Final Results for the Year Ended 31 December 2022

RNS Number : 2302V

Epwin Group PLC

04 April 2023

 

4^th April 2023

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

Final results for the year ended 31 December 2022

Strong performance and strategic delivery

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 full year results for the year ended 31 December 2022.

2022 Financial highlights

£m	2022	2021
Revenue	355.8	329.6
Underlying operating profi t 1	21.5	18.5
Underlying operating margin 1	6.0%	5.6%
Statutory operating profit	16.9	17.7
Adjusted profit before tax 1	16.5	13. 7
Profit before tax	11.9	12. 9
Basic EPS	5.78p	8.61p
Adjusted EPS1	8.95p	9.16p
Dividend per share for the year	4.45p	4.10p
Pre-tax operating cash flow	38.6	34.9
Covenant net debt 2	17.9	9.4
Covenant net debt to adjusted EBITDA 2	0.6x	0.4x
Underlying operating cash conversion 3	180%	189%

(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, demonstrating continued resilience of core products and markets:

o  Record revenues of £355.8 million, growth of 8% on a strong 2021 comparative

o  Underlying operating profit increased by 16% to £21.5 million (2021: £18.5 million), ahead of pre-pandemic levels

o  Strong cash generation with pre-tax operating cash inflow of £38.6 million (2021: £34.9 million)

· Robust financial position:

o  Covenant net debt at year end of £17.9 million (2021: £9.4 million), better than expected, after net acquisition cash consideration of £17.8 million in 2022

o  Covenant net debt 0.6x adjusted EBITDA, well within covenant limits

o  Significant headroom on banking facilities, in excess of £60 million, to support the Group's strategy

· Dividend per share increased by 8.5%:

o  Proposed final dividend of 2.55 pence per share, resulting in a total dividend for 2022 of 4.45 pence per share (2021: 4.10 pence per share)

Operational and strategic headlines

· Strong progress delivering on our strategy:

o  Value-enhancing acquisitions:

§ Acquired Poly-Pure, a UK-based materials recycler and re-processer providing a strong strategic fit whilst enhancing our sustainability credentials

§ Acquired Mayfield, expanding the geographical coverage and product range for our decking operations and outdoor products range

o  New product development:

§ Aluminium window system and PVC decking sales building momentum, with demand levels for these products ahead of management's expectations

§ Further investment in new tooling to increase re-processed material usage and enhance sustainable materials capabilities

o  Operational improvement:

§ Investment to increase aluminium finishing plant capacity completed

§ Relocation of inventories and logistics operations to the new Telford facility progressing

o  Progress continues on ESG framework and targets, building on inherent environmental and sustainability credentials of the Group's energy efficient, low maintenance and recyclable products

· Actively managing operational and inflationary challenges:

o  Continuing to work with customers to pass on input cost inflation sustainably

o  Labour availability and wage inflation being managed through measures to attract and retain the best people

Current trading and outlook

· Current trading is in line with the Board's expectations, with 2023 revenue to date ahead of a strong H1 2022 comparative

· Poly-Pure and Mayfield integration on-track

· Core businesses are operating well, with Window Systems resolving its operational challenges and continuing to address margin pressures

· Positive medium and long-term RMI market drivers

o  Poorly maintained and ageing housing stock, underinvested social housing and a shortage of housing supply

o  Environmental concerns driving government policy focus on decarbonis ing the UK housing stock and improv ing the energy efficiency of homes 

· Healthy pipeline of further M&A opportunities

Jon Bednall, CEO of Epwin, commented:

"I am grateful once again to all of the Group's employees who worked hard together to deal with the challenges of 2022 and deliver a strong overall performance . 

Our trading performance remained robust through 2022, delivering operating profit above pre-pandemic levels. We made good strategic progress, and I am delighted to welcome the Poly-Pure and Mayfield businesses to the Group, both of which continue to broaden the Group's product range, materials capabilities and sustainability credentials. I am equally delighted to welcome an increased number of apprentices to the Group, along with our first graduate programme intake.

We have begun the new financial year well. Whilst cognisant of the macroeconomic and market headwinds, the Group remains confident of delivering a further year of strategic and operational progress in 2023, supported by the strength of the medium and long-term drivers of our markets."

Contact information

Epwin Group Plc Jon Bednall, Chief Executive Chris Empson, Group Finance Director	0203 128 8168
Shore Capital (Nominated Adviser and Joint Broker) Corporate Advisory Daniel Bush / Iain Sexton Corporate Broking Fiona Conroy Zeus Capital Limited (Joint Broker) Dominic King / Nick Searle	0207 408 4090 0203 829 5000
MHP Communications Reg Hoare / Charlie Barker / Pauline Guenot	0203 128 8168 [e-mail]

Forthcoming dates:

Ex-dividend date                             11 May 2023

Dividend record date  12 May 2023

Annual General Meeting              23 May 2023

Dividend payment date                   5 June 2023

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 www.epwin.co.uk/investors/

Chairman's Statement

Robust performance

Trading remained robust through to the end of the year following a strong first half, with revenues increasing by 8% to £355.8 million against a strong comparative (2021: £329.6 million), predominantly driven by pricing actions to recover the significant sector-wide cost inflation as well as acquisitions completed in 2022, which contributed revenues of £3.8 million in the year. After a period of unprecedented demand, following the post-pandemic boom in RMI spending and high levels of activity in the new build market, there were signs of demand softening in the second half of the year. The Group has continued to navigate the well-publicised issues of labour, energy and raw material cost inflation to deliver an underlying operating profit in line with expectations.

