TIDMEPWN
RNS Number : 5346Y
Epwin Group PLC
10 September 2020
10 September 2020
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. 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 2020
Resilient performance ahead of earlier expectations; optimistic
for prospects in H2
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 2020.
Financial highlights
GBPm H1 2020 H1 2019
========================================= ========== ==========
Revenue 93.3 140.0
Underlying operating (loss)/profi t (1) (1.8) 9.4
Underlying operating margin - 6.7%
Adjusted (loss)/profit before tax (1) (4.1) 7.3
(Loss)/Profit before tax (4.8) 6.7
Adjusted EPS (2) (2.24p) 4.20p
Basic EPS - continuing (2.73p) 3.78p
Dividend per share - 1.75p
Net debt (81.7) (88.4)
Net debt (excluding IFRS 16) (21.3) (29.2)
Net debt to adjusted EBITDA (3) 0.8x 1.0x
========================================= ========== ==========
(1) Stated before amortisation of acquired other intangible
assets, share-based payments and other non-underlying items.
(2) Adjusted EPS is calculated based on continuing profit after
tax adding back amortisation of acquired other intangible assets,
share-based payments and other non-underlying items.
(3) Adjusted EBITDA based on the FY19 audited results.
Financial headlines
-- Trading was ahead of Board's revised expectations. Q2 2020
significantly affected by COVID-19 pandemic following a strong
period up to the third week of March, with H1 performance impacted
accordingly.
-- Financial position remains strong:
o Net debt (excluding IFRS 16) 0.8x adjusted EBITDA based on the
FY19 audited results, reduced to GBP21.3 million (HY19: GBP29.2
million).
o Significant headroom on banking facilities with c.GBP60
million of headroom at the half year, supported by management
actions taken to conserve cash.
o Banking covenants met as at half year end; management do not
anticipate the need to seek a variation or waiver to its covenants.
No additional funding has been required.
-- The Board recognises the importance of dividends for shareholders:
o Given the disruption and uncertainty caused by COVID-19, the
Board is not recommending an interim dividend for 2020.
o The Board intends to recommence dividend payments as soon as
practical, subject to full year financial performance and greater
visibility of prospects for 2021.
Operational headlines
-- Majority of operations restarted in May, with additional safe
working practices implemented (having closed all operations on 25
March 2020 in response to the COVID-19 pandemic).
-- Significant progress made on Group's site consolidation programme despite lockdown delays:
o Construction largely complete on new Telford distribution and
finishing facility, expected to be fully operational by the end of
2020.
o This industry-leading facility will deliver operational
efficiencies from 2021 with higher levels of automation supporting
the growth of both our existing and planned new products.
-- Continued product development activities during the period
with the launch of the Adek aluminium decking product in Q1 2020,
supplementing the 2019 launches of the Stellar aluminium window
system and the Dekboard PVC decking product.
Current Trading and Outlook
-- Demand stronger than anticipated from customers serving the
RMI market, which represents around 70% of historic Group
revenues.
-- Overall Group revenue on like for like sales for the month:
o July up 2%
o August up 3%
-- Strong bounce back in the window systems and cellular
extrusions businesses, which form part of the Extrusion and
Moulding segment of the Group. Like for like sales for the month on
the prior year:
o July up 12%
o August up 7%
-- Capacity continues to be reviewed and adjusted to meet
changing levels of demand across the Group's operations.
-- Demand for window systems extrusions has been particularly
strong and sustained, such that lead times have increased
significantly and materials supply chains are now under
pressure.
-- New build and Social Housing sectors' demand was initially
slower to return, but call-offs now increasing steadily as build
programmes and refurbishment schemes are re-established.
-- As previously stated, the impact of COVID-19 will inevitably
have a material impact on trading for the current year as a whole,
however, at this stage the effect is anticipated to be less than
the initially expected, with the Board expecting significantly
improved performance in H2.
-- Medium-term drivers for the RMI market remain positive.
Jon Bednall, Chief Executive Officer, said:
"It has been encouraging to see the resilience of the underlying
demand for our products, particularly with the UK RMI sector
performing strongly since June. Demand in this sector is sustaining
at much higher levels than anticipated and, with other markets also
picking up, we continue to ramp up our activities and work with our
supply chain partners to meet this demand.
