TIDMEPWN
RNS Number : 3419Z
Epwin Group PLC
14 September 2022
14 September 2022
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 2022
Good half year trading performance, confident of achieving
expectations
Epwin Group Plc (AIM: EPWN) ("Epwin" or the "Group"), the
leading manufacturer of energy efficient and low maintenance
building products, with significant market shares, supplying the
Repair, Maintenance and Improvement ("RMI"), new build and social
housing sectors, announces its unaudited half year results for the
six months to 30 June 2022 ("H1 2022").
Financial highlights
GBPm H1 2022 H1 2021
========================================== ======== ==========
Revenue 178.0 157.8
Underlying operating profit (1) 10.7 9.4
Underlying operating margin 6.0% 6.0%
Adjusted profit before tax (1) 8.3 7.1
Profit before tax 7.9 6.6
Adjusted EPS (1) 4.68p 4.06p
Basic EPS 4.40p 3.72p
Dividend per share 1.90p 1.75p
Covenant net debt(2) 7.3 15.8
Covenant net debt to adjusted EBITDA(2) 0.3x 0.6x
Underlying operating cash conversion (3) 129.9% 158.5%
========================================== ======== ==========
(1) Stated before amortisation of acquired other intangible
assets, share-based payments 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
-- Good trading performance continued:
o Revenue 13% ahead of a strong 2021 comparative period
o Underlying operating profit 14% ahead of 2021 as margins
maintained by pricing action and surcharges
o Ongoing strong cash generation, with underlying operating cash
conversion of 130%
-- Financial position continues to strengthen:
o Strong balance sheet to support achievement of strategic
objectives
o Covenant net debt reduced to GBP7.3 million (HY21: GBP15.8
million; FY21: GBP9.4 million); 0.3x adjusted EBITDA
o Significant headroom on banking facilities, in excess of GBP65
million at the half year end
-- Interim dividend of 1.90 pence per share declared, an increase of 9% on H1 2021
Operational and strategic headlines
-- Active management of operational and inflationary challenges continues:
o Managing further input cost inflation and pressure on
overheads
o Continuing to work with customers to pass-on heightened costs
appropriately
-- Good progress delivering on our strategy:
o Operational improvement:
-- Further increased production capacity of powder coating
facility for Stellar aluminium window system
-- Full relocation of inventories to new Telford distribution
and finishing facility expected to complete, in line with guidance,
in 2022 to allow full realisation of consolidation benefits
o New product development:
-- Aluminium window profile and PVC decking sales building
encouraging momentum
o Value enhancing acquisitions:
-- Recently announced acquisition of Poly-Pure Ltd:
-- A leading UK materials re-processer, recycling post-consumer
and post-industrial PVC building materials
-- Highly synergistic acquisition providing further growth and sustainability opportunities
-- Initial cash consideration of GBP15 million on cash-free
debt-free basis representing a multiple of 6x FY22 adjusted
EBITDA
-- Three-year earnout capped at GBP15 million which if achieved
would equate to a multiple of 3x FY25 adjusted EBITDA after
synergies
-- Successful integration of 2021 bolt-on acquisitions, with H1
2022 performance in line with management expectations
o Progress continues on ESG framework and targets, building on
inherent environmental and sustainability benefits of the Group's
energy efficient, recyclable and low maintenance products
Current trading and outlook
-- The Board is confident in achieving a 2022 result in line
with its expectations, notwithstanding the macroeconomic and
geopolitical environment
-- Current trading is in-line with the Board's expectations,
seeing good demand following some moderation in June and July
against historically high comparatives
-- Medium and long-term drivers for the RMI market remain positive
-- The Group continues to execute its strategy and has a healthy
pipeline of further M&A opportunities
Jon Bednall, Chief Executive Officer, said:
"I am pleased to report a good trading performance in the first
half and we remain confident of meeting our expectations in
2022.
The need to improve the energy efficiency of the UK housing
stock is growing in urgency, given the UK's net zero commitments,
the widely reported increase in energy costs and the historic and
longstanding backlog in housing maintenance.
