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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% | 87.00 | 86.00 | 88.00 | 87.00 | 87.00 | 87.00 | 112,444 | 08:00:00 |
| 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 2019 to Apr 2024
TIDMEPWN
RNS Number : 5346Y
Epwin Group PLC
10 September 2020
10 September 2020
The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.
Epwin Group Plc
Half year results for the six months to 30 June 2020
Resilient performance ahead of earlier expectations; optimistic for prospects in H2
Epwin Group Plc (AIM: EPWN) ("Epwin" or the "Group"), the leading manufacturer of low maintenance building products, supplying the Repair, Maintenance and Improvement ("RMI"), new build and social housing sectors, announces its half year results for the six months to 30 June 2020.
Financial highlights
GBPm H1 2020 H1 2019 ========================================= ========== ========== Revenue 93.3 140.0 Underlying operating (loss)/profi t (1) (1.8) 9.4 Underlying operating margin - 6.7% Adjusted (loss)/profit before tax (1) (4.1) 7.3 (Loss)/Profit before tax (4.8) 6.7 Adjusted EPS (2) (2.24p) 4.20p Basic EPS - continuing (2.73p) 3.78p Dividend per share - 1.75p Net debt (81.7) (88.4) Net debt (excluding IFRS 16) (21.3) (29.2) Net debt to adjusted EBITDA (3) 0.8x 1.0x ========================================= ========== ==========
(1) Stated before amortisation of acquired other intangible assets, share-based payments and other non-underlying items.
(2) Adjusted EPS is calculated based on continuing profit after tax adding back amortisation of acquired other intangible assets, share-based payments and other non-underlying items.
(3) Adjusted EBITDA based on the FY19 audited results.
Financial headlines
-- Trading was ahead of Board's revised expectations. Q2 2020 significantly affected by COVID-19 pandemic following a strong period up to the third week of March, with H1 performance impacted accordingly.
-- Financial position remains strong:
o Net debt (excluding IFRS 16) 0.8x adjusted EBITDA based on the FY19 audited results, reduced to GBP21.3 million (HY19: GBP29.2 million).
o Significant headroom on banking facilities with c.GBP60 million of headroom at the half year, supported by management actions taken to conserve cash.
o Banking covenants met as at half year end; management do not anticipate the need to seek a variation or waiver to its covenants. No additional funding has been required.
-- The Board recognises the importance of dividends for shareholders:
o Given the disruption and uncertainty caused by COVID-19, the Board is not recommending an interim dividend for 2020.
o The Board intends to recommence dividend payments as soon as practical, subject to full year financial performance and greater visibility of prospects for 2021.
Operational headlines
-- Majority of operations restarted in May, with additional safe working practices implemented (having closed all operations on 25 March 2020 in response to the COVID-19 pandemic).
-- Significant progress made on Group's site consolidation programme despite lockdown delays:
o Construction largely complete on new Telford distribution and finishing facility, expected to be fully operational by the end of 2020.
o This industry-leading facility will deliver operational efficiencies from 2021 with higher levels of automation supporting the growth of both our existing and planned new products.
-- Continued product development activities during the period with the launch of the Adek aluminium decking product in Q1 2020, supplementing the 2019 launches of the Stellar aluminium window system and the Dekboard PVC decking product.
Current Trading and Outlook
-- Demand stronger than anticipated from customers serving the RMI market, which represents around 70% of historic Group revenues.
-- Overall Group revenue on like for like sales for the month:
o July up 2%
o August up 3%
-- Strong bounce back in the window systems and cellular extrusions businesses, which form part of the Extrusion and Moulding segment of the Group. Like for like sales for the month on the prior year:
o July up 12%
o August up 7%
-- Capacity continues to be reviewed and adjusted to meet changing levels of demand across the Group's operations.
-- Demand for window systems extrusions has been particularly strong and sustained, such that lead times have increased significantly and materials supply chains are now under pressure.
-- New build and Social Housing sectors' demand was initially slower to return, but call-offs now increasing steadily as build programmes and refurbishment schemes are re-established.
-- As previously stated, the impact of COVID-19 will inevitably have a material impact on trading for the current year as a whole, however, at this stage the effect is anticipated to be less than the initially expected, with the Board expecting significantly improved performance in H2.