"Whilst we remain in unprecedented times and must continue to
manage its challenges, we are optimistic for trading prospects in
the second half of the year and expect to make further strategic
progress by concluding our current site consolidation and
rationalisation programme as well as continuing with our product
development and other strategic initiatives.
"Looking further ahead, the medium and long-term drivers for our
markets remain positive, and we are confident that we will emerge
from this period with the financial strength and operational
flexibility to continue to take advantage of the opportunities that
will be presented.
"The Group has a strong track record of making dividend payments
and, whilst these remain suspended due to the current levels of
uncertainty, the Board is mindful of the importance of dividends to
our shareholders and will review the position when it has
visibility of the full year."
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
Edward Mansfield / Daniel Bush / Hugo 0207 408 4090
Masefield
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
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
Results
Half year revenue and underlying operating profit was
significantly impacted by the COVID-19 pandemic. Trading was
slightly ahead of the Board's expectations up until the third week
of March when the Group suspended operations following the
Government's COVID-19 announcements, which also resulted in a
significant reduction in demand from the Group's customers.
The Group maintained a low level of supply, where it was safe to
do so, for those customers that continued to operate. However, the
majority of operations remained suspended throughout April, only
recommencing during May; albeit at much reduced levels of activity
and after the implementation of enhanced health and safety
procedures in line with Government guidance. The Group scaled up
operations in line with increased market demand and by June all
operations were active to varying degrees.
Sales for the half year of GBP93.3 million were ahead of the
revised Board's expectations when lockdown commenced in March,
albeit 33% lower than the comparative period last year (HY19:
GBP140.0 million), due to the temporary closure of the
business.
6 months
6 months ended ended
30 June 2020 30 June 2019
Key financials GBPm GBPm
==================================== =============== =============
Revenue 93.3 140.0
==================================== =============== =============
Adjusted EBITDA 6.4 17.5
Amortisation of computer software (0.1) (0.1)
Depreciation (8.1) (8.0)
Underlying operating (loss)/profit
(*) (1.8) 9.4
Amortisation of acquired other
intangible assets (0.2) (0.1)
Other non-underlying items (0.5) (0.1)
Share-based payments expense - (0.4)
Operating (loss)/profit (2.5) 8.8
==================================== =============== =============
Underlying operating margin
(*) - 6.7%
Operating margin - 6.3%
==================================== =============== =============
(*) Underlying operating profit and margin is operating profit
before amortisation of acquired other intangible assets,
share-based payments and other non-underlying items.
As a result of the 33% reduction in volumes, the Group made an
underlying operating loss of GBP1.8 million (HY19: GBP9.4 million
profit). The extent of the loss was limited by use of the
Coronavirus Job Retention Scheme ("CJRS"), which enabled the Group
to retain the majority of its skilled labour workforce, whose
knowledge, experience and hard work were essential to the
successful restart of operations, as well as the future of the
business.
Further progress with site consolidation and rationalisation
programme
Significant progress was made on the development of
purpose-built facilities in Telford to consolidate window systems
warehousing and finishing operations, with construction works now
largely complete. However, delays as a result of COVID-19 and the
subsequent increase in demand since operations restarted will not
see the site fully operational until the end of the year when the
business shutdown will allow the relocation of PVC profile
inventories.
This industry-leading facility will deliver operational
efficiencies from 2021 with higher levels of automation supporting
the growth of both our existing and planned new products.
Products development continues
Product development activities continued during the period with
the launch of the Adek aluminium decking product in Q1 2020,
supplementing the 2019 launches of the Stellar aluminium window
system and the Dekboard PVC decking product.
Segmental Results
6 months
6 months ended ended
30 June 2020 30 June 2019
GBPm GBPm
============================================== =============== =============
Revenue
Extrusion & Moulding 60.7 87.8
Fabrication & Distribution 32.6 52.2
Total 93.3 140.0
============================================== =============== =============
Underlying segmental operating (loss)/profit
Extrusion & Moulding (0.3) 8.6
Fabrication & Distribution (0.4) 1.8
Underlying segmental operating (loss)/profit
before corporate costs (0.7) 10.4
Corporate costs (1.1) (1.0)
============================================== =============== =============
Underlying operating (loss)/profit
(*) (1.8) 9.4
Amortisation of acquired other intangible
assets (0.2) (0.1)
Other non-underlying items (0.5) (0.1)
Share-based payments expense - (0.4)
Operating (loss)/profit (2.5) 8.8
============================================== =============== =============
(*) Underlying operating profit is operating profit before
amortisation of acquired other intangible assets, share-based
payments and other non-underlying items
Extrusion and Moulding
-- Revenue decreased by 30.9% to GBP60.7 million.
