Epwin Group Plc (LON:EPWN), the leading manufacturer of low maintenance building products, supplying the Repair, Maintenance and Improvement, new build and social housing sectors, has announced its half year results for the six months to 30 June 2021.
Financial highlights
| £m | H1 2021 | H1 2020 | H1 2019 |
| Revenue | 157.8 | 93.3 | 140.0 |
| Underlying operating profit/(loss) 1 | 9.4 | (1.8) | 9.4 |
| Underlying operating margin | 6.0% | – | 6.7% |
| Adjusted profit/(loss) before tax 1 | 7.1 | (4.1) | 7.3 |
| Profit/(loss) before taxAdjusted EPS 1Basic EPS | 6.64.06p3.72p | (4.8)(2.24)p(2.73)p | 6.74.20p3.78p |
| Dividend per share | 1.75p | – | 1.75p |
| Covenant net debt | (15.8) | (21.3) | (29.2) |
| Covenant net debt to adjusted EBITDA | 0.6x | 1.4x | 1.1x |
| Net debt (including IFRS 16: Leases) | (92.1) | (81.7) | (88.4) |
| Underlying operating cash conversion 2 | 158.5% | – | 156.4% |
(1) Stated before amortisation of acquired other intangible assets, share-based payments and other non-underlying items.
(2) Underlying operating cash conversion is pre-tax operating cash flow as a percentage of underlying operating profit.
Financial headlines
· Strong trading performance, despite pandemic operational challenges:
o High RMI demand continued into H1 2021
o Revenues 69% ahead of 2020 and 13% up on the same period in 2019
o Underlying operating profit of £9.4 million recovered to 2019 level
· Financial position remains strong:
o Covenant net debt reduced to £15.8 million (HY20: £21.3 million; FY20: £18.5 million); 0.6x adjusted EBITDA
o Includes cost of £4.6 million on acquisitions in H1 2021
o Significant headroom on banking facilities, in excess of £60 million at the half year end
· Interim dividend of 1.75 pence per share declared
Operational and strategic headlines
· Health and safety remains a priority
· Continued strategic progress:
o Site consolidation and rationalisation programme:
– Construction completed on new Telford distribution and finishing facility, with final payment of £5.2 million received during H1 2021
– Full relocation of inventories to the new facility in 2022 after exceptionally high demand levels in 2021
o Value enhancing acquisitions – SBS acquired in January 2021 and PBS in June 2021:
– Both well-established regional independent distributors of plastic building products, increasing access to the Group’s product offer
– Adds 12 trade counters in Cumbria, Northumberland, Southern Scotland and Norfolk
o New product development:
– Aluminium window profile and PVC decking sales building encouraging momentum
· Ongoing development of ESG framework and sustainability agenda
Current Trading and Outlook
· Trading in line with analysts’ forecasts increased at the July 2021 trading update
· Strong demand from customers serving the RMI market, which represents around 70% of historic Group revenues, is expected to continue for the foreseeable future
· Continue to actively manage ongoing supply chains and logistics pressures:
o PVC raw materials in particular impacted, exacerbated by supplier plant issues restricting availability and driving up the price of resin
o Steps have been, and continue to be, taken to recover these costs in the market in an equitable manner
o Labour availability and wage inflation presenting some challenges
· Medium and long-term drivers for the RMI market remain positive
· Further potential bolt-on M&A opportunities continue to emerge
· Well positioned as operating conditions improve and pent-up demand takes effect
Jon Bednall, Chief Executive Officer, said:
“I would again like to recognise and thank all of our people for their continued effort and hard work during the ongoing pandemic disruption.
Our trading performance during the first half has been encouraging and we have continued to make good strategic progress. This has been underpinned by ongoing strong demand from our key RMI markets, together with proactive management of raw material cost inflation and supply chain issues.
We are optimistic for trading prospects in the second half and expect to make further gains in market share, whilst continuing to manage the challenges that the pandemic presents. Looking further ahead, we remain confident that we can take advantage of future opportunities, supported by the positive medium and long-term drivers for the Group’s products.”
