Half-year Results
11/09/2024 07:00
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RNS Number : 6332D Epwin Group PLC 11 September 2024
11 September 2024
This announcement contains inside information for the purposes of Regulation
11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310 (as
amended). Upon the publication of this announcement via a Regulatory
Information Service, this inside information is now considered to be in the
public domain.
Epwin Group Plc
("Epwin" or the "Group")
Half year results for the six months to 30 June 2024
Underlying operating profit in line with a strong 2023 comparative; confident
of achieving full year expectations
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, announces its unaudited half year results
for the six months to 30 June 2024 ("H1 2024").
Financial highlights
£m H1 2024
H1 2023
Revenue 158.0 180.0
Underlying operating profit (1) 12.0 11.9
Underlying operating margin 7.6% 6.6%
Adjusted profit before tax (1) 8.8 8.7
Profit before tax 8.0 7.9
Adjusted EPS (1) 4.76p 4.82p
Basic EPS 4.20p 4.27p
Interim dividend per share 2.10p 2.00p
Pre-tax operating cash flow 15.8 19.1
Covenant net debt(2) 19.5 16.1
Covenant net debt to adjusted EBITDA(2) 0.6x 0.6x
Underlying operating cash conversion (3) 131.7% 160.5%
(1) Stated before amortisation of acquired other intangible assets,
share-based payments and other non-underlying items.
(2) Covenant net debt and covenant net debt to adjusted EBITDA represent
pre-IFRS 16 measures.
(3) Underlying operating cash conversion is pre-tax operating cash flow as a
percentage of underlying operating profit.
Financial headlines
· Trading remains resilient despite challenging environment:
o Continued improvement in underlying operating margin to 7.6% (HY23: 6.6%)
o Revenues behind a strong H1 2023 comparative, as a result of lower PVC
input prices reducing previously levied surcharges and subdued demand in the
Group's core markets
o Responsible management of balance between volume and margin to deliver
underlying operating profit slightly ahead of a strong prior year comparative
o Group remains highly cash generative, with pre-tax operating cash inflow
of £15.8 million (HY23: £19.1 million) and underlying operating cash
conversion of over 130%
· Robust financial position:
o Covenant net debt of £19.5 million remained at 0.6x adjusted EBITDA; the
increase from year end being due to working capital seasonality, in addition
to £3.3 million being deployed on the share buyback programme and payment of
£4.0 million final dividend
o Robust balance sheet, with in excess of £55 million headroom on banking
facilities to support strategic objectives
o Banking facilities recently extended to August 2027
· Shareholder returns boosted:
o £7.3 million returned to shareholders during the period
o Extended share buyback programme announced in April 2024 close to
completion
o Intention to extend share buyback programme for a further 5 million shares
o Interim dividend of 2.10 pence per share declared, an increase of 5% on H1
2023
Operational and strategic headlines
· Continued delivery of our strategy:
o Operational improvement:
§ Sharp focus on operational and manufacturing efficiency driving margin
improvement
§ Roll-out of consolidated IT system across distribution network completed,
commercial and operational benefits starting to be realised
o Value enhancing acquisitions:
§ Bolt-on acquisition expanding trade counter network in Scotland
§ Acquired a further GRP moulding business for £1.3 million early in H2
§ Healthy pipeline of potential acquisitions
o Sustainability:
§ Continued focus on energy usage, production efficiency and increased
processing of recycled materials
§ Further investment in reporting capabilities and development of
sustainability framework and targets
Current trading and outlook - 2024 results anticipated to be in line with
consensus* expectations
· Q3 trading to date has followed a similar trend to the first half of
the year
· Well-positioned when markets recover, on the back of an improving
economic outlook, although demand is expected to remain subdued through H2
2024
· Continuing focus on managing the balance between volume and margin,
maintaining customer service levels and driving further operational
efficiencies
· Board remains confident of delivering 2024 results in line with
market consensus* expectations
· Medium and long-term drivers for the Group's markets remain positive:
o Shortage of new and affordable homes, new government committing to
increasing the number of homes built
o Poorly maintained, underinvested and ageing housing stock
o Increasing concern about the quality of social housing
o Net zero driving need to decarbonise the UK housing stock and improve the
energy efficiency of homes
Jon Bednall, Chief Executive Officer, said:
"Trading in the first half was consistent with the Board's expectations, with
underlying profit in line with a strong 2023 comparative, despite challenging
markets. We remain confident of achieving our full year expectations, with a
further year of profit progression and business development.