-- The reduction in volumes resulted in an operating loss of GBP0.3 million.
Fabrication and Distribution
-- Revenue decreased by 37.5% to GBP32.6 million.
-- The reduction in volumes resulted in an operating loss of GBP0.4 million.
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.
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
(HY19: GBP0.1 million), relating to the brand and customer
relationship intangible assets recognised on acquisitions.
ii. Other non-underlying items
Other non-underlying items in 2020 relate predominantly to
restructuring costs.
iii. Share-based payments expense
The share-based payment expense of GBPnil (HY19: GBP0.4 million)
comprises IFRS 2: Share-based payments charges in respect of the:
Long-Term Incentive Plan, which matured on 31 December 2019, and
SAYE schemes.
Cash flow
6 months 6 months
ended 30 ended 30
June 2020 June 2019
GBPm GBPm
====================================== =========== ===========
Pre-tax operating cash flow 9.1 14.7
Tax paid (0.7) (0.7)
Acquisitions - (2.3)
Net capital expenditure (1.3) (3.9)
Net site development cash flow (3.4) -
Net interest paid (0.9) (0.8)
Facility drawdown 33.0 7.2
Lease payments (5.0) (5.4)
Dividends - (4.6)
Increase in cash 30.8 4.2
====================================== =========== ===========
Opening cash 17.2 6.1
====================================== =========== ===========
Closing cash 48.0 10.3
Borrowings (65.3) (37.7)
Finance leases liabilities (4.0) (1.8)
====================================== =========== ===========
Net debt excluding impact of IFRS 16 (21.3) (29.2)
====================================== =========== ===========
Pre-tax operating cash flow was impacted by the loss in
contribution as a result of the COVID-19 related temporary closure
of the business, offset by working capital reduction and cash
management measures implemented to maximise facility headroom
during this period of uncertainty. The Group also utilised the CJRS
as well as deferral of the March 2020 VAT liability to March
2021.
In addition, management took measures including deferring
non-essential capital expenditure and suspending dividend payments
(GBP4.6m in the prior half-year) in order to preserve cash and
further increase facility headroom during this period of COVID-19
related uncertainty.
Financing
The Group's banking facilities were increased last year,
totalling GBP75 million. The Board has not sought to amend its
existing covenants, increase these bank facilities further nor
access other sources of funding, as it believes its available
headroom provides sufficient liquidity based on current analysis
and the support of its various stakeholders. Net debt, on a
pre-IFRS 16 basis at 30 June 2020 was GBP21.3 million, 0.8x
adjusted EBITDA based on the FY19 audited results.
Finance costs for the period comprise GBP0.9 million interest on
borrowings and GBP1.4 million of discount unwind associated with
IFRS 16 lease liabilities. Interest costs increased in comparison
to the same period in the prior year due to the Board's decision to
fully draw down its borrowing facilities as a precaution when the
impact of COVID-19 became apparent. The cost of drawing down the
facilities was partially offset by a decrease in borrowing
rates.
Dividend
The Board recognises the importance of dividends for
shareholders. However, given the disruption and uncertainty caused
by COVID-19, the Board is not recommending an interim dividend for
2020. The Board intends to recommence dividend payments as soon as
practical, subject to full year financial performance and greater
visibility of prospects for 2021.
Outlook
The impact of COVID-19 will inevitably have a material impact on
trading for the current year. With the key trading months of
September, October and November still ahead of us, there is
inevitably a higher level of uncertainty around forecasts for the
remainder of the year. However, the Group continues to monitor
levels of demand across all its operations and is implementing cost
saving measures when and where appropriate, as well as expanding
supply where demand requires.
