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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Epwin Group Plc | LSE:EPWN | London | Ordinary Share | GB00BNGY4Y86 | ORD 0.05P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.50 | 0.58% | 87.00 | 86.00 | 88.00 | 87.00 | 86.50 | 86.50 | 34,468 | 12:52:05 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Gen Contractor-nonres Bldgs | 355.8M | 8.4M | 0.0580 | 15.00 | 126.09M |
From Apr 2021 to Apr 2024
TIDMEPWN
RNS Number : 3906H
Epwin Group PLC
06 April 2022
6(th) April 2022
This announcement contains inside information for the purposes of Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310 (as amended). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.
Epwin Group Plc
Final results for the year ended 31 December 2021
Strong performance and continued strategic progress
Epwin Group Plc (AIM: EPWN) ("Epwin" or the "Group"), the leading manufacturer of low maintenance building products, supplying the Repair, Maintenance and Improvement ("RMI"), new build and social housing sectors, announces its audited full year results for the year ended 31 December 2021.
2021 Financial highlights
GBPm 2021 2020 2019 -------------------------------------- ------ ------ ------ Revenue 329.6 241.0 282.1 Underlying operating profi t (1) 18.5 9.4 21.2 Underlying operating margin (1) 5.6% 3.9% 7.5% Statutory operating profit 17.7 6.3 17.2 Adjusted profit before tax (1) 13. 7 5.0 16.4 Profit before tax 12. 9 1.9 12.4 Basic EPS 8.61p 1.82p 7.49p Dividend per share for the year 4.10p 1.00p 1.75p Pre-tax operating cash flow 34.9 23.7 34.8 Covenant net debt (2) 9.4 18.5 16.4 Covenant net debt to adjusted EBITDA (2) 0.4x 1.3x 0.6x Underlying operating cash conversion (3) 189% 252% 164% -------------------------------------- ------ ------ ------
(1) Adjusted for amortisation of acquired other intangible assets, share-based payments expense and other non-underlying items.
(2) Covenant net debt and covenant net debt to adjusted EBITDA represent pre-IFRS 16 measures.
(3) Underlying operating cash conversion is pre-tax operating cash flow as a percentage of underlying operating profit.
Financial headlines
-- Strong trading performance:
o Record revenues of GBP329.6 million, 37% ahead of 2020 and 17% ahead of 2019
o Underlying operating profit of GBP18.5 million (2020: GBP9.4 million, 2019: GBP21.2 million)
o Strong cash generation with pre-tax operating cash inflow of GBP34.9 million (2020: GBP23.7 million, 2019: GBP34.8 million) and underlying operating cash conversion of 189%
o Continued resilience of Group's core markets, with high RMI demand throughout 2021
-- Financial position strengthened:
o Covenant net debt significantly reduced to GBP9.4 million (2020: GBP18.5 million)
o Covenant net debt 0.4x adjusted EBITDA, after GBP5.3 million cash cost of acquisitions
o Significant headroom on banking facilities, in excess of GBP65 million, to support growth strategy
-- Proposed final dividend of 2.35 pence per share, resulting in total dividend for 2021 of 4.10 pence per share (2020: 1.00 pence per share)
Operational and strategic headlines
-- Active management of pandemic-related operational and inflationary challenges
o Significant inflationary and availability pressure on material and labour costs
o Successful and continued implementation of price increases and surcharges, albeit with a lag to cost inflation
-- Good progress delivering on our strategy:
o Operational improvement:
-- Construction completed on new Telford distribution and finishing facility
-- Full relocation of inventories to the new facility to be completed in 2022
o Value enhancing acquisitions:
-- Acquired three well-established regional independent distributors of plastic building products
-- Adds 13 trade counters in Cumbria, Northumberland, Southern Scotland, Lancashire and Norfolk
o New product development:
-- Aluminium window system and PVC decking sales continue to see strong growth, with demand levels for these products well ahead of management's expectations
o Continued market share gains
o ESG framework and targets, building on inherent environmental and sustainability benefits of the Group's products
Current trading and outlook
-- Strong RMI demand expected to continue in 2022, albeit at slower growth rate than last year -- Continued focus on actively managing ongoing supply chain and inflationary pressures -- Healthy pipeline of further M&A opportunities -- Positive medium and long-term RMI market drivers
-- Current trading is in line with the Board's expectations, with 2022 revenue to date ahead of 2021. The Group is well positioned for the rest of the year
Jon Bednall, CEO of Epwin, commented:
"I am pleased to report that our trading performance for the year as a whole was strong, despite the well-reported supply chain and inflationary pressures that presented a particular challenge to our fenestration businesses. This is testament to the hard work of our people in a year which has seen many challenges for businesses and individuals.
We are optimistic for the Group's trading prospects in 2022 and expect to make further gains in market share, whilst continuing to manage the challenges that the current environment presents. We remain confident in the strength of the medium and long-term drivers of our markets."
Contact information
Epwin Group Plc Jon Bednall, Chief Executive Chris Empson, Group Finance Director 0203 128 8168 Shore Capital (Nominated Adviser and Joint Broker) Corporate Advisory 0207 408 4090 Daniel Bush / Iain Sexton Corporate Broking Fiona Conroy Zeus Capital Limited (Joint Broker) John Goold / Dominic King 0203 829 5000 MHP Communications 0203 128 8168 Reg Hoare / Charlie Barker / Pauline epwin@mhpc.com Guenot
Forthcoming dates:
Ex-dividend date 12 May 2022 Dividend record date 13 May 2022 Annual General Meeting 24 May 2022 Dividend payment date 6 June 2022
About Epwin
Epwin is the leading manufacturer of low maintenance building products with significant market shares, supplying the Repair, Maintenance and Improvement (" RMI"), new build and social housing sectors.
The Company is incorporated, domiciled and operates principally in the United Kingdom.
Information for investors can be accessed www.epwin.co.uk/investors/
Chairman's Statement
Encouraging performance
The performance of the Group during 2021 has been encouraging with the strong demand levels seen in the RMI market during the second half of 2020 continuing throughout the year, as revenues and EPS exceeded 2019 pre-pandemic levels. The Group has made good strategic progress during the year, in particular completing three bolt on acquisitions and achieving significant growth with the new products launched in recent periods.
On behalf of the Board and our shareholders, I would again like to thank all our employees and their families for their efforts and the commitment they have continued to demonstrate during the Covid-19 pandemic.
Inflationary headwinds
Consistent with other industries, raw materials cost inflation has been one of the main challenges for the building products sector in 2021 and into 2022. The ongoing implications of the Covid-19 pandemic, as well as the high levels of demand from the RMI market, continue to put pressure on operations and supply chains. Increases in raw material costs, in particular PVC resin, and the ability of the Group to pass these costs on to customers have been the dominant factors during 2021. The Group is successfully passing on the increase in costs to its customer base through a mixture of price increases and surcharges, albeit with a natural timing lag and not yet recovering the full margin impact, as the Group has been cognisant that the level of increase needs to be managed in an equitable manner with customers.