We retain a positive view of our future prospects and believe a market
recovery is now more likely during 2025. Looking further ahead, the medium and
long‐term drivers for the Group's products continue to be positive, whilst
our strong balance sheet will enable us to continue to invest for growth both
organically and by selective acquisitions."
*Based upon Company collated average analyst consensus for FY24 underlying
operating profit which the Board believes to be £25.8 million (within a range
of underlying operating profit expectations of £25.6 million to £26.1
million)
Contact information
Epwin Group Plc 078 3462 3818
Jon Bednall, Chief Executive
Chris Empson, Group Finance Director
Shore Capital (Nominated Advisor and Joint Broker) 0207 408 4090
Corporate Advisory
Daniel Bush / Harry Davies-Ball
Corporate Broking
Fiona Conroy
Zeus Capital Limited (Joint Broker) 0203 829 5000
Dominic King / Nick Searle
MHP 078 3462 3818
Reg Hoare / Matthew Taylor / Finn Taylor epwin@mhpgroup.com
Forthcoming dates:
Ex-dividend date 19
September 2024
Dividend record date 20 September 2024
Dividend payment
date 8 October
2024
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 at www.epwin.co.uk/investors
(https://protect.checkpoint.com/v2/___http:/www.epwin.co.uk/investors___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzo3OWZjZjkwYjI2MTY1M2QwMmZmYmM2ZWQzZTQ4YTY1Mzo2OmI0ODU6NTE2MTAyODNhYWI2MmIxMzE4Yjg3MzY4MTFlMzE5NTdhYmI0NzBjNGY5ZDRiNDJmYTRiZmJiODg0OTA4YmZmYjpwOkY6Tg)
Group business review
Trading and results
The Group is pleased to report another resilient performance against a market
backdrop that continued to be challenging. Demand remained subdued in the new
build and RMI markets during the first half of the year, driven by ongoing
macroeconomic challenges, with the picture complicated by poor weather and
uncertainty regarding the timing and outcome of the general election. Against
this difficult backdrop, the Board is pleased to note that the Group adapted
well and traded in line with its expectations.
Revenue of £158.0 million was 12% below a strong comparative of £180.0
million, as a result of lower PVC input prices reducing previously levied
surcharges and demand remaining subdued in new build and RMI markets, as
widely reported across the sector. Underlying revenues, excluding surcharges,
were 8% lower than H1 2023 but only 2% behind H2 2023.
Competitive pricing pressures have been a factor in some parts of the
business, particularly our distribution network, and the Group continues to
take a disciplined approach to pricing to protect both profit margins and
market share.
Underlying operating profit of £12.0 million was slightly ahead of the
comparative period (HY23: £11.9 million), but represents a significant
enhancement in underlying operating margin, which improved by 100 basis points
on HY23, to 7.6%, and a further increase on the FY23 operating margin, as a
result of easing raw material price inflation and a sharp focus on operational
efficiencies.
The Group has continued to see inflationary pressures easing, with some
moderation of key input costs, including electricity and PVC resin prices.
However, wage inflation continues to be a factor, particularly following
increases in the National Living Wage. As a result, the Group continues to
implement pricing actions where and when necessary.