Whilst we are mindful of the current macroeconomic uncertainty,
our diverse customer base and end markets, as well as our
longstanding trading relationships and strong balance sheet,
provide resilience against potential short-term changes in market
conditions.
The Group has therefore been able to invest towards our
strategic objectives, including operational improvement , n ew
product development and the delivery of v alue enhancing
acquisitions .
We are, therefore, confident in the medium and long-term drivers
of our end markets and believe we are well positioned to deliver
sustainable long-term performance. "
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)
Dominic King / Nick Searle 0203 829 5000
MHP Communications 0203 128 8168
Reg Hoare / Charlie Barker / Pauline epwin@mhpc.com
Guenot
Forthcoming dates:
Ex-dividend date 22 September 2022
Dividend record date 23 September 2022
Dividend payment date 14 October 2022
About Epwin
Epwin is the leading manufacturer of energy efficient and 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.
www.epwin.co.uk
Group business review
Trading and results
The Group continued to make good progress against our strategic
objectives in H1 2022, while delivering a robust trading
performance. The Group's focus continues to be on operational
efficiency, product and material development, identifying and
completing value-enhancing acquisitions and building on the Group's
inherent ESG credentials. Despite well-documented inflationary
challenges, trading conditions remained robust during the first
half of 2022. The Group performed well, with revenues of GBP178.0
million, 13% ahead of a strong 2021 comparative period that
included the post-lockdown rapid recovery of the RMI market,
boosted by strong household savings and prioritisation of home
improvement expenditure in the absence of other big ticket spending
options.
H1 2022 revenue growth was predominantly driven by selling price
increases to recover further input cost inflation. The three
bolt-on acquisitions completed during 2021 also contributed to the
higher revenues. This was offset by a slight decline in volumes
from a record high in 2021 as the market began to moderate towards
the end of the first half, as cost of living increases began to
impact consumer spending and some of the Group's customers began to
reduce stock levels in response to improved supply chain
resilience. There were also some deferments to social housing
contract start dates. During the period we exited select customers
and contracts, where the margins were below acceptable levels and
we had been unable to pass on adequate material price inflation, as
we strive to allocate resource effectively and strike the right
balance between price and volume.
Raw materials costs continued to increase in H1 2022, with PVC
resin hitting an all-time high in April, although this has
currently plateaued. Inflation, including wage inflation, has put
pressure on overheads. The Group continues to work with its
customers to pass on heightened costs appropriately through price
increases and surcharges. Despite disruption to supply chains in
the wider market, the Group has been able to secure sufficient raw
materials to meet demand and expects to be able to continue to do
so. Labour retention and recruitment remain challenges and measures
have been put in place to retain and attract the best people.
Underlying operating profit increased by 14% to GBP10.7 million
(HY21: GBP9.4 million), as price increases, surcharges and other
actions taken to mitigate the impact of input cost inflation begin
to drive a recovery in margin, albeit not yet to pre-pandemic
levels, offset by continued inflationary pressures on
overheads.