-- Medium-term drivers for the RMI market remain positive.
Jon Bednall, Chief Executive Officer, said:
"It has been encouraging to see the resilience of the underlying demand for our products, particularly with the UK RMI sector performing strongly since June. Demand in this sector is sustaining at much higher levels than anticipated and, with other markets also picking up, we continue to ramp up our activities and work with our supply chain partners to meet this demand.
"Whilst we remain in unprecedented times and must continue to manage its challenges, we are optimistic for trading prospects in the second half of the year and expect to make further strategic progress by concluding our current site consolidation and rationalisation programme as well as continuing with our product development and other strategic initiatives.
"Looking further ahead, the medium and long-term drivers for our markets remain positive, and we are confident that we will emerge from this period with the financial strength and operational flexibility to continue to take advantage of the opportunities that will be presented.
"The Group has a strong track record of making dividend payments and, whilst these remain suspended due to the current levels of uncertainty, the Board is mindful of the importance of dividends to our shareholders and will review the position when it has visibility of the full year."
Contact information
Epwin Group Plc Jon Bednall, Chief Executive Chris Empson, Group Finance Director 0203 128 8572 Shore Capital (Nominated Adviser and Joint Broker) Corporate Advisory Edward Mansfield / Daniel Bush / Hugo 0207 408 4090 Masefield Corporate Broking Fiona Conroy Zeus Capital Limited (Joint Broker) John Goold / Dominic King 0203 829 5000 MHP Communications 0203 128 8572 Reg Hoare / Charlie Barker / Florence epwin@mhpc.com Mayo
About Epwin
Epwin is the leading manufacturer of low maintenance building products, supplying the Repair, Maintenance and Improvement ("RMI"), new build and social housing sectors. The Company is incorporated, domiciled and operates principally in the United Kingdom.
www.epwin.co.uk
Group Business Review
Results
Half year revenue and underlying operating profit was significantly impacted by the COVID-19 pandemic. Trading was slightly ahead of the Board's expectations up until the third week of March when the Group suspended operations following the Government's COVID-19 announcements, which also resulted in a significant reduction in demand from the Group's customers.
The Group maintained a low level of supply, where it was safe to do so, for those customers that continued to operate. However, the majority of operations remained suspended throughout April, only recommencing during May; albeit at much reduced levels of activity and after the implementation of enhanced health and safety procedures in line with Government guidance. The Group scaled up operations in line with increased market demand and by June all operations were active to varying degrees.
Sales for the half year of GBP93.3 million were ahead of the revised Board's expectations when lockdown commenced in March, albeit 33% lower than the comparative period last year (HY19: GBP140.0 million), due to the temporary closure of the business.
Hot Features
Premium
6 months
6 months ended ended
30 June 2020 30 June 2019
Key financials GBPm GBPm
==================================== =============== =============
Revenue 93.3 140.0
==================================== =============== =============
Adjusted EBITDA 6.4 17.5
Amortisation of computer software (0.1) (0.1)
Depreciation (8.1) (8.0)
Underlying operating (loss)/profit
(*) (1.8) 9.4
Amortisation of acquired other
intangible assets (0.2) (0.1)
Other non-underlying items (0.5) (0.1)
Share-based payments expense - (0.4)
Operating (loss)/profit (2.5) 8.8
==================================== =============== =============
Underlying operating margin
(*) - 6.7% Operating margin - 6.3% ==================================== =============== =============
(*) Underlying operating profit and margin is operating profit before amortisation of acquired other intangible assets, share-based payments and other non-underlying items.
As a result of the 33% reduction in volumes, the Group made an underlying operating loss of GBP1.8 million (HY19: GBP9.4 million profit). The extent of the loss was limited by use of the Coronavirus Job Retention Scheme ("CJRS"), which enabled the Group to retain the majority of its skilled labour workforce, whose knowledge, experience and hard work were essential to the successful restart of operations, as well as the future of the business.
Further progress with site consolidation and rationalisation programme
Significant progress was made on the development of purpose-built facilities in Telford to consolidate window systems warehousing and finishing operations, with construction works now largely complete. However, delays as a result of COVID-19 and the subsequent increase in demand since operations restarted will not see the site fully operational until the end of the year when the business shutdown will allow the relocation of PVC profile inventories.
