TIDMEPWN
RNS Number : 7651L
Epwin Group PLC
15 September 2021
15 September 2021
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014 which is part of UK law
by virtue of the European Union (Withdrawal) Act 2018. Upon the
publication of this announcement via the Regulatory Information
Service, this inside information is now considered to be in the
public domain.
Epwin Group Plc
Half year results for the six months to 30 June 2021
Strong trading continues, actively managing cost pressures
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 half year results
for the six months to 30 June 2021 ("H1 2021").
Financial highlights
GBPm H1 2021 H1 2020 H1 2019
====================================== ======== ========== ==========
Revenue 157.8 93.3 140.0
Underlying operating profit/(loss)
(1) 9.4 (1.8) 9.4
Underlying operating margin 6.0% - 6.7%
Adjusted profit/(loss) before tax
(1) 7.1 (4.1) 7.3
Profit/(loss) before tax 6.6 (4.8) 6.7
Adjusted EPS (1) 4.06p (2.24)p 4.20p
Basic EPS 3.72p (2.73)p 3.78p
Dividend per share 1.75p - 1.75p
Covenant net debt (15.8) (21.3) (29.2)
Covenant net debt to adjusted EBITDA 0.6x 1.4x 1.1x
Net debt (including IFRS 16: Leases) (92.1) (81.7) (88.4)
Underlying operating cash conversion
(2) 158.5% - 156.4%
====================================== ======== ========== ==========
(1) Stated before amortisation of acquired other intangible
assets, share-based payments and other non-underlying items.
(2) Underlying operating cash conversion is pre-tax operating
cash flow as a percentage of underlying operating profit.
Financial headlines
-- Strong trading performance, despite pandemic operational challenges:
o High RMI demand continued into H1 2021
o Revenues 69% ahead of 2020 and 13% up on the same period in
2019
o Underlying operating profit of GBP9.4 million recovered to
2019 level
-- Financial position remains strong:
o Covenant net debt reduced to GBP15.8 million (HY20: GBP21.3
million; FY20: GBP18.5 million); 0.6x adjusted EBITDA
o Includes cost of GBP4.6 million on acquisitions in H1 2021
o Significant headroom on banking facilities, in excess of GBP60
million at the half year end
-- Interim dividend of 1.75 pence per share declared
Operational and strategic headlines
-- Health and safety remains a priority
-- Continued strategic progress:
o Site consolidation and rationalisation programme:
-- Construction completed on new Telford distribution and
finishing facility, with final payment of GBP5.2 million received
during H1 2021
-- Full relocation of inventories to the new facility in 2022
after exceptionally high demand levels in 2021
o Value enhancing acquisitions - SBS acquired in January 2021
and PBS in June 2021:
-- Both well-established regional independent distributors of
plastic building products, increasing access to the Group's product
offer
-- Adds 12 trade counters in Cumbria, Northumberland, Southern
Scotland and Norfolk
o New product development:
-- Aluminium window profile and PVC decking sales building
encouraging momentum
-- Ongoing development of ESG framework and sustainability agenda
Current Trading and Outlook
-- Trading in line with analysts' forecasts increased at the July 2021 trading update
-- Strong demand from customers serving the RMI market, which
represents around 70% of historic Group revenues, is expected to
continue for the foreseeable future
-- Continue to actively manage ongoing supply chains and logistics pressures:
o PVC raw materials in particular impacted, exacerbated by
supplier plant issues restricting availability and driving up the
price of resin
o Steps have been, and continue to be, taken to recover these
costs in the market in an equitable manner
o Labour availability and wage inflation presenting some
challenges
-- Medium and long-term drivers for the RMI market remain positive
-- Further potential bolt-on M&A opportunities continue to emerge
-- Well positioned as operating conditions improve and pent-up demand takes effect
Jon Bednall, Chief Executive Officer, said:
"I would again like to recognise and thank all of our people for
their continued effort and hard work during the ongoing pandemic
disruption.
Our trading performance during the first half has been
encouraging and we have continued to make good strategic progress.
This has been underpinned by ongoing strong demand from our key RMI
markets, together with proactive management of raw material cost
inflation and supply chain issues.