Key financials
6 months ended 6 months ended
30 June 2022 30 June 2021
GBPm GBPm
=========================================== =============== ===============
Revenue 178.0 157.8
=========================================== =============== ===============
Underlying operating profit 10.7 9.4
Amortisation of acquired other intangible
assets (0.1) (0.2)
Other non-underlying items - (0.1)
Share-based payments expense (0.3) (0.2)
Operating profit 10.3 8.9
Underlying operating margin 6.0% 6.0%
Operating margin 5.8% 5.6%
=========================================== =============== ===============
Segmental results
6 months ended 6 months ended
===========================================
30 June 2022 30 June 2021
GBPm GBPm
=========================================== =============== ===============
Revenue
Extrusion and moulding 111.3 97.0
Fabrication and distribution 66.7 60.8
=========================================== =============== ===============
Total 178.0 157.8
=========================================== =============== ===============
Underlying segmental operating
profit
Extrusion and moulding 8.0 6.4
Fabrication and distribution 4.0 4.0
=========================================== =============== ===============
Underlying segmental operating
profit 12.0 10.4
Corporate costs (1.3) (1.0)
=========================================== =============== ===============
Underlying operating profit 10.7 9.4
Amortisation of acquired other intangible
assets (0.1) (0.2)
Other non-underlying items - (0.1)
Share-based payments expense (0.3) (0.2)
=========================================== =============== ===============
Operating profit 10.3 8.9
=========================================== =============== ===============
Extrusion and moulding
-- Revenue increased by 15% in comparison to H1 2021 to GBP111.3
million, primarily due to selling price increases to recover input
cost inflation
-- During 2021, the Extrusion and Moulding segment bore the
majority of the impact of the market-wide supply chain disruption
and raw material cost increases
-- Steps taken by the business, during 2021 and continuing in
2022, to mitigate these appropriately through price increases,
surcharges and other measures have resulted in a recovery in
underlying operating margin to 7.2% (HY21: 6.6%); albeit not yet to
pre-pandemic levels
Fabrication and distribution
-- Revenue increased by 10% in comparison to a strong H1 2021 to
GBP66.7 million, of which 6% is through additional revenue from
acquisitions completed in 2021, with the balance due to selling
price increases, offset by lower volume
-- RMI market demand remained robust in H1 2022, albeit with
some moderation in June from historically strong comparatives
whilst the Group's fabricators supplying the social housing market
continued to see the deferment of some contract start dates
-- Underlying operating profit margin continues to be ahead of
medium-term expectations for the segment with the impact of the
site consolidation and rationalisation activities of recent years
continuing to drive improvement
New product development
The Group has continued to see strong demand for products
launched during 2019 and 2020, in particular the aluminium window
system, Stellar, and the PVC decking product, Dekboard. Upgrades
have been completed to the Stellar aluminium window system powder
coating facility in Telford to further increase capacity as a
result of strong demand for the product since its launch in
2019.
Progress with site consolidation and rationalisation
programme
Construction work on the purpose-built facilities in Telford, to
consolidate window systems warehousing and finishing operations,
was successfully completed, and final payment received, in 2021.
Full relocation of inventories and logistics operations to the new
facility is well underway, and is expected to complete in 2022,
which will allow the Group to start realising the full
consolidation and synergistic benefits of the new facility.
Value enhancing acquisitions
A key aspect of the Group's strategy is to execute value
enhancing acquisitions.
Poly-Pure acquisition
On 9 September 2022, the Group completed the acquisition of
Poly-Pure Ltd, a leading UK materials re-processor, recycling
post-consumer and post-industrial PVC building materials, including
UPVC window frames.
The acquisition presents a strong strategic rational for the
Group:
-- Growth opportunity: Poly-Pure has generated strong levels of
revenue and EBITDA growth since establishment, with a diverse and
growing customer base and with a programme to expand its processing
capacity. There is increasing industry focus on improving the use
of reprocessed materials in manufacturing and Epwin believes there
are a range of opportunities for Poly-Pure to continue to execute
its growth plan;
-- Cost synergies: Poly-Pure has the ability to provide Epwin
with a further, cost effective, supply of recycled PVC, with the
potential for operational efficiencies and cost benefits;
-- Sustainability: The acquisition, alongside Epwin's existing
capital expenditure programme, accelerates the Group's ambitions to
integrate an even greater proportion of recycled materials into its
products.
-- Material sourcing: Poly-Pure has strong links within the
industry and a proven ability to source post-industrial and
post-consumer recyclable building plastics materials. The greater
ability to re-process waste materials provides Epwin with an
additional source of raw material.
In Poly-Pure's financial year ended 31 July 2022, it expects to
report revenues of c.GBP10 million and adjusted EBITDA of c.GBP2.5
million. Poly-Pure has net assets on acquisition of approximately
GBP3m. The acquisition of Poly-Pure is expected to be margin
accretive for Epwin at the adjusted EBITDA level and is expected to
be immediately earnings enhancing.