Key financials
6 months ended 6 months ended
30 June 2024 30 June 2023
(unaudited) (unaudited)
£m £m
Revenue 158.0 180.0
Underlying operating profit 12.0 11.9
Amortisation of acquired other intangible assets (0.5) (0.5)
Share-based payments expense (0.3) (0.3)
Operating profit 11.2 11.1
Underlying operating margin 7.6% 6.6%
Operating margin 7.1% 6.2%
Segmental results
6 months ended 6 months ended
30 June 2024 30 June 2023
(unaudited) (unaudited)
£m £m
Revenue
Extrusion and moulding 96.2 113.4
Fabrication and distribution 61.8 66.6
Total 158.0 180.0
Underlying segmental operating profit
Extrusion and moulding 10.9 10.6
Fabrication and distribution 2.9 3.1
Underlying segmental operating profit 13.8 13.7
Corporate costs (1.8) (1.8)
Underlying operating profit 12.0 11.9
Amortisation of acquired other intangible assets (0.5) (0.5)
Share-based payments expense (0.3) (0.3)
Operating profit 11.2 11.1
Extrusion and moulding
· Revenues reduced by 15% compared to the comparative period, primarily
due to the impact of lower PVC input prices reducing previously levied
surcharges and reduced volumes due to lower levels of demand in the new build
and private housing RMI sectors
· Steps taken by the business, during 2023 and continuing in 2024, on
pricing and operational efficiency, as well as the impact of lower surcharges,
have resulted in a significant improvement in underlying operating margin to
11.3% (HY23: 9.3%)
Fabrication and distribution
· Revenues decreased by 6% compared to the comparative period,
predominantly driven by reduced volumes in our distribution network, offset by
our social housing facing fabricators, who saw an improvement in demand
· Increased competition for limited demand continues to drive pressure
on margins in the distribution network. The Group's approach continues to be
focussed on balancing volume and profitability through responsible pricing,
with operating margins in line with H1 2023 despite the challenging trading
conditions
Strategic progress
The Group's focus continues to be on product and material development,
operational efficiency, identifying and completing value‐enhancing
acquisitions and building on the Group's inherent sustainability credentials.
Operational efficiency and leverage
Against a challenging market backdrop and as sector-wide volumes softened
compared to the prior period, the Group maintained a sharp focus on
operational efficiency and cost reduction initiatives. Industry-leading
manufacturing performance and continually improving working practices
contributed to enhanced operating profit margins.
Across our key manufacturing locations, materials efficiency and scrap rates
continue to be closely monitored alongside quality indicators. We strive for
operational excellence and continue to see improvement across all metrics from
already strong starting points, driven by a focus on the fundamentals,
promoting a culture of continuous improvement and the engagement of our
employees.
During the first half the Group was able to maintain our high standards of
customer service, while optimising inventory levels, to ensure we meet
customer needs through competitive lead times, with a low level of back orders
across our product range.
The roll-out of the consolidated IT system across our distribution network,
which commenced in 2023, completed as anticipated during the first half of the
year. The single system is delivering the expected benefits of improved
information flow, enabling more streamlined reporting and simplified
monitoring of KPIs, whilst providing enhanced information at a branch level to
support sales.
Value-enhancing acquisitions
Completion of selective, value enhancing acquisitions remains a core part of
the Group's strategy and there continues to be a healthy pipeline of further
potential acquisitions that the Group may seek to progress.
During the period, and to the date of this report, the Group spent £1.9
million on selective bolt-on acquisitions expanding both its trade counter
network and its glass-reinforced plastic ("GRP") moulding businesses.
Sustainability
The Group continues to view sustainability as being fundamental to our
corporate strategy. As a manufacturer of sustainable building products, we see
the Group having a significant opportunity in the UK's journey to net zero and
as part of efforts to address the shortage of affordable and energy efficient
homes, in addition to under investment in the existing housing stock.
As a manufacturing Group, we have a relentless focus on the efficiency of our
operations and during the period we have continued to take strides on energy
efficiency and the elimination of waste in our manufacturing processes as well
as improving vehicle loading and utilisation across our HGV fleet. This is
important as both an environmentally-responsible and financially-responsible
business, as operational efficiencies have contributed to the further
improvement in operating margins.
In addition to increased processing of recycled materials, which remains a
core part of our sustainability strategy, a key focus during the period has
been further investment in our sustainability-related reporting capabilities.
Governance structures continue to develop, as we work towards formalising
meaningful KPIs and targets to support the UK's net zero strategy, and the
Group's Sustainability Forum, established in 2023 and chaired by an Executive
Director, is meeting quarterly and will begin reporting to the Board.