We are optimistic for trading prospects in the second half and
expect to make further gains in market share, whilst continuing to
manage the challenges that the pandemic presents. Looking further
ahead, we remain confident that we can take advantage of future
opportunities, supported by the positive medium and long-term
drivers for the Group's products."
Contact information
Epwin Group Plc
Jon Bednall, Chief Executive
Chris Empson, Group Finance Director 0203 128 8572
Shore Capital (Nominated Adviser and
Joint Broker)
Corporate Advisory 0207 408 4090
Edward Mansfield / Daniel Bush
Corporate Broking
Fiona Conroy
Zeus Capital Limited (Joint Broker)
John Goold / Dominic King 0203 829 5000
MHP Communications 0203 128 8572
Reg Hoare / Charlie Barker / Florence epwin@mhpc.com
Mayo
Forthcoming dates:
Ex-dividend date 23 September 2021
Dividend record date 24 September 2021
Dividend payment date 15 October 2021
About Epwin
Epwin is the leading manufacturer of low maintenance building
products, 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.
www.epwin.co.uk
Group Business Review
Trading and results
Half year revenues of GBP157.8 million were significantly ahead
of the COVID-19 impacted H1 2020 (HY20: GBP93.3 million) and ahead
of pre-pandemic H1 2019 levels (HY19: GBP140.0 million). Revenue
growth was predominantly organic and demand driven as the
acceleration experienced in H2 2020, following the March 2020
lockdown, continued through into 2021. Selling price increases
passed on as a result of input cost inflation, the acquisition of
SBS (Cumbria) ("SBS") and growth in new product sales also
contributed to the higher revenues.
Underlying operating profit also recovered strongly to GBP9.4
million (HY20: loss of GBP1.8 million), returning to pre-pandemic
2019 levels. The main drivers behind the improvement to underlying
operating profit were higher volumes and selling price increases,
offset by raw material price increases and operating inefficiencies
resulting from the ongoing pandemic.
As has been widely reported, supply chains remain under
significant pressure from high market demand, shortages from global
events and supplier issues which have continued throughout 2021.
Consequently, raw material prices have continued to increase. The
Group has taken and continues to take steps to mitigate these
equitably through price increases, surcharges and other measures;
albeit this process naturally lags the increase in input
prices.
6 months 6 months 6 months
ended ended ended
30 June 2021 30 June 2020 30 June 2019
Key financials GBPm GBPm GBPm
==================================== ============= ============= =============
Revenue 157.8 93.3 140.0
==================================== ============= ============= =============
Adjusted EBITDA 17.6 6.4 17.5
Amortisation of computer software (0.2) (0.1) (0.1)
Depreciation (8.0) (8.1) (8.0)
Underlying operating profit/(loss) 9.4 (1.8) 9.4
Amortisation of acquired other
intangible assets (0.2) (0.2) (0.1)
Other non-underlying items (0.1) (0.5) (0.1)
Share-based payments expense (0.2) - (0.4)
Operating profit/(loss) 8.9 (2.5) 8.8
Underlying operating margin 6.0% - 6.7%
Operating margin 5.6% - 6.3%
==================================== ============= ============= =============
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.
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 completed. Following practical completion, the final
GBP5.2 million payment was received in full in February 2021. In
total, the acquisition, development and sale and leaseback of the
new Telford site has generated a net cash surplus of GBP10.0
million.
The COVID-19 pandemic and the continuation of the exceptionally
high demand levels seen post lockdown into and throughout H1 2021
has required the window systems operation to continue operating
across its existing sites. It is now anticipated that the
relocation of inventories and logistics operations to the new
facility will take place in 2022 which will allow the Group to
start realising the consolidation and synergistic benefits of the
new facility.
Value enhancing acquisitions
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. Including
synergistic benefits, we anticipate 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 activities
and related assets of Plastic Building Supplies Limited ("PBS"), an
established distributor of plastic building products from four
branches across Norfolk. We anticipate an EBITDA multiple,
including synergies, of three times from the end of 2021.
Total consideration for these acquisitions was GBP4.8 million,
comprising GBP4.6 million paid in cash and GBP0.2 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.
ESG
The Group continued to make progress with developing its ESG
framework and targets, while delivering on its sustainability
agenda.
Having aligned its operations with the United Nations (UN)
Sustainable Development Goals ("SDGs"), meaningful actions continue
to be taken to reduce the Group's carbon footprint such as
switching to sustainable raw materials and improvements to energy
and resource efficiency.