The initial cash consideration of GBP15 million on a cash-free
debt-free basis represents a multiple of 6x estimated 2022 EBITDA
and is funded using existing Group facilities. Further deferred
consideration may become payable, subject to an earnout mechanism,
based upon the adjusted EBITDA in the three calendar years to 31
December 2023, 31 December 2024 and 31 December 2025 respectively,
capped in aggregate at a further GBP15 million in cash which, if
achieved, would equate to a 31 December 2025 adjusted EBITDA
multiple after synergies of 3x.
The three bolt-on acquisitions completed during 2021, which
further increased the geographical coverage of the Group's plastic
distribution business, have been successfully integrated and are
performing in line with management's expectations.
Completion of selective, value enhancing acquisitions remains a
core part of the Group's strategy and there continues to be a
healthy pipeline of potential further acquisitions that the Group
is seeking to progress.
ESG
The Group continues to make progress with developing its ESG
framework and targets, while delivering on its sustainability
agenda in support of its wider strategy.
Progress continues on the capital expenditure programme,
approved during 2021, to facilitate the increased use of recycled
material within the Group's PVC extrusion operations, and ESG
considerations are central to the planning and approval of future
capital expenditure. The recently completed acquisition of
Poly-Pure Ltd, a leading UK materials re-processor, will further
bolster the recycling capabilities of the Group and enable us to
accelerate this programme, improving the already strong
environmental credentials of our products. Initiatives to improve
fleet efficiency and reduce plant energy and water consumption
continue as part of an ongoing focus on maximising the efficiency
of our operations.
We continue to see a key role for the Group's products, as
sustainable building products, in the UK's journey to net zero and
as part of efforts to address the shortage of affordable and energy
efficient homes. In addition to our energy efficient windows and
doors, our PVC, wood plastic composite and aluminium low
maintenance building products are designed and manufactured to be
longer life than traditional alternatives and are typically
recyclable, contributing to a circular economy and reducing
landfill waste.
Our people are central to the success of the Group and the
welfare of our staff is of paramount importance. The Group
continues to be committed to providing high-quality training,
learning and development opportunities for all employees, providing
support wherever it is needed, as well as striving for the highest
standards of governance.
Cash flow
6 months ended 6 months ended
30 June 2022 30 June 2021
GBPm
===============
GBPm
========================================== =============== ===============
Pre-tax operating cash flow 13.9 14.9
Tax paid (1.0) -
Acquisitions - (4.6)
Net capital expenditure (3.6) (2.8)
Net site development cash flow - 5.0
Interest on borrowings (0.7) (0.6)
Net (repayment)/drawdown of borrowings (0.5) 2.7
Lease payments (3.5) (6.7)
Net proceeds of share issues/repurchases - 0.1
Dividends (3.4) (1.5)
Increase in cash and cash equivalents 1.2 6.5
========================================== =============== ===============
Opening cash and cash equivalents 9.8 2.2
========================================== =============== ===============
Closing cash and cash equivalents 11.0 8.7
Borrowings (14.7) (20.0)
Lease assets 4.6 2.3
Lease liabilities (84.2) (83.1)
========================================== =============== ===============
Net debt (83.3) (92.1)
========================================== =============== ===============
Covenant net debt (7.3) (15.8)
========================================== =============== ===============
The Group remains highly cash generative, achieving a pre-tax
operating cash flow of GBP13.9 million (HY21: GBP14.9 million),
broadly consistent with a strong comparative period and
representing cash conversion of 130%.
Capital expenditure has increased compared to H1 2021, as the
Group continues to invest in line with its strategic objectives of
operational improvement, efficiency and sustainability.
Financing
The Group has maintained in excess of GBP65 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 GBP15.8
million as at 30 June 2021, and GBP9.4m at 31 December 2021, to
GBP7.3 million as at 30 June 2022. The decrease in net debt
(including IFRS 16) compared to the previous period is primarily
driven by continued strong cash generation resulting in reduced
borrowings .