Cash flow
6 months ended 6 months ended
30 June 2024 30 June 2023
(unaudited) (unaudited)
£m
£m
Pre-tax operating cash flow 15.8 19.1
Tax paid (0.6) (0.6)
Acquisitions (0.6) -
Payment of deferred and contingent consideration - (1.7)
Net capital expenditure (4.3) (3.5)
Interest on borrowings (1.4) (1.5)
Net repayment of borrowings - (5.0)
Lease payments (7.0) (6.7)
Dividends (4.0) (3.7)
Net impact of share issue and buyback (3.3) -
Decrease in cash and cash equivalents (5.4) (3.6)
Opening cash and cash equivalents 12.5 15.1
Closing cash and cash equivalents 7.1 11.5
Borrowings (24.7) (24.8)
Lease assets 5.0 5.5
Lease liabilities (89.3) (93.3)
Net debt including IFRS 16 (101.9) (101.1)
Covenant net debt (19.5) (16.1)
Operating cash flows
The Group remains highly cash generative, achieving a pre-tax operating cash
flow of £15.8 million (HY23: £19.1 million), representing an underlying
operating cash conversion of 132%. The first half of 2024 saw an expected
increase in working capital due to seasonality.
Investing cash flows
Capital expenditure of £4.3 million (HY23: £3.5 million) represents an
increase compared to H1 2023, as the Group continues to invest in line with
its strategic objectives. Capital expenditure continues to be focussed on
driving operational efficiency alongside tooling to expand the Group's
material re-processing capabilities and ability to incorporate recycled
material into our core products.
In addition, the Group spent £0.6 million on a bolt-on acquisition which
expands its trade counter network in Scotland.
Financing cash flows
The interest cost of £1.4 million (HY23: £1.5 million) was broadly in line
with the prior year, as interest rates remain high, offset by a focus on cash
management resulting in reduced average levels of RCF drawdown compared to the
prior period.
Covenant net debt has increased to £19.5 million from £14.4 million as at 31
December 2023, primarily due to the expected increase in working capital
during the first half of the year, the payment of the final dividend in
respect of 2023 of £4.0 million and a £3.3 million net outflow relating to
the purchase of own shares under the share buyback programme.
At 30 June 2024, the Group had in excess of £55 million headroom on its
existing banking facilities which comprise a £65 million Sustainability
Linked Loan revolving credit facility through to August 2026 and a £10
million overdraft facility. Since 30 June, the Group extended the revolving
credit facility to August 2027 on the same terms.
Shareholder returns
The Board recognises the importance of dividends to shareholders and, taking
into account the outlook for the Group and our strong financial position, has
declared an interim dividend of 2.10 pence per share (HY23: 2.00 pence),
representing an increase on the prior period of 5%. The dividend will be paid
on 8 October 2024 to shareholders on the register on 20 September 2024, and is
in line with the Board's policy.
The initial share buyback programme, announced in November 2023, completed in
April 2024 having repurchased 3 million shares. This was extended by 3 million
shares and, to the date of this report, a further 2.9 million shares have been
repurchased and cancelled under the programme, at a cost of £2.6 million.
Additionally, the Group repurchased 0.7 million shares, at a cost of £0.6
million, following the vesting and exercise of options under the Group SAYE
scheme in January 2024.
The extended programme is close to completion and the Group intends to
continue the share buyback programme for a further 5 million shares. This
buyback programme recognises the fact that our strong cash generation and
balance sheet provide the opportunity to take advantage of market conditions
to repurchase shares at attractive levels and return additional funds to
shareholders.
Outlook
The Group's trading performance during H1 2024 has demonstrated our continued
resilience and ability to deliver on profit expectations despite the
challenging trading environment.
Despite a continued shortage of new homes, and following 20-30% reductions in
completions in 2023, most housebuilders are expecting the number of
completions to fall again in 2024. However, the moderation of interest and
mortgage rates will improve the affordability of homes for potential buyers,
with housebuilders beginning to report increased enquiries and reservation
rates going into H2 2024 and anticipating growth in 2025 and beyond.
The improving economic outlook should also drive a recovery in the private
housing RMI market as both potential homebuyers and existing homeowners
benefit from sustained real wage growth, normalising inflation levels and
interest rate cuts, with the Construction Products Association ("CPA")
forecasting a return to growth for the RMI market in 2025.
Social housing RMI is increasingly considered to be a priority and there is a
growing focus on decarbonisation of the public housing stock and the need for
urgent improvements to the general condition of social housing. The CPA is
forecasting modest growth of 2% for 2024 and 2025, which is currently being
borne out in our social facing businesses who are seeing improved demand and
fewer deferments of contract start dates, which have impacted the business in
recent years.
