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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 92.00 | 90.00 | 94.00 | 92.00 | 92.00 | 92.00 | 75,408 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Gen Contractor-nonres Bldgs | 355.8M | 8.4M | 0.0580 | 15.86 | 133.33M |
From May 2019 to May 2024
TIDMEPWN
RNS Number : 8758L
Epwin Group PLC
11 September 2019
11(th) September 2019
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 2019
Continuing robust performance and strategic delivery
Epwin Group Plc (AIM: EPWN) ("Epwin" or the "Group"), a 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 2019.
Financial highlights
Hot Features
Premium
H1 2019 H1 2019 H1 2018 (4)
GBPm pre-IFRS 16
====================================== ========== ============== ==============
Revenue 140.0 140.0 140.5
Underlying operating profit
(1) 9.4 8.3 7.5
Underlying operating profit
margin 6.7% 5.9% 5.3%
Adjusted profit before tax
(1) 7.3 7.5 6.8
Profit before tax 6.7 6.9 5.8
Adjusted EPS (2) 4.20p 4.34p 3.78p
Basic EPS - continuing 3.78p 3.92p 3.29p
Dividend per share 1.75p 1.75p 1.70p
Net debt (excluding IFRS 16) (29.2) (29.2) (28.6)
Underlying operating cash conversion
(3) 156.4% 115.7% 158.7%
====================================== ========== ============== ==============
(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) Underlying operating cash conversion is pre-tax operating cash flow as a percentage of underlying operating profit.
(4) Restated for 2018 discontinued glass sealed unit operations.
Financial headlines
-- Revenue of GBP140.0 million, in line with expectations:
o Strong demand in Q1 driven by new customer wins and Brexit-related stockpiling, which unwound in Q2.
o Revenues up 0.5% on a like for like basis, against strong H1 2018 comparatives.
-- Underlying operating profit increased by 10.7% to GBP8.3 million on a pre-IFRS 16 basis (up by 25.3% to GBP9.4 million on a reported basis):
o Benefited from the site rationalisation programme launched in 2018.
o Stable material prices have enabled recovery of some of the significant cost increases suffered during 2017 and 2018.
-- Financial position remains robust:
o Operating cash conversion remains strong, with net debt of GBP29.2m at the half year, representing 1x adjusted EBITDA.
o Bank facilities renegotiated increasing to GBP65.0 million revolving credit facility plus GBP10.0 million overdraft, on more favourable terms.
-- Interim dividend of 1.75 pence per share declared (up 3%), to be paid on 18 October 2019 to shareholders on the register on 20 September 2019.
Delivering on our strategy
-- Further progress with the Group's site consolidation and rationalisation programme, in particular at the Telford site:
o Warehouse build and site consolidation project is progressing to plan - will ultimately consolidate seven existing units into two.
o Purchase and sale of the site completed and agreement to build and lease the facility. The lease is on an arm's length basis at commercial market rates.
o Taken together, these agreements are expected to generate net additional cash of approximately GBP8.0 million in the current year.
o The site will be fully developed and operational in H1 2020 and will significantly improve the logistics and finishing operations of the Window Systems business and enable the growth and development of the new aluminium window system.
o Unrelated to the Telford site, as previously reported, the Group disposed of its non-core glass-sealed unit manufacturing operation in Northampton in early January 2019.
-- Continued investment in enhancing the product portfolio to further develop the Group's long-term market position:
o New aluminium window system launched in May 2019. Strong reception from both existing customer base and potential new customers with sales commencing in Q4.
o Acquisition of PVS, a decking installation business, completed in February 2019 for GBP2.5m. PVS provides additional routes to market for the Group's decking products.
o Continued strong sales growth from the Profile 22 Optima window system, up 15% year on year, with further new customer wins during H1 2019.
Current trading
-- Current trading is in line with expectations.
-- Short-term macroeconomic uncertainty continues to impact market conditions, particularly in the key RMI market.
-- Medium-term drivers remain positive:
o Underinvestment in existing UK housing stock becoming more acute as repair and maintenance expenditure cannot be deferred indefinitely.
o New build housing supported by underlying demand and government incentives.
o Social housing market likely to see growth as government allows greater flexibility on financing.
Jon Bednall, Chief Executive Officer, said:
"The Group delivered a robust trading performance in the first half of 2019, in line with expectations in what continues to be challenging market conditions.
We have made good strategic progress on all fronts - the acquisition of PVS provides further routes to market and supports the investment we made to develop our decking system; the new aluminium window system was launched on time and has been well received by our customer base and the wider market.
Operationally, our site consolidation programme has continued to plan, including important steps forward on our new warehousing and finishing facility in Telford, where the transactions will significantly reduce the Group's debt. We also successfully exited from our Northampton glass-sealed unit manufacturing operations.
