TIDMEPWN
RNS Number : 9756M
Epwin Group PLC
20 September 2023
20 September 2023
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
("Epwin" or the "Group")
Half year results for the six months to 30 June 2023
Trading ahead of a strong 2022 comparative; confident of
achieving full year expectations
Epwin Group Plc (AIM: EPWN), 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 2023 ("H1
2023").
Financial highlights
GBPm H1 2023 H1 2022
========================================== ======== ==========
Revenue 180.0 178.0
Underlying operating profit (1) 11.9 10.7
Underlying operating margin 6.6% 6.0%
Adjusted profit before tax (1) 8.7 8.3
Profit before tax 7.9 7.9
Adjusted EPS (1) 4.82p 4.68p
Basic EPS 4.27p 4.40p
Interim dividend per share 2.00p 1.90p
Pre-tax operating cash flow 19.1 13.9
Covenant net debt(2) 16.1 7.3
Covenant net debt to adjusted EBITDA(2) 0.6x 0.3x
Underlying operating cash conversion (3) 160.5% 129.9%
========================================== ======== ==========
(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
-- Strong trading continues:
o Revenue ahead of a strong H1 2022, despite challenging market
conditions and slight moderation of trading in the second
quarter
o Underlying operating profit 11% ahead of H1 2022, with a 60
bps improvement in underlying operating margin
o Margin recovery driven by pricing actions, operational
improvement, easing raw material price inflation and cost
management
o Ongoing positive cash generation, with pre-tax operating cash
flow of GBP19.1m (HY22: GBP13.9m) and underlying operating cash
conversion of 160%
-- Robust financial position:
o Robust balance sheet, with in excess of GBP60 million headroom
on banking facilities to support strategic objectives
o Banking facilities renewed - GBP65 million Sustainability
Linked Loan facility agreed with existing lenders through to August
2026 alongside a GBP10 million overdraft facility
o Reduction in covenant net debt to GBP16.1 million from GBP17.9
million as at 31 December 2022, primarily due to strong operational
cash flows
o Covenant net debt 0.6x adjusted EBITDA, well within covenant
limits and unchanged from the year-end notwithstanding the normal
first half increase in working capital and prior year
acquisitions
-- Interim dividend of 2.00 pence per share declared, an increase of 5% on H1 2022
Operational and strategic headlines
-- Inflationary pressures easing; continues to be actively managed:
o Raw material cost inflation has continued to ease, although
PVC resin prices remain at elevated levels
o Labour, energy and other inflationary cost pressures continue
to be managed carefully
-- Good progress delivering on our strategy:
o Operational improvement:
-- Consolidation of decking manufacturing to a single site
completed, with operational synergies being realised, and the
integration of the distribution network and consolidation of IT
systems progressing
o New product development:
-- Progress being made on increasing the use of recycled
materials within extruded products and wider product range
extension
o Value enhancing acquisitions:
-- Focus on integration of 2022 acquisitions, progressing in
line with management expectations
-- Healthy pipeline of potential acquisitions
o Further progress on sustainability:
-- Sustainability Linked Loan incorporated into Group's banking
facilities on renewal
-- Integration of Poly-Pure acquisition along with investment to
expand recycling capabilities and increase use of recycled material
within the Group and for the market
-- Continued focus on energy usage and production efficiency
Current trading and outlook - 2023 results expected to be in
line with expectations
-- Q3 trading to date has been encouraging with profitability ahead of 2022
-- RMI demand has remained robust into H2 2023, with trading in core markets remaining resilient
-- The Group's broad product range, diverse customer base,
well-invested operations, flexible cost base, longstanding supplier
relationships and strong balance sheet provide a large measure of
resilience against the potential effect of short-term
macro-economic headwinds
-- The Board remains confident of delivering a 2023 result in
line with market consensus* expectations - demonstrating continued
delivery against rising post-Covid market expectations
-- Medium and long-term drivers for the Group's markets remain positive
Jon Bednall, Chief Executive Officer, said:
"We delivered another positive performance in our first half,
both in line with the Board's expectations and ahead of a strong H1
2022 as well as continuing to make good progress on our strategy.