The medium to long-term drivers for the Group's core markets remain positive.
The UK continues to face a shortage of new and affordable housing and we are
encouraged that the new government has reinforced commitments to housebuilding
targets and easing planning constraints. Meanwhile, the UK's existing housing
stock is ageing and underinvested, with increasing concerns about building
safety and performance, and the Group's sustainable building products have a
clear role to play in the upgrading and decarbonisation necessary to improve
living standards and meet net zero commitments.
We anticipate that the trading environment will remain challenging during the
second half of 2024. However, the Group's broad product range, diverse
customer base, well-invested operations, flexible cost base, longstanding
supplier relationships and strong balance sheet provide a large measure of
resilience. We continue to focus on responsibly balancing volume and margin,
meeting the needs of our customers, disciplined cost management and
operational efficiency alongside our core strategic objectives. As a result,
the Board remains confident of the Group delivering underlying operating
profit for the full year in line with expectations, as well as for its medium
and long-term prospects.
Condensed consolidated income statement
for the six months ended 30 June 2024
6 months ended 6 months ended Year ended 31 December 2023
30 June 2024 30 June 2023
(unaudited) (unaudited) (audited)
Note £m £m £m
Group revenue 2 158.0 180.0 345.4
Cost of sales (102.4) (125.1) (231.4)
Gross profit 55.6 54.9 114.0
Distribution expenses (20.0) (21.2) (42.0)
Administrative expenses (24.4) (22.6) (51.3)
Underlying operating profit 12.0 11.9 25.5
Amortisation of acquired other intangible assets 3 (0.5) (0.5) (1.0)
Share-based payments expense 3 (0.3) (0.3) (0.7)
Other non-underlying items 3 - - (3.1)
Operating profit 11.2 11.1 20.7
Finance costs (3.2) (3.2) (7.5)
Profit before tax 8.0 7.9 13.2
Taxation 5 (2.0) (1.7) (3.9)
Profit for the period 6.0 6.2 9.3
Pence Pence Pence
Basic earnings per share 6 4.20 4.27 6.41
Diluted earnings per share 6 4.13 4.20 6.31
Condensed consolidated balance sheet
as at 30 June 2024
30 June 2024 30 June 2023 31 December 2023
(unaudited) (unaudited) (audited)
Note £m £m £m
Assets
Non-current assets
Goodwill 4 89.6 93.2 89.0
Other intangible assets 5.5 5.8 5.9
Property, plant and equipment 36.2 34.2 35.4
Right of use assets 65.9 70.6 68.8
Lease assets 8 4.5 5.0 4.7
Deferred tax asset - 0.8 -
201.7 209.6 203.8
Current assets
Inventories 38.4 38.5 37.4
Trade and other receivables 46.9 48.9 35.8
Lease assets 8 0.5 0.5 0.5
Income tax receivable - - 0.7
Cash and cash equivalents (excluding bank overdrafts) 8 7.1 13.0 13.1
92.9 100.9 87.5
Total assets 294.6 310.5 291.3
Liabilities
Current liabilities
Bank overdrafts 8 - 1.5 0.6
Lease liabilities 8 10.9 10.5 10.7
Trade and other payables 65.8 75.2 59.4
Deferred consideration 0.1 0.2 0.1
Income tax payable 0.7 0.6 -
Provisions 1.2 1.2 1.1
78.7 89.2 71.9
Non-current liabilities
Other interest-bearing loans and borrowings 8 24.7 24.8 24.6
Lease liabilities 8 78.4 82.8 81.8
Deferred and contingent consideration 7.3 7.6 7.2
Provisions 2.3 2.2 2.5
Deferred tax liability 1.2 - 1.2
113.9 117.4 117.3
Total liabilities 192.6 206.6 189.2
Net assets 102.0 103.9 102.1
Equity
Ordinary share capital 0.1 0.1 0.1
Share premium 14.2 13.0 13.0
Merger reserve 25.5 25.5 25.5
Retained earnings 62.2 65.3 63.5
Total equity 102.0 103.9 102.1
Condensed consolidated statement of changes in equity
for the six months ended 30 June 2024 (unaudited)
Share capital Share premium Merger reserve Retained earnings Total