On behalf of the Board and our shareholders, I would again like to thank our hard-working employees for their efforts and the commitment they have continued to demonstrate to the Group during the year, whilst welcoming the employees of Poly-Pure and Mayfield to the Epwin Group. In recognition of the impact that the exceptional energy cost inflation has had on household budgets, we were pleased to be able to make a contribution to help through the award of a cost of living support payment to all employees with the exception of senior management.

Macroeconomic environment

Consistent with other industries, inflation and the impact of the rising cost of living have been the dominant factors during 2022. The Group experienced unprecedented raw material cost inflation, in particular in relation to energy, following the invasion of Ukraine, and to PVC resin, which reached an all-time high cost in April. The Group continues to pass on cost increases to its customer base through a mixture of price increases and surcharges where needed, whilst being mindful of the impact on our customers' operations. There are signs that inflation is now starting to ease. As well as raw material cost inflation, further emerging themes during the course of the year have been wage inflation and employee retention, due to high levels of employment in the UK generally and, in particular, in many of our key manufacturing locations, as well as the cost of living and the impact this is having on our employees. Measures continue to be introduced to improve both employee retention and recruitment, to manage the near-term impacts of labour availability and increasing market pay rates.

Strategic progress

The Group's strategy remains focused on extending our product portfolio, technical capability and channels to market, both through investment in new products and acquisitions, operational improvement, cross-selling across our customer base, and leveraging the recognition and channels of our brands for the benefit of the Group.

Value-enhancing acquisitions

T he Group continued to implement its strategy of pursuing selective, value-enhancing acquisitions that help us to achieve our broader objectives, with two further acquisitions undertaken in 2022.

On 9 September 2022, the Group acquired Poly-Pure Limited ("Poly-Pure"), a leading UK materials re-processor, recycling post-consumer and post-industrial PVC building materials, including PVC window frames. The acquisition, for an initial cash consideration, net of cash acquired, of £14.9 million and further earnout of up to £15 million, is a major investment in the Group's recycling capabilities and a strong strategic fit with the Group.

On 1 December 2022, the Group acquired the Mayfield Group of companies ("Mayfield"), for an initial cash consideration, net of cash acquired, of £2.9 million. The main trading entity in the Group is Hampton Decking Limited. Mayfield supplies high-quality decking and related products to the holiday park industry primarily under the Mayfield name. The acquisition further extends the Group's operations in these markets, which have seen good growth over recent years, offering the opportunity for operational synergies and increased cross-selling of the Group's products.

Progress with site consolidation and rationalisation programme

The relocation of inventories and logistics operations to the Group's purpose-built Telford facilities is progressing. The Group continues to explore further opportunities for consolidation and rationalisation of its activities. During the year, the Group commenced projects to consolidate decking production into a single site and to consolidate IT systems across our distribution network.

Product and materials development

Strong demand continues for the Group's newest products, in particular the aluminium window system, Stellar®, and the PVC decking product, Dekboard®, which have seen demand ahead of management's expectations. We continue to upgrade and improve our existing products, selectively and as technology advances, to improve their functionality and relevance. In 2022 we have further increased the capacity of our aluminium finishing plant.

The Group's priority for 2023 is to increase the utilisation of recycled materials across our product range, particularly in our PVC extrusion operations. Capital expenditure projects, commenced in 2021, and the acquisition of Poly-Pure during the year, which extends the Group's in-house recycling capabilities and ability to source recycled material, mean the Group is well placed to deliver on this during 2023.

ESG

The Group continued to make progress on our sustainability agenda during the year to bolster our already strong inherent sustainability credentials. Our ESG reporting has continued to develop, including presenting an integrated Sustainability Report for the second year. We have been working with a third party to establish a carbon footprint for the Group, including Scope 3 emissions, and have begun to take actions based on the initial results.

Capital investment to develop and increase recycling capabilities continued during the year. The acquisition of Poly-Pure during the period also represents a significant investment in our materials re-processing capabilities.

Other notable progress during the period included:

· GHG emissions reduced per £m of gross revenue by 15% from prior year

· 87% of revenue from products that are widely recyclable

· Cost of living support payment to employees, excluding senior management

· Fair Tax Mark retained

· Changes to Board composition during the year, now more Non-Executive Directors than Executive Directors

Board changes

As reported in 2021, we were pleased to welcome Shaun Smith to the board at the beginning of January 2022, establishing a balance between Non-Executive and Executive Directors. Following the retirement of Mike O'Leary in March 2022, we commenced a process to recruit an additional Non-Executive Director, resulting in the appointment of Stephen Harrison to the Board in November 2022. Stephen brings a wealth of industry and commercial experience to the Board. He is currently CEO of Forterra plc, with plans to step down from that role during the first half of 2023. As part of our ongoing review of Board composition and in accordance with his retirement plan, Shaun Hanrahan stepped down as Executive Director in June 2022. As at 31 December 2022, the Board comprised two Executive Directors and three Non-Executive Directors.

Corporate governance and AGM

The Board of Directors, including myself as Chairman, acknowledges the importance of the ten principles set out in the QCA Code and details of our compliance with the Code can be found in the Corporate Governance section of this Annual Report as well as on the corporate website.

The Annual General Meeting ("AGM") will be held at 1b Stratford Court, Cranmore Boulevard, Solihull, B90 4QT on Tuesday 23 May 2023 at 11.00 am.