This is testament to the combined efforts of all my Epwin
colleagues and I would like to thank them for continuing to deliver
strong post--Covid performance improvement.
Trading has been encouraging in the second half to date and the
Board remains confident of achieving full year expectations in line
with market consensus. We are optimistic about our future prospects
despite the short--term macroeconomic headwinds, with long-term
structural drivers of demand for our energy efficient, recyclable
and low maintenance building products in place."
*Company collated analyst consensus for FY23 underlying
operating profit is GBP24.0m
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 078 3462 3818
Reg Hoare / Charlie Barker / Pauline epwin@mhpgroup.com
Guenot
Forthcoming dates:
Ex-dividend date 28 September 2023
Dividend record date 29 September 2023
Dividend payment date 17 October 2023
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.
Information for investors can be accessed at
www.epwin.co.uk/investors
Group business review
Trading and results
The Group delivered a pleasing trading performance in H1 2023,
with revenues of GBP180.0 million marginally ahead of a strong
comparative period despite the well-publicised challenging trading
conditions. The increase in revenue was driven by pricing actions
to recover material and other input cost inflation and the
acquisitions undertaken in 2022, which contributed GBP7.3 million
of revenue to H1 2023 . This was offset by a slight decline in
volumes, as macroeconomic and fiscal factors impacted demand in Q2,
as anticipated.
Underlying operating profit increased by 11% to GBP11.9 million
(HY22: GBP10.7 million), as pricing actions, operational
improvement, easing raw material price inflation and cost
management continue to drive a recovery in margin. Underlying
operating margin improved by 60 basis points, to 6.6% in H1
2023.
The inflationary pressures that significantly impacted raw
material costs in 2021 and 2022 continued to ease, with PVC resin
prices starting to normalise, although remaining at elevated levels
by historical standards. However, other inflationary cost
pressures, in particular labour and energy, continued to be key
themes through Q1 2023, before starting to ease in Q2.
Key financials
6 months ended 6 months ended
30 June 2023 30 June 2022
GBPm GBPm
=========================================== =============== ===============
Revenue 180.0 178.0
=========================================== =============== ===============
Underlying operating profit 11.9 10.7
Amortisation of acquired other intangible
assets (0.5) (0.1)
Share-based payments expense (0.3) (0.3)
Operating profit 11.1 10.3
Underlying operating margin 6.6% 6.0%
Operating margin 6.2% 5.8%
=========================================== =============== ===============
Segmental results
6 months ended 6 months ended
===========================================
30 June 2023 30 June 2022
GBPm GBPm
=========================================== =============== ===============
Revenue
Extrusion and moulding 113.4 111.3
Fabrication and distribution 66.6 66.7
=========================================== =============== ===============
Total 180.0 178.0
=========================================== =============== ===============
Underlying segmental operating
profit
Extrusion and moulding 10.6 8.0
Fabrication and distribution 3.1 4.0
=========================================== =============== ===============
Underlying segmental operating
profit 13.7 12.0
Corporate costs (1.8) (1.3)
=========================================== =============== ===============
Underlying operating profit 11.9 10.7
Amortisation of acquired other intangible
assets (0.5) (0.1)
Share-based payments expense (0.3) (0.3)
=========================================== =============== ===============
Operating profit 11.1 10.3
=========================================== =============== ===============
Extrusion and moulding
-- Revenues remained strong, increasing by 1.9% in comparison to
H1 2022, to GBP113.4 million, primarily due to the impact of
selling price increases implemented to recover material and other
cost inflation and the impact of the 2022 acquisition of Poly-Pure,
which contributed GBP4.4 million of external sales.
-- As a result of the steps taken by the business, primarily in
2022, to recover margins in an equitable manner through selling
price increases and surcharges, the underlying operating margin
increased to 9.3% (HY22: 7.2%).
Fabrication and distribution
-- Revenue was broadly in line with a strong H1 2022 at GBP66.6
million, of which GBP2.9 million is through additional revenue from
the Mayfield acquisition completed in 2022. The impact of
macroeconomic factors and fiscal tightening has been particularly
experienced in our downstream businesses.