As well as raw material cost inflation, further emerging themes during the course of the year have been wage inflation and staff retention, as a result of both the Covid-19 pandemic and Brexit. Our employees are critical to the performance of the Group, their expertise and commitment are what makes Epwin a market-leading business and will drive its future success. Measures have been introduced to improve both staff retention and recruitment, to manage the near-term impacts of labour availability and increasing market pay rates.
Strategic progress
The Group has made pleasing progress with its strategy of operational improvement, broadening the product portfolio and materials capabilities, selective acquisitions, cross-selling and market-share growth.
Product development
The PVC decking products and aluminium window systems continue to see significant growth with demand ahead of management's expectations, following the delay of their launch as a result of the pandemic. Stellar, our aluminium window system, has achieved good traction with both new customers and within our existing fabricator customer base. Dekboard, the Group's PVC decking system, has also seen strong growth as it has established and reinforced its routes to market.
With PVC prices at historical highs and potential future cost and supply volatility, the Group has also commenced projects to further increase the use of recycled PVC resin within its products.
Value enhancing acquisitions
The Group completed three bolt on acquisitions during the year to further extend its network of trade counters, now in excess of 100.
On 5 January 2021, the Group acquired the trade and related assets of SBS (Cumbria) Limited ("SBS"), a well-established regional distributor of plastic building products operating across eight branches in Cumbria and Southern Scotland.
On 30 June 2021, the Group acquired the trade counter activities and related assets of Plastic Building Supplies Limited ("PBS"), an established distributor of plastic building products with four branches across Norfolk.
On 11 November 2021, the Group acquired Accrington Plastics Limited a single branch distributor of plastic building products based in the North West of England.
Total consideration for these acquisitions was GBP5.4 million, net of cash acquired, comprising GBP5.3 million paid in cash and GBP0.1 million deferred. These acquisitions further increase the geographical coverage of the Group's plastic distribution business and offer the opportunity for synergies and wider expansion over time alongside the Group's partnerships with its key independent distribution partners.
Progress with site consolidation and rationalisation programme
Construction work on the purpose-built facilities in Telford, to consolidate our Window Systems warehousing and finishing operations, completed in the first half of 2021.
The Covid-19 pandemic and the continuation of the exceptionally high demand levels seen post lockdown and throughout 2021 has required the Window Systems operation to continue operating across its existing sites in order to maintain service levels for customers. It is now anticipated that the relocation of inventories and logistics operations to the new facility will take place in 2022 which will then allow the Group to start realising the consolidation and synergistic benefits of the new facility.
ESG
The Group continued to make progress with developing its ESG framework and targets, having aligned its operations with the United Nations Sustainable Development Goals ("UN SDGs"). Notable progress during the period included:
-- Commissioning of carbon balance sheet to establish a baseline for its carbon footprint -- Commencing investment to develop and increase recycling capabilities -- 87% of revenue from recyclable products -- Achieving the Fair Tax Mark -- Appointment of an additional non-executive director -- Reduced GHG emissions per GBPm of gross revenue by 20% from prior year -- Gender pay gap in 2021 - women paid on average more than men
The Group has strong inherent sustainability credentials with its energy efficient and low maintenance building products and has already taken meaningful actions to reduce the Group's carbon footprint such as increasingly switching to sustainable raw materials and making improvements to energy and resource efficiency.
Board changes
We were pleased to welcome Shaun Smith to the board at the beginning of January 2022. Shaun has significant and broad finance and commercial experience, having been most recently Chief Financial Officer at Norcros plc, and he will add significant insight and value to our board.
Unfortunately, Mike O'Leary, who joined the board shortly after the IPO, stepped down in March 2022 for health reasons. Mike made a terrific contribution to the board, and we will miss his wise counsel. We wish Mike a full recovery. We will be seeking to appoint another non-executive director during the year.
Corporate governance and AGM
The Board of Directors, including myself as Chairman, acknowledges the importance of the ten principles set out in the QCA Code and details of our compliance with the Code can be found in the Corporate Governance section of the 2021 Annual Report as well as on the corporate website.
The Annual General Meeting ("AGM") will be held at 1B Stratford Court, Cranmore Boulevard, Solihull, B90 4QT on Tuesday 24 May 2022 at 11.00 am .
Current public health guidance and legislation issued by the UK Government in relation to the Covid-19 pandemic would permit public gatherings and travel at the date of the AGM. The AGM has been arranged assuming the Company will be able to hold a physical in-person meeting. However, due to the ongoing Covid-19 situation, the Board considers it appropriate to minimise physical attendances at the AGM. Shareholders are therefore encouraged to vote by proxy. Whilst all shareholders are still legally entitled physically to attend the AGM, please consider carefully before doing so.
Results
Revenues were significantly higher than both their Covid-19 impacted 2020 comparatives, as well as the 2019 comparative, the last year unaffected by the Covid-19 pandemic. The increase in revenues to a record GBP 329. 6 million (2020: GBP241.0 million, 2019: GBP282.1 million) was driven by high levels of demand as well as the selling price increases and surcharges implemented as a result of cost inflation. Underlying operating profit increased to GBP 18.5 million compared to GBP9.4 million in 2020, but remained behind the 2019 underlying operating profit of GBP21.2 million mainly as a result of material cost inflation and the lag in passing on cost increases to customers. Statutory operating profit was GBP 17.7 million (2020: GBP6.3 million, 2019: GBP17.2 million).
Cash generation continued to be strong with pre-tax operating cash flow of GBP34.9 million, returning to 2019 levels (2020: GBP23.7 million, 2019: GBP34.8 million). The Group finished the year with significantly reduced covenant net debt of GBP9.4 million (2020: GBP18.5 million, 2019: GBP16.4 million), representing 0.4x adjusted EBITDA and well within covenant levels.
Dividends
The Board is recommending a final dividend of 2.35 pence per share (2020: 1.00 pence per share) to be paid on 6 June 2022 to shareholders on the register on 13 May 2022 . Along with the interim dividend of 1.75 pence per ordinary share, paid in October 2021, this takes the full year dividend to 4.10 pence per ordinary share (2020: 1.00 pence per share).
Summary and outlook
The Group's trading performance during 2021 has been encouraging and it has continued to make good strategic progress in a trading environment that has been buoyant since the second half of 2020. Customer demand, particularly from the RMI sector, remains strong. Trading in 2022 to date is in line with the Board's expectations with revenue ahead of the same period in 2021.
Supply chains remain under pressure and raw material costs continue to increase as a result of the continuing impact of the Covid-19 pandemic and, more recently, the tragic events in Ukraine. The Group's strong relationships with its PVC resin suppliers have ensured it has been able to secure material supply; albeit the market price of PVC resin has doubled since the end of 2019. The Group is passing on these increased costs to its customers in an equitable manner through price increases and surcharges and remains confident of its ability to continue to work with its customers to manage further cost inflation fairly.
Our strategy continues to be based on operational improvement, broadening the product portfolio and capabilities, value enhancing acquisitions, cross-selling and market share growth in key sectors to build a sustainable, resilient business, delivering further growth as market conditions continue to improve.