Results

Revenues increased by 8% to £355.8 million (2021: £329.6 million) driven predominantly by pricing actions to recover the significant cost inflation in the sector, as well as through acquisitions completed in 2022, which contributed revenues of £3.8 million in the year. Underlying operating profit increased to £21.5 million compared to £18.5 million in 2021, ahead of pre-pandemic levels. Statutory operating profit was £16.9 million (2021: £17.7 million) due to the impact of non-underlying acquisition-related costs and a goodwill impairment charge.

Cash generation continued to be strong, with pre-tax operating cash flow of £38.6 million (2021: £34.9 million). The Group finished the year with covenant net debt of £17.9 million (2021: £9.4 million), ahead of expectations given the cash cost of in-year acquisitions, representing 0.6x adjusted EBITDA and well within covenant levels.

Dividends

The Board is recommending a final dividend of 2.55 pence per share (2021: 2.35 pence per share) to be paid on 5 June 2023 to shareholders on the register on 12 May 2023. Along with the interim dividend of 1.9 pence per ordinary share, paid in October 2022, this takes the full year dividend to 4.45 pence per ordinary share (2021: 4.10 pence per share), in line with the Board's policy of a progressive dividend that is approximately twice covered by adjusted profit after tax.

Summary and outlook

The Group's trading performance during 2022 has been robust and it has continued to make good strategic progress, increasing revenue and underlying operating profit in challenging operating conditions and against strong comparatives.

The Board is cognisant of the uncertain macroeconomic environment and its effect on our markets. The impact of the rising cost of living on consumer confidence and spending, together with signs of a slowdown in the housing market, have contributed to the Construction Product Association forecasting declines in the RMI and new build markets for 2023. However, the Group's broad product range, diverse customer base and operations, longstanding supplier relationships and strong balance sheet provide a large measure of resilience against any short-term changes in conditions.

Our strategy continues to be based on operational improvement, broadening the product portfolio and capabilities, value-enhancing acquisitions, cross-selling and market share growth in key sectors to build a sustainable and resilient business.

The medium to long-term drivers of the market remain positive, with the UK still facing a shortage of new and affordable housing, an ageing and underinvested housing stock and increasing concern about the quality of social housing. Environmental concerns are driving legislation and initiatives that will require improvements to homes on a larger scale than simply essential maintenance, with the need to decarbonise the UK housing stock and improve the energy efficiency of homes growing in urgency given the UK's net zero commitments.

We remain confident of executing our strategy, supported by the strength of the medium and long-term drivers of our markets, despite the current macroeconomic outlook.

Andrew Eastgate

Chairman

4 April 2023

Business review

Strategic and operational review

The Group continued to make good progress against our strategic objectives in 2022, while delivering a robust trading performance. The Group's focus continues to be on operational efficiency, product and materials development, identifying and completing value-enhancing acquisitions and building on the Group's inherent ESG credentials. Despite well-documented inflationary challenges and the resulting impact on consumer confidence and real incomes, trading conditions remained robust during 2022.

The Group performed well, with revenues of £355.8 million, 8% ahead of a strong 2021 comparative period that included the post-lockdown rapid recovery of the RMI market, boosted by strong household savings and prioritisation of home improvement expenditure in the absence of other big ticket spending options.

Revenue growth was predominantly driven by selling price increases to recover the continuing impact of inflation. Bolt-on acquisitions completed during 2021 and 2022 also contributed to the higher revenues. This was offset by a slight decline in volumes from the exceptional levels of demand in 2021 as the market showed signs of moderation through the second half of the year, as cost of living challenges began to impact consumer confidence and spending. The Group continued to experience some deferments to social housing contract start dates. Due to the high levels of demand in 2021 and the first half of 2022, combined with tight supply chains, we also exited certain customers and contracts, where margins were below acceptable levels and we had been unable to pass on adequate material price inflation, as we strive to allocate resource effectively and strike the right balance between price and volume.

Raw material costs continued to increase during the first half of the year, with PVC resin hitting an all-time high in April. Although this has since plateaued, PVC prices remain significantly above pre-pandemic levels. Inflation, including wage inflation, continues to put pressure on overheads and the Group has been working with its customers to pass on these heightened costs appropriately through price increases and surcharges. Labour retention and recruitment remain challenges and measures have been put in place to retain and attract the best people. During the year, we welcomed an increased number of apprentices to the Group, along with our first graduate programme cohort .

Underlying operating profit increased by 16% to £21.5 million, as price increases, surcharges and other actions taken to mitigate the impact of input cost inflation as well as efficiency improvements in manufacturing and logistics began to drive a recovery in margin towards pre-pandemic levels.

Our Extrusion and Moulding segment, which has been particularly impacted by raw material cost inflation, has seen improved margins due to pricing actions to recover inflation. Trading conditions continued to be robust, with some indications of softening demand in the second half of the year but also signs that inflation may be easing. The Group continues to carefully manage its cost base in the face of uncertain macroeconomic and market conditions, with investment in strategic priorities protected.

The Fabrication and Distribution segment continued to perform well against strong 2021 comparatives with recent acquisitions, which extended the geographical coverage of the Group's distribution network, contributing in line with expectations. Margins were impacted slightly as the material price increases experienced by Extrusion and Moulding were passed on. The Group has identified further opportunities for margin improvement, product synergies and cross-selling within the segment, with the commencement of a project to consolidate IT systems across the distribution network and a review of any further opportunities for competitor product to be supplanted with the Group's own ranges.