-- In our distribution network, subdued market conditions have
impacted volumes. The Group's approach has been to balance volume
and profitability through responsible pricing to maintain our
returns from these markets.
Strategic progress
The Group's focus continues to be on product and material
development, operational efficiency, identifying and completing
value--enhancing acquisitions and building on the Group's inherent
ESG credentials.
New product development
Following the acquisition of Poly-Pure in 2022, the Group
commenced the introduction of in-house recycled materials into its
extruded product range during the first half of the year, with
further investment in plant and tooling in the process of being
brought onstream to further increase recycled material usage. This
investment will continue, selectively, in line with tooling
replacement programmes.
The Group continues to see significant opportunities for its
aluminium window system, Stellar, and the PVC decking product,
Dekboard .
Progress with site consolidation and rationalisation
programme
The project, commenced in 2022, to consolidate our decking
production into a single site has been completed and will enable
operational synergies to be realised from the second half of
2023.
The project to consolidate IT systems across our distribution
network is progressing and is expected to go live on a phased basis
in Q4 2023 with the roll-out across our branch network to be
completed in 2024. The single system will result in improved
information flow, enabling more streamlined reporting and
monitoring of KPIs.
Value-enhancing acquisitions
During 2022, the Group completed the acquisition of Poly-Pure, a
leading UK materials re-processor, and Mayfield, a supplier of
decking and related products to the holiday park industry.
Integration of the 2022 acquisitions has been a key focus of the
Group and is progressing in line with management's
expectations.
The initial Poly-Pure integration is well progressed, although
capital investment plans to raise capacity and margins have been
impacted by long lead times on plant to expand re-processing
capacity and produce higher margin materials. The business has also
been impacted by increased prices for recyclate driven by an
increase in market demand. However, the acquisition has enabled the
Group to accelerate its ambitions to integrate a greater proportion
of recycled materials into its core product range, as well as
recycle more of its own production waste and develop the wider
market for recycled raw materials. This programme will continue,
selectively, in line with the Group's tooling replacement
programme.
Mayfield has expanded the geographical coverage of the Group's
growing decking operations and outdoor products range and the
transition of third-party production to our own facilities has
commenced. As a result, Mayfield has delivered an encouraging
performance against challenging conditions in the holiday park
market.
Completion of selective, value enhancing acquisitions remains a
core part of the Group's strategy and there continues to be a
healthy pipeline of further potential acquisitions that the Group
is seeking to progress.
Sustainability
The Group continues to make progress with developing its
sustainability framework and targets, while delivering on its
sustainability agenda in support of its wider strategy. 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 as
well as improve the existing housing stock.
Sustainability considerations are embedded throughout our
operations and decision-making processes and a focus on operational
efficiency, one of our core operational objectives, inherently
drives sustainable behaviour. Energy usage, scrap rates and
production efficiency are closely monitored at all manufacturing
locations, enabling the Group to identify opportunities for
improvement. For example, at our glass-reinforced plastic
operations, we have expanded the use of cold pour moulding during
the period, which results in reduced waste and energy usage.
Our commitment to our sustainability strategy is underlined by
the formalisation of sustainability metrics within our new
Sustainability Linked Loan Facility with Barclays and HSBC. Further
details of this facility are set out below.
The Group's core focus during the period has been the
integration of Poly-Pure and expansion of the Group's PVC recycling
activities, enabling us to contribute to a circular economy through
recycling of post-consumer waste. As recycled material replaces
virgin PVC, it is expected that the Group's carbon footprint will
continue to reduce over time.