Finance costs for the period comprise GBP0.7 million interest
paid on borrowings, GBP0.1 million amortisation of facility
arrangement fees and GBP1.6 million of interest on IFRS 16 lease
liabilities.
Lease payments of GBP3.5 million (HY21: GBP6.7 million) are net
of a GBP2.7 million premium on renewal of the lease for the Group's
core cellular extrusion operation in Tamworth.
Dividend
The Board intends to declare an interim dividend of 1.90 pence
per share (HY21: 1.75 pence), representing an increase on the prior
period of 9%. The dividend will be paid on 14 October 2022 to
shareholders on the register on 23 September 2022.
Outlook
The Group's trading performance during the first half of 2022
has been encouraging, with continued good strategic progress
despite a trading environment that presents a number of
well-reported challenges.
Continued demand for home, garden and leisure space
improvements, stimulated by the pandemic and the resulting changes
in working patterns, as well as a high level of planning
applications during 2021, means there continues to be a market
pipeline of projects going into the second half of the year.
We expect historically high raw material costs to continue for
the remainder of 2022, although indications are that the price of
PVC resin has currently plateaued. The impact of the war in Ukraine
on power prices is being closely monitored and has the potential to
cause a further increase in raw material processing costs and
prices. The continued impact of inflation on overheads, including
wage inflation, and other key input costs will mean that we will
continue to work with customers to pass on increased costs as
needed in a fair and reasonable manner.
Customer demand from the RMI sector, the Group's core end
market, moderated in June and July from a historical high, with
August and current trading in line with Board expectations. Recent
forecasts from the Construction Products Association (CPA) suggest
a contraction of the RMI market for 2022 and 2023, before picking
up in 2024. Clearly there is much uncertainty in this outlook, in
particular because a majority of RMI activity relates to essential
repairs that cannot be delayed or to non-essential maintenance work
that can be postponed but not indefinitely, making demand in this
market less volatile than other segments of the economy. Similarly,
the drive to improve the energy efficiency of UK domestic
properties is gathering momentum and is likely to be beneficial to
the Group.
Our housebuilder-facing businesses continue to see strong demand
with many housebuilders reporting that they have forward sold their
full 2022 builds and forecasting further growth for 2023, resulting
in healthy order books and inquiries. The Social housing businesses
have continued to see the deferment of some contract start dates,
however, despite this we anticipate continued stable demand from
this market.
Whilst mindful of the current macroeconomic uncertainty, our
diverse customer base, covering a number of markets within the
construction industry, longstanding supplier relationships and
strong balance sheet provide resilience against short-term changes
in market conditions.
Despite the short-term uncertainty, the medium to long-term
drivers for the market remain positive. The UK faces a shortage of
new and affordable housing and an ageing and underinvested housing
stock, with a significant backlog of maintenance and improvement
work on private housing and public sector assets. Environmental and
safety concerns are driving legislation and initiatives that will
require improvements to homes on a larger scale than simply
essential maintenance, with the need to decarbonise the UK housing
stock and improve the energy efficiency of homes growing in urgency
given the widely reported increase in energy costs and the UK's net
zero commitments.
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. Investment has
continued against these strategic objectives, including capital
expenditure to ensure the Group's plant and machinery is
market-leading and to improve the sustainability and efficiency of
our operations.
Whilst mindful of the wider macroeconomic and geopolitical
uncertainty, the Board remains confident of achieving its
expectations in 2022 and believes that the Group is well positioned
going into the second half of the year. We are confident in our
business model, the resilience of our core markets and the
diversity of our customer base, and that the medium- and long-term
drivers of our end markets leave us well positioned to deliver
sustainable long-term growth.