Our new build-facing operations continued to benefit from high levels of activity in the housing market and have had a strong start to 2023, despite housebuilders slowing the build of new homes. These operations have been particularly affected by labour challenges and, as reported elsewhere, the Group is taking action to support employee satisfaction and retention.

Issues around deferment of contract start dates, which we reported in 2021 were impacting our social housing-facing businesses, eased during the year. The condition of social housing is becoming increasingly high profile, as the country struggles to build enough homes and the condition of the existing housing stock deteriorates, which could drive increased repair and maintenance activity, albeit potentially constrained by challenging local authority budgets.

Strategic progress

Value-enhancing acquisitions

The Group continued to prioritise the completion of selective, value-enhancing acquisitions that help us to achieve our strategic objectives, with two further acquisitions undertaken in 2022.

On 9 September 2022, the Group acquired Poly-Pure Limited ("Poly-Pure"), a leading UK materials re-processor, recycling post-consumer and post-industrial PVC building materials, including PVC window frames. The acquisition, for an initial cash consideration, net of cash acquired, of £14.9 million and further earnout capped in aggregate at £15 million, which, if achieved, would equate to a 31 December 2025 adjusted EBITDA multiple after synergies of 3x.

The acquisition represents a major investment in the Group's recycling capabilities and is a strong strategic fit with the Group:

· Growth opportunity - Poly-Pure has generated strong levels of revenue and EBITDA growth since 2018, with a diverse and growing customer base and with a programme to expand its processing capacity. There is increasing industry focus on improving the use of recycled materials in manufacturing and we believe there are a range of opportunities for Poly-Pure to continue to execute its growth plan

· Cost synergies - Poly-Pure has the ability to provide the Group with a further, cost effective, supply of recycled PVC, with the potential for operational efficiencies and cost benefits

· Material sourcing - Poly-Pure has strong links within the industry and a proven ability to source post-industrial and post-consumer recyclable building plastics materials. The greater ability to re-process waste materials provides Epwin with an additional source of raw material

· Value-enhancing acquisition - the acquisition helps the Group to achieve its operational and sustainability objectives and is expected to be margin accretive at the adjusted EBITDA level and immediately earnings enhancing

· Sustainability - the acquisition aligns strongly with our sustainability agenda; enabling us to contribute to a circular economy through the recycling of post-consumer waste and improve the already strong environmental credentials of our products through incorporating a greater proportion of recycled PVC in our manufacturing process over time

The Group's focus for 2023 will be integrating Poly-Pure into the wider Group, in particular ensuring the Group's recyclate requirements are serviced and maximised.

On 1 December 2022, the Group acquired the Mayfield Group of companies ("Mayfield"), for an initial cash consideration, net of cash acquired, of £2.9 million. The main trading entity is Hampton Decking Limited. Mayfield supplies high-quality decking and related products to the holiday park industry primarily under the Mayfield name. The acquisition further extends the Group's operations in these markets, which have seen good growth over recent years, offering the opportunity for synergies and increased cross-selling of the Group's products.

New product development

We experienced strong demand for the Group's newest products, in particular the aluminium window system, Stellar®, and the PVC decking product, Dekboard®, which have continued to see demand ahead of management's expectations.

We continue to upgrade and improve our existing products, where needed, to improve their functionality and to ensure they meet regulatory requirements. During the year, we developed a capped decking product which improves durability and slip resistance and expanded the range of colours available for our PVC window systems . In 2021, we reported that, r eflecting both the need to operate in an ever more environmentally sustainable manner and the current highly inflated cost of raw materials, the Group commenced investment to increase its ability to incorporate recycled materials in its PVC extrusion operations. The Group has started to bring this new machinery on line during the year, with further investment planned for 2023.  

The acquisition of Poly-Pure during the year extends the Group's in-house recycling capabilities and ability to source recycled material, which in addition to our capital expenditure, will enable the Group to steadily increase the proportion of recycled material in its products over the coming years.

Progress with site consolidation and rationalisation programme

In 2021 it was reported that construction work on the purpose-built facilities in Telford, to consolidate Window Systems warehousing and finishing operations, had been successfully completed on time and on budget. The relocation of inventories and logistics operations to the new facility is progressing and, when complete, will allow the Group to start realising the full consolidation and synergistic benefits. In 2022 the Group also commenced a project to consolidate its decking production into a single site, realising both operational and investment synergies, which is expected to complete during the year.

Our Fabrication and Distribution segment has grown significantly through acquisition in recent years and the Group continues to identify opportunities for further synergies, particularly across our distribution network. We have commenced a project to consolidate IT systems across our distribution network, allowing for improved information flow, more streamlined reporting and enabling key performance indicators to be monitored and compared across the distribution businesses more readily. Alongside this we are investing in upgrading and refurbishing our distribution outlets, to ensure they are appealing to customers and to maximise their performance, with 36 branches upgraded during the year and further redevelopments planned for 2023.

Health and safety

As a manufacturing business the Group is committed to ensuring a safe, clean and healthy working environment for all its employees and promotes continuous improvement in health and safety standards across all operations. Our operational KPIs include health and safety metrics. There has been a significant reduction in reportable injuries compared to the prior period, which is a positive development, albeit the occurrence of any injury is always disappointing. There has also been a slight increase in accident frequency during the period. We believe this is driven primarily by increased reporting of minor accidents as employees are encouraged to report all incidents, even when minor, to ensure we have the most accurate picture possible and to promote a culture where health and safety is continually improving. The KPIs continue to be monitored closely by the main and divisional Boards to ensure that appropriate and timely action is taken to maintain a safe operating environment.