The medium to long-term drivers for the market remain positive, with an ageing and underinvested housing stock, as well as environmental and safety concerns driving new legislation and initiatives that will require improvements to homes, including in respect of energy efficiency, on a larger scale than simply essential maintenance. The pandemic has also stimulated demand for home, garden and leisure space spending, with lockdowns highlighting the need for improvements, addressing maintenance and creating workspace.
We are optimistic for the Group's trading prospects in 2022 and expect to make further gains in market share, whilst continuing to manage the challenges that the current environment presents.
Andrew Eastgate
Chairman
6 April 2022
Business review
Strategic and operational review
The strong trading conditions seen in the second half of 2020 continued throughout 2021, still predominantly driven by the RMI sector.
Whilst positive from a volume and selling price perspective, this high market demand combined with raw materials shortages from global events and supplier issues placed significant pressure on supply chains. This consequently resulted in inflationary headwinds. Through its strong relationships with suppliers the Group has been able to ensure continuity in its requirements for raw materials, however, the cost of these materials has risen significantly throughout the year. The price of PVC, the Group's main input material, is now at twice the price it was at the start of the pandemic in March 2020 and over 75% higher than at the end of 2020. The Group has consequently increased selling prices and introduced surcharges to recover input cost inflation in a fair and equitable manner.
The Group has also introduced measures to improve both staff retention and recruitment to manage labour availability and increased market pay rates, which will have an impact in the near term, as a result of both the Covid-19 pandemic and Brexit.
The pandemic, and resulting supply chain and inflationary pressures, have impacted the Group's business units in different ways. This has determined the approach each has taken, and continues to take, to mitigate the cost inflation in an equitable manner through selling price increases, surcharges and other measures.
The operations within the Extrusion and Moulding segment have been particularly impacted by raw material cost inflation. Our market leading position in cellular extrusions, as well as the decision to maintain high stock holdings and a strong operational performance, have enabled the cellular businesses to ensure continuity of supply and service to our customers. We believe, as a result, that our cellular businesses have been able to take market share whilst increasing selling prices to recover the material cost inflation, albeit not yet to a level that recovers the full margin.
Our Window Systems business has faced a number of operational challenges following the initial pandemic lockdown in 2020. As the business manufactures components for a window system, the balance of stock holding is critical. The initial lockdown hit at a crucial time, as stock levels were being built in the first half of the year and as the business was preparing to relocate its warehousing operations to the new Telford facility. The unprecedented levels of demand following lockdown, which continued through 2021, combined with supply chain pressures on key raw materials, saw longer lead times for customers. The material cost inflation has been passed on to a point, through a combination of selling price increases and surcharges, but this has been done in an equitable manner, often with a natural lag to the cost inflation impact, recognising our service levels and other market challenges faced by our longstanding customers. The level of service improved over the course of 2021 and continues to normalise in 2022.
The Fabrication and Distribution segment has performed particularly well during 2021 as a result of strong demand and a good operational performance. The result also reflects the strategic progress of the Group in recent years having made a number of acquisitions to further extend the geographical coverage of the Group's distribution network and the rationalisation programme undertaken to streamline the fabrication operations. The segment has achieved record revenues, operating profit and margins in the year.
We believe that demand in our new build facing operations was influenced by the end of the Government's temporary extension to the nil rate stamp duty band. The nil rate band increase was initially set to reduce from GBP500,000 on the 31 March 2021 but was extended through to 30 June 2021. As a result of this, the Group's new build facing operations saw the high levels of demand from the housebuilders initially seen in Q4 2020 continue throughout Q1 2021. Subsequently, demand levels remained robust but not at the levels seen earlier in the year and slightly behind 2019 levels. As a consequence of their more labour-intensive manufacturing processes, the output of our new build facing operations has also been impacted by the widely reported labour challenges, particularly in the second half of the year. As described above, we have taken actions to support staff retention and recruitment initiatives.
Demand from the social housing sector has been slower to return from the initial lockdown in March 2020 with contract start dates continuing to be delayed. However, demand is recovering to 2019 levels and order books continue to build.
Strategic progress
Value enhancing acquisitions
The Group completed three bolt on acquisitions during the year to further extend its network of trade counters.
On 5 January 2021, the Group acquired the business of SBS (Cumbria) Limited ("SBS"), a well-established regional distributor of plastic building products operating across eight branches in Cumbria and Southern Scotland. Including synergistic benefits, we anticipate achieving an EBITDA multiple of four times, with the full benefits of the acquisition being realised from the end of 2021.
On 30 June 2021, the Group acquired the trade counter business of Plastic Building Supplies Limited ("PBS"), an established distributor of plastic building products from four branches across Norfolk. We anticipate achieving an EBITDA multiple, including synergies, of three times from the end of 2021.
On 11 November 2021, the Group acquired Accrington Plastics Limited, a single branch distributor of plastic building products.
Total consideration for these acquisitions was GBP5.4 million, net of cash acquired, comprising GBP5.3 million paid in cash and GBP0.1 million deferred. These acquisitions further increase the geographical coverage of the Group's plastic distribution business and offer the opportunity for synergies and wider expansion over time alongside the Group's partnerships with its key independent distribution partners.
New product development
The Group has seen strong demand for the new products launched during 2019 and 2020, in particular the aluminium window system, Stellar, and the PVC decking product, Dekboard, which have seen demand well ahead of management's expectations. This is particularly pleasing given the impact the Covid-19 lockdown had on the initial phase of their launch.
Reflecting both the continual need to operate in an ever more environmentally sustainable manner, as well as the current highly inflated cost of raw materials, the Group has commenced investment to increase the utilisation of recycled materials in its PVC extrusion operations. Due to the long lead times for plant and tooling this is anticipated to come on stream in the second half of 2022.
Progress with site consolidation and rationalisation programme
Construction work on the purpose-built facilities in Telford, to consolidate Window Systems warehousing and finishing operations, has been successfully completed on time and on budget.
The Covid-19 pandemic and the continuation of the exceptionally high demand levels seen post lockdown and throughout H1 2021 has required the Window Systems business to continue operating across its existing sites. It is now anticipated that the relocation of inventories and logistics operations to the new facility will be completed in 2022 which will allow the Group to start realising the consolidation and synergistic benefits of the new facility.
Health and safety
As a manufacturing business the Group is committed to ensuring a safe, clean and healthy working environment for all its employees and promotes continuous improvement in health and safety standards across all operations. Our operational KPIs, include health and safety metrics. There has been a slight increase in accident frequency and reportable injuries during the period. This was primarily due to increased operational activity and staffing challenges, both leading to an increase in use of temporary labour, which can present challenges resulting from a lack of familiarity with the Group's safe operating procedures when compared to more experienced permanent members of staff. An exercise has been undertaken to reduce the reliance on temporary labour and to reinforce the importance of adherence to established operating procedures. The KPIs continue to be monitored closely by the main and divisional Boards to ensure that appropriate and timely action is taken to maintain a safe operating environment.
Throughout the Covid-19 pandemic, the health, safety and wellbeing of our employees, as well as their families, has remained the primary concern. Our overriding principle has been to follow the Government's guidance whilst ensuring that the Group is protected and can continue trading in order to secure employment for our committed workforce.
Covid-19 safe and compliant working practices have remained in place throughout 2021 and into 2022, as well as work from home measures when Government guidance has advised and where feasible for the employee and business.
