statements consolidate those of the Company
and its subsidiaries (together referred to as the "Group"). The
Group financial statements are prepared on the historical cost
basis except where UK-adopted International Accounting Standards
require an alternative treatment.
The Group financial statements have been prepared and approved
by the directors in accordance with UK-adopted International
Accounting Standards.
The Group's accounting policies are set out in the 2020 Annual
Report and Accounts and have been applied consistently in 2021.
During 2021, the Financial Reporting Council ("FRC") submitted a
request for further information on the Group's Annual Report and
Accounts for the year ended 31 December 2020. Following completion
of this review, the Directors have concluded that although the
Group's banking facilities allow the offset of cash balances held
with the bank with overdraft balances with the same bank, the
overdraft balances of Group entities should be separately presented
gross on the Consolidated Balance Sheet, rather than netted off
against cash and cash equivalents held by other Group entities,
with the same bank. As a result, the Consolidated Balance Sheet as
at 31 December 2020 has been restated.
The restatement, which grosses up cash at bank and bank
overdraft by GBP10.9m, did not result in any change to reported
profit, earnings per share, net assets or cash flows reported in
the 2020 Annual Report and Accounts.
Going concern
The Directors have prepared cash flow forecasts for a period of
at least 12 months from the date of approval of these financial
statements which indicate that, taking account of reasonably
possible downsides and the ongoing anticipated impact of input cost
inflation on the operations and its financial resources, the Group
and Company will have sufficient funds to meet their liabilities as
they fall due for that period.
The Board continues to monitor the evolving status of the
Covid-19 pandemic and the ongoing events in Ukraine. The Group
balance sheet remains robust with significant financial headroom on
committed banking facilities through to June 2024. The banking
facilities comprise a GBP65 million Revolving Credit Facility and
GBP10 million overdraft facility. The Group has traded profitably
throughout 2021, and to the date of this report, and strengthened
its financial position during 2021, reducing net debt and
maintaining significant headroom on its covenants.
The Group has not made use of the Coronavirus Job Retention
Scheme ("CJRS") grants during 2021 and all deferred payment
arrangements with suppliers and HMRC were fully cleared by 31
December 2020.
The Group prepares, and the Board reviews, detailed budgets and
forecasts which it has confidence in achieving in a normal business
environment. The Directors have prepared cash flow, facility
headroom and financial covenant forecasts for a period of at least
12 months from the date of approval of these financial statements.
The Directors considered the financial resources of the Group, as
well as its forecasts and severe but plausible stress test
scenarios.
The Group starts 2022 with significant headroom on its banking
facilities and the forecasts show that there is sufficient
liquidity and headroom to ensure compliance with all covenants
throughout the going concern period.
Consequently, the Directors are confident that the Group and
Company will have sufficient funds to continue to meet their
liabilities as they fall due for at least 12 months from the date
of approval of the financial statements and therefore have prepared
the financial statements on a going concern basis.
2. Segmental reporting
Segmental information is presented in respect of the Group's
reportable operating segments in line with IFRS 8: Operating
Segments, which requires segmental information to be disclosed on
the same basis as it is viewed internally by the Chief Operating
Decision Maker. The Chief Operating Decision Maker is considered to
be the Board of Directors.
Operating segments Operations
Extrusion and Moulding Extrusion and marketing of PVC and
aluminium window profile systems, PVC cellular roofline and
cladding, decking, rigid rainwater and drainage products as well as
Wood Plastic Composite ("WPC") and aluminium decking products.
Moulding of Glass Reinforced Plastic ("GRP") building
components.
Fabrication and Distribution Fabrication, marketing and
distribution of windows and doors, cellular roofline, cladding,
rainwater, drainage and decking products.
2021 2020
GBPm GBPm
---------------------------------------------- ------- -------
Revenue from external customers
---------------------------------------------- ------- -------
Extrusion and Moulding - total revenue 240.8 181.2
Inter-segment revenue (38.5) (26.9)
------- -------
Extrusion and Moulding - external revenue 202.3 154.3
Fabrication and Distribution - total revenue 127.3 86.7
Inter-segment revenue - -
------- -------
Fabrication and Distribution - external
revenue 127.3 86.7
---------------------------------------------- ------- -------
Total revenue from external customers 329.6 241.0
---------------------------------------------- ------- -------
Segmental operating profit
Extrusion and Moulding 12.2 8.3
Fabrication and Distribution 8.4 3.2
---------------------------------------------- ------- -------
Segmental operating profit before corporate
costs 20.6 11.5
Corporate costs (2.1) (2.1)
---------------------------------------------- ------- -------
Underlying operating profit 18.5 9.4
Amortisation of acquired other intangible
assets (0.3) (0.3)
Other non-underlying items (0.1) (2.8)
Share-based payments expense (0.4) -
---------------------------------------------- ------- -------
Operating profit 17.7 6.3
---------------------------------------------- ------- -------
3. Acquisitions
On 5 January 2021, the Group acquired the trade and related
assets of SBS (Cumbria) Limited ("SBS") for cash consideration of
GBP3.8 million on a cash and debt free basis.