ESG

The Group continues to develop its reporting in relation to ESG as a matter of increasing importance to investors and other key stakeholders. For the second year, we have presented an integrated Sustainability Report bringing together all reporting relevant to ESG issues. We continue to identify opportunities to take action on carbon emissions and improve our resource and energy efficiency, support our hard-working employees and ensure we maintain the highest standards of governance.

Market overview and outlook

Trading conditions remained robust in 2022, with some signs of demand moderation seen in the second half of the year, albeit from the historically high levels seen in the second half of 2020 and throughout 2021.

Private housing RMI

Market expectations

· Private housing RMI is now the third largest construction sector having reached historic high levels after the post-pandemic boom in 2021

· The Construction Products Association ("CPA") Industry Forecasts (published January 2023) suggest a fall of 9.0% in 2023 before stabilising in 2024, driven by falling disposable incomes and consumer spending, particularly in the first half, and reduced activity in the housing market

Impact on the Group

· The short-term impact is likely to be detrimental to the Group, with declining consumer confidence leading to reduced demand, however this is already incorporated into our forecasts and plans

· Non-essential, smaller discretionary improvements are likely to be most impacted. A majority of RMI activity relates to essential repairs that cannot be delayed or maintenance work that can be postponed but not indefinitely, providing a level of base activity for the Group

· Uncertainty around the length and depth of any potential economic downturn, with signs consumer confidence may be stabilising and employment levels remaining high

Response and outlook

· Proactive cost control in face of economic headwinds, including careful management of stock levels and working capital to ensure responsiveness

· Strong market position with high-quality, energy efficient products and a national distribution network to service the market

· Continued investment in new product development to ensure our product offer remains attractive to customers

· Cross-selling and business development, to identify further opportunities to supplant competitor product in our distribution network

Private new build housing

Market expectations

· After two very strong years for housebuilders, the CPA expects completions to fall by 11% in 2023 and 2% in 2024, driven by the end of Help to Buy and other government schemes, house price contraction and increased mortgage rates

Impact on the Group

· In the short term there is likely to be a contraction in demand for the Group's new build-facing businesses, with several national housebuilders reporting that, while they are forward sold into Q2 2023, they are now experiencing a slowdown in orders and sales

· Housebuilders are likely to slow their build rate, focusing on completing existing developments and be more selective about land acquisition given the uncertainty

· Several of the indicators of housing market activity, such as property transactions, are lagging indicators as mortgage deals are agreed in advance. Therefore, the impact is not yet fully known and may be less severe than feared

Response and outlook

· Our new build-facing businesses have had a strong start to the year, with healthy order books to the end of H1

· There is more uncertainty around levels of demand during H2, with management closely monitoring and ready to respond through disciplined cost management and operational efficiencies

· Medium and long-term drivers remain strong as the chronic undersupply of housing continues, with shortage of affordable housing and support for first-time buyers remaining high profile politically

· Opportunities for our new build-facing businesses to sell into other markets

Public housing RMI and new build

Market expectations

· Social housing RMI considered a priority, with providers focusing on addressing legacy safety issues, increasingly high-profile quality issues and decarbonisation of existing stock

· Growth limited by cost inflation and financially constrained local authorities, CPA forecasting public housing RMI to remain flat in 2023 before returning to growth in 2024

Impact on the Group

· Indicators remain that local authorities are prioritising cladding remediation activity and other fire safety work at the expense of other non-urgent general works on existing properties that can be delayed. In 2020 and 2021, our social housing-facing window fabricators saw the deferment of some contract start dates, although this has eased during the year

· Issues relating to the quality of housing built and maintained by social landlords, including damp, boiler faults and general disrepair are becoming increasingly high profile. This could result in housing associations and local authorities diverting more spending to basic repairs and maintenance, which would benefit the Group

Response and outlook

· Pricing actions to recover input cost inflation provides tailwind into 2023

· Long-term drivers remain strong, with underinvestment in the social housing stock and concerns about quality of housing becoming higher profile

· ESG matters of particular importance to social housing providers and local authorities, Epwin is well placed with strong sustainability credentials

Summary

The Group is cognisant of the macroeconomic headwinds of inflation, cost of living challenges, house price softening and increased mortgage rates, with the potential impact these have on consumer confidence. These headwinds suggest some short-term uncertainty. However, early indications are that the depth and length of any economic downturn may not be as severe as initially forecast. Indeed, current trading is in line with the Board's expectations with 2023 revenue to date ahead of a strong 2022 comparative. Core businesses are operating well, with Window Systems resolving its operational challenges and continuing to address margin pressures.

The medium to long-term underlying market drivers remain strong:

· The UK's existing housing stock is ageing and underinvested in recent years, resulting in an increasing backlog of properties that will require essential repairs and maintenance

· An increasing UK population and shortage of suitable new housing

· Increased demand for UK-based holidays, expected to drive growth in the holiday park sector

· Environmental concerns that will continue to drive legislation and initiatives requiring improvements, including in respect of energy efficiency, to homes on a larger scale than just essential maintenance

· Changing structural trends with hybrid working increasing time spent at home and supporting spend on home improvement, including on gardens and outdoor spaces

Jonathan Bednall

Chief Executive Officer

4 April 2023

Financial Review

Total revenue for the year ended 31 December 2022 was £355.8 million (2021: £329.6 million), 8% ahead of a strong comparative period that included the rapid recovery of the RMI market following the pandemic and saw record levels of activity across the construction industry. The increase in revenue over 2021 was largely driven by selling price increases to recover further significant cost inflation in the first half of the year. As a result of these significant levels of demand , as well as tight supply chains, during the period we exited certain customers and contracts where the margins were below acceptable levels and we had been unable to pass on adequate material price inflation, as we strive to allocate resource effectively and strike the right balance between price and volume.