Segmental Results
6 months ended 6 months ended 6 months ended
30 June 2021 30 June 2020 30 June 2019
GBPm GBPm GBPm
==================================== =============== =============== ===============
Revenue
Extrusion & Moulding 97.0 60.7 87.8
Fabrication & Distribution 60.8 32.6 52.2
Total 157.8 93.3 140.0
==================================== =============== =============== ===============
Underlying segmental operating
profit/(loss)
Extrusion & Moulding 6.4 (0.3) 8.6
Fabrication & Distribution 4.0 (0.4) 1.8
Underlying segmental operating
profit/(loss) before corporate
costs 10.4 (0.7) 10.4
Corporate costs (1.0) (1.1) (1.0)
==================================== =============== =============== ===============
Underlying operating profit/(loss) 9.4 (1.8) 9.4
Amortisation of acquired other
intangible assets (0.2) (0.2) (0.1)
Other non-underlying items (0.1) (0.5) (0.1)
Share-based payments expense (0.2) - (0.4)
Operating profit/(loss) 8.9 (2.5) 8.8
==================================== =============== =============== ===============
Extrusion and Moulding
-- Revenue increased by 60% in comparison to H1 2020 to GBP97.0
million as a result of the lockdown in March 2020 and the
heightened RMI demand levels that have continued since then
-- In comparison to H1 2019, revenues increased by 10% as a
result of strong customer demand and selling price increases
-- 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
prices
Fabrication and Distribution
-- Revenue increased by 87% in comparison to H1 2020 to GBP60.8
million, mainly as a result of the lockdown in March 2020
-- In comparison to H1 2019, revenues have increased by 16%, of
which 10% is through increased volumes and selling price increases,
with the balance due to the acquisition of SBS
-- The improvement in margin in Fabrication and Distribution
reflects both the increased volumes and the success of passing on
price increases. The segment's result has also significantly
benefitted 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, and 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 GBP0.2 million was charged during the year
(HY20: GBP0.2 million), relating to the brand and customer
relationship intangible assets recognised on acquisitions.
ii. Other non-underlying items
Other non-underlying items in 2021 relate to professional fees
associated with the acquisitions of SBS and PBS.
iii. Share-based payments expense
The share-based payment expense of GBP0.2 million (HY20: GBPnil)
comprises IFRS 2: Share-based payments charges in respect of a new
Long-Term Incentive Plan established in May 2021 for senior
management and a further issue of options under the Group's Save As
You Earn ("SAYE") scheme in January 2021.
Cash flow
6 months 6 months 6 months
ended 30 ended 30 ended 30
June 2021 June 2020 June 2019
GBPm GBPm
=========== ===========
Pre-tax operating cash flow 14.9 9.1 14.7
Tax paid - (0.7) (0.7)
Acquisitions (4.6) - (2.3)
Net capital expenditure (2.8) (1.3) (3.9)
Net site development cash flow 5.0 (3.4) -
Net interest paid (0.6) (0.9) (0.8)
Facility drawdown 2.7 33.0 7.2
Lease payments (6.7) (5.0) (5.4)
Share issues/repurchases 0.1 - -
Dividends (1.5) - (4.6)
Increase in cash 6.5 30.8 4.2
================================ =========== =========== ===========
Opening cash 2.2 17.2 6.1
================================ =========== =========== ===========
Closing cash 8.7 48.0 10.3
Borrowings (20.0) (65.3) (37.7)
Lease assets 2.3 5.8 -
Leases liabilities (83.1) (70.2) (61.0)
================================ =========== =========== ===========
Net debt (92.1) (81.7) (88.4)
================================ =========== =========== ===========
Covenant net debt (15.8) (21.3) (29.2)
================================ =========== =========== ===========
Pre-tax operating cash flow returned to 2019 levels as the
activity of the Group recovered following the pandemic related
business closure in H1 2020. As the business had fully reopened
during H2 2020, and remained open during the further lockdowns in
November 2020 and January 2021, it has not sought to utilise any of
the Government support schemes during H1 2021 and all deferred
liabilities such as the March 2020 VAT liability have been repaid
in full.