This industry-leading facility will deliver operational efficiencies from 2021 with higher levels of automation supporting the growth of both our existing and planned new products.
Products development continues
Product development activities continued during the period with the launch of the Adek aluminium decking product in Q1 2020, supplementing the 2019 launches of the Stellar aluminium window system and the Dekboard PVC decking product.
Segmental Results
6 months
6 months ended ended
30 June 2020 30 June 2019
GBPm GBPm
============================================== =============== =============
Revenue
Extrusion & Moulding 60.7 87.8
Fabrication & Distribution 32.6 52.2
Total 93.3 140.0
============================================== =============== =============
Underlying segmental operating (loss)/profit
Extrusion & Moulding (0.3) 8.6
Fabrication & Distribution (0.4) 1.8
Underlying segmental operating (loss)/profit
before corporate costs (0.7) 10.4
Corporate costs (1.1) (1.0)
============================================== =============== =============
Underlying operating (loss)/profit
(*) (1.8) 9.4
Amortisation of acquired other intangible
assets (0.2) (0.1)
Other non-underlying items (0.5) (0.1)
Share-based payments expense - (0.4)
Operating (loss)/profit (2.5) 8.8
============================================== =============== =============
(*) Underlying operating profit is operating profit before amortisation of acquired other intangible assets, share-based payments and other non-underlying items
Extrusion and Moulding
-- Revenue decreased by 30.9% to GBP60.7 million. -- The reduction in volumes resulted in an operating loss of GBP0.3 million.
Fabrication and Distribution
-- Revenue decreased by 37.5% to GBP32.6 million. -- The reduction in volumes resulted in an operating loss of GBP0.4 million.
Non-underlying items
To assist users of the financial statements the Group reports certain performance measures as underlying as it believes they provide better information on the ongoing trading performance of the business.
Non-underlying items that have been excluded from operating profit in arriving at underlying operating profit include:
i. Amortisation of acquired other intangible assets
Amortisation of GBP0.2 million was charged during the year (HY19: GBP0.1 million), relating to the brand and customer relationship intangible assets recognised on acquisitions.
ii. Other non-underlying items
Other non-underlying items in 2020 relate predominantly to restructuring costs.
iii. Share-based payments expense
The share-based payment expense of GBPnil (HY19: GBP0.4 million) comprises IFRS 2: Share-based payments charges in respect of the: Long-Term Incentive Plan, which matured on 31 December 2019, and SAYE schemes.
Cash flow
6 months 6 months
ended 30 ended 30
June 2020 June 2019
GBPm GBPm
====================================== =========== ===========
Pre-tax operating cash flow 9.1 14.7
Tax paid (0.7) (0.7)
Acquisitions - (2.3)
Net capital expenditure (1.3) (3.9)
Net site development cash flow (3.4) -
Net interest paid (0.9) (0.8)
Facility drawdown 33.0 7.2
Lease payments (5.0) (5.4)
Dividends - (4.6)
Increase in cash 30.8 4.2
====================================== =========== ===========
Opening cash 17.2 6.1
====================================== =========== ===========
Closing cash 48.0 10.3
Borrowings (65.3) (37.7)
Finance leases liabilities (4.0) (1.8)
====================================== =========== ===========
Net debt excluding impact of IFRS 16 (21.3) (29.2)
====================================== =========== ===========
Pre-tax operating cash flow was impacted by the loss in contribution as a result of the COVID-19 related temporary closure of the business, offset by working capital reduction and cash management measures implemented to maximise facility headroom during this period of uncertainty. The Group also utilised the CJRS as well as deferral of the March 2020 VAT liability to March 2021.
In addition, management took measures including deferring non-essential capital expenditure and suspending dividend payments (GBP4.6m in the prior half-year) in order to preserve cash and further increase facility headroom during this period of COVID-19 related uncertainty.