The full-year impact of bolt-on acquisitions completed during 2021 also contributed to the higher revenues, as well as the in-year acquisitions of Poly-Pure and Mayfield which contributed £3.8 million of revenue. This was partially offset by a decline in volumes as the market began to moderate towards the middle of the year, with inflation and the rising cost of living starting to impact consumer confidence and spending.

Raw material costs continued to increase during the first half of the year, with PVC resin hitting an all-time high in April, with energy and labour costs also increasing significantly. Although there are signs that inflation is easing, the rate of inflation remains high. The Group continues to work with its customers to pass on these heightened costs appropriately through price increases and surcharges.

Underlying operating profit increased by 16% to £21.5 million in the period (2021: £18.5 million), as we continue to recover our margin towards pre-pandemic levels, offset by inflationary pressures on overheads. Operating profit for the year was £16.9 million (2021: £17.7 million) impacted by increased non-underlying costs primarily related to in-year acquisitions and goodwill impairment.

Key financials	Year ended 31 December 2022 £m	Year ended 31 December 2021 £m
Revenue	355.8	329.6
Underlying operating profit	21.5	18.5
Amortisation of acquired other intangible assets	(0.3)	(0.3)
Share-based payments expense	(0.6)	(0.4)
Acquisition-related costs	(0.7)	(0.1)
Goodwill impairment	(3.0)	-
Operating profit	16.9	17.7
Underlying operating margin	6.0%	5.6%
Operating margin	4.7%	5.4%

	Year ended 31 December 2022	Year ended 31 December 2021
Reportable segments
	£m	£m
Revenue
Extrusion and Moulding	221.1	202.3
Fabrication and Distribution	134.7	127.3
Total	355.8	329.6
Underlying segmental operating profit
Extrusion and Moulding	16.8	12.2
Fabrication and Distribution	7.5	8.4
Underlying segmental operating profit before corporate costs	24.3	20.6
Corporate costs	(2.8)	(2.1)
Underlying operating profit	21.5	18.5
Non-underlying items	(4.6)	(0.8)
Operating profit	16.9	17.7

Extrusion and Moulding

· Revenue increased by 9.3% in comparison to 2021, predominantly due to the continued successful implementation of selling price increases and surcharges to recover material cost inflation, of which 1.7% is due to the contribution of Poly-Pure during the period following the acquisition in September

· Steps taken by the business, during 2021 and continuing in 2022, on pricing and operational efficiency have resulted in an improvement in underlying operating margin to 7.6% (2021: 6.0%); albeit not yet to pre-pandemic levels

Fabrication and Distribution

· Revenue increased by 5.8% in comparison to a strong 2021, predominantly due to selling price increases with a small contribution from Mayfield, which was acquired in December 2022

· Underlying Fabrication and Distribution segmental operating profit was down slightly compared to an exceptionally strong 2021 due to the impact of continued input cost inflation passed on by the Extrusion and Moulding segment, as well as external suppliers, and reflecting the impact of the softening in RMI demand seen towards the end of the year

Corporate costs

· Corporate costs increased in comparison to 2021, primarily due to additional investment in the Group's cybersecurity capabilities and training and measures to support employee recruitment and retention, including a cost of living support payment to Groupwide employees and the implementation of a graduate scheme

Non-underlying items

To assist users of the financial statements, the Group reports certain performance measures as underlying as it believes they provide better information on the ongoing trading performance of the business. Items excluded from operating profit in arriving at underlying operating profit are non-cash items such as amortisation of acquired other intangible assets and share-based payments expense as well as significant one-off incomes or costs that are not part of the underlying trading performance of the business.

Non-underlying items excluded from operating profit in arriving at underlying operating profit include:

	Year ended 31 December 2022	Year ended 31 December 2021
	£m	£m
Amortisation of acquired other intangible assets	(0.3)	(0.3)
Share-based payments expense	(0.6)	(0.4)
Acquisition-related costs	(0.7)	(0.1)
Goodwill impairment	(3.0)	-
Non-underlying items	(4.6)	(0.8)

i.  Amortisation of acquired other intangible assets

  Amortisation of £0.3 million was charged during the year (2021: £0.3 million), relating to the brand and   customer relationship intangible assets recognised on acquisitions.

ii.  Share-based payments expense

  Share-based payments include the IFRS 2: Share-based payments charge in respect of the Long-Term   Incentive Plan ("LTIP") and Save As You Earn ("SAYE") scheme. There were further issues of options   under both schemes during the period.

iii.  Acquisition-related costs

  Acquisition-related costs of £0.7 million (2021: £0.1 million) are the legal and professional fees   associated with the acquisitions of Poly-Pure and Mayfield during the year.

iv.  Goodwill impairment

  The goodwill impairment charge arose in relation to the Ecodek CGU. Changes to regulations relating   to the fire resistance of materials used on the exterior of high-rise buildings, following the Grenfell   Tower fire in 2017, resulted in the business losing a core market for its wood-plastic composite decking.   Since then, increased uncertainty regarding future cash flows has resulted in a reduction in the value   in use of the CGU. This has resulted in a partial impairment charge of £3.0 million in the year to reflect   the fact that the discounted present value of future cash flows did not support the full carrying value   of the asset.