£m £m £m £m £m
Balance as at 1 January 2024 0.1 13.0 25.5 63.5 102.1
Comprehensive income
Profit for the period - - - 6.0 6.0
Total comprehensive income - - - 6.0 6.0
Transactions with owners recorded directly in equity
Exercise of share options - 1.2 - (0.4) 0.8
Purchase of own shares (see note 9) - - - (3.2) (3.2)
Share-based payments expense assets - - - 0.3 0.3
Dividends (see note 7) - - - (4.0) (4.0)
Total transactions with owners - 1.2 - (7.3) (6.1)
Balance as at 30 June 2024 0.1 14.2 25.5 62.2 102.0
for the six months ended 30 June 2023 (unaudited)
Share capital Share premium Merger reserve Retained earnings Total
£m £m £m £m £m
Balance as at 1 January 2023 0.1 13.0 25.5 62.5 101.1
Comprehensive income
Profit for the period - - - 6.2 6.2
Total comprehensive income - - - 6.2 6.2
Transactions with owners recorded directly in equity
Share-based payments expense assets - - - 0.3 0.3
Dividends (see note 7) - - - (3.7) (3.7)
Total transactions with owners - - - (3.4) (3.4)
Balance as at 30 June 2023 0.1 13.0 25.5 65.3 103.9
for the year ended 31 December 2023 (audited)
Share capital Share premium Merger reserve Retained earnings Total
£m £m £m £m £m
Balance as at 1 January 2023 0.1 13.0 25.5 62.5 101.1
Comprehensive income
Profit for the year - - - 9.3 9.3
Total comprehensive income - - - 9.3 9.3
Transactions with owners recorded directly in equity
Purchase of own shares (see note 9) - - - (2.4) (2.4)
Share-based payments expense assets - - - 0.7 0.7
Dividends (see note 7) - - - (6.6) (6.6)
Total transactions with owners - - - (8.3) (8.3)
Balance as at 31 December 2023 0.1 13.0 25.5 63.5 102.1
Consolidated cash flow statement
for the six months ended 30 June 2024
6 months ended 6 months ended Year ended
30 June 2024 30 June 2023 31 December 2023
(unaudited) (unaudited) (audited)
Note £m £m £m
Cash flows from operating activities
Profit for the period 6.0 6.2 9.3
Adjustments for:
Depreciation, amortisation and impairment 9.1 9.4 24.6
Profit on disposal of fixed assets - - 0.1
Contingent consideration adjustment - - (1.1)
Net finance costs 3.2 3.2 7.5
Taxation 5 2.0 1.7 3.9
Share-based payments 0.3 0.3 0.7
20.6 20.8 45.0
(Increase)/Decrease in inventories (0.9) 2.6 3.7
(Increase)/Decrease in trade and other receivables (11.1) (8.4) 4.7
Increase/(Decrease) in trade and other payables 7.3 4.6 (13.4)
Decrease in provisions (0.1) (0.5) (0.3)
Pre-tax operating cash flow 15.8 19.1 39.7
Tax paid (0.6) (0.6) (2.1)
Net cash flow from operating activities 15.2 18.5 37.6
Cash flows from investing activities
Payment of contingent and deferred consideration - (1.7) (1.8)
Acquisition of subsidiary (0.6) - -
Acquisition of fixed assets (4.3) (3.5) (8.6)
Net cash flow from investing activities (4.9) (5.2) (10.4)
Cash flows from financing activities
Interest on borrowings (1.4) (1.5) (3.1)
Net repayment of borrowings - (5.0) (5.5)
Interest on lease liabilities (1.7) (1.7) (3.4)
Repayment of lease liabilities (5.3) (5.0) (10.9)
Purchase of own shares 9 (4.3) - (0.3)
Issue of shares 1.0 - -
Dividends paid 7 (4.0) (3.7) (6.6)
Net cash flow from financing activities (15.7) (16.9) (29.8)
Net decrease in cash and cash equivalents (5.4) (3.6) (2.6)
Cash and cash equivalents at the beginning of the period 12.5 15.1 15.1
Cash and cash equivalents at the end of the period 8 7.1 11.5 12.5
Notes to the condensed consolidated financial statements
for the six months ended 30 June 2024
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 2024. These
are in accordance with the accounting policies as set out in the Group's
consolidated financial statements for the year ended 31 December 2023.