ESG
ESG is a core part of the Group's strategy. As the Group's energy efficient and low maintenance products have inherent sustainability credentials, a key element of our strategy is based on innovation to maximise the environmental benefit of our products. As a manufacturing business of scale, we are energy and resource intensive. Therefore, another key part of our sustainability strategy is a focus on optimising the efficiency of our production processes and wider operations and increasing the use of recycled resources in our manufacturing plants. During the year the Group has approved a capital expenditure programme to facilitate the increased use of recycled material in its PVC extrusion operations and has undertaken initiatives to improve fleet efficiency and reduce plant energy and water consumption. The Group continues to develop its reporting in relation to ESG, noting it is a matter of increasing importance to investors and other key stakeholders, and will present an integrated Sustainability Report, bringing together all reporting relevant to ESG issues, as part of the 2021 Annual Report and Accounts.
Market overview
The strong trading conditions seen in the second half of 2020 continued throughout 2021, still predominantly driven by the RMI sector. Households that had saved through lockdown continued to prioritise expenditure on home improvements whilst other big ticket spending options such as holidays and motor vehicles remained limited.
Private housing RMI
The strong RMI demand seen throughout 2021 is expected to continue through the first half of 2022. This is a result of historical underinvestment in both home repair and maintenance, as well as the continuing desire for home improvement, driven by the increase in working from home and supported by strong household finances as a consequence of the pandemic. However, the impact of inflation, including this month's increases in energy costs and National Insurance Contributions, will lead to a rise in the cost of living and potentially lower disposable incomes, which could moderate RMI spend in the second half of 2022 and into 2023.
Social housing RMI and new build
Having been slower to recover following the initial pandemic lockdown, social housing RMI and new build are expected to grow in 2022, with the Construction Products Association ("CPA") forecasting 7% growth in 2022 for social housing RMI, followed by 5% growth in 2023, and 3% growth in 2022 and 2023 for social housing new build. However, local authority and housing association funding is expected to remain focused on remediating legacy safety issues such as cladding on high-rise buildings, at the expense of other maintenance and new public housing. This may be to the short-term detriment of the Group's products, with our social facing window fabrication business in particular continuing to see the deferment of some contract start dates.
Private new build housing
New build demand was strong during the first half of 2021, supported by the Government's stamp duty holiday and Help to Buy scheme. Whilst there are some headwinds in the form of supply chain and inflationary pressures, as well as the rising cost of living and interest rates, which will impact the affordability of homes, demand for private new build housing is expected to continue during 2022, supported by an underlying shortage of suitable housing particularly for first time buyers.
Outlook
Demand levels are expected to remain strong through most of 2022, but the Group is cognisant of the headwinds in the form of continuing supply chain challenges, inflationary pressures and the rising cost of living, as well as continuing uncertainty around the emergence of new Covid-19 variants and the impact of the tragic events in Ukraine. These headwinds mean that while demand is expected to remain strong, high growth rates like those seen in the second half of 2020 and throughout 2021 are unlikely to continue at the same pace in 2022.
The medium to long-term underlying market drivers remain strong:
-- The UK's existing housing stock is ageing and underinvested in recent years, resulting in an increasing backlog of properties that will require essential repairs and maintenance.
-- An increasing UK population and shortage of suitable new housing.
-- Environmental and safety concerns that will continue to drive legislation and initiatives that will require improvements, including in respect of energy efficiency, to homes on a larger scale than just essential maintenance.
-- Changing structural trends with an increase in time spent at home, including working from home, will lead to continued investment in home improvement.
Jonathan Bednall
Chief Executive Officer
6 April 2022
Financial Review
Total revenue for the year ended 31 December 2021 was a record GBP329.6 million (2020: GBP241.0 million, 2019: GBP282.1 million). The increase in revenue over 2020 was in part as a consequence of the pandemic related business closure at the end of March 2020, but also the strong levels of RMI demand seen since the second half of 2020 and throughout 2021, as well as the impact of selling price increases and surcharges required to combat the significant raw material and other cost inflation experienced since Q4 2020. The increase in revenue over 2019 is predominantly as a result of strong RMI demand and selling price increases and surcharges in response to material cost inflation. The three acquisitions completed in 2021 contributed GBP9.5 million of revenue.
Underlying operating profit increased significantly to GBP18.5 million in the period (2020: GBP9.4 million) as a result of a full year of trading and strong demand from the RMI sector. Underlying operating profit remains slightly below 2019 levels, as a consequence of unprecedented material cost inflation, in particular in relation to PVC resin which has increased in price by 75% during the course of 2021 and is now more than double the prevailing pre-pandemic price. Underlying operating margin trails 2019 by 1.9% as the Group has sought to pass on the material price increases in an equitable manner to its customers, albeit with an unavoidable lag. As at December 2021, the business has communicated and implemented selling price increases and surcharges that recover the material cost increases, but these do not yet recover the full margin impact. Operating profit for the year was GBP17.7 million (2020: GBP6.3 million, 2019: GBP17.2 million) driven by strong trading and lower non-underlying costs than in previous years.
Hot Features
Premium
Key financials Year ended Year ended Year ended
31 December 31 December 31 December
2021 2020 2019
GBPm GBPm GBPm
------------------------------------------- ------------- ------------- -------------
Revenue 329.6 241.0 282.1
------------------------------------------- ------------- ------------- -------------
Underlying operating profit (*) 18.5 9.4 21.2
Amortisation of acquired other intangible
assets (0.3) (0.3) (0.3)
Other non-underlying items (0.1) (2.8) (2.3)
Share-based payments expense (0.4) - (1.4)
Operating profit 17.7 6.3 17.2
------------------------------------------- ------------- ------------- -------------
Underlying operating margin (*) 5.6% 3.9% 7.5%
Operating margin 5.4% 2.6% 6.1%
------------------------------------------- ------------- ------------- -------------
(*) Stated before amortisation of acquired other intangible assets, share-based payments and other non-underlying items.