Current trading is line with expectations, and the Board retains its positive view of the medium-term prospects for the market given the continued under investment in RMI, long-term new build demand and pent up demand in social housing markets."
Enquiries:
Epwin Group Plc 0203 128 8572
Jon Bednall, Chief Executive
Chris Empson, Group Finance Director
Zeus Capital Limited (Nomad and Joint 0161 831
Broker) 1512
0203 829
Nick Cowles / Jamie Peel 5000
John Goold / Dominic King
Panmure Gordon (UK) Limited (Joint 0207 886
Broker) 2500
0203 128
Erik Anderson / Dominic Morley 8572
MHP Communications
Reg Hoare / Charlie Barker / Florence
Mayo
Forthcoming dates:
Ex-dividend date 19 September 2019 Dividend record date 20 September 2019 Dividend payment date 18 October 2019
About Epwin
Epwin is a 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 were in line with expectations. Strong demand in Q1 was driven by new customer wins and, we believe, forward-purchasing by customers ahead of Brexit. This was followed by weaker demand in Q2 as the delay of Brexit led to an unwind of forward-purchasing, compounded by poor weather in June. This view is supported by the UK construction data which shows a sharp loss of momentum for the UK construction sector in the second quarter attributed to heightened political and economic uncertainty.
6 months 6 months
ended ended
============
Proforma
6 months
ended 30
30 June 2019 June 2019 30 June 2018
(pre-IFRS
16) (restated)
Key financials GBPm GBPm GBPm
================================ ============= ============ =============
Revenue 140.0 140.0 140.5
================================ ============= ============ =============
Underlying operating profit
(*) 9.4 8.3 7.5
Amortisation of acquired other
intangible assets (0.1) (0.1) (0.6)
Other non-underlying items (0.1) (0.1) -
Share-based payments expense (0.4) (0.4) (0.4)
Operating profit 8.8 7.7 6.5 ================================ ============= ============ ============= Underlying operating profit margin (*) 6.7% 5.9% 5.3% Operating profit margin 6.3% 5.5% 4.6% ================================ ============= ============ =============
(*) Underlying operating profit and margin is operating profit before amortisation of acquired other intangible assets, share-based payments and other non-underlying items.
On a like for like basis, adjusting for the acquisitions of PVS and Amicus and closure of the Cardiff window fabrication plant, revenues increased by 0.5%. This was mainly driven by selling price increases as the Group seeks to recover some of the substantial price increases of materials borne over the last two years.
Underlying operating profit increased by GBP1.9 million to GBP9.4 million. Of this increase, GBP1.1 million is as a result of the implementation of IFRS 16 with effect from 1 January 2019. Further details on the impact of IFRS 16 can be found in notes 1 and 10 to these financial statements. Excluding the impact of IFRS 16, underlying operating profit increased by GBP0.8 million.
Material input costs remained relatively flat compared to the same period in 2018. This, combined with more stable market conditions in the second half of 2018 and early 2019, has allowed the Group to recover some of the c.GBP10.0 million of annualised material cost inflation absorbed by the business through 2017 and 2018.
In addition, the acquisition of PVS contributed GBP0.3 million to underlying operating profit alongside operational savings from the closure of the Cardiff window fabrication in 2018 of GBP0.5 million. These upsides were offset by start-up costs associated with the new aluminium window system operation, lower volume in our door business, as a result of uncertainty around fire testing in relation to Glass Reinforced Plastic ("GRP") doors and also some operational inefficiency associated with the ongoing window systems site rationalisation and consolidation project.
Continued investment in enhancing the product portfolio
In February 2019, the Group acquired Premier Distribution (Gt. Yarmouth) Limited, trading as "PVS". 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. The acquisition of PVS opens up further routes to market for Epwin's existing and new PVC decking products. Initial consideration was GBP2.5 million with the potential to increase, subject to the performance of the business over an extended earnout period. During H1 2019, PVS contributed GBP1.9 million of revenue and underlying operating profit of GBP0.3 million.
Non-underlying items of GBP0.1 million represent legal fees associated with the acquisition of PVS.
In May 2019, the Window Systems business launched its new aluminium window system to a positive reception from its existing customer base as well as a good level of interest from new potential customers. Whilst a smaller market than PVC window systems, aluminium window systems are a growing part of the market; particularly for domestic property improvements and in commercial applications.
Further progress with site consolidation and rationalisation programme
The development of purpose-built facilities in Telford to consolidate window systems warehousing and finishing operations is progressing to plan and is on track to be completed and operational during H1 2020. Groundworks are completed and construction of the logistics facility is well underway. The aluminium equipment has been installed and is currently being commissioned within the finishing plant, with the move of foiling operations planned for the year-end shut down.
The Group entered into arm's length agreements to acquire, sell, develop and lease the new Telford warehouse and finishing plant, which are expected to deliver circa GBP8.0 million of surplus cash to the Group in the current year. The lease is at commercial market rates.