Condensed consolidated income
statement
for the six months ended 30 June
2022
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2021
2022 2021
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
================================== ===== ============ ============ =============
Group revenue 2 178.0 157.8 329.6
================================== ===== ============ ============ =============
Cost of sales (127.6) (112.5) (236.9)
================================== ===== ============ ============ =============
Gross profit 50.4 45.3 92.7
Distribution expenses (20.5) (18.8) (38.7)
Administrative expenses (19.6) (17.6) (36.3)
Underlying operating profit 10.7 9.4 18.5
Amortisation of acquired other
intangible assets 3 (0.1) (0.2) (0.3)
Other non-underlying items 3 - (0.1) (0.1)
Share-based payments expense 3 (0.3) (0.2) (0.4)
---------------------------------- ----- ------------ ------------ -------------
Operating profit 10.3 8.9 17.7
Finance costs (2.4) (2.3) (4.8)
================================== ===== ============ ============ =============
Profit before tax 7.9 6.6 12.9
Taxation 4 (1.5) (1.2) (0.4)
================================== ===== ============ ============ =============
Profit for the period 6.4 5.4 12.5
================================== ===== ============ ============ =============
Pence Pence Pence
Basic earnings per share 5 4.40 3.72 8.61
Diluted earnings per share 5 4.35 3.69 8.52
Condensed consolidated balance
sheet
as at 30 June 2022
30 June 30 June 31 December
2022 2021 2021
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
======================================= ===== ============ ============ ============
Assets
Non-current assets
Goodwill 75.5 74.8 75.5
Other intangible assets 2.1 2.8 2.4
Property, plant and equipment 28.8 29.9 28.5
Right of use assets 62.4 65.7 64.0
Lease assets 7 4.4 2.1 2.0
Deferred tax asset 4.6 3.9 4.6
======================================= ===== ============ ============ ============
177.8 179.2 177.0
======================================= ===== ============ ============ ============
Current assets
Inventories 45.5 34.8 41.0
Trade and other receivables 50.5 48.2 43.6
Lease assets 7 0.2 0.2 0.2
Cash and cash equivalents (excluding
bank overdrafts) 7 22.1 15.8 9.8
======================================= ===== ============ ============ ============
118.3 99.0 94.6
======================================= ===== ============ ============ ============
Total assets 296.1 278.2 271.6
======================================= ===== ============ ============ ============
Liabilities
Current liabilities
Bank overdrafts 7 11.1 7.1 -
Other interest-bearing loans and
borrowings 7 - - 0.5
Lease liabilities 7 9.7 9.7 9.4
Trade and other payables 79.3 68.2 71.5
Income tax payable 0.9 0.8 0.4
Provisions 0.8 1.3 1.2
======================================= ===== ============ ============ ============
101.8 87.1 83.0
======================================= ===== ============ ============ ============
Non-current liabilities
Other interest-bearing loans and
borrowings 7 14.7 20.0 14.6
Lease liabilities 7 74.5 73.4 72.2
Deferred and contingent consideration 1.1 1.2 1.1
Provisions 2.4 3.0 2.4
======================================= ===== ============ ============ ============
92.7 97.6 90.3
======================================= ===== ============ ============ ============
Total liabilities 194.5 184.7 173.3
======================================= ===== ============ ============ ============
Net assets 101.6 93.5 98.3
======================================= ===== ============ ============ ============
Equity
Ordinary share capital 0.1 0.1 0.1
Share premium 13.0 12.6 13.0
Merger reserve 25.5 25.5 25.5
Retained earnings 63.0 55.3 59.7
======================================= ===== ============ ============ ============
Total equity 101.6 93.5 98.3
======================================= ===== ============ ============ ============
Condensed consolidated statement of changes in equity
for the six months ended 30 June
2022
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2022 2021 2021
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
==================================== ===== ============ ============ =============
Balance at the start of the period 98.3 89.3 89.3
Profit for the period 6.4 5.4 12.5
Issue of shares - 0.5 0.5
Acquisition of treasury shares - (0.4) (0.4)
Settlement of share-based payments - - -