The recognition and measurement requirements of all UK-adopted International
Accounting Standards 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 2024 and should be read in
conjunction with the Group's consolidated financial statements for the year
ended 31 December 2023 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
2024 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 11 September 2024.
Going concern
These condensed financial statements have been prepared on the going concern
basis, 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 FY23 Annual Report and Accounts, the Directors prepared
cash flow forecasts for a period of at least 12 months from the date of
approval of those financial statements which indicated that, taking account of
reasonably possible downsides and wider macroeconomic conditions on the
operations and its financial resources, the Group had sufficient funds to meet
its liabilities as they fell due. Actual revenues, profits and cash flows
during the 6 months to 30 June 2024 and current financial projections indicate
that the Group continues to have sufficient funds to meet its liabilities as
they fall due. As such, the Directors believe that it remains appropriate for
the Group to continue to adopt the going concern basis in preparing these
condensed financial statements.
The Group's balance sheet remains robust and it retains significant headroom
on committed banking facilities through to August 2027. The bank facilities
available to the Group comprise a £65 million Revolving Credit Facility and a
£10 million overdraft facility. At 30 June 2024 the Group had in excess of
£55 million of headroom on its 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
and aluminium window profile systems, PVC cellular roofline and cladding,
decking, rigid rainwater and drainage products as well as Wood Plastic
Composite ("WPC") and aluminium decking products. Moulding of Glass Reinforced
Plastic ("GRP") building components. Re-processing of PVC waste.
Fabrication and distribution Fabrication, marketing and
distribution of windows and doors, cellular roofline, cladding, rainwater,
drainage and decking products.
6 months ended 6 months ended Year ended
30 June 30 June 31 December
2024 2023 2023
(unaudited) (unaudited) (audited)
£m £m £m
Revenue from external customers
Extrusion and moulding 96.2 113.4 210.3
Fabrication and distribution 61.8 66.6 135.1
Total 158.0 180.0 345.4
Segmental operating profit
Extrusion and moulding 10.9 10.6 21.6
Fabrication and distribution 2.9 3.1 7.4
Segmental operating profit before corporate and other costs 13.8 13.7 29.0
Corporate costs (1.8) (1.8) (3.5)
Underlying operating profit 12.0 11.9 25.5
Amortisation of acquired other intangible assets (0.5) (0.5) (1.0)
Share-based payments expense (0.3) (0.3) (0.7)
Other non-underlying items - - (3.1)
Operating profit 11.2 11.1 20.7
3. Underlying operating profit
Operating profit is stated after charging/(crediting) the following
non-underlying items:
6 months ended 6 months ended Year ended 31 December 2023
30 June 2024 30 June 2023 (audited)
(unaudited) (unaudited)
£m £m £m
Amortisation of acquired other intangible assets 0.5 0.5 1.0
Share-based payments expense 0.3 0.3 0.7
Contingent consideration adjustment - - (1.1)
Goodwill impairment - - 4.2
Non-underlying expense 0.8 0.8 4.8
Amortisation of acquired other intangible assets
£0.5 million (HY23: £0.5 million) amortisation of brand and customer
contract intangible assets acquired through business combinations.
Share-based payments expense
The share-based payment expense of £0.3 million (HY23 £0.3 million)
represents the IFRS 2: Share-based payments charge in respect of the Long-Term
Incentive Plan ("LTIP") established in May 2021 for senior management and the
Group's Save As You Earn ("SAYE") scheme. During the period there was a
further issue of options under the LTIP.
4. Acquisition
During the period, the Group acquired the trade and assets of a single
plastics distribution branch in Glasgow for total consideration of £0.6
million. The following table summarises the consideration paid and the
provisional fair values of the assets and liabilities acquired at the
acquisition date.
Provisional fair values on acquisition
(unaudited)
£m
Recognised amounts of identifiable assets and liabilities:
Right of use assets 0.1
Inventories 0.1
Trade and other payables (0.1)
Lease liabilities (0.1)
Fair value of assets acquired -
Goodwill 0.6
Consideration 0.6
5. Taxation
The tax charge for the six months to 30 June 2024 is based on the estimated
tax rate for the full year.