Financing
The Group has maintained in excess of GBP60 million headroom on
its existing banking facilities which comprise a GBP65 million
revolving facility through to June 2024 and a GBP10 million
overdraft facility. Covenant net debt has reduced from GBP29.2
million as at 30 June 2019 to GBP15.3 million as at 30 June 2021.
The increase in net debt (including IFRS 16) since HY19 is as a
result of an increase in lease liabilities due to the sale and
leaseback transaction associated with the development of the
distribution and finishing facility in Telford, which had fully
completed by 31 December 2020.
Finance costs for the period comprise GBP0.6 million interest on
borrowings (HY20: GBP0.9 million). Borrowing costs reduced due to
lower levels of facility utilisation during H1 2021 compared to H1
2020, when the Group fully drew down on its facilities in response
to the March 2020 temporary business closure due to the COVID-19
pandemic.
During H1 2021, the Group received the final GBP5.2 million
payment associated with the development and sale and leaseback of
the Telford distribution and finishing facility. Although the full
move into these premises has been delayed by the COVID-19 pandemic
and the pressure the subsequent heightened levels of demand have
placed on our existing operations, the new facility allows the
consolidation of five warehousing and finishing facilities. It also
houses the Group's aluminium operations and is expected to generate
operational savings once fully operational during 2022.
Dividend
The Board intends to declare an interim dividend of 1.75 pence
per share (HY20: nil pence, HY19: 1.75 pence), to be paid on 15
October 2021 to shareholders on the register on 24 September 2021.
For the 2021 financial year, the Board intends to split the
dividend more evenly between interim and final than the traditional
one third, two thirds split of prior years, in recognition both of
the performance and cash generation of the business during H1 2021,
and of the cancellation of the FY19 final and FY20 interim
dividends.
Going concern
As disclosed in the FY20 Annual Report and Accounts, the
Directors prepared cash flow forecasts for a period of at least 12
months from the date of approval of those financial statements
which indicated that, taking account of reasonably possible
downsides and the anticipated impact of COVID-19 on the operations
and its financial resources, the Group and Company had sufficient
funds to meet its liabilities as they fell due. Actual revenues,
profits and cash flows during the 6 months to 30 June 2021 were
considerably ahead of these forecasts and re-forecasts indicate
that the Group continues to have sufficient funds to meet its
liabilities as they fall due. As such, the Directors believe that
it remains appropriate for the Group to continue to adopt the going
concern basis in preparing these condensed financial
statements.
Outlook
The Group's trading performance during the first half of 2021
has been encouraging as it has continued to make good strategic
progress in a buoyant trading environment that has presented a
number of challenges following the COVID-19 lockdown of the economy
during 2020.
Customer demand, particularly from the RMI sector, has continued
to be strong throughout H1 2021 and this is expected to continue
for the remainder of 2021.
We expect supply chains to remain under pressure and high raw
material costs to continue for the remainder of 2021 as businesses
continue to experience very high demand and inventory levels
recover from the closure of operations and exceptional demand seen
since 2020. PVC resin prices, in particular, are expected to remain
high for the remainder of 2021 as further force majeure events and
planned plant maintenance at the large PVC resin producers continue
to restrict capacity and supply. The restrictions on supply
experienced in the final quarter of 2020 have continued throughout
H1 2021. The Group's strong relationships with the PVC resin
suppliers have ensured it has been able to secure material supply;
albeit the market price of PVC resin has increased by in excess of
80% from 2019 and early 2020 levels. 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, selective
acquisitions, cross-selling and market share growth in key sectors
to build a sustainable, resilient business, prepared for growth as
market conditions improve and pent-up demand takes effect.
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 legislation and
initiatives that will require improvements to homes 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.
The Construction Products Association latest summer forecast
predicts RMI to be up 16% in 2021 and a further 3% in 2022. Within
these forecasts the new build housing sector is anticipated to
grow, driven by underlying demand and government incentives. Social
new build is also expected to see growth.
We are optimistic for trading prospects in the second half and
expect to make further gains in market share, whilst continuing to
manage the challenges that the pandemic presents. Overall, we are
confident that we will emerge a stronger business and that we can
take advantage of potential opportunities that will present
themselves.
