COVID-19 update and notice of results

RNS Number : 5581H

Epwin Group PLC

25 March 2020

 

25 March 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

("Epwin" or the "Group")

COVID-19 update and deferral of publication of results

Epwin Group Plc, the low maintenance building products manufacturer, supplying businesses in the Repair, Maintenance and Improvement ("RMI"), new build and social housing sectors, provides the following update on the impact of COVID-19 on the Group, its actions to mitigate it and its results for the year ended 31 December 2019. 

COVID-19 update and response

The health, safety and wellbeing of our employees, their families, our customers and suppliers is our overriding priority. We are doing all we can to support our employees during this unprecedented time and are actively encouraging them to precisely follow the latest Government guidance on COVID-19.

In anticipation of significantly reduced demand levels and in the interest of customer and employee safety, we have taken the decision to implement a controlled shutdown of Epwin's operating sites for a temporary period. We will restart the business as soon as it is safe and socially responsible to do so.

Balance sheet, liquidity and dividend

The Group has a strong balance sheet with significant headroom on its banking facilities which it renewed in June 2019 for an initial period of three years to June 2022, comprising a £65m Revolving Credit Facility and £10m overdraft.  We have now taken the prudent step of drawing down the remainder of our Revolving Credit Facility.   

In addition, we have been actively focussed on cost reduction and cash management measures in recent weeks, including the deferral of capital expenditure and tax payments, with the agreement of HMRC.  The Group also intends to make use of the Coronavirus Job Retention Scheme grants as far as it is able, in order to maximise its liquidity at this time. 

Whilst the Board believes that the Group is well positioned to withstand a period of uncertainty such as is associated with this pandemic, it believes that it would be imprudent to recommend the payment of a final dividend for the year ended 31 December 2019.  The Board believes that it is in the best interests of the Group to conserve cash reserves until there is a greater level of visibility over the full impact of COVID-19 on the business. 

Epwin remains an inherently cash generative business and once the extent and duration of any disruption is better understood, the Board fully intends to recommence dividend payments. 

Delay to results

On 21 March 2020 the Financial Conduct Authority ("FCA") issued guidance requesting a delay, for at least two weeks, to forthcoming announcements of preliminary results due to the disruption caused by COVID-19. On 24 March 2020 the Quoted Companies Alliance ("QCA") expressed their support for the FCA's request for AIM companies. 

As previously announced, Epwin intended to announce its results for the year ended 31 December 2019 on Thursday 2 April 2020.  However, based on the above guidance, the announcement will be postponed.  The Group will await further guidance from the FCA, the QCA and the Financial Reporting Council regarding the timing of the announcement of its 2019 results.

Consistent with the trading update on 23 January 2020, the Group's underlying operating profit for the year ended 31 December 2019 is anticipated to be within the range of market expectations.  Upon completion of audit work, the Group expects to report (on a pre-IFRS16 basis):

· Revenue of £282.1m (2018: £281.1m)

· Underlying operating profit of £19.1m (2018: £18.7m)

· Net debt of £16.4m (2018: £24.8m), representing 0.6x adjusted EBITDA

· Substantial progress with its strategic priorities

Current trading and outlook

Year to date trading is slightly ahead of the Board's expectations.

However, the impact of COVID-19 and our decision to temporarily cease activity will inevitably have a material impact on trading for the year ending 31 December 2020.  We anticipate levels of demand to reduce significantly as customers close their businesses for a period.

As a result of this uncertainty, the Board is not able to provide financial guidance for the current financial year ended 31 December 2020 at this stage. 

Jon Bednall, Chief Executive, commented:

"The Group had a successful year of trading in 2019, once again delivering a strong cashflow whilst investing significantly in our operations for the future.  With our strong balance sheet and the strategic progress the Group has made with site consolidations, broadening our product portfolio, alongside advancing our product offer and routes to market we are well placed to service our customers and markets when the current crisis recedes."

"We think it's the right thing to pause our operations this week in line with many other businesses and we are focussed ontaking actions to protect the business and enhance our liquidity to withstand this period of uncertainty."

Contact information

Epwin Group Plc Jon Bednall, Chief Executive Chris Empson, Group Finance Director	0203 128 8572
Shore Capital (Nominated Adviser and Joint Broker) Advisory Edward Mansfield / Daniel Bush / Hugo Masefield Broking Fiona Conroy Zeus Capital (Joint Broker) John Goold / Dominic King	020 7408 4090 0203 829 5000 0203 829 5000
MHP Communications Reg Hoare / Charlie Barker / Florence Mayo	0203 128 8572

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

 

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