Financing
The Group's banking facilities were increased last year, totalling GBP75 million. The Board has not sought to amend its existing covenants, increase these bank facilities further nor access other sources of funding, as it believes its available headroom provides sufficient liquidity based on current analysis and the support of its various stakeholders. Net debt, on a pre-IFRS 16 basis at 30 June 2020 was GBP21.3 million, 0.8x adjusted EBITDA based on the FY19 audited results.
Finance costs for the period comprise GBP0.9 million interest on borrowings and GBP1.4 million of discount unwind associated with IFRS 16 lease liabilities. Interest costs increased in comparison to the same period in the prior year due to the Board's decision to fully draw down its borrowing facilities as a precaution when the impact of COVID-19 became apparent. The cost of drawing down the facilities was partially offset by a decrease in borrowing rates.
Dividend
The Board recognises the importance of dividends for shareholders. However, given the disruption and uncertainty caused by COVID-19, the Board is not recommending an interim dividend for 2020. The Board intends to recommence dividend payments as soon as practical, subject to full year financial performance and greater visibility of prospects for 2021.
Outlook
The impact of COVID-19 will inevitably have a material impact on trading for the current year. With the key trading months of September, October and November still ahead of us, there is inevitably a higher level of uncertainty around forecasts for the remainder of the year. However, the Group continues to monitor levels of demand across all its operations and is implementing cost saving measures when and where appropriate, as well as expanding supply where demand requires.
The Group exited the half year with strong demand levels, in particular in its core window systems and cellular extrusions businesses, where July and August revenues were 12% and 7% up on prior year, respectively. From mid-August, order intake in some parts of the Group accelerated to levels above capacity and have placed material supply chains under pressure. It remains to be seen the extent to which these demand levels are a result of pent-up demand due to the lockdown or sustainable demand levels driven by consumers spending more time at home during the lockdown and reprioritising their spending to RMI.
Demand from new build has been more subdued, as housebuilders prioritise plots that had sold and were nearing build completion. However, this demand is slowly returning as the housebuilders' build programmes are re-established in order to meet the underlying demand for new build properties as a result of the housing shortage.
Similarly, Social Housing refurbishment programmes are being restarted and scheduled as the recovery of activity continues.
The medium-term drivers for the RMI market remain positive, with an ageing and underinvested housing stock, as well as environmental and safety concerns driving legislation and initiatives that will require improvements to homes on a larger scale than simply essential maintenance. The new build housing sector is anticipated to grow, driven by underlying demand and government incentives. Social new build is also expected to see growth.
In the near term, there may be continued uncertainty around the UK's exit from the EU. Whilst the impact is unable to be predicted, it could affect consumer confidence and cause delays in decision making across a number of sectors.
Nonetheless, we are more optimistic for trading prospects in the second half and expect to make further gains in market share and continue to make strategic progress with our site consolidation and rationalisation programme, whilst continuing to manage the challenges that the pandemic presents. Overall, we are confident that we will emerge a stronger business and that we can take advantage of potential opportunities that will present themselves after the crisis.
Condensed Consolidated Income
Statement
for the six months ended 30
June 2020
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2019
2020 2019
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
==================================== ===== ============ ============ =============
Group revenue 2 93.3 140.0 282.1
==================================== ===== ============ ============ =============
Cost of sales (67.5) (96.5) (193.3)
==================================== ===== ============ ============ =============
Gross profit 25.8 43.5 88.8
Distribution expenses (13.5) (16.7) (33.7)
Administrative expenses (14.8) (18.0) (37.9)
Underlying operating (loss)/profit (1.8) 9.4 21.2
Amortisation of acquired other
intangible assets 3 (0.2) (0.1) (0.3)
Other non-underlying items 3 (0.5) (0.1) (2.3)
Share-based payments expense 3 - (0.4) (1.4)