The Group exited the half year with strong demand levels, in
particular in its core window systems and cellular extrusions
businesses, where July and August revenues were 12% and 7% up on
prior year, respectively. From mid-August, order intake in some
parts of the Group accelerated to levels above capacity and have
placed material supply chains under pressure. It remains to be seen
the extent to which these demand levels are a result of pent-up
demand due to the lockdown or sustainable demand levels driven by
consumers spending more time at home during the lockdown and
reprioritising their spending to RMI.
Demand from new build has been more subdued, as housebuilders
prioritise plots that had sold and were nearing build completion.
However, this demand is slowly returning as the housebuilders'
build programmes are re-established in order to meet the underlying
demand for new build properties as a result of the housing
shortage.
Similarly, Social Housing refurbishment programmes are being
restarted and scheduled as the recovery of activity continues.
The medium-term drivers for the RMI 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 new build housing sector is anticipated
to grow, driven by underlying demand and government incentives.
Social new build is also expected to see growth.
In the near term, there may be continued uncertainty around the
UK's exit from the EU. Whilst the impact is unable to be predicted,
it could affect consumer confidence and cause delays in decision
making across a number of sectors.
Nonetheless, we are more optimistic for trading prospects in the
second half and expect to make further gains in market share and
continue to make strategic progress with our site consolidation and
rationalisation programme, 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
after the crisis.
Condensed Consolidated Income
Statement
for the six months ended 30
June 2020
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2019
2020 2019
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
==================================== ===== ============ ============ =============
Group revenue 2 93.3 140.0 282.1
==================================== ===== ============ ============ =============
Cost of sales (67.5) (96.5) (193.3)
==================================== ===== ============ ============ =============
Gross profit 25.8 43.5 88.8
Distribution expenses (13.5) (16.7) (33.7)
Administrative expenses (14.8) (18.0) (37.9)
Underlying operating (loss)/profit (1.8) 9.4 21.2
Amortisation of acquired other
intangible assets 3 (0.2) (0.1) (0.3)
Other non-underlying items 3 (0.5) (0.1) (2.3)
Share-based payments expense 3 - (0.4) (1.4)
------------------------------------ ----- ------------ ------------ -------------
Operating (loss)/profit (2.5) 8.8 17.2
Finance costs (0.9) (0.8) (2.1)
IFRS 16 discount unwind on
lease liabilities (1.4) (1.3) (2.7)
==================================== ===== ============ ============ =============
(Loss)/profit before tax (4.8) 6.7 12.4
Taxation 5 0.9 (1.3) (1.7)
==================================== ===== ============ ============ =============
(Loss)/profit for the period (3.9) 5.4 10.7
==================================== ===== ============ ============ =============
Pence Pence Pence
Basic (loss)/earnings per
share 6 (2.73) 3.78 7.49
Diluted (loss)/earnings per
share 6 (2.72) 3.77 7.47
Condensed Consolidated Balance
Sheet
as at 30 June 2020
30 June 30 June 31 December
2020 2019 2019
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
================================ ===== ============ ============ ============
Assets
Non-current assets
Goodwill 72.2 72.2 72.2
Other intangible assets 3.3 3.9 3.5
Property, plant and equipment 46.3 36.5 46.1
Right of use assets 49.8 49.1 51.4
Lease assets 8 5.2 - 5.3
Deferred tax asset 3.8 1.6 3.8
================================ ===== ============ ============ ============
180.6 163.3 182.3
================================ ===== ============ ============ ============
Current assets
Inventories 28.0 30.5 30.3
Trade and other receivables 28.8 46.9 43.6
Lease assets 8 0.6 - 0.4
Cash and cash equivalents 8 48.0 10.3 17.2
================================ ===== ============ ============ ============
105.4 87.7 91.5
================================ ===== ============ ============ ============
Total assets 286.0 251.0 273.8
================================ ===== ============ ============ ============
Liabilities
Current liabilities
Lease liabilities 8 10.1 8.2 9.0
Trade and other payables 61.6 61.7 75.2
Income tax payable (0.6) 1.4 1.0
Provisions 0.9 1.8 1.1
================================ ===== ============ ============ ============
