Epwin Group Plc (LON: EPWN), the leading manufacturer of low maintenance building products, supplying the Repair, Maintenance and Improvement (“RMI”), new build and social housing sectors, has announced its audited full year results for the year ended 31 December 2021.
2021 Financial highlights
| £m | 2021 | 2020 | 2019 | |||
| Revenue | 329.6 | 241.0 | 282.1 | |||
| Underlying operating profit 1 | 18.5 | 9.4 | 21.2 | |||
| Underlying operating margin 1 | 5.6% | 3.9% | 7.5% | |||
| Statutory operating profit | 17.7 | 6.3 | 17.2 | |||
| Adjusted profit before tax 1 | 13.7 | 5.0 | 16.4 | |||
| Profit before tax | 12.9 | 1.9 | 12.4 | |||
| Basic EPS | 8.61p | 1.82p | 7.49p | |||
| Dividend per share for the yearPre-tax operating cash flow | 4.10p34.9 | 1.00p23.7 | 1.75p34.8 | |||
| Covenant net debt 2 | 9.4 | 18.5 | 16.4 | |||
| Covenant net debt to adjusted EBITDA 2 | 0.4x | 1.3x | 0.6x | |||
| Underlying operating cash conversion 3 | 189% | 252% | 164% | |||
(1) Adjusted for amortisation of acquired other intangible assets, share-based payments expense 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
· Strong trading performance:
o Record revenues of £329.6 million, 37% ahead of 2020 and 17% ahead of 2019
o Underlying operating profit of £18.5 million (2020: £9.4 million, 2019: £21.2 million)
o Strong cash generation with pre-tax operating cash inflow of £34.9 million (2020: £23.7 million, 2019: £34.8 million) and underlying operating cash conversion of 189%
o Continued resilience of Group’s core markets, with high RMI demand throughout 2021
· Financial position strengthened:
o Covenant net debt significantly reduced to £9.4 million (2020: £18.5 million)
o Covenant net debt 0.4x adjusted EBITDA, after £5.3 million cash cost of acquisitions
o Significant headroom on banking facilities, in excess of £65 million, to support growth strategy
· Proposed final dividend of 2.35 pence per share, resulting in total dividend for 2021 of 4.10 pence per share (2020: 1.00 pence per share)
Operational and strategic headlines
· Active management of pandemic-related operational and inflationary challenges
o Significant inflationary and availability pressure on material and labour costs
o Successful and continued implementation of price increases and surcharges, albeit with a lag to cost inflation
· Good progress delivering on our strategy:
o Operational improvement:
§ Construction completed on new Telford distribution and finishing facility
§ Full relocation of inventories to the new facility to be completed in 2022
o Value enhancing acquisitions:
§ Acquired three well-established regional independent distributors of plastic building products
§ Adds 13 trade counters in Cumbria, Northumberland, Southern Scotland, Lancashire and Norfolk
o New product development:
§ Aluminium window system and PVC decking sales continue to see strong growth, with demand levels for these products well ahead of management’s expectations
o Continued market share gains
o ESG framework and targets, building on inherent environmental and sustainability benefits of the Group’s products
Current trading and outlook
· Strong RMI demand expected to continue in 2022, albeit at slower growth rate than last year
· Continued focus on actively managing ongoing supply chain and inflationary pressures
· Healthy pipeline of further M&A opportunities
· Positive medium and long-term RMI market drivers
· Current trading is in line with the Board’s expectations, with 2022 revenue to date ahead of 2021. The Group is well positioned for the rest of the year
Jon Bednall, CEO of Epwin, commented:
“I am pleased to report that our trading performance for the year as a whole was strong, despite the well-reported supply chain and inflationary pressures that presented a particular challenge to our fenestration businesses. This is testament to the hard work of our people in a year which has seen many challenges for businesses and individuals.
We are optimistic for the Group’s trading prospects in 2022 and expect to make further gains in market share, whilst continuing to manage the challenges that the current environment presents. We remain confident in the strength of the medium and long-term drivers of our markets.”