Condensed Consolidated Income
Statement
for the six months ended 30
June 2021
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2020
2021 2020
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
==================================== ===== ============ ============ =============
Group revenue 2 157.8 93.3 241.0
==================================== ===== ============ ============ =============
Cost of sales (112.5) (67.5) (168.8)
==================================== ===== ============ ============ =============
Gross profit 45.3 25.8 72.2
Distribution expenses (18.8) (13.5) (30.7)
Administrative expenses (17.6) (14.8) (35.2)
Underlying operating profit/(loss) 9.4 (1.8) 9.4
Amortisation of acquired other
intangible assets 3 (0.2) (0.2) (0.3)
Other non-underlying items 3 (0.1) (0.5) (2.8)
Share-based payments expense 3 (0.2) - -
------------------------------------ ----- ------------ ------------ -------------
Operating profit/(loss) 8.9 (2.5) 6.3
Net finance costs (0.6) (0.9) (1.5)
IFRS 16 discount unwind on
lease liabilities (1.7) (1.4) (2.9)
==================================== ===== ============ ============ =============
Profit/(loss) before tax 6.6 (4.8) 1.9
Taxation 5 (1.2) 0.9 0.7
==================================== ===== ============ ============ =============
Profit/(loss) for the period 5.4 (3.9) 2.6
==================================== ===== ============ ============ =============
Pence Pence Pence
Basic earnings/(loss) per
share 6 3.72 (2.73) 1.82
Diluted earnings/(loss) per
share 6 3.69 (2.72) 1.82
Condensed Consolidated Balance
Sheet
as at 30 June 2021
30 June 30 June 31 December2020
2021 2020
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
======================================= ===== ============ ============ ===========================
Assets
Non-current assets
Goodwill 4 74.8 72.2 72.2
Other intangible assets 2.8 3.3 2.8
Property, plant and equipment 29.9 46.3 29.5
Right of use assets 65.7 49.8 66.4
Lease assets 8 2.1 5.2 2.2
Deferred tax asset 3.9 3.8 3.8
======================================= ===== ============ ============ ===========================
179.2 180.6 176.9
======================================= ===== ============ ============ ===========================
Current assets
Inventories 34.8 28.0 29.6
Trade and other receivables 48.2 28.8 44.3
Lease assets 8 0.2 0.6 0.2
Income tax receivable - 0.6 0.5
Cash and cash equivalents 8 8.7 48.0 2.2
======================================= ===== ============ ============ ===========================
91.9 106.0 76.8
======================================= ===== ============ ============ ===========================
Total assets 271.1 286.6 253.7
======================================= ===== ============ ============ ===========================
Liabilities
Current liabilities
Lease liabilities 8 9.7 10.1 9.3
Trade and other payables 68.2 61.6 57.6
Income tax payable 0.8 - -
Provisions 1.3 0.9 1.2
======================================= ===== ============ ============ ===========================
80.0 72.6 68.1
======================================= ===== ============ ============ ===========================
Non-current liabilities
Other interest-bearing loans
and borrowings 8 20.0 65.3 17.3
Lease liabilities 8 73.4 60.1 74.9
Deferred and contingent consideration 1.2 1.0 1.0
Provisions 3.0 2.7 3.1
======================================= ===== ============ ============ ===========================
97.6 129.1 96.3
======================================= ===== ============ ============ ===========================
Total liabilities 177.6 201.7 164.4
======================================= ===== ============ ============ ===========================
Net assets 93.5 84.9 89.3
======================================= ===== ============ ============ ===========================
Equity
Ordinary share capital 0.1 0.1 0.1
Share premium 12.6 12.5 12.5
Merger reserve 25.5 25.5 25.5
Retained earnings 55.3 46.8 51.2
======================================= ===== ============ ============ ===========================
Total equity 93.5 84.9 89.3
======================================= ===== ============ ============ ===========================
Condensed Consolidated Statement
of Changes in Equity
for the six months ended 30
June 2021
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
======================================= ===== ============ ============ =============
Balance at the start of the
period 89.3 88.8 88.8
Profit/(loss) for the period 5.4 (3.9) 2.6
Settlement of share based payments 0.1 - (2.1)