------------------------------------ ----- ------------ ------------ -------------
Operating (loss)/profit (2.5) 8.8 17.2
Finance costs (0.9) (0.8) (2.1)
IFRS 16 discount unwind on
lease liabilities (1.4) (1.3) (2.7)
==================================== ===== ============ ============ =============
(Loss)/profit before tax (4.8) 6.7 12.4
Taxation 5 0.9 (1.3) (1.7)
==================================== ===== ============ ============ =============
(Loss)/profit for the period (3.9) 5.4 10.7
==================================== ===== ============ ============ =============
Pence Pence Pence
Basic (loss)/earnings per
share 6 (2.73) 3.78 7.49
Diluted (loss)/earnings per
share 6 (2.72) 3.77 7.47
Condensed Consolidated Balance
Sheet
as at 30 June 2020
30 June 30 June 31 December
2020 2019 2019
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
================================ ===== ============ ============ ============
Assets
Non-current assets
Goodwill 72.2 72.2 72.2
Other intangible assets 3.3 3.9 3.5
Property, plant and equipment 46.3 36.5 46.1
Right of use assets 49.8 49.1 51.4
Lease assets 8 5.2 - 5.3
Deferred tax asset 3.8 1.6 3.8
================================ ===== ============ ============ ============
180.6 163.3 182.3
================================ ===== ============ ============ ============
Current assets
Inventories 28.0 30.5 30.3
Trade and other receivables 28.8 46.9 43.6
Lease assets 8 0.6 - 0.4
Cash and cash equivalents 8 48.0 10.3 17.2
================================ ===== ============ ============ ============
105.4 87.7 91.5
================================ ===== ============ ============ ============
Total assets 286.0 251.0 273.8
================================ ===== ============ ============ ============
Liabilities
Current liabilities
Lease liabilities 8 10.1 8.2 9.0
Trade and other payables 61.6 61.7 75.2
Income tax payable (0.6) 1.4 1.0
Provisions 0.9 1.8 1.1
================================ ===== ============ ============ ============
72.0 73.1 86.3
Non-current liabilities
Other interest-bearing loans
and borrowings 8 65.3 37.7 32.3
Lease liabilities 8 60.1 52.8 62.0
Contingent consideration 1.0 1.0 1.0
Provisions 2.7 1.4 3.4
================================ ===== ============ ============ ============
129.1 92.9 98.7
================================ ===== ============ ============ ============
Total liabilities 201.1 166.0 185.0
================================ ===== ============ ============ ============
Net assets 84.9 85.0 88.8
================================ ===== ============ ============ ============
Equity
Ordinary share capital 0.1 0.1 0.1
Share premium 12.5 12.5 12.5
Merger reserve 25.5 25.5 25.5
Retained earnings 46.8 46.9 50.7
================================ ===== ============ ============ ============
Total equity 84.9 85.0 88.8
================================ ===== ============ ============ ============
Condensed Consolidated Statement
of Changes in Equity
for the six months ended 30
June 2020
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
================================== ============ ============ =============
Balance at the start of the
period 88.8 83.8 83.8
(Loss)/profit for the period (3.9) 5.4 10.7
Issue of shares - - -
Share-based payments - 0.4 1.4
Dividends 7 - (4.6) (7.1)
================================== ============ ============ =============
Balance at the end of the period 84.9 85.0 88.8
================================== ============ ============ =============
Consolidated Cash Flow Statement
for the six months ended 30 June 2020
6 months 6 months Year ended
ended ended 31 December
30 June 30 June 2019
2020 2019
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
============================== ===== ============ ============ =============
Cash flows from operating
activities
(Loss)/profit for the period (3.9) 5.4 10.7
Adjustments for:
Depreciation and amortisation 8.4 8.2 17.3
(Gain)/loss on disposal of
property,
plant and equipment - (0.3) 1.7
Gain on disposal of right of
use
asset - - (0.4)
Exceptional gain on sale and
leaseback - - (0.6)
Net finance costs 2.3 2.1 4.8
Taxation (0.9) 1.7 1.7
Share-based payments - 0.4 1.4
5.9 17.5 36.6
Decrease/(increase) in
inventories 2.3 (1.1) (0.9)
Decrease/(increase) in trade
and
other receivables 14.8 (4.0) (4.8)
(Decrease)/increase in trade
and
other payables (13.0) 3.0 3.3
(Decrease)/increase in
provisions (0.9) (0.7) 0.6
============================== ===== ============ ============ =============
Pre-tax operating cash flow 9.1 14.7 34.8
Tax paid (0.7) (0.7) (3.3)
============================== ===== ============ ============ =============
Net cash flow from operating
activities 8.4 14.0 31.5
Cash flows from investing
activities
Acquisition of subsidiary,
net of
cash acquired 4 - (2.3) (2.3)
Acquisition of property,
plant and