Reportable segments Year ended Year ended Year ended
31 December 31 December 31 December
2021 2020 2019
GBPm GBPm GBPm
------------------------------------------- ------------- ------------- -------------
Revenue
------------------------------------------- ------------- ------------- -------------
Extrusion and Moulding 202.3 154.3 177.6
Fabrication and Distribution 127.3 86.7 104.5
------------------------------------------- ------------- ------------- -------------
Total 329.6 241.0 282.1
------------------------------------------- ------------- ------------- -------------
Underlying segmental operating profit
Extrusion and Moulding 12.2 8.3 18.7
Fabrication and Distribution 8.4 3.2 4.6
------------------------------------------- ------------- ------------- -------------
Underlying segmental operating profit
before corporate costs 20.6 11.5 23.3
Corporate costs (2.1) (2.1) (2.1)
------------------------------------------- ------------- ------------- -------------
Underlying operating profit 18.5 9.4 21.2
Amortisation of acquired other intangible
assets (0.3) (0.3) (0.3)
Other non-underlying items (0.1) (2.8) (2.3)
Share-based payments expense (0.4) - (1.4)
------------------------------------------- ------------- ------------- -------------
Operating profit 17.7 6.3 17.2
------------------------------------------- ------------- ------------- -------------
Extrusion and Moulding
-- Revenue increased by 31% in comparison to 2020, to a record GBP202.3 million, as a result of the bounce back following the lockdown in March 2020 and the heightened RMI demand levels seen in H2 2020 that have continued throughout 2021, as well as selling price increases and surcharges
-- In comparison to 2019, revenues increased by 14% as a result of strong customer demand and the selling price increases and surcharges required to combat material cost inflation, particularly in relation to PVC resin
-- Supply chain disruption and increases in raw material costs have impacted margins. By the nature of its activities, the Extrusion and Moulding segment has borne the majority of the impact of the supply chain issues and raw material cost increases. The business has taken, and continues to take, steps to mitigate these equitably through price increases, surcharges and other measures; albeit this process naturally lags the continuing increase in input costs
Fabrication and Distribution
-- Revenue increased by 47% in comparison to 2020, to a record GBP127.3 million, mainly as a result of the bounce back following the lockdown in March 2020 in addition to selling prices and the contribution of acquisitions during the year
-- In comparison to 2019, revenues have increased by 22%, of which 13% is through increased volumes and selling price increases, with the balance due to acquisitions
-- Underlying Fabrication and Distribution segmental operating profit increased by 83% from 2019
-- The improvement in profitability and margin, to record levels, reflects increased volumes, successful passing on of price increases and the benefits from the site consolidation and rationalisation activities over recent years
Non-underlying items
To assist users of the financial statements, the Group reports certain performance measures as underlying as it believes they provide better information on the ongoing trading performance of the business. Items excluded from operating profit in arriving at underlying operating profit are non-cash items such as amortisation of acquired other intangible assets and share-based payments expense as well as significant one-off incomes or costs that are not part of the underlying trading performance of the business.
Non-underlying items that have been excluded from operating profit in arriving at underlying operating profit include:
i. Amortisation of acquired other intangible assets
Amortisation of GBP0.3 million was charged during the year (2020: GBP0.3 million), relating to the brand and customer relationship intangible assets recognised on acquisitions.
ii. Other non-underlying items
Other non-underlying items relate to legal and professional fees associated with the purchase of the trade and assets of SBS (Cumbria) Limited ("SBS") and Plastic Building Supplies ("PBS") as well as the acquisition of Accrington Plastics Limited.
In 2020, other non-underlying items include business reorganisation costs as a result of Covid-19 and the consolidation of Window Systems warehousing and finishing operations into the new Telford development. These costs are partially offset by a further profit on the sale and leaseback transaction undertaken in 2019, which completed in 2020.
Year ended Year ended Year ended
31 December 31 December 31 December
2021 2020 2019
GBPm GBPm GBPm
----------------------------------- ------------- ------------- -------------
Acquisition costs (0.1) - (0.1)
Profit on sale and leaseback - 1.1 0.6
Site consolidation and redundancy - (3.9) (2.8)
----------------------------------- ------------- ------------- -------------
Other non-underlying items (0.1) (2.8) (2.3)
----------------------------------- ------------- ------------- -------------
iii. Share-based payments expense
Share-based payments include the IFRS 2: Share-based payments charge in respect of the Long-Term Incentive Plan ("LTIP") and Save As You Earn ("SAYE") scheme. A new LTIP scheme was launched in May 2021 for the Executive Directors and certain senior employees, and there was also a further issue of options under the Group's SAYE scheme during the period. The charge for 2020 was GBPnil as a result of the expiry of the previous LTIP scheme in 2019.
Cash flow Year ended Year ended Year ended
31 December 31 December 31 December
2021 2020 2019
GBPm GBPm GBPm
---------------------------------------- ------------- ------------- -------------
Pre-tax operating cash flow 34.9 23.7 34.8
Tax paid (0.5) (0.8) (3.3)
Acquisitions (5.3) - (2.2)
Net capital expenditure (5.4) (3.2) (8.6)
Net site development cash flow 4.8 (4.8) 10.1
Interest on borrowings (1.5) (1.4) (1.6)
Net (repayment)/drawdown of borrowings (2.1) (15.1) 1.3
Lease payments (13.4) (13.4) (12.3)
Issue/purchase of shares 0.1 - -
Dividends (4.0) - (7.1)
Increase/(decrease) in cash and
cash equivalents 7.6 (15.0) 11.1
---------------------------------------- ------------- ------------- -------------
Opening cash and cash equivalents 2.2 17.2 6.1
Closing cash and cash equivalents 9.8 2.2 17.2
Borrowings (15.1) (17.3) (32.3)
Lease assets 2.2 2.4 5.7
Lease liabilities (81.6) (84.2) (71.0)
---------------------------------------- ------------- ------------- -------------
Closing net debt (84.7) (96.9) (80.4)
---------------------------------------- ------------- ------------- -------------
Covenant net debt* (9.4) (18.5) (16.4)
---------------------------------------- ------------- ------------- -------------
(*) Covenant net debt represents a pre-IFRS 16 measure
Covenant net debt reduced to GBP9.4 million at 31 December 2021 (2020: GBP18.5 million, 2019: GBP16.4 million), representing a covenant net debt to adjusted EBITDA ratio of 0.4x, as a result of strong cash generation during the period. Pre-tax operating cash flow recovered to pre-pandemic levels at GBP34.9 million (2020: GBP23.7 million, 2019: GBP34.8 million) through improved profitability. Working capital remained relatively consistent, increasing by GBP1.4 million as a result of a significant increase in the value of inventories, as a consequence of higher stock holding and material price inflation, offset by a corresponding increase in trade payables.
Tax paid
Tax payments during the year of GBP0.5 million (2020: GBP0.8m, 2019: GBP3.3m) were lower than previous years due to lower profits in 2020 as a result of the pandemic.
Net capital expenditure
Net capital expenditure of GBP5.4 million represents ongoing replacement expenditure as well as investment in plant, fixtures and fittings.
Site development
The net site development cash inflow of GBP4.8 million represents the receipt in 2021 of the final GBP5.2 million due from the landlord on completion of the Telford development, net of final retention payments related to construction. The GBP4.8 million cash outflow in 2020 represented costs of construction.
Financing
The Group has banking facilities on a two bank, syndicated basis with Barclays and HSBC through to June 2024. The facilities comprise a revolving credit facility of GBP65.0 million and an overdraft of GBP10.0 million. The Group has in excess of GBP65 million headroom at 31 December 2021 providing the Group with the facilities to pursue its strategy.
Net interest paid for the period comprises GBP1.5 million interest payments on borrowings and arrangement fees relating to the extension of facilities through to June 2024 (2020: GBP1.4 million).