Share-based payments charge 0.2 - -
Dividends 7 (1.5) - -
======================================= ===== ============ ============ =============
Balance at the end of the period 93.5 84.9 89.3
======================================= ===== ============ ============ =============
Consolidated Cash Flow Statement
for the six months ended 30 June 2021
6 months 6 months Year
ended ended ended
30 June 30 June 31
2021 2020 December
2020
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
=================================== ======= ============ ============ ==========
Cash flows from operating
activities
Profit/(loss) for the period 5.4 (3.9) 2.6
Adjustments for:
Depreciation and amortisation 8.4 8.4 19.2
Loss on disposal of property,
plant
and equipment - - 1.1
Exceptional gain on sale and
leaseback - - (1.1)
Net finance costs 2.3 2.3 4.4
Taxation 5 1.2 (0.9) (0.7)
Share-based payments 0.2 - -
17.5 5.9 25.5
(Increase)/decrease in inventories (3.9) 2.3 0.7
(Increase)/decrease in trade and
other receivables (7.9) 14.8 (0.7)
Increase/(decrease) in trade and
other payables 9.5 (13.0) (1.6)
(Decrease) in provisions (0.3) (0.9) (0.2)
=================================== ======= ============ ============ ==========
Pre-tax operating cash flow 14.9 9.1 23.7
Tax paid - (0.7) (0.8)
=================================== ======= ============ ============ ==========
Net cash flow from operating
activities 14.9 8.4 22.9
Cash flows from investing
activities
Acquisition of subsidiary, net of
cash acquired 4 (4.6) - -
Acquisition of property, plant and
equipment (0.1) (1.2) (3.0)
Acquisition of other intangible
assets (2.7) (0.1) (0.2)
Proceeds on sale and leaseback,
net of development costs 5.0 (3.4) (4.8)
Net cash flow from investing
activities (2.4) (4.7) (8.0)
Cash flows from financing
activities
Net interest paid (0.6) (0.9) (1.4)
(Repayment)/drawdown of borrowings 2.7 33.0 (15.1)
Interest on lease liabilities (1.7) (1.4) (2.9)
Repayment of lease liabilities (5.0) (3.6) (10.5)
Net proceeds from the issue or 0.1 - -
repurchase
of shares
Dividends paid 7 (1.5) - -
=================================== ======= ============ ============ ==========
Net cash flow from financing
activities (6.0) 27.1 (29.9)
Net increase/(decrease) in cash
and cash equivalents 6.5 30.8 (15.0)
=================================== ======= ============ ============ ==========
Cash and cash equivalents at the
beginning of the period 2.2 17.2 17.2
=================================== ======= ============ ============ ==========
Cash and cash equivalents at the
end of the period 8 8.7 48.0 2.2
=================================== ======= ============ ============ ==========
Notes to the Condensed Consolidated Financial Statements
for the six months ended 30 June 2020
1. Basis of preparation
These financial statements have been prepared on the basis of
the accounting policies expected to be adopted for the year ended
31 December 2021. These are in accordance with the accounting
policies as set out in the Group's consolidated financial
statements for the year ended 31 December 2020.
As a result of the UK leaving the European Union ("EU") and the
end of the transition period on 31 December 2020, UK companies are
no longer subject to EU legislation. The recognition and
measurement requirements of all UK-adopted International Accounting
Standards ('UK-adopted IAS') as required to be adopted by AIM
listed companies have been applied as from 1 January 2021.
AIM listed companies are not required to comply with IAS 34
'Interim Financial Reporting' and accordingly the Company has taken
advantage of this exemption.
The financial information in these financial statements does not
constitute statutory accounts for the six months ended 30 June 2021
and should be read in conjunction with the Group's consolidated
financial statements for the year ended 31 December 2020 which were
unqualified and did not contain statements under sections 498(2)
and (3) Companies Act 2006.
The condensed consolidated financial statements for the six
months to 30 June 2021 have not been audited or reviewed by
auditors pursuant to the Auditing Practices Board guidance on
Review of Interim Financial Information.
The condensed consolidated financial statements were approved by
the Board of Directors on 14 September 2021.
Going concern
These condensed financial statements have been prepared on the
going concern basis, after considering the ongoing impact and risks
from COVID-19, as the Directors have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future.