72.0 73.1 86.3
Non-current liabilities
Other interest-bearing loans
and borrowings 8 65.3 37.7 32.3
Lease liabilities 8 60.1 52.8 62.0
Contingent consideration 1.0 1.0 1.0
Provisions 2.7 1.4 3.4
================================ ===== ============ ============ ============
129.1 92.9 98.7
================================ ===== ============ ============ ============
Total liabilities 201.1 166.0 185.0
================================ ===== ============ ============ ============
Net assets 84.9 85.0 88.8
================================ ===== ============ ============ ============
Equity
Ordinary share capital 0.1 0.1 0.1
Share premium 12.5 12.5 12.5
Merger reserve 25.5 25.5 25.5
Retained earnings 46.8 46.9 50.7
================================ ===== ============ ============ ============
Total equity 84.9 85.0 88.8
================================ ===== ============ ============ ============
Condensed Consolidated Statement
of Changes in Equity
for the six months ended 30
June 2020
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
================================== ============ ============ =============
Balance at the start of the
period 88.8 83.8 83.8
(Loss)/profit for the period (3.9) 5.4 10.7
Issue of shares - - -
Share-based payments - 0.4 1.4
Dividends 7 - (4.6) (7.1)
================================== ============ ============ =============
Balance at the end of the period 84.9 85.0 88.8
================================== ============ ============ =============
Consolidated Cash Flow Statement
for the six months ended 30 June 2020
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2019
2020 2019
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
============================== ===== ============ ============ =============
Cash flows from operating
activities
(Loss)/profit for the period (3.9) 5.4 10.7
Adjustments for:
Depreciation and amortisation 8.4 8.2 17.3
(Gain)/loss on disposal of
property,
plant and equipment - (0.3) 1.7
Gain on disposal of right of
use
asset - - (0.4)
Exceptional gain on sale and
leaseback - - (0.6)
Net finance costs 2.3 2.1 4.8
Taxation (0.9) 1.7 1.7
Share-based payments - 0.4 1.4
5.9 17.5 36.6
Decrease/(increase) in
inventories 2.3 (1.1) (0.9)
Decrease/(increase) in trade
and
other receivables 14.8 (4.0) (4.8)
(Decrease)/increase in trade
and
other payables (13.0) 3.0 3.3
(Decrease)/increase in
provisions (0.9) (0.7) 0.6
============================== ===== ============ ============ =============
Pre-tax operating cash flow 9.1 14.7 34.8
Tax paid (0.7) (0.7) (3.3)
============================== ===== ============ ============ =============
Net cash flow from operating
activities 8.4 14.0 31.5
Cash flows from investing
activities
Acquisition of subsidiary,
net of
cash acquired 4 - (2.3) (2.3)
Acquisition of property,
plant and
equipment (1.2) (3.5) (8.2)
Acquisition of other
intangible assets (0.1) (0.5) (0.4)
Proceeds on sale and
leaseback, net
of development costs (3.4) - 10.1
Proceeds on disposal of
subsidiary 4 - 0.1 0.1
Net cash flow from investing
activities (4.7) (6.2) (0.7)
Cash flows from financing
activities
Net interest paid (0.9) (0.8) (1.6)
Drawdown of borrowings 33.0 7.2 1.3
Repayment of lease
liabilities (5.0) (5.4) (12.3)
Dividends paid 7 - (4.6) (7.1)
============================== ===== ============ ============ =============
Net cash flow from financing
activities 27.1 (3.6) (19.7)
Net increase in cash and cash
equivalents 30.8 4.2 11.1
============================== ===== ============ ============ =============
Cash and cash equivalents at
the
beginning of the period 17.2 6.1 6.1
============================== ===== ============ ============ =============
Cash and cash equivalents at
the
end of the period 8 48.0 10.3 17.2
============================== ===== ============ ============ =============
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 2020. These are in accordance with the Group's
accounting policies as set out in the Group's consolidated
financial statements for the year ended 31 December 2019.
The recognition and measurement requirements of all
International Financial Reporting Standards ('IFRSs'),
International Accounting Standards ('IAS') and interpretations
currently endorsed by the International Accounting Standards Board
('IASB') and its committees as adopted by the EU and 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 2020
and should be read in conjunction with the Group's consolidated
financial statements for the year ended 31 December 2019 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 2020 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 9 September 2020.