Christopher Empson
Group Finance Director
6 April 2022
Consolidated Income Statement and Other Comprehensive Income
for the year ended 31 December 2021
2021 2020
Note GBPm GBPm
-------------------------------- ----- -------- --------
Revenue 2 329.6 241.0
--------------------------------- ----- -------- --------
Cost of sales (236.9) (168.8)
--------------------------------- ----- -------- --------
Gross profit 92.7 72.2
Distribution expenses (38.7) (30.7)
Administrative expenses (36.3) (35.2)
Underlying operating profit 18.5 9.4
Amortisation of acquired other
intangible assets 4 (0.3) (0.3)
Other non-underlying items 4 (0.1) (2.8)
Share-based payments expense 4 (0.4) -
--------------------------------- ----- -------- --------
Operating profit 17.7 6.3
Finance costs 5 (4.8) (4.4)
--------------------------------- ----- -------- --------
Profit before tax 12.9 1.9
Taxation 6 (0.4) 0.7
--------------------------------- ----- -------- --------
Profit for the year and total
comprehensive income 12.5 2.6
--------------------------------- ----- -------- --------
Earnings per share pence pence
-------------------------------- ----- -------- --------
Basic 7 8. 61 1.82
Diluted 7 8. 52 1.82
--------------------------------- ----- -------- --------
Consolidated Balance Sheet
as at 31 December 2021
2020
2021 as restated*
GBPm GBPm
-------------------------------------- ------ --------------
Assets
Non-current assets
Goodwill 75.5 72.2
Other intangible assets 2.4 2.8
Property, plant and equipment 28.5 29.5
Right of use assets 64.0 66.4
Lease assets 2.0 2.2
Deferred tax 4.6 3.8
--------------------------------------- ------ --------------
177.0 176.9
Current assets
Inventories 41.0 29.6
Trade and other receivables 43.6 44.3
Lease assets 0.2 0.2
Income tax receivable - 0.5
Cash and cash equivalents (excluding
bank overdrafts)* 9.8 13.1
--------------------------------------- ------ --------------
94.6 87.7
Total assets 271.6 264.6
--------------------------------------- ------ --------------
Liabilities
Current liabilities
Bank overdraft* - 10.9
Other interest-bearing loans and 0.5
borrowings -
Lease liabilities 9.4 9.3
Trade and other payables 71.5 57.6
Income tax payable 0.4 -
Provisions 1.2 1.2
--------------------------------------- ------ --------------
83.0 79.0
Non-current liabilities
Other interest-bearing loans and
borrowings 14.6 17.3
Lease liabilities 72.2 74.9
Contingent consideration 1.1 1.0
Provisions 2.4 3.1
--------------------------------------- ------ --------------
90.3 96.3
Total liabilities 173.3 175.3
--------------------------------------- ------ --------------
Net assets 98.3 89.3
--------------------------------------- ------ --------------
Equity
Ordinary share capital 0.1 0.1
Share premium 13.0 12.5
Merger reserve 25.5 25.5
Retained earnings 59.7 51.2
======================================= ====== ==============
Total equity 98.3 89.3
--------------------------------------- ------ --------------
--
* see note 1
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
Share Share Merger Retained
capital premium reserve earnings Total
GBPm GBPm GBPm GBPm GBPm
-------------------------------- --------- --------- --------- ---------- ------
Balance as at 1 January
2020 0.1 12.5 25.5 50.7 88.8
--------------------------------- --------- --------- --------- ---------- ------
Comprehensive income:
Profit for the year - - - 2.6 2.6
--------------------------------- --------- --------- --------- ---------- ------
Total comprehensive income - - - 2.6 2.6
--------------------------------- --------- --------- --------- ---------- ------
Transactions with owners
recorded directly in equity:
Settlement of share-based
payments - - - (2.1) (2.1)
Share-based payments expense - - - - -
Dividends - - - - -
-------------------------------- --------- --------- --------- ---------- ------
Total transactions with
owners - - - (2.1) (2.1)
--------------------------------- --------- --------- --------- ---------- ------
Balance as at 31 December
2020 and 1 January 2021 0.1 12.5 25.5 51.2 89.3
--------------------------------- --------- --------- --------- ---------- ------
Comprehensive income:
Profit for the year - - - 12.5 12.5
--------------------------------- --------- --------- --------- ---------- ------
Total comprehensive income - - - 12.5 12.5
--------------------------------- --------- --------- --------- ---------- ------
Transactions with owners
recorded directly in equity:
Issue of shares - 0.5 - - 0.5
Acquisition of treasury
shares - - - (0.4) (0.4)
Share-based payments expense - - - 0.4 0.4
Dividends - - - (4.0) (4.0)
--------------------------------- --------- --------- --------- ---------- ------
Total transactions with
owners - 0.5 - (4.0) (3.5)
--------------------------------- --------- --------- --------- ---------- ------
Balance as at 31 December
2021 0.1 13.0 25.5 59.7 98.3
--------------------------------- --------- --------- --------- ---------- ------
Consolidated Cash Flow Statement
for the year ended 31 December 2021
2021 2020
GBPm GBPm
---------------------------------------------------- ------- -------
Cash flows from operating activities
Profit for the year 12.5 2.6
Adjustments for:
Depreciation, amortisation and impairment
of fixed assets 17.8 19.2
Loss on disposal of fixed assets 0.4 1.1
Gain on sale and leaseback - (1.1)
Net finance costs 4.8 4.4
Taxation 0.4 (0.7)
Share-based payments expense 0.4 -
---------------------------------------------------- ------- -------
Operating cash flow before movement in working
capital 36.3 25.5
(Increase)/decrease in inventories (10.0) 0.7
(Increase) in trade and other receivables (2.9) (0.7)
Increase/(decrease) in trade and other payables 12.4 (1.6)
(Decrease) in provisions (0.9) (0.2)
----------------------------------------------------- ------- -------
Pre-tax operating cash flow 34.9 23.7
Tax paid (0.5) (0.8)
----------------------------------------------------- ------- -------
Net cash inflow from operating activities 34.4 22.9
----------------------------------------------------- ------- -------
Cash flow from investing activities
Acquisition of subsidiary, net of cash acquired (5.3) -
Acquisition of property, plant and equipment (5.5) (3.0)
Acquisition of other intangible assets - (0.2)
Proceeds on sale and leaseback, net of development
costs 4.8 (4.8)
Proceeds on disposal of property, plant 0.1 -
and equipment
---------------------------------------------------- ------- -------
Net cash outflow from investing activities (5.9) (8.0)
----------------------------------------------------- ------- -------
Cash flow from financing activities
Interest on borrowings (1.5) (1.4)
Repayment of borrowings (15.1) (48.1)
Drawdown of borrowings 13.0 33.0
Interest on lease liabilities (3.5) (2.9)
Repayment of lease liabilities (9.9) (10.5)
Proceeds of share issue 0.5 -
Acquisition of treasury shares (0.4) -
Dividends paid (4.0) -
---------------------------------------------------- ------- -------
Net cash outflow from financing activities (20.9) (29.9)
----------------------------------------------------- ------- -------
Net increase/(decrease) in cash and cash
equivalents 7.6 (15.0)
Cash and cash equivalents at the beginning
of year 2.2 17.2
----------------------------------------------------- ------- -------
Cash and cash equivalents at end of year 9.8 2.2
----------------------------------------------------- ------- -------
Secured bank loans (15.1) (17.3)
Lease assets 2.2 2.4
Lease liabilities (81.6) (84.2)
----------------------------------------------------- ------- -------
Net debt at end of year (84.7) (96.9)
----------------------------------------------------- ------- -------
1. Basis of preparation
Whilst the financial information included in this Preliminary Announcement has been prepared on the basis of UK-adopted International Accounting Standards ("Adopted IFRSs"), this announcement does not itself contain sufficient information to comply with Adopted IFRSs.