As disclosed in the FY20 Annual Report and Accounts, the
Directors prepared cash flow forecasts for a period of at least 12
months from the date of approval of those financial statements
which indicated that, taking account of reasonably possible
downsides and the anticipated impact of COVID-19 on the operations
and its financial resources, the Group and Company had sufficient
funds to meet its liabilities as they fell due. Actual revenues,
profits and cash flows during the 6 months to 30 June 2021 were
considerably ahead of the these forecasts, and re-forecasts
indicate that the Group continues to have sufficient funds to meet
its liabilities as they fall due.
The banking facilities available to the Group comprise a GBP65
million Revolving Credit Facility, through to June 2024, and a
GBP10 million overdraft facility. At 30 June 2021 the Group had in
excess of GBP60 million of headroom on its banking facilities.
Based on the above, the Directors believe that it remains
appropriate for the Group to continue to adopt the going concern
basis in preparing these condensed financial statements.
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.
Reportable segments Operations
Extrusion and Moulding Extrusion and marketing of PVC and
aluminium window profile systems, PVC cellular roofline and
cladding, rigid rainwater and drainage products as well as PVC,
Wood Plastic Composite ("WPC") and aluminium decking products.
Moulding of Glass Reinforced Plastic ("GRP") building
components.
Fabrication and Distribution Fabrication, installation and
marketing of windows and doors, cellular roofline, cladding,
decking, rainwater and drainage products.
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Revenue from external customers
------------------------------------- ------------ ------------ -------------
Extrusion & Moulding 97.0 60.7 154.3
Fabrication & Distribution 60.8 32.6 86.7
-------------------------------------- ------------ ------------ -------------
Total 157.8 93.3 241.0
====================================== ============ ============ =============
Segmental operating profit/(loss)
------------------------------------- ------------ ------------ -------------
Extrusion & Moulding 6.4 (0.3) 8.3
Fabrication & Distribution 4.0 (0.4) 3.2
-------------------------------------- ------------ ------------ -------------
Segmental operating profit/(loss)
before corporate and other costs 10.4 (0.7) 11.5
Corporate costs (1.0) (1.1) (2.1)
====================================== ============ ============ =============
Underlying operating profit/(loss) 9.4 (1.8) 9.4
Amortisation of acquired other
intangible assets (0.2) (0.2) (0.3)
Other non-underlying items (0.1) (0.5) (2.8)
Share-based payments expense (0.2) - -
===================================== ============ ============ =============
Operating profit/(loss) 8.9 (2.5) 6.3
====================================== ============ ============ =============
3. Underlying operating profit
'Underlying operating profit' is the key profit measure used by
the Board to assess the underlying financial performance of the
operating divisions and the Group as a whole. 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, and significant one-off
incomes or costs that are not part of the underlying trading
performance of the business.
Non-underlying items included within operating profit
include:
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
================================ ============= ============= =============
Amortisation of acquired other
intangible assets (0.2) (0.2) (0.3)
Other non-underlying items (0.1) (0.5) (2.8)
Share-based payments (0.2) - -
================================ ============= ============= =============
Non-underlying expense (0.5) (0.7) (3.1)
================================ ============= ============= =============
Amortisation of acquired other intangible assets
GBP0.2 million (HY20: GBP0.2 million) amortisation of brand and
customer contract 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:
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
=================================== ============= ============= =============
Acquisition expenses (0.1) - -
Profit on sale and leaseback
transaction - - 1.1
Site consolidation and redundancy - (0.5) (3.9)
Other non-underlying items (0.1) (0.5) (2.8)
=================================== ============= ============= =============
During the period the Group incurred professional fees of GBP0.1
million in relation to the acquisitions of the trade and assets of
SBS (Cumbria) and Plastic Building Supplies, see note 4 for further
details.
Share-based payments expense
The share-based payment expense of GBP0.2 million (HY20: GBPnil)
represents the IFRS 2: Share-based payments charge in respect of a
new Long-Term Incentive Plan established in May 2021 for senior
management and a further issue of options under the Group's Save As
You Earn ("SAYE") scheme in January 2021.
4. Acquisitions
Acquisitions in the half year ended 30 June 2021
During the period the Group acquired the trade and related
assets of two trade distributors.
On 5 January 2021, the Group acquired SBS (Cumbria), trading as
SBS, for cash consideration of GBP3.8 million on a cash and debt
free basis. SBS is a well-established distributor of plastic
building products operating across eight branches in Cumbria and
Southern Scotland.