Share-based payments expense 0.3 0.2 0.4
Dividends 6 (3.4) (1.5) (4.0)
==================================== ===== ============ ============ =============
Balance at the end of the period 101.6 93.5 98.3
==================================== ===== ============ ============ =============
Consolidated cash flow statement
for the six months ended 30 June 2022
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2022 2021 2021
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
=========================================== ====== ============ ============ =============
Cash flows from operating activities
Profit for the period 6.4 5.4 12.5
Adjustments for:
Depreciation and amortisation 7.8 8.4 17.8
Loss on disposal of fixed assets - - 0.4
Net finance costs 2.4 2.3 4.8
Taxation 4 1.5 1.2 0.4
Share-based payments 0.3 0.2 0.4
=========================================== ====== ============ ============ =============
18.4 17.5 36.3
(Increase) in inventories (4.5) (3.9) (10.0)
(Increase) in trade and other receivables (6.9) (7.9) (2.9)
Increase in trade and other payables 7.3 9.5 12.4
(Decrease) in provisions (0.4) (0.3) (0.9)
=========================================== ====== ============ ============ =============
Pre-tax operating cash flow 13.9 14.9 34.9
Tax paid (1.0) - (0.5)
=========================================== ====== ============ ============ =============
Net cash flow from operating activities 12.9 14.9 34.4
Cash flows from investing activities
Acquisition of subsidiary, net of
cash acquired - (4.6) (5.3)
Acquisition of property, plant and
equipment (3.6) (2.8) (5.5)
Proceeds on sale and leaseback, net
of development costs - 5.0 4.8
Proceeds on disposal of property,
plant and equipment - - 0.1
=========================================== ====== ============ ============ =============
Net cash flow from investing activities (3.6) (2.4) (5.9)
Cash flows from financing activities
Interest on borrowings (0.7) (0.6) (1.5)
Net (repayment)/drawdown of borrowings (0.5) 2.7 (2.1)
Interest on lease liabilities (1.6) (1.7) (3.5)
Repayment of lease liabilities (1.9) (5.0) (9.9)
Net proceeds of share issue - 0.1 0.1
Dividends paid 6 (3.4) (1.5) (4.0)
=========================================== ====== ============ ============ =============
Net cash flow from financing activities (8.1) (6.0) (20.9)
Net increase in cash and cash equivalents 1.2 6.5 7.6
=========================================== ====== ============ ============ =============
Cash and cash equivalents at the
beginning of the period 9.8 2.2 2.2
=========================================== ====== ============ ============ =============
Cash and cash equivalents at the
end of the period 7 11.0 8.7 9.8
=========================================== ====== ============ ============ =============
Notes to the condensed consolidated financial statements
for the six months ended 30 June 2022
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 2022. These are in accordance with the accounting
policies as set out in the Group's consolidated financial
statements for the year ended 31 December 2021.
The recognition and measurement requirements of all UK-adopted
International Accounting Standards as required to be adopted by AIM
listed companies have been applied. 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 2022
and should be read in conjunction with the Group's consolidated
financial statements for the year ended 31 December 2021 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 2022 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 2022.
Going concern
These condensed financial statements have been prepared on the
going concern basis, 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 FY21 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 ongoing anticipated impact of input cost
inflation, labour availability and wider macroeconomic conditions
on the operations and its financial resources, the Group had
sufficient funds to meet its liabilities as they fell due. Actual
revenues, profits and cash flows during the 6 months to 30 June
2022 and current financial projections 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.
The Group balance sheet remains robust with significant headroom
on committed banking facilities through to June 2024. The bank
facilities available to the Group comprise a GBP65 million
Revolving Credit Facility and a GBP10 million overdraft facility.