Cash flow
6 months ended 6 months ended
30 June 2023 30 June 2022
GBPm
===============
GBPm
==================================== =============== ===============
Pre-tax operating cash flow 19.1 13.9
Tax paid (0.6) (1.0)
Payment of deferred and contingent (1.7) -
consideration
Net capital expenditure (3.5) (3.6)
Interest on borrowings (1.5) (0.7)
Net repayment of borrowings (5.0) (0.5)
Lease payments (6.7) (3.5)
Dividends (3.7) (3.4)
(Decrease)/Increase in cash and
cash equivalents (3.6) 1.2
==================================== =============== ===============
Opening cash and cash equivalents 15.1 9.8
==================================== =============== ===============
Closing cash and cash equivalents 11.5 11.0
Borrowings (24.8) (14.7)
Lease assets 5.5 4.6
Lease liabilities (93.3) (84.2)
==================================== =============== ===============
Net debt including IFRS 16 (101.1) (83.3)
==================================== =============== ===============
Covenant net debt (16.1) (7.3)
==================================== =============== ===============
Operating cash flows
The Group remains highly cash generative, achieving a pre-tax
operating cash flow of GBP19.1 million (HY22: GBP13.9 million),
representing an underlying operating cash conversion of 160%. The
first half of 2023 saw the traditional increase in working capital
following the Christmas and New Year industry shutdown.
Investing cash flows
Capital expenditure is in line with H1 2022, as the Group
continues to invest in line with its strategic objectives. During
H1 2023, capital expenditure has been focussed on expanding the
Group's material re-processing capabilities and ability to
incorporate recycled material into our core products.
Deferred and contingent consideration of GBP1.7 million was paid
during the period, relating to GBP0.9 million of contingent
consideration in relation to the acquisition of PVS in 2019 and
GBP0.7 million relating to net cash/debt and working capital
adjustments associated with the acquisitions of Poly-Pure and
Mayfield in 2022.
Financing cash flows
Covenant net debt has reduced to GBP16.1 million from GBP17.9
million as at 31 December 2022, primarily due to strong operational
cash flows .
The higher interest cost of GBP1.5 million (HY22: GBP0.7
million) is driven by higher borrowings during the period as a
result of these acquisitions, as well as the well-publicised
increases to the Bank of England base rate.
In August 2023 the Group renewed its existing revolving credit
facilities with Barclays and HSBC on comparable terms. The new
facility is a Sustainability Linked Loan facility of GBP65 million
for an initial period of 3 years with the option to extend for a
further two years. The sustainability metrics included in the
facility are based on the Group's energy intensity ratio and the
amount of material recycled. In combination with the GBP10 million
overdraft facility, the new borrowing facility maintains the
Group's significant financial headroom, which at 30 June 2023 was
in excess of GBP60 million, supporting the Group's strategic
objectives.
Dividend
The Board has declared an interim dividend of 2.0 pence per
share (HY22: 1.90 pence), representing an increase on the prior
period of 5%. The dividend will be paid on 17 October 2023 to
shareholders on the register on 29 September 2023 and is in line
with the Board's dividend policy.
Outlook
The Group's robust trading performance during the first half of
2023 has been encouraging and our core markets have remained
resilient in the face of challenging macroeconomic conditions.
Private housing RMI, the Group's core end market, is now the
third largest construction sector having reached historic high
levels following the post-pandemic boom in 2021. While there was a
slight moderation of trading in the second quarter and continuing
uncertainty regarding the length and depth of any potential
economic downturn in the short to medium-term, Q3 trading to date
has been encouraging with profitability ahead of 2022. A majority
of RMI activity relates to essential repairs that cannot be delayed
or maintenance work that cannot be postponed indefinitely,
providing a resilient base level of activity for the Group. We
believe that underlying home improvement works continue to perform
strongly.
After two very strong years for housebuilders, the Construction
Products Association now predicts a decline in the new build market
of 19% for 2023 before starting to recover in 2024, driven by house
price contraction and increased mortgage rates. This has not yet
been borne out in our new build-facing businesses, which have had a
strong H1, as housebuilders have focussed on completing existing
developments driving demand for products such as our GRP porches,
dormers and chimneys.
Some of the significant material cost inflation that impacted
the Group throughout 2021 and 2022 has eased, with PVC resin prices
falling back, although still significantly above historic averages.
However, other input cost inflation remains, particularly in
relation to labour, where recruitment and retention have improved,
but wage inflation remains, and power prices, which have come down
from the record highs of 2022, but remain high due to the ongoing
uncertainty around the situation in Ukraine.
The Board is cognisant of the potential impact of short-term
macroeconomic headwinds. However, the Group's broad product range,
diverse customer base, well-invested operations, flexible cost
base, longstanding supplier relationships and strong balance sheet
provide a large measure of resilience. As a result, the Board
remains confident of the Group delivering underlying operating
profit for the full year in line with expectations.