equipment (1.2) (3.5) (8.2)
Acquisition of other
intangible assets (0.1) (0.5) (0.4)
Proceeds on sale and
leaseback, net
of development costs (3.4) - 10.1
Proceeds on disposal of
subsidiary 4 - 0.1 0.1
Net cash flow from investing
activities (4.7) (6.2) (0.7)
Cash flows from financing
activities
Net interest paid (0.9) (0.8) (1.6)
Drawdown of borrowings 33.0 7.2 1.3
Repayment of lease
liabilities (5.0) (5.4) (12.3)
Dividends paid 7 - (4.6) (7.1)
============================== ===== ============ ============ =============
Net cash flow from financing
activities 27.1 (3.6) (19.7)
Net increase in cash and cash
equivalents 30.8 4.2 11.1
============================== ===== ============ ============ =============
Cash and cash equivalents at
the
beginning of the period 17.2 6.1 6.1
============================== ===== ============ ============ =============
Cash and cash equivalents at
the
end of the period 8 48.0 10.3 17.2
============================== ===== ============ ============ =============
Notes to the Condensed Consolidated Financial Statements
for the six months ended 30 June 2020
1. Basis of preparation
These financial statements have been prepared on the basis of the accounting policies expected to be adopted for the year ended 31 December 2020. These are in accordance with the Group's accounting policies as set out in the Group's consolidated financial statements for the year ended 31 December 2019.
The recognition and measurement requirements of all International Financial Reporting Standards ('IFRSs'), International Accounting Standards ('IAS') and interpretations currently endorsed by the International Accounting Standards Board ('IASB') and its committees as adopted by the EU and as required to be adopted by AIM listed companies have been applied. AIM listed companies are not required to comply with IAS 34 'Interim Financial Reporting' and accordingly the Company has taken advantage of this exemption.
The financial information in these financial statements does not constitute statutory accounts for the six months ended 30 June 2020 and should be read in conjunction with the Group's consolidated financial statements for the year ended 31 December 2019 which were unqualified and did not contain statements under sections 498(2) and (3) Companies Act 2006.
The condensed consolidated financial statements for the six months to 30 June 2020 have not been audited or reviewed by auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.
The condensed consolidated financial statements were approved by the Board of Directors on 9 September 2020.
Going concern
These condensed financial statements have been prepared on the going concern basis, after considering the impact and risks arising from COVID-19 and Brexit, as the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.
As disclosed in the FY19 Annual Report and Accounts, in response to COVID-19 and the subsequent Government lockdown, as well as in anticipation of significantly reduced demand levels and in the interest of customer and employee safety, the decision was taken on 25 March 2020 to implement a controlled shutdown of Epwin's operating sites for a temporary period.
Based on these unprecedented circumstances, the Group prepared a number of financial models ranging from the reasonably optimistic through to an assumed worst-case scenario.
Following the temporary suspension of operations in March 2020, as lockdown measures were eased, the Group commenced a phased restart and by June all operations had restarted. Actual results for the half year were significantly ahead of the 'optimistic' forecast model. The Board now believe, based on actual results and latest forecasts, that the uncertainty has lessened and currently do not anticipate the need to seek a variation or waiver to its existing covenants.
At 30 June 2020 the Group had GBP60 million of headroom on it banking facilities.
Based on the above, the Directors believe that it remains appropriate for the Group to continue to adopt the going concern basis in preparing these condensed financial statements.
2. Segmental reporting
Segmental information is presented in respect of the Group's reportable operating segments in line with IFRS 8 'Operating Segments', which requires segmental information to be disclosed on the same basis as it is viewed internally by the Chief Operating Decision Maker.
Reportable segments Operations
Extrusion and Moulding Extrusion and marketing of PVC window profile systems, PVC cellular roofline and cladding, rigid rainwater and drainage products and Wood Plastic Composite ("WPC") decking products. Moulding of Glass Reinforced Plastic ("GRP") building components.
Fabrication and Distribution Fabrication, installation and marketing of windows and doors, cellular roofline, cladding, decking, rainwater and drainage products.
