Acquisition of Poly-Pure Ltd
12/09/2022 07:00
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RNS Number : 0230Z Epwin Group PLC 12 September 2022
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12 September 2022
Epwin Group Plc
("Epwin" or the "Group")
Acquisition of Poly-Pure Ltd
Highly synergistic acquisition providing further growth and sustainability
opportunities
Epwin Group Plc (AIM: EPWN) ("Epwin" or the "Group"), the leading manufacturer
of energy efficient and low maintenance building products, with significant
market shares, supplying the Repair, Maintenance and Improvement ("RMI"), new
build and social housing sectors, today announces that it has completed the
acquisition of Poly-Pure Ltd ("Poly-Pure") for an initial cash consideration
of £15 million on a debt-free and cash-free basis, funded from the Group's
existing facilities.
Background to Poly-Pure
Poly-Pure is a leading UK materials re-processor, recycling post-consumer and
post-industrial PVC building materials, notably UPVC window frames.
Established in 2018, Poly-Pure supplies re-processed PVC to a diverse customer
base. The business is based in Norwich and has 25 employees.
In Poly-Pure's financial year ended 31 July 2022, it expects to report
revenues of c.£10 million (£4.7 million in its financial year to 31 July
2021) and adjusted EBITDA of c.£2.5 million (£0.4 million in the year to 31
July 2021). Underlying profit before tax for the year ended 31 July 2022 is
expected to be £2.4 million. Poly-Pure has net assets on acquisition of
approximately £3m.
The acquisition of Poly-Pure is expected to be margin accretive for Epwin at
the adjusted EBITDA level and is expected to be immediately earnings
enhancing.
Strong strategic rationale
A key aspect of the Group's strategy is to execute value enhancing
acquisitions. The acquisition is a strong strategic fit with the Epwin Group:
· Growth opportunity: Poly-Pure has generated strong levels of revenue
and EBITDA growth since its establishment, with a diverse and growing customer
base and with a programme to expand its processing capacity. There is
increasing industry focus on improving the use of reprocessed materials in
manufacturing and Epwin believes there are a range of opportunities for
Poly-Pure to continue to execute its growth plan;
· Cost synergies: Poly-Pure has the ability to provide Epwin with a
further, cost effective, supply of recycled PVC, with the potential for
operational efficiencies and cost benefits;
· Sustainability: the acquisition, alongside Epwin's existing capital
expenditure programme, accelerates the Group's ambitions to integrate an even
greater proportion of recycled materials into its products;
· Material sourcing: Poly-Pure has strong links within the industry and
a proven ability to source post-industrial and post-consumer recyclable
building plastics materials. The greater ability to re-process waste materials
provides Epwin with an additional source of raw material.
Transaction details
The initial cash consideration of £15 million on a cash-free debt-free basis
represents a multiple of 6x estimated 2022 adjusted EBITDA. Further deferred
consideration may become payable, subject to an earnout mechanism, in equal
instalments based upon the adjusted EBITDA of Poly-Pure in the three calendar
years to 31 December 2023, 31 December 2024 and 31 December 2025 respectively,
capped in aggregate at a further £15 million in cash which, if achieved,
would equate to a 31 December 2025 adjusted EBITDA multiple after synergies of
3x.
The acquisition will be funded from existing Group facilities. As at 30 June
2022 covenant net debt was £7.3 million which represented 0.3x adjusted
EBITDA, providing the Group with in excess of £65 million of headroom on its
facilities.
The directors of Poly-Pure will remain with the business, working within
Epwin's Extrusion and Moulding segment to ensure the Group's recyclate
requirements are serviced and maximised.
Jon Bednall, Chief Executive Officer, said:
"I am pleased to welcome Poly-Pure to Epwin. Poly-Pure is a high-quality,
growing business and a strong strategic fit, which will enable us to further
bolster our recycling capabilities and accelerate delivery of our
sustainability agenda.
We see good opportunities to derive synergistic benefits with our existing
operations, increase the proportion of recycled material used in our products
and further improve the already strong environmental credentials of the
Group's products. The acquisition also furthers our strategy of broadening our
materials capabilities for the future. We welcome Poly-Pure's management and
employees to the Epwin Group."
Contact information
Epwin Group Plc 0203 128 8168
Jon Bednall, Chief Executive
Chris Empson, Group Finance Director
Shore Capital (Nominated Adviser and Joint Broker) 0207 408 4090
Corporate Advisory
Daniel Bush / Iain Sexton
Corporate Broking
Fiona Conroy
Zeus Capital Limited (Joint Broker) 0203 829 5000
Dominic King / Nick Searle
MHP Communications 0203 128 8168
Reg Hoare / Charlie Barker / Pauline Guenot epwin@mhpc.com
About Epwin
Epwin is the leading manufacturer of energy efficient and low maintenance
building products with significant market shares, supplying the Repair,
Maintenance and Improvement ("RMI"), new build and social housing sectors.
The Company is incorporated, domiciled and operates principally in the United
Kingdom.
Information for investors can be accessed www.epwin.co.uk/investors/
(http://www.epwin.co.uk/investors/)
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