The medium to long-term drivers for the market remain positive.
The UK faces a shortage of new and affordable housing, an ageing
and underinvested housing stock and increasing concern about the
quality of social housing. The Group's products have inherently
strong environmental credentials and a clear role to play in the
improvement and decarbonisation of the UK housing stock which will
be required to meet net zero ambitions.
Condensed consolidated income
statement
for the six months ended 30 June
2023
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2022
2023 2022
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
================================== ===== ============ ============ =============
Group revenue 2 180.0 178.0 355.8
================================== ===== ============ ============ =============
Cost of sales (125.1) (127.6) (250.5)
================================== ===== ============ ============ =============
Gross profit 54.9 50.4 105.3
Distribution expenses (21.2) (20.5) (40.1)
Administrative expenses (22.6) (19.6) (48.3)
Underlying operating profit 11.9 10.7 21.5
Amortisation of acquired other
intangible assets 3 (0.5) (0.1) (0.3)
Share-based payments expense 3 (0.3) (0.3) (0.6)
Other non-underlying items 3 - - (3.7)
---------------------------------- ----- ------------ ------------ -------------
Operating profit 11.1 10.3 16.9
Finance costs (3.2) (2.4) (5.0)
================================== ===== ============ ============ =============
Profit before tax 7.9 7.9 11.9
Taxation 4 (1.7) (1.5) (3.5)
================================== ===== ============ ============ =============
Profit for the period 6.2 6.4 8.4
================================== ===== ============ ============ =============
Pence Pence Pence
Basic earnings per share 5 4.27 4.40 5.78
Diluted earnings per share 5 4.20 4.35 5.71
Condensed consolidated balance
sheet
as at 30 June 2023
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
======================================= ===== ============ ============ ============
Assets
Non-current assets
Goodwill 93.2 75.5 93.2
Other intangible assets 5.8 2.1 6.3
Property, plant and equipment 34.2 28.8 34.3
Right of use assets 70.6 62.4 70.0
Lease assets 7 5.0 4.4 5.3
Deferred tax asset 0.8 4.6 0.8
======================================= ===== ============ ============ ============
209.6 177.8 209.9
======================================= ===== ============ ============ ============
Current assets
Inventories 38.5 45.5 41.1
Trade and other receivables 48.9 50.5 40.5
Lease assets 7 0.5 0.2 0.4
Income tax receivable - - 0.5
Cash and cash equivalents (excluding
bank overdrafts) 7 13.0 22.1 15.1
======================================= ===== ============ ============ ============
100.9 118.3 97.6
======================================= ===== ============ ============ ============
Total assets 310.5 296.1 307.5
======================================= ===== ============ ============ ============
Liabilities
Current liabilities
Bank overdrafts 7 1.5 11.1 -
Lease liabilities 7 10.5 9.7 9.7
Trade and other payables 75.2 79.3 70.6
Deferred consideration 0.2 - 1.9
Income tax payable 0.6 0.9 -
Provisions 1.2 0.8 1.7
======================================= ===== ============ ============ ============
89.2 101.8 83.9
======================================= ===== ============ ============ ============
Non-current liabilities
Other interest-bearing loans and
borrowings 7 24.8 14.7 29.8
Lease liabilities 7 82.8 74.5 82.9
Deferred and contingent consideration 7.6 1.1 7.6
Provisions 2.2 2.4 2.2
======================================= ===== ============ ============ ============
117.4 92.7 122.5
======================================= ===== ============ ============ ============
Total liabilities 206.6 194.5 206.4
======================================= ===== ============ ============ ============
Net assets 103.9 101.6 101.1
======================================= ===== ============ ============ ============
Equity
Ordinary share capital 0.1 0.1 0.1
Share premium 13.0 13.0 13.0
Merger reserve 25.5 25.5 25.5
Retained earnings 65.3 63.0 62.5
======================================= ===== ============ ============ ============