6 months 6 months
ended ended Year ended
30 June 30 June 31 December
2020 2019 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Revenue from external customers
------------------------------------- ------------ ------------ -------------
Extrusion & Moulding 60.7 87.8 177.6
Fabrication & Distribution 32.6 52.2 104.5
-------------------------------------- ------------ ------------ -------------
Total 93.3 140.0 282.1
====================================== ============ ============ =============
Segmental operating (loss)/profit
------------------------------------- ------------ ------------ -------------
Extrusion & Moulding (0.3) 8.6 18.7
Fabrication & Distribution (0.4) 1.8 4.6
-------------------------------------- ------------ ------------ -------------
Segmental operating (loss)/profit
before corporate and other costs (0.7) 10.4 23.3
Corporate costs (1.1) (1.0) (2.1)
====================================== ============ ============ =============
Underlying operating (loss)/profit (1.8) 9.4 21.2
Amortisation of acquired other
intangible assets (0.2) (0.1) (0.3)
Other non-underlying items (0.5) (0.1) (2.3)
Share-based payments expense - (0.4) (1.4)
====================================== ============ ============ =============
Operating (loss)/profit (2.5) 8.8 17.2 ====================================== ============ ============ ============= 3. Underlying operating profit
'Underlying operating profit' is the key profit measure used by the Board to assess the underlying financial performance of the operating divisions and the Group as a whole. 'Underlying operating profit' is operating profit stated before items of non-underlying and non-recurring income and expense which include; amortisation or impairment of acquired other intangible assets, business reorganisation costs, acquisition expenses, share based payments and one-off exceptional items.
Non-underlying items included within operating profit include:
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2020 June 2019 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
================================ ============= ============= =============
Amortisation of acquired other
intangible assets (0.2) (0.1) (0.3)
Other non-underlying items (0.5) (0.1) (2.3)
Share-based payments - (0.4) (1.4)
================================ ============= ============= =============
Non-underlying expense (0.7) (0.6) (4.0)
================================ ============= ============= =============
Amortisation of acquired other intangible assets
GBP0.2 million (30 June 2019: GBP0.1 million) amortisation of brand and customer contract intangible assets acquired through business combinations.
Other non-underlying items
Other non-underlying items are significant one-off incomes or costs that are not part of the underlying trading performance of the business.
Other non-underlying items include:
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2020 June 2019 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
=================================== ============= ============= =============
Acquisition expenses - (0.1) (0.1)
Profit on sale and leaseback
transaction - - 0.6
Site consolidation and redundancy (0.5) - (2.8)
Other non-underlying items (0.5) (0.1) (2.3)
=================================== ============= ============= =============
During the period the Group incurred redundancy costs of GBP0.5 million.
Share-based payments expense
The share-based payment expense of GBPnil (30 June 2019: GBP0.4 million) comprises IFRS 2: Share-based payments charges in respect of the: Long-Term Incentive Plan GBPnil (30 June 2019: GBP0.3 million), which matured on 31 December 2019, and SAYE schemes of GBPnil (30 June 2019: GBP0.1 million).
4. Acquisitions
Acquisitions in the half year ended 30 June 2019
On 1 February 2019, the Group acquired Premier Distribution (Gt. Yarmouth) Limited, trading as PVS, for initial cash consideration of GBP2.5 million. PVS supplies and installs PVC decking and related products to the holiday park and park home markets as well as to residential customers and local authorities. PVS forms part of the Fabrication and Distribution segment.
The following table summarises the consideration paid for PVS and the provisional fair values of the assets and liabilities acquired at the acquisition date.
Premier Distribution
(Gt. Yarmouth) Limited
fair values on acquisition
GBPm
----------------------------------------------- ----------------------------
Recognised amounts of identifiable assets
and liabilities acquired
Acquired intangibles - brand 0.1
Acquired intangibles - customer relationships 0.1
Property, plant and equipment 1.8
Right of use assets 0.1
Inventories 0.2
Trade and other receivables 0.3
Cash and cash equivalent 0.5
Other interest-bearing loans and borrowings (0.9)
Lease liabilities (0.1)
Trade and other payables (0.3)
Income tax payable (0.2)
Provisions (0.1)
------------------------------------------------ ----------------------------
Fair value of assets acquired 1.5
Goodwill 2.0
------------------------------------------------ ----------------------------
Total consideration 3.5
------------------------------------------------ ----------------------------
Consideration
Cash consideration 2.5
Contingent consideration 1.0
------------------------------------------------ ----------------------------
Total consideration 3.5
------------------------------------------------ ----------------------------
On acquisition, other intangible fixed assets of GBP0.2 million were recognised, representing the PVS brand and customer relationships.