Segmental Results
Proforma
6 months
ended 30
June 2019
(pre-IFRS
6 months 16) 6 months
ended GBPm ended
===========
30 June
2018
30 June
2019 (restated)
===========
GBPm GBPm
=========================================== ========= =========== ============
Revenue
=========================================== ========= =========== ============
Extrusion & Moulding 87.8 87.8 88.5
Fabrication & Distribution 52.2 52.2 52.0
Total 140.0 140.0 140.5
=========================================== ========= =========== ============
Underlying segmental operating profit
Extrusion & Moulding 8.6 8.1 7.7
Fabrication & Distribution 1.8 1.2 0.7
Underlying segmental operating profit
before corporate costs 10.4 9.3 8.4
Corporate costs (1.0) (1.0) (0.9)
=========================================== ========= =========== ============
Underlying operating profit (*) 9.4 8.3 7.5
Amortisation of acquired other intangible
assets (0.1) (0.1) (0.6)
Other non-underlying items (0.1) (0.1) -
Share-based payments expense (0.4) (0.4) (0.4)
Operating profit 8.8 7.7 6.5
=========================================== ========= =========== ============
(*) 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 marginally mainly as a consequence of the acquisition of Amicus Building Products Limited, an existing customer whose associated revenues are now classified as internal. This was largely offset by price increases as the Group seeks to recover some of the substantial material price increases borne over the last couple of years.
-- Underlying operating profit increased by GBP0.9 million to GBP8.6 million (2018: GBP7.7 million). Excluding the impact of IFRS 16, underlying operating profit improved by GBP0.4 million as a result of efficiency savings and selling price increases, offset in part by start-up costs associated with the new aluminium window system and some operational inefficiency associated with site complexity as we prepare for the consolidation of the window system warehousing and finishing activities into a new purpose-built facility in Telford during H1 2020.
Fabrication and Distribution
-- Revenue increased to GBP52.2 million (2018: GBP52.0 million) as a result of the acquisition of PVS in February 2019, the full period effect of the March 2018 acquisition of Amicus and increased volumes in our Distribution business. These increases were offset by the closure of the Cardiff window fabrication plant in June 2018 and lower fire-door volumes due to market uncertainty around fire testing of GRP products.
-- Underlying operating profit improved to GBP1.8 million (2018: GBP0.7 million). Excluding the impact of IFRS 16, underlying operating profit improved by GBP0.5 million as a result of the acquisition of PVS in February 2019, the benefit of the closure of the loss-making Cardiff window fabrication plant in June 2018 and increased volumes in our Distribution business. These increases were offset by lower fire-door volume and contribution.
Cash flow
6 months Proforma 6 months
ended ended 30
30 June June 2018
2019
6 months (restated)
ended 30
June 2019
GBPm (pre-IFRS GBPm
16)
GBPm
====================================== ========= ============ ============
Pre-tax operating cash flow 14.7 9.6 11.9
Tax paid (0.7) (0.7) (1.5)
Acquisitions (2.3) (2.3) -
Net capital expenditure (3.9) (3.9) (6.1)
Net interest paid (0.8) (0.8) (0.6)
Increase in borrowings 7.2 7.2 2.5
Lease payments (5.4) (0.3) (0.6) Dividends (4.6) (4.6) (6.4) Discontinued operations - - (0.7) (Increase) / decrease in cash 4.2 4.2 (1.5) ====================================== ========= ============ ============ Opening cash 6.1 6.1 7.3 ====================================== ========= ============ ============ Closing cash 10.3 10.3 5.8 Borrowings (37.7) (37.7) (32.4) Finance leases liabilities (1.8) (1.8) (2.0) ====================================== ========= ============ ============ Net debt excluding impact of IFRS 16 (29.2) (29.2) (28.6) ====================================== ========= ============ ============
The Group generated strong pre-tax operating cash flow of GBP9.6 million on a pre-IFRS 16 basis (2018: GBP11.9 million), representing cash conversion of 115.7% (2018: 158.7%).
Acquisitions
The cash outflow of GBP2.3 million related to acquisitions represents GBP2.0 million initial cash consideration, net of cash acquired, relating to PVS and GBP0.3 million of deferred consideration relating to Amicus.
Financing
The Group has renegotiated its banking facilities to a GBP65.0 million revolving credit facility (up from GBP37.5 million) and GBP10.0 million overdraft. The revolving credit facility is for a term of three years with the option to extend for a further two years. The terms are materially improved from the previous facility. The Group operates well within facilities and current banking covenants.
Net debt at 30 June 2019 was GBP29.2 million, 1x adjusted EBITDA.
Finance costs for the period comprise GBP0.8 million interest on borrowings and GBP1.3 million of discount unwind associated with IFRS 16 lease liabilities.