Cash flow	Year ended 31 December 2022	Year ended 31 December 2021
	£m	£m
Pre-tax operating cash flow	38.6	34.9
Tax paid	(2.2)	(0.5)
Acquisitions, net of cash acquired	(17.8)	(5.3)
Payment of deferred consideration	(0.3)	-
Net capital expenditure	(9.1)	(5.4)
Net site development cash flow	-	4.8
Interest on borrowings	(1.6)	(1.5)
Net drawdown/(repayment) of borrowings	14.5	(2.1)
Lease payments	(10.6)	(13.4)
Issue/purchase of shares	-	0.1
Dividends	(6.2)	(4.0)
Increase in cash and cash equivalents	5.3	7.6
Opening cash and cash equivalents	9.8	2.2
Closing cash and cash equivalents	15.1	9.8
Borrowings	(29.8)	(15.1)
Lease assets	5.7	2.2
Lease liabilities	(92.6)	(81.6)
Closing net debt	(101.6)	(84.7)
Covenant net debt*	(17.9)	(9.4)

(*) Covenant net debt represents a pre-IFRS 16 measure

Covenant net debt increased to £17.9 million as at 31 December 2022 (2021: £9.4 million), representing a covenant net debt to adjusted EBITDA ratio of 0.6x, as a result of the use of the Group's existing facilities to fund the initial cash cost of acquisitions of £17.8 million, offset by strong cash generation during the period. The Group comfortably complied with covenants at all times during the year. Pre-tax operating cash flow increased by 11% to £38.6 million through improved profitability and working capital management. The movement in working capital compared to 2021 was driven by strong cash collection resulting in a lower level of trade receivables, partially offset by a decrease in trade payables.

Tax paid

Tax payments during the year of £2.2 million (2021: £0.5 million) increased due to the higher level of profits achieved.

Net capital e xpenditure

Net capital expenditure increased to £9.1 million as the Group continues to invest in line with its strategic objectives of operational improvement, efficiency and sustainability alongside ongoing replacement of plant and machinery as needed. The higher level of investment is as a result of lower levels of capital expenditure in recent years, as well as the long lead times on plant due to the impact of the pandemic on supply chains.

Lease payments

Lease payments of £10.6 million were £2.8 million lower than 2021 (2021: £13.4 million) as a result of a lease incentive received in relation to a lease renewal in the period.

Financing

The Group has banking facilities on a two bank, syndicated basis with Barclays and HSBC through to June 2024. The facilities comprise a revolving credit facility of £65.0 million and an overdraft of £10.0 million. The Group has in excess of £60 million headroom at 31 December 2022 providing the Group with the facilities to pursue its strategy.

Net interest paid for the period comprises £1.6 million interest payments on borrowings (2021: £1.5 million).

Acquisitions

The acquisition of Poly-Pure and Mayfield during the period resulted in the recognition of £20.7 million of goodwill and £8.7 million of deferred and contingent consideration, of which £0.3 million was settled before the year end, see note 3 for further detail.

Christopher Empson

Group Finance Director

4 April 2023

Consolidated Income Statement and Other Comprehensive Income

for the year ended 31 December 2022

			2022	2021
		Note	£m	£m
Revenue		2	355.8	329.6
Cost of sales			(250.5)	(236.9)
Gross profit			105.3	92.7
Distribution expenses			(40.1)	(38.7)
Administrative expenses			(48.3)	(36.3)
Underlying operating profit			21.5	18.5
Amortisation of acquired other intangible assets		4	(0.3)	(0.3)
Share-based payments expense		4	(0.6)	(0.4)
Acquisition-related costs		4	(0.7)	(0.1)
Goodwill impairment		4	(3.0)	-
Operating profit			16.9	17.7
Finance costs		5	(5.0)	(4.8)
Profit before tax			11.9	12.9
Taxation		6	(3.5)	(0.4)
Profit for the year and total comprehensive income			8.4	12.5
Earnings per share			pence	pence
Basic		7	5.78	8. 61
Diluted		7	5.71	8. 52

Consolidated Balance Sheet

as at 31 December 2022

	Note	2022 £m	2021 £m
Assets
Non-current assets
Goodwill	9	93.2	75.5
Other intangible assets		6.3	2.4
Property, plant and equipment		34.3	28.5
Right of use assets		70.0	64.0
Lease assets		5.3	2.0
Deferred tax		0.8	4.6
		209.9	177.0
Current assets
Inventories		41.1	41.0
Trade and other receivables		40.5	43.6
Lease assets		0.4	0.2
Income tax receivable		0.5	-
Cash and cash equivalents		15.1	9.8
		97.6	94.6
Total assets		307.5	271.6
Liabilities
Current liabilities
Other interest-bearing loans and borrowings		-	0.5
Lease liabilities		9.7	9.4
Trade and other payables		70.6	71.5
Deferred and contingent consideration		1.9	-
Income tax payable		-	0.4
Provisions		1.7	1.2
		83.9	83.0
Non-current liabilities
Other interest-bearing loans and borrowings		29.8	14.6
Lease liabilities		82.9	72.2
Deferred and contingent consideration		7.6	1.1
Provisions		2.2	2.4
		122.5	90.3
Total liabilities		206.4	173.3
Net assets		101.1	98.3
Equity
Ordinary share capital		0.1	0.1
Share premium		13.0	13.0
Merger reserve		25.5	25.5
Retained earnings		62.5	59.7
Total equity		101.1	98.3