On 30 June 2021, the Group acquired Plastic Building Supplies,
trading as PBS, for initial cash consideration of GBP0.8 million
and further deferred consideration of GBP0.2m. The consideration is
provisional subject to a net asset true-up adjustment. PBS operates
four plastic distribution branches across Norfolk.
The following table summarises the consideration paid for SBS
and PBS and the provisional fair values of the assets and
liabilities acquired at the acquisition date.
SBS and PBS
provisional
fair values
on acquisition
GBPm
GBPm
------------------------------------------------- ----------------
Recognised amounts of identifiable assets
and liabilities acquired liabilities: assumed:
Acquired intangibles - brand 0.3
Property, plant and equipment 1.0
Right of use assets 2.2
Inventories 1.3
Trade and other receivables 1.0
Cash and cash equivalent -
Other interest-bearing loans and borrowings -
Lease liabilities (2.2)
Trade and other payables (1.1)
Provisions (0.3)
Fair value of assets acquired 2.2
Goodwill 2.6
-------------------------------------------------- ----------------
Total consideration 4.8
-------------------------------------------------- ----------------
Consideration
Cash consideration 4.6
Deferred consideration 0.2
-------------------------------------------------- ----------------
Total consideration 4.8
-------------------------------------------------- ----------------
On acquisition, other intangible fixed assets of GBP0.3 million
were recognised, representing the SBS and PBS brands.
The goodwill recognised of GBP2.6 million represents the
collective local market knowledge of the workforce, plus the
potential for cross selling and synergies that exist as a result of
the larger scale of the Epwin Group.
5. Taxation
The tax charge for the six months to 30 June 2021 is based on
the estimated tax rate for continuing operations for the full
year.
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 change was subsequently enacted on 10 June 2021. As at
the 30 June 2020 balance sheet date, the corporation tax rate was
19%, however the deferred tax asset/liability at this date has been
calculated using a blend of rates of 19% and 25%, depending on when
the asset/liability is expected to reverse (30 June 2020: 17%).
6. Earnings per share (EPS)
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
(unaudited) (unaudited) (audited)
pence pence pence
========= ============= ============= =============
EPS
Basic 3.72 (2.73) 1.82
Diluted 3.69 (2.72) 1.82
========= ============= ============= =============
6 months 6 months
ended 30 ended 30 Year ended
June 2021 June 2020 31 December
(unaudited) (unaudited) 2020 (audited)
No. No. No.
==================================== ============= ============= ================
Number of shares
Weighted average number of
shares used to calculate earnings
per share
* Basic 145,167,949 142,926,660 143,004,710
* Diluted 146,373,787 143,169,478 143,144,480
===================================== ============= ============= ================
7. Dividends
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
=============================== ============= ============= =============
2020 final dividend of 1 penny 1.5 - -
per share
=============================== ============= ============= =============
1.5 - -
=============================== ============= ============= =============
8. Net debt
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2021 June 2020 2020
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
=================================== ============ ============ =============
Cash and cash equivalents 8.7 48.0 2.2
Secured bank loans (20.0) (65.3) (17.3)
Lease assets 2.3 5.8 2.4
Lease liabilities (83.1) (70.2) (84.2)
==================================== ============ ============ =============
Net debt (92.1) (81.7) (96.9)
Add back: lease liabilities 83.1 70.2 84.2
Deduct: lease assets (2.3) (5.8) (2.4)
Deduct: finance lease liabilities (4.5) (4.0) (3.4)
==================================== ============ ============ =============
Covenant net debt (15.8) (21.3) (18.5)
==================================== ============ ============ =============
The banking facilities available to the Group are a GBP65.0
million Revolving Credit Facility and GBP10.0 million overdraft,
secured on the assets of the Group. The revolving credit facility
has a term through to June 2024.
9. Cautionary statement
This document contains certain forward-looking statements with
respect of the financial condition, results, operations and
businesses 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 document
should be construed as a profit forecast.
10. Copies of this half year report
Further copies of this half year report are available from the
registered office: Epwin Group Plc, 1b Stratford Court, Cranmore
Boulevard, Solihull, B90 4QT or on the Company's website
www.epwin.co.uk
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END
IR SFIFILEFSEDU
(END) Dow Jones Newswires
September 15, 2021 01:59 ET (05:59 GMT)
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