IFRS 16
IFRS 16: Leases became effective for accounting periods commencing on or after 1 January 2019. The standard introduces a single lease accounting model that requires the recognition on the balance sheet of right of use assets and lease liabilities in relation to almost all leases. While IFRS 16 has no impact on the cash flows of the business, it does have a fundamental impact on the presentation of the Group's financial statements as well as certain financial measures such as EBITDA, operating profit, interest and net debt.
These financial statements to 30 June 2019 are the first set of results to be presented under this new leasing model. As permitted under IFRS 16, comparatives for 2018 have not been restated and the impact on net assets has been recognised within retained earnings at 1 January 2019. The impact has therefore been set out, on a proforma basis, in the tables above which present the results for 30 June 2019 on both a pre-IFRS 16 and post-IFRS 16 basis, as well as in note 10 to the financial statements.
The Group's banking covenants are unaffected by the implementation of IFRS 16 as they are based on the GAAP in force in the Group's consolidated financial statements for the year ended 31 December 2018.
Dividend
The Board is pleased to announce a 3% increase in the interim dividend to 1.75 pence per ordinary share (2018: 1.70 pence), to be paid on 18 October 2019 to shareholders on the register on 20 September 2019.
Outlook
The Group made an encouraging start to 2019 and trading since the half year has continued in line with expectations. Price increases have begun to mitigate the significant material cost inflation experienced during 2017 and 2018, we have seen stable volume in our core products and the initial benefits of our footprint reshaping are coming through.
The Board anticipates adjusted profit before tax for the full year to be in line with market expectations.
The Group's financial position remains strong, with good cash generation in the half year and net debt of GBP29.2m, representing 1x adjusted EBITDA. Furthermore, the arm's length transactions to acquire, sell, develop and lease the new Telford warehouse and finishing plant, which are expected to deliver circa GBP8.0 million of surplus cash to the Group in the current year, will significantly reduce the Group's debt. This gives the Group significant funding headroom to continue to invest in the business and progress with its strategy.
In the near term, with continued uncertainty around the timing and eventual form of the UK's exit from the EU, market conditions are expected to remain challenging as a result of low consumer confidence and delays in decision making across a number of sectors.
However, despite the external environment, the Board remains confident that the actions it is taking to strengthen the Group's position by consolidating the footprint of its manufacturing operations and focusing it towards the higher margin extrusion and moulding operations, which have technological and investment barriers to entry, will deliver an improving financial performance.
The Group remains well placed in its markets, with sound prospects for the future, supported by our confidence in the medium and long-term drivers of the RMI market.
Condensed Consolidated Income
Statement
for the six months ended 30
June 2019
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2018
2019 2018
(unaudited
(unaudited) & restated*) (audited)
Note GBPm GBPm GBPm
=================================== ===== ============ ============== =============
Group revenue 2 140.0 140.5 281.1
=================================== ===== ============ ============== =============
Cost of sales (96.5) (99.3) (196.3)
=================================== ===== ============ ============== =============
Gross profit 43.5 41.2 84.8
Distribution expenses (16.7) (16.8) (34.4)
Administrative expenses (18.0) (17.9) (35.6)
Underlying operating profit 9.4 7.5 18.7
Amortisation of acquired other
intangible assets 3 (0.1) (0.6) (1.2)
Other non-underlying items 3 (0.1) - (2.0)
Share-based payments expense 3 (0.4) (0.4) (0.7)
----------------------------------- ----- ------------ -------------- -------------
Operating profit 8.8 6.5 14.8
Finance costs (0.8) (0.7) (1.5)
IFRS 16 discount unwind (1.3) - -
=================================== ===== ============ ============== =============
Profit before tax 6.7 5.8 13.3
Taxation 6 (1.3) (1.1) (2.5)
=================================== ===== ============ ============== =============
Profit from continuing operations 5.4 4.7 10.8
Loss from discontinued operations
net of tax 5 - (0.3) (5.0)
=================================== ===== ============ ============== =============
5.4 4.4 5.8
=================================== ===== ============ ============== =============
Pence Pence Pence
Basic earnings per share 7 3.78 3.08 4.06
Basic - continuing operations 7 3.78 3.29 7.56
Basic - discontinued operations 7 - (0.21) (3.50)
Diluted earnings per share 7 3.77 3.07 4.05
Diluted - continuing operations 7 3.77 3.28 7.54
Diluted - discontinued operations 7 - (0.21) (3.49)
* restated for the reclassification of distribution expenses, see note 1, and discontinued operations, see note 5.