The goodwill recognised of GBP2.0 million represents the know-how of the workforce, plus the potential for cross-selling and synergies that exist as a result of the vertical integration with, and the larger scale of, the Epwin Group.
Disposals in the half year ended 30 June 2019
On 7 January 2019, the Group disposed of the trade and certain assets and liabilities of its glass-sealed unit manufacturing business in Northampton for cash consideration of GBP0.1 million.
5. Taxation
The tax charge for the six months to 30 June 2020 is based on the estimated tax rate for continuing operations for the full year.
The UK corporation tax rate reduced from 20% to 19% effective from 1 April 2017. A further reduction to 17%, which was to be effective from 1 April 2020, was substantively enacted on 6 September 2016. However, in the Budget held on 11 March 2020, the Government announced that the reduction down to 17% would no longer take place, with the rate to remain at 19% going forward. As at the 30 June 2020 balance sheet date, the reduction to 17% had been enacted and not formally reversed, and so the deferred tax asset at this date has still been calculated using this rate.
6. (Loss)/earnings per share (EPS)
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2020 June 2019 2019
(unaudited) (unaudited) (audited)
pence pence pence
========= ============= ============= =============
EPS
Basic (2.73) 3.78 7.49
Diluted (2.72) 3.77 7.47
========= ============= ============= =============
6 months 6 months
ended 30 ended 30 Year ended
June 2020 June 2019 31 December
(unaudited) (unaudited) 2019 (audited)
No. No. No.
==================================== ============= ============= ================
Number of shares
Weighted average number of
shares used to calculate earnings
per share
* Basic 142,926,660 142,925,173 142,925,173
* Diluted 143,169,478 143,147,189 143,168,763
===================================== ============= ============= ================
7. Dividends
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2020 June 2019 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
================================== ============== ============= =============
2018 final dividend of 3.20
pence per share - 4.6 4.6
2019 interim dividend of 1.75
pence per share - - 2.5
2019 final dividend of nil pence - - -
per share
================================== ============== ============= =============
- 4.6 7.1
================================================= ============= =============
8. Net debt
6 months 6 months Year ended
ended 30 ended 30 31 December
June 2020 June 2019 2019
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
================================ ============ ============ =============
Cash and cash equivalents 48.0 10.3 17.2
Secured bank loans (65.3) (37.7) (32.3)
Lease assets 5.8 - 5.7
Lease liabilities (70.2) (61.0) (71.0)
================================= ============ ============ =============
Net debt (81.7) (88.4) (80.4)
Add: lease liabilities 70.2 61.0 71.0
Deduct: lease assets (5.8) - (5.7)
Add: finance lease liabilities (4.0) (1.8) (1.3)
================================= ============ ============ =============
Net debt (pre-IFRS 16 basis) (21.3) (29.2) (16.4)
================================= ============ ============ =============
The banking facilities available to the Group are a GBP65.0 million Revolving Credit Facility and GBP10.0 million overdraft, secured on the assets of the Group. The revolving credit facility was for an initial term of three years through to June 2022, with an option to extend for a further two years.
9. Cautionary statement
This document contains certain forward-looking statements with respect of the financial condition, results, operations and businesses of Epwin Group Plc. Whilst these statements are made in good faith based on information available at the time of approval, these statements and forecasts inherently involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause the actual result or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this document should be construed as a profit forecast.
10. Copies of this half year report
Further copies of this half year report are available from the registered office: Epwin Group Plc, 1b Stratford Court, Cranmore Boulevard, Solihull, B90 4QT or on the Company's website www.epwin.co.uk
This information is provided by RNS, the news service of the 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.
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END
IR KKCBDABKDFCK
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