Going concern
These condensed financial statements have been prepared on the
going concern basis, after considering the impact and risks arising
from COVID-19 and Brexit, 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 FY19 Annual Report and Accounts, in response
to COVID-19 and the subsequent Government lockdown, as well as in
anticipation of significantly reduced demand levels and in the
interest of customer and employee safety, the decision was taken on
25 March 2020 to implement a controlled shutdown of Epwin's
operating sites for a temporary period.
Based on these unprecedented circumstances, the Group prepared a
number of financial models ranging from the reasonably optimistic
through to an assumed worst-case scenario.
Following the temporary suspension of operations in March 2020,
as lockdown measures were eased, the Group commenced a phased
restart and by June all operations had restarted. Actual results
for the half year were significantly ahead of the 'optimistic'
forecast model. The Board now believe, based on actual results and
latest forecasts, that the uncertainty has lessened and currently
do not anticipate the need to seek a variation or waiver to its
existing covenants.
At 30 June 2020 the Group had GBP60 million of headroom on it
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 window
profile systems, PVC cellular roofline and cladding, rigid
rainwater and drainage products and Wood Plastic Composite ("WPC")
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
2020 2019 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Revenue from external customers
------------------------------------- ------------ ------------ -------------
Extrusion & Moulding 60.7 87.8 177.6
Fabrication & Distribution 32.6 52.2 104.5
-------------------------------------- ------------ ------------ -------------
Total 93.3 140.0 282.1
====================================== ============ ============ =============
Segmental operating (loss)/profit
------------------------------------- ------------ ------------ -------------
Extrusion & Moulding (0.3) 8.6 18.7
Fabrication & Distribution (0.4) 1.8 4.6
-------------------------------------- ------------ ------------ -------------
Segmental operating (loss)/profit
before corporate and other costs (0.7) 10.4 23.3
Corporate costs (1.1) (1.0) (2.1)
====================================== ============ ============ =============
Underlying operating (loss)/profit (1.8) 9.4 21.2
Amortisation of acquired other
intangible assets (0.2) (0.1) (0.3)
Other non-underlying items (0.5) (0.1) (2.3)
Share-based payments expense - (0.4) (1.4)
====================================== ============ ============ =============
Operating (loss)/profit (2.5) 8.8 17.2
====================================== ============ ============ =============
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. 'Underlying operating
profit' is operating profit stated before items of non-underlying
and non-recurring income and expense which include; amortisation or
impairment of acquired other intangible assets, business
reorganisation costs, acquisition expenses, share based payments
and one-off exceptional items.
Non-underlying items included within operating profit
include:
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2020 June 2019 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
================================ ============= ============= =============
Amortisation of acquired other
intangible assets (0.2) (0.1) (0.3)
Other non-underlying items (0.5) (0.1) (2.3)
Share-based payments - (0.4) (1.4)
================================ ============= ============= =============
Non-underlying expense (0.7) (0.6) (4.0)
================================ ============= ============= =============
Amortisation of acquired other intangible assets
GBP0.2 million (30 June 2019: GBP0.1 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 2020 June 2019 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
=================================== ============= ============= =============
Acquisition expenses - (0.1) (0.1)
Profit on sale and leaseback
transaction - - 0.6
Site consolidation and redundancy (0.5) - (2.8)
Other non-underlying items (0.5) (0.1) (2.3)
=================================== ============= ============= =============
During the period the Group incurred redundancy costs of GBP0.5
million.
Share-based payments expense
The share-based payment expense of GBPnil (30 June 2019: GBP0.4
million) comprises IFRS 2: Share-based payments charges in respect
of the: Long-Term Incentive Plan GBPnil (30 June 2019: GBP0.3
million), which matured on 31 December 2019, and SAYE schemes of
GBPnil (30 June 2019: GBP0.1 million).
4. Acquisitions
Acquisitions in the half year ended 30 June 2019
On 1 February 2019, the Group acquired Premier Distribution (Gt.
Yarmouth) Limited, trading as PVS, for initial cash consideration
of GBP2.5 million. PVS supplies and installs PVC decking and
related products to the holiday park and park home markets as well
as to residential customers and local authorities. PVS forms part
of the Fabrication and Distribution segment.