Condensed Consolidated Balance
Sheet
as at 30 June 2019
30 June 30 June 31 December
2019 2018 2018
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
================================ ===== ============ ============ ============
Assets
Non-current assets
Goodwill 72.2 70.2 70.2
Other intangible assets 3.9 4.1 3.5
Property, plant and equipment 36.5 38.7 37.2
Right of use assets 10 49.1 - -
Assets held for sale - - 0.1
Deferred tax asset 1.6 0.5 0.7
================================ ===== ============ ============ ============
163.3 113.5 111.7
================================ ===== ============ ============ ============
Current assets
Inventories 30.5 29.1 29.2
Trade and other receivables 48.8 47.9 40.4
Cash and cash equivalents 9 10.3 5.8 6.1
================================ ===== ============ ============ ============
89.6 82.8 75.7
================================ ===== ============ ============ ============
Total assets 252.9 196.3 187.4
================================ ===== ============ ============ ============
Liabilities
Current liabilities
Other interest-bearing loans
and borrowings 9 - 26.0 5.6
Lease liabilities 10 8.2 - -
Trade and other payables 61.7 63.7 61.3
Contingent consideration 1.0 0.3 0.3
Tax payable 1.4 1.0 0.6
Provisions 1.8 3.0 1.5
================================ ===== ============ ============ ============
74.1 94.0 69.3
Non-current liabilities
Other interest-bearing loans
and borrowings 9 37.7 8.4 25.3
Lease liabilities 10 52.8 - -
Provisions 1.4 3.2 2.8
================================ ===== ============ ============ ============
91.9 11.6 28.1
================================ ===== ============ ============ ============
Total liabilities 166.0 105.6 97.4
================================ ===== ============ ============ ============
Net assets 86.9 90.7 90.0
================================ ===== ============ ============ ============
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 48.8 52.6 51.9
================================ ===== ============ ============ ============
Total equity 86.9 90.7 90.0
================================ ===== ============ ============ ============
Condensed Consolidated Statement
of Changes in Equity
for the six months ended 30
June 2019
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2019 2018 2018
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
================================== === ============ ============ =============
Balance at the start of the
period 90.0 93.7 93.7
IFRS 9 adoption - (1.4) (1.4)
IFRS 16 adoption 10 (4.3) - -
================================== === ============ ============ =============
Balance at the start of the
period (restated) 85.7 92.3 92.3
Profit for the period 5.4 4.4 5.8
Issue of shares - - -
Share-based payments 0.4 0.4 0.7
Dividends 8 (4.6) (6.4) (8.8)
================================== === ============ ============ =============
Balance at the end of the period 86.9 90.7 90.0
================================== === ============ ============ =============
Consolidated Cash Flow Statement
for the six months ended 30 June 2019
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2018
2019 2018
(unaudited
(unaudited) & restated*) (audited)
Note GBPm GBPm GBPm
============================ ===== ============ ============== =============
Cash flows from operating
activities
Profit for the period 5.4 4.4 5.8
Adjustments for:
Depreciation and
amortisation 8.2 4.4 9.0
(Gain)/loss on disposal (0.3) - 0.3
Finance costs 2.1 0.7 1.5
Taxation 1.3 1.1 2.5
Share-based payments 0.4 0.4 0.7
Discontinued operations - 0.3 5.0
============================ ===== ============ ============== =============
17.1 11.3 24.8
(Increase)/decrease in
inventories (1.1) 2.1 1.6
(Increase)/decrease in
trade and
other receivables (4.0) (1.8) 0.7
Increase in trade and other
payables 3.0 0.6 2.8
Decrease in provisions (0.3) (0.3) (2.2)
============================ ===== ============ ============== =============
Pre-tax operating cash flow 14.7 11.9 27.7
Tax paid (0.7) (1.5) (2.6)
============================ ===== ============ ============== =============
Net cash inflow from
operating activities 14.0 10.4 25.1
Cash flows from investing
activities
Acquisition of subsidiary,
net of
cash acquired 5 (2.3) - -
Proceeds on disposal of
subsidiary 6 0.1 - -
Acquisition of other
intangible assets (0.5) (0.3) (0.5)
Acquisition of property,
plant and
equipment (3.5) (5.8) (12.0)
============================ ===== ============ ============== =============
Net cash outflow from
investing activities (6.2) (6.1) (12.5)
Cash flows from financing
activities
Net interest paid (0.8) (0.6) (1.3)
Facility arrangement fees - - (0.4)
Drawdown/(repayment) of
borrowings 7.2 2.5 (0.3)
Repayment of lease
liabilities (5.4) (0.6) (1.1)
Dividends paid 8 (4.6) (6.4) (8.8)
============================ ===== ============ ============== =============
Net cash outflow from
financing activities (3.6) (5.1) (11.9)
Net cash outflow from
discontinued
operations 6 - (0.7) (1.9)
Net increase/(decrease) in
cash and
cash equivalents 4.2 (1.5) (1.2)
============================ ===== ============ ============== =============
Cash and cash equivalents
at the
beginning of the period 6.1 7.3 7.3
============================ ===== ============ ============== =============
Cash and cash equivalents
at the
end of the period 10.3 5.8 6.1
============================ ===== ============ ============== =============
* restated, see note 5
Notes to the Condensed Consolidated Financial Statements
for the six months ended 30 June 2019
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 2019. 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 2018, except for the adoption of new and amended standards as set out below.