The Group expects to publish full Consolidated Financial Statements in April 2022. The financial information set out in this Preliminary Announcement does not constitute the Group's Consolidated Financial Statements for the years ended 31 December 2021 or 2020, but is derived from those Financial Statements which were approved by the Board of Directors on 6 April 2022. The auditor, RSM UK Audit LLP, has reported on the Group's Consolidated Financial Statements and the report was unqualified and did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006.
The statutory financial statements for the year ended 31 December 2021 have not yet been delivered to the Registrar of Companies and will be delivered following the Company's Annual General Meeting.
The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the "Group"). The Group financial statements are prepared on the historical cost basis except where UK-adopted International Accounting Standards require an alternative treatment.
The Group financial statements have been prepared and approved by the directors in accordance with UK-adopted International Accounting Standards.
The Group's accounting policies are set out in the 2020 Annual Report and Accounts and have been applied consistently in 2021.
During 2021, the Financial Reporting Council ("FRC") submitted a request for further information on the Group's Annual Report and Accounts for the year ended 31 December 2020. Following completion of this review, the Directors have concluded that although the Group's banking facilities allow the offset of cash balances held with the bank with overdraft balances with the same bank, the overdraft balances of Group entities should be separately presented gross on the Consolidated Balance Sheet, rather than netted off against cash and cash equivalents held by other Group entities, with the same bank. As a result, the Consolidated Balance Sheet as at 31 December 2020 has been restated.
The restatement, which grosses up cash at bank and bank overdraft by GBP10.9m, did not result in any change to reported profit, earnings per share, net assets or cash flows reported in the 2020 Annual Report and Accounts.
Going concern
The Directors have prepared cash flow forecasts for a period of at least 12 months from the date of approval of these financial statements which indicate that, taking account of reasonably possible downsides and the ongoing anticipated impact of input cost inflation on the operations and its financial resources, the Group and Company will have sufficient funds to meet their liabilities as they fall due for that period.
The Board continues to monitor the evolving status of the Covid-19 pandemic and the ongoing events in Ukraine. The Group balance sheet remains robust with significant financial headroom on committed banking facilities through to June 2024. The banking facilities comprise a GBP65 million Revolving Credit Facility and GBP10 million overdraft facility. The Group has traded profitably throughout 2021, and to the date of this report, and strengthened its financial position during 2021, reducing net debt and maintaining significant headroom on its covenants.
The Group has not made use of the Coronavirus Job Retention Scheme ("CJRS") grants during 2021 and all deferred payment arrangements with suppliers and HMRC were fully cleared by 31 December 2020.
The Group prepares, and the Board reviews, detailed budgets and forecasts which it has confidence in achieving in a normal business environment. The Directors have prepared cash flow, facility headroom and financial covenant forecasts for a period of at least 12 months from the date of approval of these financial statements. The Directors considered the financial resources of the Group, as well as its forecasts and severe but plausible stress test scenarios.
The Group starts 2022 with significant headroom on its banking facilities and the forecasts show that there is sufficient liquidity and headroom to ensure compliance with all covenants throughout the going concern period.
Consequently, the Directors are confident that the Group and Company will have sufficient funds to continue to meet their liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.
2. Segmental reporting
Segmental information is presented in respect of the Group's reportable operating segments in line with IFRS 8: Operating Segments, which requires segmental information to be disclosed on the same basis as it is viewed internally by the Chief Operating Decision Maker. The Chief Operating Decision Maker is considered to be the Board of Directors.
Operating segments Operations
Extrusion and Moulding Extrusion and marketing of PVC and aluminium window profile systems, PVC cellular roofline and cladding, decking, rigid rainwater and drainage products as well as Wood Plastic Composite ("WPC") and aluminium decking products. Moulding of Glass Reinforced Plastic ("GRP") building components.
Fabrication and Distribution Fabrication, marketing and distribution of windows and doors, cellular roofline, cladding, rainwater, drainage and decking products.
2021 2020
GBPm GBPm
---------------------------------------------- ------- -------
Revenue from external customers
---------------------------------------------- ------- -------
Extrusion and Moulding - total revenue 240.8 181.2
Inter-segment revenue (38.5) (26.9)
------- -------
Extrusion and Moulding - external revenue 202.3 154.3
Fabrication and Distribution - total revenue 127.3 86.7
Inter-segment revenue - -
------- -------
Fabrication and Distribution - external
revenue 127.3 86.7
---------------------------------------------- ------- -------
Total revenue from external customers 329.6 241.0
---------------------------------------------- ------- -------
Segmental operating profit
Extrusion and Moulding 12.2 8.3
Fabrication and Distribution 8.4 3.2
---------------------------------------------- ------- -------
Segmental operating profit before corporate
costs 20.6 11.5
Corporate costs (2.1) (2.1)
---------------------------------------------- ------- -------
Underlying operating profit 18.5 9.4
Amortisation of acquired other intangible
assets (0.3) (0.3)
Other non-underlying items (0.1) (2.8)
Share-based payments expense (0.4) -
---------------------------------------------- ------- -------
Operating profit 17.7 6.3
---------------------------------------------- ------- -------
3. Acquisitions
On 5 January 2021, the Group acquired the trade and related assets of SBS (Cumbria) Limited ("SBS") for cash consideration of GBP3.8 million on a cash and debt free basis.
On 30 June 2021, the Group acquired the trade counter and related assets of Plastic Building Supplies Limited ("PBS") for initial cash consideration of GBP0.8 million and deferred consideration of GBP0.1 million.
On 11 November 2021, the Group acquired Accrington Plastics Limited ("AP") for cash consideration of GBP1.2 million.
The following table summarises the consideration paid for SBS, PBS and AP and the provisional fair values of the assets and liabilities acquired at the acquisition date.
SBS, PBS and AP provisional
fair values on acquisition
GBPm
------------------------------------------- ----------------------------
Recognised amounts of identifiable assets
and liabilities acquired:
Acquired intangibles - brand 0.4
Property, plant and equipment 1.0
Right of use assets 2.4
Inventories 1.4
Trade and other receivables 1.2
Cash and cash equivalents 0.5
Lease liabilities (2.4)
Trade and other payables (1.5)
Corporation tax liability (0.1)
Deferred tax liability (0.1)
Provisions (0.2)
-------------------------------------------- ----------------------------
Fair value of assets acquired 2.6
Goodwill 3.3
-------------------------------------------- ----------------------------
Total consideration 5.9
-------------------------------------------- ----------------------------
Consideration
Cash consideration 5.8
Deferred consideration 0.1
-------------------------------------------- ----------------------------
Total consideration 5.9
-------------------------------------------- ----------------------------
4. Non-underlying items
Non-underlying items included within operating profit:
2021 2020
GBPm GBPm
-------------------------------- ------ ------
Amortisation of acquired other
intangible assets (0.3) (0.3)
Other non-underlying items (0.1) (2.8)
Share-based payments expense (0.4) -
-------------------------------- ------ ------
Non-underlying expense (0.8) (3.1)
-------------------------------- ------ ------
Amortisation of acquired other intangible assets
GBP0.3 million (2020: GBP0.3 million) amortisation of brand and customer relationship intangible assets acquired through business combinations.
