Epwin Group, Jon Bednall, Chief Executive Officer, said:
“Trading in the first half year has been satisfactory, despite challenging market conditions and cost inflation. The site consolidation and development programme which commenced in late 2017 is progressing and is expected to be completed in the second half of 2019. Alongside these programmes we have continued the work necessary to broaden our product portfolio and invest in our operations for future growth.
We remain confident in the long-term prospects for the RMI market and are continuing to progress our strategy, focused on operational improvement, selective acquisitions, product range expansion and development. We are confident in continuing our record of strong cash generation and our ability to offer an attractive return to shareholders.”
Epwin Group Plc (LON:EPWN), a leading manufacturer of low maintenance building products, supplying the Repair, Maintenance and Improvement, new build and social housing sectors, today announced its half year results for the six months to 30 June 2018.
Financial highlights
|
£m |
H1 2018 |
H1 2017 |
|
Revenue |
142.4 |
149.9 |
|
Underlying operating profit 1 |
7.1 |
11.1 |
|
Underlying operating profit margin |
5.0% |
7.4% |
|
Adjusted profit before tax 2 |
6.4 |
10.5 |
|
Profit before tax Adjusted EPS 3 Basic EPS |
5.4 3.78p 3.08p |
7.5 6.47p 4.36p |
|
Dividend per share |
1.70p |
2.23p |
|
Net debt |
(28.6) |
(28.2) |
|
Underlying operating cash conversion 4 |
160.6% |
75.7% |
(1) Underlying operating profit and margin is operating profit before amortisation of acquired other intangible assets, share-based payments and other non-underlying items.
(2) Adjusted profit before tax is profit before tax before amortisation of acquired other intangible assets, share-based payments and other non-underlying items.
(3) Adjusted EPS is calculated based on profit after tax adding back amortisation of acquired other intangible assets, share-based payments and other non-underlying items.
(4) Underlying operating cash conversion is pre-tax operating cash flow as a percentage of underlying operating profit.
Financial headlines
· Revenues better than anticipated in the first half year, despite the impact of adverse weather in early 2018 and demonstrating the Group’s resilience after the previously reported loss of its two largest customers in the second half of 2017.
· Materials and labour cost inflation continues to impact the industry. Price increases being implemented across the business to address this, albeit challenging in current market conditions.
· Cash conversion strong at 161%, with net debt of £28.6m, representing less than one times 2017 adjusted EBITDA.
· Modest delays in site consolidation and consequent operational inefficiencies impacting performance.
· Interim dividend of 1.70 pence per share declared, in line with the previously announced dividend policy, to be paid on 19 October 2018 to shareholders on the register on 21 September 2018.
Delivering on our strategy
· Ongoing progress with site consolidation programme designed to adjust cost base and further improve the efficiency of operations through 2019, including:
o Former glass plant site and lease in Newton Abbot have now been successfully exited.
o Closure of the Macclesfield extrusion facility is progressing for this year.
o Plan initiated to exit the Cardiff fabrication plant in this year.
o Significant new facility planned for Telford to consolidate warehousing and finishing activities, reducing operating sites and costs from H2 2019.
o New warehousing facility in Scunthorpe operational, enhancing logistics capabilities and operational footprint now.
· Acquisition of Amicus Building Products completed in March 2018 for £0.5m consideration, adding a further 15 building plastic distribution outlets.
· Continued investment in new and existing products and materials to further develop the Group’s long-term market position:
o Continued strong sales growth from the Profile 22 Optima window system.
o New decking ranges launched in both PVC and Wood-Plastic Composite.
o Progress made towards the launch of additional fenestration products during 2019, further developing the Group’s long-term market position.
Current trading
· Medium-term drivers for the Group’s products remain positive with underinvestment in existing UK housing stock and continuing demand for new homes.
· Short-term market conditions, particularly in the key RMI market, remain lacklustre, with weak consumer confidence impacting demand for big ticket purchases and exacerbated by uncertainty around the UK’s exit from the EU.
· As reported in the AGM statement in May, there is expected to be a return to a more usual pattern of a greater weighting of profit towards the seasonally busier second half of the year than in more recent years.
· The Board anticipates adjusted profit before tax for the full year to be in line with market expectations.
