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
£m
H1 2020
H1 2019
Revenue
93.3
140.0
Underlying operating (loss)/profit 1
(1.8)
9.4
Underlying operating margin
-
6.7%
Adjusted (loss)/profit before tax 1
(4.1)
7.3
(Loss)/Profit before tax Adjusted EPS 2 Basic EPS - continuing
(4.8) (2.24p) (2.73p)
6.7 4.20p 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 £21.3 million (HY19: £29.2 million).
o Significant headroom on banking facilities with c.£60 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 Masefield Corporate Broking Fiona Conroy Zeus Capital Limited (Joint Broker) John Goold / Dominic King
0207 408 4090 0203 829 5000
MHP Communications Reg Hoare / Charlie Barker / Florence Mayo
0203 128 8572 epwin@mhpc.com
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 £93.3 million were ahead of the revised Board's expectations when lockdown commenced in March, albeit 33% lower than the comparative period last year (HY19: £140.0 million), due to the temporary closure of the business.
6 months ended
6 months ended
Key financials
30 June 2020 £m
30 June 2019 £m
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 £1.8 million (HY19: £9.4 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 ended
6 months ended
30 June 2020
30 June 2019
£m
£m
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 £60.7 million.
· The reduction in volumes resulted in an operating loss of £0.3 million.
Fabrication and Distribution
· Revenue decreased by 37.5% to £32.6 million.
· The reduction in volumes resulted in an operating loss of £0.4 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 £0.2 million was charged during the year (HY19: £0.1 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 £nil (HY19: £0.4 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 ended 30 June 2020 £m
6 months ended 30 June 2019 £m
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 (£4.6m 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 £75 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 £21.3 million, 0.8x adjusted EBITDA based on the FY19 audited results.
Finance costs for the period comprise £0.9 million interest on borrowings and £1.4 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 ended 30 June 2020
6 months ended 30 June 2019
Year ended 31 December 2019
(unaudited)
(unaudited)
(audited)
Note
£m
£m
£m
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 2020
30 June 2019
31 December 2019
(unaudited)
(unaudited)
(audited)
Note
£m
£m
£m
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 ended 30 June 2020
6 months ended 30 June 2019
Year ended 31 December 2019
(unaudited)
(unaudited)
(audited)
£m
£m
£m
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 ended 30 June 2020
6 months ended 30 June 2019
Year ended 31 December 2019
(unaudited)
(unaudited)
(audited)
Note
£m
£m
£m
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 £60 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 ended 30 June 2020
6 months ended 30 June 2019
Year ended 31 December 2019
(unaudited)
(unaudited)
(audited)
£m
£m
£m
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 ended 30 June 2020 (unaudited)
6 months ended 30 June 2019 (unaudited)
Year ended 31 December 2019 (audited)
£m
£m
£m
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
£0.2 million (30 June 2019: £0.1 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 ended 30 June 2020 (unaudited)
6 months ended 30 June 2019 (unaudited)
Year ended 31 December 2019 (audited)
£m
£m
£m
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 £0.5 million.
Share-based payments expense
The share-based payment expense of £nil (30 June 2019: £0.4 million) comprises IFRS 2: Share-based payments charges in respect of the: Long-Term Incentive Plan £nil (30 June 2019: £0.3 million), which matured on 31 December 2019, and SAYE schemes of £nil (30 June 2019: £0.1 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 £2.5 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
£m
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 £0.2 million were recognised, representing the PVS brand and customer relationships.
The goodwill recognised of £2.0 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 £0.1 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 ended 30 June 2020 (unaudited)
6 months ended 30 June 2019 (unaudited)
Year ended 31 December 2019 (audited)
pence
pence
pence
EPS
Basic
(2.73)
3.78
7.49
Diluted
(2.72)
3.77
7.47
6 months ended 30 June 2020 (unaudited)
6 months ended 30 June 2019 (unaudited)
Year ended 31 December 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 ended 30 June 2020 (unaudited)
6 months ended 30 June 2019 (unaudited)
Year ended 31 December 2019 (audited)
£m
£m
£m
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 ended 30 June 2020
6 months ended 30 June 2019
Year ended 31 December 2019
(unaudited)
(unaudited)
(audited)
£m
£m
£m
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 £65.0 million Revolving Credit Facility and £10.0 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.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
END
IR KKCBDABKDFCK