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.
On the basis of current financial projections and facilities available, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and, accordingly, consider that it is appropriate to adopt the going concern basis in preparing these Interim Financial Statements.
The financial information in these financial statements does not constitute statutory accounts for the six months ended 30 June 2019 and should be read in conjunction with the Group's consolidated financial statements for the year ended 31 December 2018 which were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) 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 2019 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 10 September 2019.
New and amended standards adopted by the Group
IFRS 16: Leases became effective on 1 January 2019. Note 10 to these financial statements sets out the impact of the initial implementation of IFRS 16: Leases on the opening balance sheet as at 1 January 2019, as well as the impact on the income statement and balance sheet for the 6 months ended 30 June 2019.
Reclassification of distribution costs
Consistent with the adjustment made in the 31 December 2018 financial statements to the classification of distribution costs for the year ended 31 December 2017, the presentation of GBP2.0 million of administration expenses in the period ended 30 June 2018 have been reclassified as distribution costs following an exercise to better reflect the nature of expenditure. Operating profit and net assets remain unchanged as a result of this adjustment.
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
2019 2018 2018
(unaudited
(unaudited) & restated) (audited)
GBPm GBPm GBPm
Revenue from external customers
----------------------------------- ------------ ------------- -------------
Extrusion & Moulding 87.8 88.5 177.4
Fabrication & Distribution 52.2 52.0 103.7
------------------------------------ ------------ ------------- -------------
Total 140.0 140.5 281.1
==================================== ============ ============= =============
Segmental operating profit
----------------------------------- ------------ ------------- -------------
Extrusion & Moulding 8.6 7.7 17.5
Fabrication & Distribution 1.8 0.7 2.9
------------------------------------ ------------ ------------- -------------
Segmental operating profit before
corporate and other costs 10.4 8.4 20.4
Corporate costs (1.0) (0.9) (1.7)
==================================== ============ ============= =============
Underlying operating profit 9.4 7.5 18.7
Amortisation of acquired other
intangible assets (0.1) (0.6) (1.2)
Other non-underlying items (0.1) - (2.0)
Share-based payments expense (0.4) (0.4) (0.7)
==================================== ============ ============= =============
Group operating profit 8.8 6.5 14.8
Finance costs (0.8) (0.7) (1.5)
IFRS 16 discount unwind (1.3) - -
=================================== ============ ============= =============
Profit before tax 6.7 5.8 13.3
==================================== ============ ============= =============
3. Underlying operating profit
'Underlying operating profit' is the key profit measure used by the Board to assess the underlying financial performance of the operating divisions and the Group as a whole. '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 2019 June 2018 2018
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
================================ ============= ============= =============
Amortisation of acquired other
intangible assets (0.1) (0.6) (1.2)
Other non-underlying items (0.1) - (2.0)
Share-based payments (0.4) (0.4) (0.7)
================================ ============= ============= =============
Non-underlying expense (0.6) (1.0) (3.9)
================================ ============= ============= =============
Amortisation of acquired other intangible assets
GBP0.1million (30 June 2018: GBP0.6 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 2019 June 2018 2018
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
=================================== ============= ============= =============
Acquisition expenses (0.1) - -
Profit on exit of lease - 0.7 0.8
Site consolidation and redundancy - (0.7) (2.8)
=================================== ============= ============= =============
Other non-underlying items (0.1) - (2.0)
=================================== ============= ============= =============
Share-based payments expense
The share-based payment expense of GBP0.4 million (30 June 2018: GBP0.4 million) comprises IFRS 2: Share-based payments charges in respect of the: Long-Term Incentive Plan GBP0.3 million (30 June 2018: GBP0.3 million) and SAYE schemes of GBP0.1 million (30 June 2018: 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
provisional fair
values on acquisition
(unaudited)
GBPm
GBPm
------------------------------------------------- ------------------------
Recognised amounts of identifiable assets
and liabilities acquired liabilities: assumed:
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.
5. Discontinued operations
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. An impairment charge of GBP3.6 million was recognised in the year to 31 December 2018 to write down property, plant and equipment and inventories to their recoverable amount. This disposal exits the Group from the glass-sealed unit market.
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2019 June 2018 2018
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
================================== ============== ============= =============
Revenue - 1.9 4.5
Operating expenses - (2.3) (6.9)
Impairment charge - - (3.6)
================================== ============== ============= =============
Loss before tax - (0.4) (6.0)
Taxation - 0.1 1.0
================================== ============== ============= =============
Loss after tax from discontinued
operations - (0.3) (5.0)
================================== ============== ============= =============
The trading results of the glass-sealed unit manufacturing business for the 6 months ended 30 June 2018 and year ended 31 December 2018 have been presented under discontinued operations and the assets and liabilities associated with the business classified as held for sale as at 31 December 2018.