On 30 June 2021, the Group acquired the trade counter and
related assets of Plastic Building Supplies Limited ("PBS") for
initial cash consideration of GBP0.8 million and deferred
consideration of GBP0.1 million.
On 11 November 2021, the Group acquired Accrington Plastics
Limited ("AP") for cash consideration of GBP1.2 million.
The following table summarises the consideration paid for SBS,
PBS and AP and the provisional fair values of the assets and
liabilities acquired at the acquisition date.
SBS, PBS and AP provisional
fair values on acquisition
GBPm
------------------------------------------- ----------------------------
Recognised amounts of identifiable assets
and liabilities acquired:
Acquired intangibles - brand 0.4
Property, plant and equipment 1.0
Right of use assets 2.4
Inventories 1.4
Trade and other receivables 1.2
Cash and cash equivalents 0.5
Lease liabilities (2.4)
Trade and other payables (1.5)
Corporation tax liability (0.1)
Deferred tax liability (0.1)
Provisions (0.2)
-------------------------------------------- ----------------------------
Fair value of assets acquired 2.6
Goodwill 3.3
-------------------------------------------- ----------------------------
Total consideration 5.9
-------------------------------------------- ----------------------------
Consideration
Cash consideration 5.8
Deferred consideration 0.1
-------------------------------------------- ----------------------------
Total consideration 5.9
-------------------------------------------- ----------------------------
4. Non-underlying items
Non-underlying items included within operating profit:
2021 2020
GBPm GBPm
-------------------------------- ------ ------
Amortisation of acquired other
intangible assets (0.3) (0.3)
Other non-underlying items (0.1) (2.8)
Share-based payments expense (0.4) -
-------------------------------- ------ ------
Non-underlying expense (0.8) (3.1)
-------------------------------- ------ ------
Amortisation of acquired other intangible assets
GBP0.3 million (2020: GBP0.3 million) amortisation of brand and
customer relationship intangible assets acquired through business
combinations.
Other non-underlying items
Other non-underlying items are significant one-off incomes or
costs that are not part of the underlying trading performance of
the business.
Other non-underlying items include:
2021 2020
GBPm GBPm
------------------------------------------ ------ ------
Profit on sale and leaseback transaction - 1.1
Site consolidation and redundancy - (3.9)
Acquisition costs (0.1) -
------------------------------------------ ------ ------
Other non-underlying items (0.1) (2.8)
------------------------------------------- ------ ------
Included in site consolidation and redundancy is GBPnil (2020:
GBP2.1 million) of plant, equipment and fixtures impairment
relating to sites exited as part of the Window Systems site
consolidation.
Share-based payments expense
The share-based payment expense of GBP0.4 million (2020: GBPnil)
comprises IFRS 2: Share-based payment charges of GBP0.1 million
(2020: GBPnil) in respect of the Long-Term Incentive Plan, which
was launched in May 2021, and SAYE schemes of GBP0.3 million (2020:
GBPnil).
5. Finance costs
2021 2020
GBPm GBPm
----------------------------------- ----- -----
Interest expense on borrowings 1.1 1.4
Amortisation of loan fees 0.2 0.1
Net interest on lease liabilities 3.5 2.9
------------------------------------ ----- -----
Total finance costs 4.8 4.4
------------------------------------ ----- -----
6. Taxation
2021 2020
GBPm GBPm
----------------------------------- ------ ------
Current tax
Current period 1.4 -
Prior period (0.1) (0.7)
----------------------------------- ------ ------
Total current tax charge/(credit) 1.3 (0.7)
Deferred tax
Current period (0.5) (0.5)
Prior period (0.4) 0.5
----------------------------------- ------ ------
Total deferred tax credit (0.9) -
Total tax charge/(credit) 0.4 (0.7)
----------------------------------- ------ ------
UK corporation tax is calculated at 19% (2020: 19%) of the
estimated assessable profit for the year.
The Group's total income tax charge/(credit) is reconciled with
the standard rates of UK corporation tax for the year of 19% (2020:
19%) as follows:
2021 2020
GBPm GBPm
---------------------------------------------- ------ ------
Profit before tax 12.9 1.9
---------------------------------------------- ------ ------
Tax at standard UK corporation tax rate of
19% (2020: 19%) 2.4 0.4
Factors affecting the charge for the period:
Expenses not deductible 0.3 0.2
Losses utilised for which no deferred tax
previously recognised (0.5) (0.5)
Difference in tax rate (1.2) (0.6)
Super deduction benefit (0.2) -
Prior period (0.4) (0.2)
---------------------------------------------- ------ ------
Total tax charge/(credit) 0.4 (0.7)
---------------------------------------------- ------ ------
Factors that may affect future current and total tax charges
In the Spring Budget 2020, the UK government announced that from
1 April 2020 the corporation tax rate would remain at 19% (rather
than reducing to 17%, as previously enacted). In the Budget held on
3 March 2021, the Government announced that the corporation tax
rate will increase to 25% from 1 April 2023. This new law was
substantively enacted on 24 May 2021. Deferred taxes at the balance
sheet date have been measured using these enacted tax rates and
reflected in the financial statements.