The following table summarises the consideration paid for PVS
and the provisional fair values of the assets and liabilities
acquired at the acquisition date.
Premier Distribution
(Gt. Yarmouth) Limited
fair values on acquisition
GBPm
----------------------------------------------- ----------------------------
Recognised amounts of identifiable assets
and liabilities acquired
Acquired intangibles - brand 0.1
Acquired intangibles - customer relationships 0.1
Property, plant and equipment 1.8
Right of use assets 0.1
Inventories 0.2
Trade and other receivables 0.3
Cash and cash equivalent 0.5
Other interest-bearing loans and borrowings (0.9)
Lease liabilities (0.1)
Trade and other payables (0.3)
Income tax payable (0.2)
Provisions (0.1)
------------------------------------------------ ----------------------------
Fair value of assets acquired 1.5
Goodwill 2.0
------------------------------------------------ ----------------------------
Total consideration 3.5
------------------------------------------------ ----------------------------
Consideration
Cash consideration 2.5
Contingent consideration 1.0
------------------------------------------------ ----------------------------
Total consideration 3.5
------------------------------------------------ ----------------------------
On acquisition, other intangible fixed assets of GBP0.2 million
were recognised, representing the PVS brand and customer
relationships.
The goodwill recognised of GBP2.0 million represents the
know-how of the workforce, plus the potential for cross-selling and
synergies that exist as a result of the vertical integration with,
and the larger scale of, the Epwin Group.
Disposals in the half year ended 30 June 2019
On 7 January 2019, the Group disposed of the trade and certain
assets and liabilities of its glass-sealed unit manufacturing
business in Northampton for cash consideration of GBP0.1
million.
5. Taxation
The tax charge for the six months to 30 June 2020 is based on
the estimated tax rate for continuing operations for the full
year.
The UK corporation tax rate reduced from 20% to 19% effective
from 1 April 2017. A further reduction to 17%, which was to be
effective from 1 April 2020, was substantively enacted on 6
September 2016. However, in the Budget held on 11 March 2020, the
Government announced that the reduction down to 17% would no longer
take place, with the rate to remain at 19% going forward. As at the
30 June 2020 balance sheet date, the reduction to 17% had been
enacted and not formally reversed, and so the deferred tax asset at
this date has still been calculated using this rate.
6. (Loss)/earnings per share (EPS)
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2020 June 2019 2019
(unaudited) (unaudited) (audited)
pence pence pence
========= ============= ============= =============
EPS
Basic (2.73) 3.78 7.49
Diluted (2.72) 3.77 7.47
========= ============= ============= =============
6 months 6 months
ended 30 ended 30 Year ended
June 2020 June 2019 31 December
(unaudited) (unaudited) 2019 (audited)
No. No. No.
==================================== ============= ============= ================
Number of shares
Weighted average number of
shares used to calculate earnings
per share
* Basic 142,926,660 142,925,173 142,925,173
* Diluted 143,169,478 143,147,189 143,168,763
===================================== ============= ============= ================
7. Dividends
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2020 June 2019 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
================================== ============== ============= =============
2018 final dividend of 3.20
pence per share - 4.6 4.6
2019 interim dividend of 1.75
pence per share - - 2.5
2019 final dividend of nil pence - - -
per share
================================== ============== ============= =============
- 4.6 7.1
================================================= ============= =============
8. Net debt
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2020 June 2019 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
================================ ============ ============ =============
Cash and cash equivalents 48.0 10.3 17.2
Secured bank loans (65.3) (37.7) (32.3)
Lease assets 5.8 - 5.7
Lease liabilities (70.2) (61.0) (71.0)
================================= ============ ============ =============
Net debt (81.7) (88.4) (80.4)
Add: lease liabilities 70.2 61.0 71.0
Deduct: lease assets (5.8) - (5.7)
Add: finance lease liabilities (4.0) (1.8) (1.3)
================================= ============ ============ =============
Net debt (pre-IFRS 16 basis) (21.3) (29.2) (16.4)
================================= ============ ============ =============
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
was for an initial term of three years through to June 2022, with
an option to extend for a further two years.
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
This information is provided by RNS, the news service of the
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END
IR KKCBDABKDFCK
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