The income statement for the 6 months ended 30 June 2018 has been restated to reclassify the trading results of the glass sealed unit manufacturing business as discontinued operations.
6. Taxation
The tax charge for the six months to 30 June 2019 is based on the estimated tax rate for continuing operations for the full year.
The main rate of corporation tax was lowered from 20% to 19% from 1 April 2017, and to 17% from 1 April 2020 (both changes now enacted). This will reduce the Company's future current tax charge accordingly. The deferred tax assets at 30 June 2019 have been calculated based on the rate of 17% substantively enacted at the balance sheet date.
7. Earnings per share (EPS)
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2019 June 2018 2018
(unaudited) (unaudited) (audited)
pence pence pence
================================= ============= ============= =============
Basic EPS
Basic 3.78 3.08 4.06
Basic - continuing operations 3.78 3.29 7.56
Basic - discontinued operations - (0.21) (3.50)
================================= ============= ============= =============
Pence pence pence
=================================== ====== ======= =======
Diluted EPS
Diluted 3.77 3.07 4.05
Diluted - continuing operations 3.77 3.28 7.54
Diluted - discontinued operations - (0.21) (3.49)
=================================== ====== ======= =======
6 months 6 months
ended 30 ended 30 Year ended
June 2019 June 2018 31 December
(unaudited) (unaudited) 2018 (audited)
No. No. No.
==================================== ============= ============= ================
Number of shares
Weighted average number of
shares used to calculate earnings
per share
* Basic 142,925,173 142,921,424 142,922,704
* Diluted 143,147,189 143,222,183 143,188,565
===================================== ============= ============= ================
8. Dividends
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2019 June 2018 2018
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
=============================== ============= ============= =============
2017 final dividend of 4.46
pence per share - 6.4 6.4
2018 interim dividend of 1.70
pence per share - - 2.4
2018 final dividend of 3.20 4.6 - -
pence per share
=============================== ============= ============= =============
4.6 6.4 8.8
=============================== ============= ============= =============
The Group will pay an interim dividend of 1.75 pence per ordinary share in respect of the six months to 30 June 2019 (30 June 2018: 1.70 pence) on 18 October 2019 to shareholders on the register on 20 September 2019.
9. Net debt
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2019 June 2018 2018
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
=========================== ============ ============ =============
Cash and cash equivalents 10.3 5.8 6.1
Bank Borrowings (37.7) (32.4) (29.6)
Finance lease liabilities (1.8) (2.0) (1.3)
============================ ============ ============ =============
Net debt excluding impact
of IFRS 16 (29.2) (28.6) (24.8)
============================ ============ ============ =============
The Group has renewed its banking facilities. The facilities now 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 is for three years with an option to extend for a further two years.
10. Implementation of IFRS 16: Leases
IFRS 16: Leases became effective on 1 January 2019. The Group has applied IFRS 16: Leases with effect from 1 January 2019 using the modified retrospective approach, with the cumulative effect of initially applying the standard recognised, at the date of initial application, as an adjustment to the opening balance of retained earnings.
The Group has applied the practical expedients to; grandfather the definition of a lease on transition, applying IFRS 16: Leases to all contracts entered into before 1 January 2019 that meet the definition of a lease in accordance with the previously applied standard, IAS 17: Leases; and in relation to short-term leases and leases of low-value items, recognising the remaining lease rental payments on a straight-line basis over the remaining terms of the lease.
Right of use assets were initially measured at the present value of the cash flows payable from inception of the lease, using the Group's incremental borrowing rate at 1 January 2019, net of depreciation chargeable on a straight-line basis, over the term of the lease, for the period from inception to 1 January 2019.
Lease liabilities and lease assets were initially measured at the present value of the remaining cash flows payable as lessee or receivable as lessor as at 1 January 2019, discounted using the Group's incremental borrowing rate at that date.
The tables below set out the impact of IFRS 16: Leases on the consolidated balance sheet, as at implementation on 1 January 2019 and as at the 30 June 2019, and on the consolidated income statement for the 6 months ended 30 June 2019.