The effective tax rate in the current year of 3.1% is primarily
driven by the impact of the upcoming increase in corporation tax
rate on the value of deferred tax assets, as well as the impact of
the capital expenditure super deduction which came into force in
April 2021.
7. Earnings per share ("EPS")
Basic earnings per share are calculated by dividing the profit
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the period. The weighted
average number of shares has been adjusted for the issue and
cancellation of shares during the period.
Diluted earnings per share are calculated by dividing the profit
attributable to ordinary shareholders by the weighted average
number of ordinary shares in issue during the period, plus the
dilutive potential ordinary shares arising from share options in
issue at the end of the period.
2021 2020
EPS summary Pence Pence
------------- ------ ------
Basic EPS 8.61 1.82
Diluted EPS 8.52 1.82
------------- ------ ------
2021 2020
Number of shares No. No.
------------------------------------- ------------ ------------
Weighted average number of ordinary
shares (basic) 145,237,438 143,004,710
Effect of share options
in issue 1,550,649 139,770
--------------------------------------- ------------ ------------
Weighted average number of ordinary
shares (diluted) 146,788,087 143,144,480
--------------------------------------- ------------ ------------
8. Dividends
2021 2021 2020 2020
GBPm Pence per GBPm Pence per
share share
---------------------- ----- ---------- ----- ----------
Previous year final
dividend 1.5 1.00 - -
Current year interim
dividend 2.5 1.75 - -
---------------------- ----- ---------- ----- ----------
4.0 -
---------------------- ----- ---------- ----- ----------
The Board is recommending a final dividend of 2.35 pence per
share in respect of the financial year ending 31 December 2021.
9. Cautionary statement
This Report contains certain forward-looking statements with
respect of the financial condition, results, operations and
business of Epwin Group Plc. Whilst these statements are made in
good faith based on information available at the time of approval,
these statements and forecasts inherently involve risk and
uncertainty because they relate to events and depend on
circumstances that will occur in the future. There are a number of
factors that could cause the actual result or developments to
differ materially from those expressed or implied by these
forward-looking statements and forecasts. Nothing in this Report
should be construed as a profit forecast.
10. Annual General Meeting
The Annual General Meeting of the Company will be held on 24 May
2022 at 1B Stratford Court, Cranmore Boulevard, Solihull, B90
4QT.
Current public health guidance and legislation issued by the UK
Government in relation to the Covid-19 pandemic would permit public
gatherings and travel at the date of the Annual General Meeting.
The AGM has been arranged assuming the Company will be able to hold
a physical in person meeting. However, due to the ongoing Covid-19
situation, the Board considers it appropriate to minimise physical
attendances at the AGM. Shareholders are therefore encouraged to
vote by proxy. Whilst all shareholders are still legally entitled
physically to attend the AGM, please consider carefully before
doing so. If you do wish to attend the AGM in person please
pre-register your intention to do so by emailing epwin@mhpc.com .
Please state 'Epwin Group Plc: AGM' in the subject line of the
email and include your full name and investor code (if available),
by no later than 10.30am on 20 May 2022.
To facilitate the answering of any questions that shareholders
have, or would normally raise, during the course of the AGM, a
designated questions and answers page has been created by the
Company, which can be found at investors.epwin.co.uk . Any
questions will be addressed in the normal way, pursuant to an
explanatory note in the notices. Shareholders are requested to
submit any questions that they may have via email, in good time,
ahead of the meeting to epwin@mhpc.com . Please include a
Shareholder Reference Number in any correspondence.
The Company will continue to monitor the developing impact of
Covid-19, including any changes to the applicable law or guidance
from the UK Government. Should it become necessary or appropriate
to revise the current arrangements the Company will notify
shareholders via its website and, where appropriate, via a
Regulatory Information Service.
11. Electronic communications
The full Annual Report and Accounts for the year ended 31
December 2021 are to be published on the Company's website ,
together with the Notice convening the Company's 2021 Annual
General Meeting by 27 April 2022. Copies will also be sent out to
those shareholders who have elected to receive paper
communications. Copies can be requested by writing to the Company
Secretary, Epwin Group Plc, 1B Stratford Court, Cranmore Boulevard,
Solihull, B90 4QT or email to investors@epwin.co.uk .
This information is provided by RNS, the news service of the
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Policy.
END
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(END) Dow Jones Newswires
April 06, 2022 02:00 ET (06:00 GMT)
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