Total equity 103.9 101.6 101.1
======================================= ===== ============ ============ ============
Condensed consolidated statement of changes in equity
for the six months ended 30 June
2023
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
==================================== ===== ============ ============ =============
Balance at the start of the period 101.1 98.3 98.3
Profit for the period 6.2 6.4 8.4
Share-based payments expense 0.3 0.3 0.6
Dividends 6 (3.7) (3.4) (6.2)
==================================== ===== ============ ============ =============
Balance at the end of the period 103.9 101.6 101.1
==================================== ===== ============ ============ =============
Consolidated cash flow statement
for the six months ended 30 June 2023
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
============================================ ====== ============ ============ =============
Cash flows from operating activities
Profit for the period 6.2 6.4 8.4
Adjustments for:
Depreciation, amortisation and impairment 9.4 7.8 20.1
Profit on disposal of fixed assets - - (0.4)
Net finance costs 3.2 2.4 5.0
Taxation 4 1.7 1.5 3.5
Share-based payments 0.3 0.3 0.6
============================================ ====== ============ ============ =============
20.8 18.4 37.2
Decrease/(Increase) in inventories 2.6 (4.5) 0.3
(Increase)/Decrease in trade and other
receivables (8.4) (6.9) 5.4
Increase/(Decrease) in trade and other
payables 4.6 7.3 (4.4)
(Decrease)/Increase in provisions (0.5) (0.4) 0.1
============================================ ====== ============ ============ =============
Pre-tax operating cash flow 19.1 13.9 38.6
Tax paid (0.6) (1.0) (2.2)
============================================ ====== ============ ============ =============
Net cash flow from operating activities 18.5 12.9 36.4
Cash flows from investing activities
Acquisition of subsidiary, net of
cash acquired - - (17.8)
Payment of contingent and deferred
consideration (1.7) - (0.3)
Acquisition of fixed assets (3.5) (3.6) (9.1)
Net cash flow from investing activities (5.2) (3.6) (27.2)
Cash flows from financing activities
Interest on borrowings (1.5) (0.7) (1.6)
Net (repayment)/drawdown of borrowings (5.0) (0.5) 14.5
Interest on lease liabilities (1.7) (1.6) (3.2)
Repayment of lease liabilities (5.0) (1.9) (7.4)
Dividends paid 6 (3.7) (3.4) (6.2)
============================================ ====== ============ ============ =============
Net cash flow from financing activities (16.9) (8.1) (3.9)
Net (decrease)/increase in cash and
cash equivalents (3.6) 1.2 5.3
============================================ ====== ============ ============ =============
Cash and cash equivalents at the beginning
of the period 15.1 9.8 9.8
============================================ ====== ============ ============ =============
Cash and cash equivalents at the
end of the period 7 11.5 11.0 15.1
============================================ ====== ============ ============ =============
Notes to the condensed consolidated financial statements
for the six months ended 30 June 2023
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 2023. These are in accordance with the accounting
policies as set out in the Group's consolidated financial
statements for the year ended 31 December 2022.
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 2023
and should be read in conjunction with the Group's consolidated
financial statements for the year ended 31 December 2022 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 2023 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 20 September 2023.
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 FY22 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
2023 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's balance sheet remains robust and it retains
significant headroom on committed banking facilities through to
August 2026. The bank facilities available to the Group comprise a
GBP65 million Revolving Credit Facility and a GBP10 million
overdraft facility. At 30 June 2023 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. Re-processing of post-industrial
and post-consumer PVC waste.