Impact of IFRS 16 on the Consolidated Balance Sheet
30 June IFRS 16 30 June
2019 adjustments 2019 31 IFRS
pre-IFRS post-IFRS December 16 1 January
16 16 2018 adjustments 2019
(unaudited) (unaudited) (unaudited) (audited) (unaudited) (unaudited)
GBPm GBPm GBPm GBPm GBPm GBPm
=================== ============= ============= ============= ============ ============ ============
Non-current assets
Goodwill 72.2 - 72.2 70.2 - 70.2
Other intangible
assets 3.9 - 3.9 3.5 - 3.5
Property, plant
and
equipment 39.5 (3.0) 36.5 37.2 (2.2) 35.0
Right of use
assets - 49.1 49.1 - 56.4 56.4
Assets held for
sale - - - 0.1 - 0.1
Deferred tax asset 0.7 0.9 1.6 0.7 0.9 1.6
=================== ============= ============= ============= ============ ============ ============
116.3 47.0 163.3 111.7 55.1 166.8
=================== ============= ============= ============= ============ ============ ============
Current assets
Inventories 30.5 - 30.5 29.2 - 29.2
Trade and other
receivables 44.7 4.1 48.8 40.4 - 40.4
Cash and cash
equivalents 10.3 - 10.3 6.1 - 6.1
=================== ============= ============= ============= ============ ============ ============
85.5 4.1 89.6 75.7 - 75.7
=================== ============= ============= ============= ============ ============ ============
Total assets 201.8 51.1 252.9 187.4 55.1 242.5
=================== ============= ============= ============= ============ ============ ============
Current
liabilities
Other
interest-bearing
loans and
borrowings 0.9 (0.9) - 5.6 (0.7) 4.9
Lease liabilities - 8.2 8.2 - 8.6 8.6
Trade and other
payables 64.6 (2.9) 61.7 61.3 (2.9) 58.4
Contingent
consideration 1.0 - 1.0 0.3 - 0.3
Tax payable 1.4 - 1.4 0.6 - 0.6
Provisions 2.3 (0.5) 1.8 1.5 (0.5) 1.0
=================== ============= ============= ============= ============ ============ ============
70.2 3.9 74.1 69.3 4.5 73.8
=================== ============= ============= ============= ============ ============ ============
Non-current
liabilities
Other
interest-bearing
loans and
borrowings 38.6 (0.9) 37.7 25.3 (0.6) 24.7
Lease liabilities - 52.8 52.8 - 55.9 55.9
Provisions 1.6 (0.2) 1.4 2.8 (0.4) 2.4
=================== ============= ============= ============= ============ ============ ============
40.2 51.7 91.9 28.1 54.9 83.0
=================== ============= ============= ============= ============ ============ ============
Total liabilities 110.4 55.6 166.0 97.4 59.4 156.8
=================== ============= ============= ============= ============ ============ ============
Net assets 91.4 (4.5) 86.9 90.0 (4.3) 85.7
=================== ============= ============= ============= ============ ============ ============
Equity
Ordinary share
capital 0.1 - 0.1 0.1 - 0.1
Share premium 12.5 - 12.5 12.5 - 12.5
Merger reserve 25.5 - 25.5 25.5 - 25.5
Retained earnings 53.3 (4.5) 48.8 51.9 (4.3) 47.6
=================== ============= ============= ============= ============ ============ ============
Total equity 91.4 (4.5) 86.9 90.0 (4.3) 85.7
=================== ============= ============= ============= ============ ============ ============
Impact of IFRS 16 on the
Consolidated
Income Statement
for the six months ended 30
June 2019
6 months ended IFRS 16 6 months
30 June 2019 adjustments ended 30
pre-IFRS 16 June 2019
post-IFRS
16
(unaudited) (unaudited) (unaudited)
GBPm GBPm GBPm
================================= ============================ ============ ============
Group revenue 140.0 - 140.0
================================= ============================ ============ ============
Cost of sales (97.0) 0.5 (96.5)
================================= ============================ ============ ============
Gross profit 43.0 0.5 43.5
Distribution expenses (17.2) 0.5 (16.7)
Administrative expenses (18.1) 0.1 (18.0)
Underlying operating profit 8.3 1.1 9.4
Amortisation of acquired other
intangible assets (0.1) - (0.1)
Other non-underlying items (0.1) - (0.1)
Share-based payments expense (0.4) - (0.4)
--------------------------------- ---------------------------- ------------ ------------
Operating profit 7.7 1.1 8.8
Net finance costs (0.8) (1.3) (2.1)
================================= ============================ ============ ============
Profit before tax 6.9 (0.2) 6.7
Taxation (1.3) - (1.3)
================================= ============================ ============ ============
Profit from continuing
operations 5.6 (0.2) 5.4
================================= ============================ ============ ============
Impact of IFRS 16 on segmental
underlying operation profit
for the six months ended 30
June 2019
Fabrication
Extrusion & Corporate
& Moulding Distribution costs Total
(unaudited) (unaudited) (unaudited) (unaudited)
GBPm GBPm GBPm GBPm
================================= ============= ============= ============ ============
Underlying operating profit
excluding impact of IFRS 16 8.1 1.2 (1.0) 8.3
Impact of IFRS 16 0.5 0.6 - 1.1
================================= ============= ============= ============ ============
Reported underlying operating
profit 8.6 1.8 (1.0) 9.4
================================= ============= ============= ============ ============
11. 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.
12. 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 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.
END
IR CKKDQPBKDKCD
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