Other non-underlying items
Other non-underlying items are significant one-off incomes or costs that are not part of the underlying trading performance of the business.
Other non-underlying items include:
2021 2020
GBPm GBPm
------------------------------------------ ------ ------
Profit on sale and leaseback transaction - 1.1
Site consolidation and redundancy - (3.9)
Acquisition costs (0.1) -
------------------------------------------ ------ ------
Other non-underlying items (0.1) (2.8)
------------------------------------------- ------ ------
Included in site consolidation and redundancy is GBPnil (2020: GBP2.1 million) of plant, equipment and fixtures impairment relating to sites exited as part of the Window Systems site consolidation.
Share-based payments expense
The share-based payment expense of GBP0.4 million (2020: GBPnil) comprises IFRS 2: Share-based payment charges of GBP0.1 million (2020: GBPnil) in respect of the Long-Term Incentive Plan, which was launched in May 2021, and SAYE schemes of GBP0.3 million (2020: GBPnil).
5. Finance costs
2021 2020
GBPm GBPm
----------------------------------- ----- -----
Interest expense on borrowings 1.1 1.4
Amortisation of loan fees 0.2 0.1
Net interest on lease liabilities 3.5 2.9
------------------------------------ ----- -----
Total finance costs 4.8 4.4
------------------------------------ ----- -----
6. Taxation
2021 2020
GBPm GBPm
----------------------------------- ------ ------
Current tax
Current period 1.4 -
Prior period (0.1) (0.7)
----------------------------------- ------ ------
Total current tax charge/(credit) 1.3 (0.7)
Deferred tax
Current period (0.5) (0.5)
Prior period (0.4) 0.5
----------------------------------- ------ ------
Total deferred tax credit (0.9) -
Total tax charge/(credit) 0.4 (0.7)
----------------------------------- ------ ------
UK corporation tax is calculated at 19% (2020: 19%) of the estimated assessable profit for the year.
The Group's total income tax charge/(credit) is reconciled with the standard rates of UK corporation tax for the year of 19% (2020: 19%) as follows:
2021 2020
GBPm GBPm
---------------------------------------------- ------ ------
Profit before tax 12.9 1.9
---------------------------------------------- ------ ------
Tax at standard UK corporation tax rate of
19% (2020: 19%) 2.4 0.4
Factors affecting the charge for the period:
Expenses not deductible 0.3 0.2
Losses utilised for which no deferred tax
previously recognised (0.5) (0.5)
Difference in tax rate (1.2) (0.6)
Super deduction benefit (0.2) -
Prior period (0.4) (0.2)
---------------------------------------------- ------ ------
Total tax charge/(credit) 0.4 (0.7)
---------------------------------------------- ------ ------
Factors that may affect future current and total tax charges
In the Spring Budget 2020, the UK government announced that from 1 April 2020 the corporation tax rate would remain at 19% (rather than reducing to 17%, as previously enacted). In the Budget held on 3 March 2021, the Government announced that the corporation tax rate will increase to 25% from 1 April 2023. This new law was substantively enacted on 24 May 2021. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in the financial statements.
The effective tax rate in the current year of 3.1% is primarily driven by the impact of the upcoming increase in corporation tax rate on the value of deferred tax assets, as well as the impact of the capital expenditure super deduction which came into force in April 2021.
7. Earnings per share ("EPS")
Basic earnings per share are calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period. The weighted average number of shares has been adjusted for the issue and cancellation of shares during the period.
Diluted earnings per share are calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period, plus the dilutive potential ordinary shares arising from share options in issue at the end of the period.
2021 2020
EPS summary Pence Pence
------------- ------ ------
Basic EPS 8.61 1.82
Diluted EPS 8.52 1.82
------------- ------ ------
2021 2020
Number of shares No. No.
------------------------------------- ------------ ------------
Weighted average number of ordinary
shares (basic) 145,237,438 143,004,710
Effect of share options
in issue 1,550,649 139,770
--------------------------------------- ------------ ------------
Weighted average number of ordinary
shares (diluted) 146,788,087 143,144,480
--------------------------------------- ------------ ------------
8. Dividends
2021 2021 2020 2020
GBPm Pence per GBPm Pence per
share share
---------------------- ----- ---------- ----- ----------
Previous year final
dividend 1.5 1.00 - -
Current year interim
dividend 2.5 1.75 - -
---------------------- ----- ---------- ----- ----------
4.0 -
---------------------- ----- ---------- ----- ----------
The Board is recommending a final dividend of 2.35 pence per share in respect of the financial year ending 31 December 2021.
9. Cautionary statement
This Report contains certain forward-looking statements with respect of the financial condition, results, operations and business of Epwin Group Plc. Whilst these statements are made in good faith based on information available at the time of approval, these statements and forecasts inherently involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause the actual result or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this Report should be construed as a profit forecast.
10. Annual General Meeting
The Annual General Meeting of the Company will be held on 24 May 2022 at 1B Stratford Court, Cranmore Boulevard, Solihull, B90 4QT.
Current public health guidance and legislation issued by the UK Government in relation to the Covid-19 pandemic would permit public gatherings and travel at the date of the Annual General Meeting. The AGM has been arranged assuming the Company will be able to hold a physical in person meeting. However, due to the ongoing Covid-19 situation, the Board considers it appropriate to minimise physical attendances at the AGM. Shareholders are therefore encouraged to vote by proxy. Whilst all shareholders are still legally entitled physically to attend the AGM, please consider carefully before doing so. If you do wish to attend the AGM in person please pre-register your intention to do so by emailing epwin@mhpc.com . Please state 'Epwin Group Plc: AGM' in the subject line of the email and include your full name and investor code (if available), by no later than 10.30am on 20 May 2022.
To facilitate the answering of any questions that shareholders have, or would normally raise, during the course of the AGM, a designated questions and answers page has been created by the Company, which can be found at investors.epwin.co.uk . Any questions will be addressed in the normal way, pursuant to an explanatory note in the notices. Shareholders are requested to submit any questions that they may have via email, in good time, ahead of the meeting to epwin@mhpc.com . Please include a Shareholder Reference Number in any correspondence.
The Company will continue to monitor the developing impact of Covid-19, including any changes to the applicable law or guidance from the UK Government. Should it become necessary or appropriate to revise the current arrangements the Company will notify shareholders via its website and, where appropriate, via a Regulatory Information Service.
11. Electronic communications
The full Annual Report and Accounts for the year ended 31 December 2021 are to be published on the Company's website , together with the Notice convening the Company's 2021 Annual General Meeting by 27 April 2022. Copies will also be sent out to those shareholders who have elected to receive paper communications. Copies can be requested by writing to the Company Secretary, Epwin Group Plc, 1B Stratford Court, Cranmore Boulevard, Solihull, B90 4QT or email to investors@epwin.co.uk .
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
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