As at the 30 June 2024 balance sheet date, the corporation tax rate was 25%.
The net deferred tax liability has been calculated based on this rate.
6. Earnings per share (EPS)
6 months ended 6 months ended Year ended
30 June 2024 30 June 2023 31 December 2023
(unaudited)
(unaudited)
(audited)
pence pence pence
EPS
Basic 4.20 4.27 6.41
Diluted 4.13 4.20 6.31
6 months ended 6 months ended Year ended
30 June 2024 (unaudited) 30 June 2023 (unaudited) 31 December 2023
(audited)
No. No. No.
Number of shares
Weighted average number of shares used to calculate earnings per share
- Basic 143,005,626 145,313,382 145,142,133
- Diluted 145,157,708 147,553,941 147,442,590
7. Dividends
6 months ended 6 months ended Year ended
30 June 2024 30 June 2023 31 December 2023
(unaudited) (unaudited) (audited)
£m £m £m
2022 final dividend of 2.55 pence per share - 3.7 3.7
2023 interim dividend of 2.00 pence per share - - 2.9
2023 final dividend of 2.80 pence per share 4.0 - -
4.0 3.7 6.6
The Board has declared an interim dividend of 2.10 pence per share in respect
of the financial year ended 31 December 2024.
8. Net debt
6 months ended 6 months ended Year ended
30 June 2024 30 June 2023 31 December 2023
(unaudited) (unaudited) (audited)
£m £m £m
Cash and cash equivalents (excluding bank overdraft) 7.1 13.0 13.1
Bank overdraft - (1.5) (0.6)
Secured bank loans (24.7) (24.8) (24.6)
Lease assets 5.0 5.5 5.2
Lease liabilities (89.3) (93.3) (92.5)
Net debt (101.9) (101.1) (99.4)
Add back: lease liabilities 89.3 93.3 92.5
Deduct: lease assets (5.0) (5.5) (5.2)
Deduct: finance lease liabilities (1.9) (2.8) (2.3)
Covenant net debt (19.5) (16.1) (14.4)
The banking facilities available to the Group are a £65 million
Sustainability Linked Loan facility and £10 million overdraft facility,
secured on the assets of the Group. The revolving Sustainability Linked credit
facility had a term through to August 2026 and, since 30 June, the Group
extended these facilities to August 2027.
9. Purchase of own shares
The table below presents a reconciliation of purchase of own shares between
the consolidated statement of changes in equity and the consolidated cash flow
statement:
6 months ended 6 months ended Year ended 31 December 2023
30 June 2024 30 June 2023 (audited)
(unaudited) (unaudited) £m
£m £m
Included in the consolidated statement of changes in equity (3.2) - (2.4)
Payments in relation to prior year financial liabilities (2.1) - -
Outstanding amount recognised as financial liabilities 1.0 - 2.1
Included in the consolidated cash flow statement (4.3) - (0.3)
On completion of the initial share buyback programme of 3 million ordinary
shares in April 2024, the Group announced the commencement of a second share
buyback programme for the repurchase of up to a further 3 million ordinary
shares for cancellation. As at 30 June 2024, 1.9 million ordinary shares had
been repurchased and cancelled in relation to the second buyback programme, at
a total cost of £1.8 million. A liability of £1.0 million in respect of the
remaining shares to be repurchased is included in Trade and other payables.
10. 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.
11. Copies of this half year report
Further copies of this half year report are available from the registered
office: Epwin Group Plc, Friars Gate, 1011 Stratford Road, Solihull, B90 4BN
or on the Company's website www.epwin.co.uk
(https://protect.checkpoint.com/v2/___http:/www.epwin.co.uk___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzo3OWZjZjkwYjI2MTY1M2QwMmZmYmM2ZWQzZTQ4YTY1Mzo2OjY3MzE6ZTZjN2RkYTJlZmVjMWU5ZTA4MjQ0NzRjODA2ZTVkZmQ5ZTA4MzlhNjg1MDQ5YmNmM2JmOGNjNzVhYzhjODA2ODpwOkY6Tg)
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