At 30 June 2022 the Group had in excess of GBP65 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
2022 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
=================================== ============ ============ =============
Revenue from external customers
----------------------------------- ------------ ------------ -------------
Extrusion and moulding 111.3 97.0 202.3
Fabrication and distribution 66.7 60.8 127.3
----------------------------------- ------------ ------------ -------------
Total 178.0 157.8 329.6
=================================== ============ ============ =============
Segmental operating profit
----------------------------------- ------------ ------------ -------------
Extrusion and moulding 8.0 6.4 12.2
Fabrication and distribution 4.0 4.0 8.4
----------------------------------- ------------ ------------ -------------
Segmental operating profit before
corporate and other costs 12.0 10.4 20.6
Corporate costs (1.3) (1.0) (2.1)
=================================== ============ ============ =============
Underlying operating profit 10.7 9.4 18.5
Amortisation of acquired other
intangible assets (0.1) (0.2) (0.3)
Other non-underlying items - (0.1) (0.1)
Share-based payments expense (0.3) (0.2) (0.4)
=================================== ============ ============ =============
Operating profit 10.3 8.9 17.7
=================================== ============ ============ =============
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
ended ended
Year ended
31 December
30 June 2022 30 June 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
================================ ============== ============== =============
Amortisation of acquired other
intangible assets (0.1) (0.2) (0.3)
Acquisition expenses - (0.1) (0.1)
Share-based payments (0.3) (0.2) (0.4)
================================ ============== ============== =============
Non-underlying expense (0.4) (0.5) (0.8)
================================ ============== ============== =============
Amortisation of acquired other intangible assets
GBP0.1 million (HY21: GBP0.2 million) amortisation of brand and
customer contract intangible assets acquired through business
combinations.
Share-based payments expense
The share-based payment expense of GBP0.3 million (HY21: GBP0.2
million) represents the IFRS 2: Share-based payments charge in
respect of the Long-Term Incentive Plan established in May 2021 for
senior management and options under the Group's Save As You Earn
("SAYE") scheme. During the period there were further issues of
options under both schemes.
4. Taxation
The tax charge for the six months to 30 June 2022 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 2022 balance sheet date, the corporation tax rate was
19%, however the net deferred tax asset at this date has been
calculated using a blend of rates of 19% and 25% for individual
assets and liabilities, depending on when the relevant asset or
liability is expected to reverse.
5. Earnings per share (EPS)
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
(unaudited) (unaudited) (audited)
pence pence pence
========= ============= ============= =============
EPS
Basic 4.40 3.72 8.61
Diluted 4.35 3.69 8.52
========= ============= ============= =============
6 months 6 months
ended 30 ended 30 Year ended
June 2022 June 2021 31 December
(unaudited) (unaudited) 2021 (audited)
No. No. No.
=================================== ============= ============= ================
Number of shares
Weighted average number of shares
used to calculate earnings per
share
* Basic 145,305,993 145,167,949 145,237,438
* Diluted 147,008,926 146,373,787 146,788,087
=================================== ============= ============= ================
6. Dividends
6 months 6 months
ended ended Year ended
31 December
30 June 2022 30 June 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
=================================== ============== ============== =============
2020 final dividend of 1.0 pence
per share - 1.5 1.5
2021 interim dividend of 1.75
pence per share - - 2.5
2021 final dividend of 2.35 pence 3.4 - -
per share
=================================== ============== ============== =============
3.4 1.5 4.0
=================================== ============== ============== =============
7. Net debt
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
=================================== ============ ============ =============
Cash and cash equivalents
(excluding bank overdraft) 22.1 15.8 9.8
Bank overdraft (11.1) (7.1) -
Secured bank loans (14.7) (20.0) (15.1)
Lease assets 4.6 2.3 2.2
Lease liabilities (84.2) (83.1) (81.6)
==================================== ============ ============ =============
Net debt (83.3) (92.1) (84.7)
Add back: lease liabilities 84.2 83.1 81.6
Deduct: lease assets (4.6) (2.3) (2.2)
Deduct: finance lease liabilities (3.6) (4.5) (4.1)
==================================== ============ ============ =============
Covenant net debt (7.3) (15.8) (9.4)
==================================== ============ ============ =============
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.
8. 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.
9. 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 SFWFMDEESELU
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