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
2023 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
=================================== ============ ============ =============
Revenue from external customers
----------------------------------- ------------ ------------ -------------
Extrusion and moulding 113.4 111.3 221.1
Fabrication and distribution 66.6 66.7 134.7
----------------------------------- ------------ ------------ -------------
Total 180.0 178.0 355.8
=================================== ============ ============ =============
Segmental operating profit
----------------------------------- ------------ ------------ -------------
Extrusion and moulding 10.6 8.0 16.8
Fabrication and distribution 3.1 4.0 7.5
----------------------------------- ------------ ------------ -------------
Segmental operating profit before
corporate and other costs 13.7 12.0 24.3
Corporate costs (1.8) (1.3) (2.8)
=================================== ============ ============ =============
Underlying operating profit 11.9 10.7 21.5
Amortisation of acquired other
intangible assets (0.5) (0.1) (0.3)
Share-based payments expense (0.3) (0.3) (0.6)
Other non-underlying items - - (3.7)
=================================== ============ ============ =============
Operating profit 11.1 10.3 16.9
=================================== ============ ============ =============
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 2023 30 June 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
================================ ============== ============== =============
Amortisation of acquired other
intangible assets (0.5) (0.1) (0.3)
Share-based payments expense (0.3) (0.3) (0.6)
Acquisition-related costs - - (0.7)
Goodwill impairment - - (3.0)
Non-underlying expense (0.8) (0.4) (4.6)
================================ ============== ============== =============
Amortisation of acquired other intangible assets
GBP0.5 million (HY22: GBP0.1 million) amortisation of brand and
customer contract intangible assets acquired through business
combinations. The increased amortisation compared to HY22 is due to
intangible assets relating to the acquisitions of Poly-Pure and
Mayfield in H2 2022.
Share-based payments expense
The share-based payment expense of GBP0.3 million (HY22: GBP0.3
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 was a further issue of
options under the Long-Term Incentive Plan.
4. Taxation
The tax charge for the six months to 30 June 2023 is based on
the estimated tax rate for the full year.
In the Budget held on 3 March 2021, the Government announced
that the corporation tax rate would increase to 25% from 1 April
2023. This change was subsequently enacted on 10 June 2021. As at
the 30 June 2023 balance sheet date, the corporation tax rate was
25%. The net deferred tax asset has been calculated based on this
rate.
5. Earnings per share (EPS)
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
(unaudited) (unaudited) (audited)
pence pence pence
========= ============= ============= =============
EPS
Basic 4.27 4.40 5.78
Diluted 4.20 4.35 5.71
========= ============= ============= =============
6 months 6 months
ended 30 ended 30 Year ended
June 2023 June 2022 31 December
(unaudited) (unaudited) 2022 (audited)
No. No. No.
=================================== ============= ============= ================
Number of shares
Weighted average number of shares
used to calculate earnings per
share
* Basic 145,313,382 145,305,993 145,305,993
* Diluted 147,553,941 147,008,926 147,138,638
=================================== ============= ============= ================
6. Dividends
6 months 6 months
ended ended Year ended
31 December
30 June 2023 30 June 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
=================================== ============== ============== =============
2021 final dividend of 2.35 pence
per share - 3.4 3.4
2022 interim dividend of 1.90
pence per share - - 2.8
2022 final dividend of 2.55 pence 3.7 - -
per share
=================================== ============== ============== =============
3.7 3.4 6.2
=================================== ============== ============== =============
7. Net debt
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
=================================== ============ ============ =============
Cash and cash equivalents
(excluding bank overdraft) 13.0 22.1 15.1
Bank overdraft (1.5) (11.1) -
Secured bank loans (24.8) (14.7) (29.8)
Lease assets 5.5 4.6 5.7
Lease liabilities (93.3) (84.2) (92.6)
==================================== ============ ============ =============
Net debt (101.1) (83.3) (101.6)
Add back: lease liabilities 93.3 84.2 92.6
Deduct: lease assets (5.5) (4.6) (5.7)
Deduct: finance lease liabilities (2.8) (3.6) (3.2)
==================================== ============ ============ =============
Covenant net debt (16.1) (7.3) (17.9)
==================================== ============ ============ =============
In August 2023 the Group renewed its existing revolving credit
facilities with Barclays and HSBC on comparable terms. The new
facility is a Sustainability Linked Loan facility of GBP65 million
for an initial period of 3 years with the option to extend for a
further two years. The sustainability metrics included in the
facility are based on the Group's energy intensity ratio and the
amount of material recycled. In combination with the GBP10 million
overdraft facility, the new borrowing facility maintains the
Group's significant financial headroom, which at 30 June 2023 was
in excess of GBP60 million, supporting the Group's strategic
objectives.
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
This information is provided by RNS, the news service of the
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END
IR NKCBNABKDDCD
(END) Dow Jones Newswires
September 20, 2023 02:00 ET (06:00 GMT)
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