Consolidated Statement of Changes in Equity

for the year ended 31 December 2022

		Share capital	Share premium	Merger reserve	Retained earnings	Total
		£m	£m	£m	£m	£m
Balance as at 1 January 2021		0.1	12.5	25.5	51.2	89.3
Comprehensive income
Profit for the year		-	-	-	12.5	12.5
Total comprehensive income		-	-	-	12.5	12.5
Transactions with owners recorded directly in equity
Issue of shares		-	0.5	-	-	0.5
Acquisition of treasury shares		-	-	-	(0.4)	(0.4)
Share-based payments expense		-	-	-	0.4	0.4
Dividends		-	-	-	(4.0)	(4.0)
Total transactions with owners		-	0.5	-	(4.0)	(3.5)
Balance as at 31 December 2021 and 1 January 2022		0.1	13.0	25.5	59.7	98.3
Comprehensive income
Profit for the year		-	-	-	8.4	8.4
Total comprehensive income		-	-	-	8.4	8.4
Transactions with owners recorded directly in equity
Share-based payments expense		-	-	-	0.6	0.6
Dividends		-	-	-	(6.2)	(6.2)
Total transactions with owners		-	-	-	(5.6)	(5.6)
Balance as at 31 December 2022		0.1	13.0	25.5	62.5	101.1

Consolidated Cash Flow Statement

for the year ended 31 December 2022

		2022	2021
		£m	£m
Cash flows from operating activities
Profit for the year		8.4	12.5
Adjustments for:
Depreciation, amortisation and impairment		20.1	17.8
(Profit)/loss on disposal of fixed assets		(0.4)	0.4
Net finance costs		5.0	4.8
Taxation		3.5	0.4
Share-based payments expense		0.6	0.4
Operating cash flow before movement in working capital		37.2	36.3
Decrease/(increase) in inventories		0.3	(10.0)
Decrease/(increase) in trade and other receivables		5.4	(2.9)
(Decrease)/increase in trade and other payables		(4.4)	12.4
Increase/(decrease) in provisions		0.1	(0.9)
Pre-tax operating cash flow		38.6	34.9
Tax paid		(2.2)	(0.5)
Net cash inflow from operating activities		36.4	34.4
Cash flow from investing activities
Acquisition of subsidiary, net of cash acquired		(17.8)	(5.3)
Payment of deferred consideration		(0.3)	-
Acquisition of fixed assets		(9.1)	(5.5)
Proceeds on sale and leaseback, net of development costs		-	4.8
Proceeds on disposal of fixed assets		-	0.1
Net cash outflow from investing activities		(27.2)	(5.9)
Cash flow from financing activities
Interest on borrowings		(1.6)	(1.5)
Repayment of borrowings		(10.5)	(15.1)
Drawdown of borrowings		25.0	13.0
Net interest on lease liabilities		(3.2)	(3.5)
Net repayment of lease liabilities		(7.4)	(9.9)
Proceeds of share issue		-	0.5
Acquisition of treasury shares		-	(0.4)
Dividends paid		(6.2)	(4.0)
Net cash outflow from financing activities		(3.9)	(20.9)
Net increase in cash and cash equivalents		5.3	7.6
Cash and cash equivalents at the beginning of year		9.8	2.2
Cash and cash equivalents at end of year		15.1	9.8
Secured bank loans		(29.8)	(15.1)
Lease assets		5.7	2.2
Lease liabilities		(92.6)	(81.6)
Net debt at end of year		(101.6)	(84.7)

1.  Basis of preparation

Whilst the financial information included in this Preliminary Announcement has been prepared on the basis of UK-adopted International Accounting Standards ("Adopted IFRSs"), this announcement does not itself contain sufficient information to comply with Adopted IFRSs.

The Group expects to publish full Consolidated Financial Statements in April 2023. The financial information set out in this Preliminary Announcement does not constitute the Group's Consolidated Financial Statements for the years ended 31 December 2022 or 2021 but is derived from those Financial Statements which were approved by the Board of Directors on 4 April 2023. The auditor, RSM UK Audit LLP, has reported on the Group's Consolidated Financial Statements and the report was unqualified and did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006.

The statutory financial statements for the year ended 31 December 2022 have not yet been delivered to the Registrar of Companies and will be delivered following the Company's Annual General Meeting.

The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the "Group"). The Group financial statements are prepared on the historical cost basis except where UK-adopted International Accounting Standards require an alternative treatment.

The Group financial statements have been prepared and approved by the directors in accordance with UK-adopted International Accounting Standards.

The Group's accounting policies are set out in the 2021 Annual Report and Accounts and have been applied consistently in 2022.

Going concern

The Directors have prepared cash flow forecasts for a period of at least 12 months from the date of approval of these financial statements which indicate that, taking account of reasonably possible downsides including the ongoing anticipated impact of current macroeconomic factors on the operations and its financial resources, the Group and Parent Company will have sufficient funds to meet their liabilities as they fall due for that period.

The Board continues to closely monitor the macroeconomic environment, including wage, energy and raw material price inflation, labour availability and Bank of England interest rate announcements. The Group balance sheet remains robust with significant financial headroom on committed banking facilities through to June 2024. The banking facilities comprise a £65 million Revolving Credit Facility and £10 million overdraft facility. The Group has traded profitably throughout 2022, and to the date of this report, and its financial position remains strong, with net debt better than expectations at the year end and maintaining ongoing significant headroom on its banking facilities and covenants.

The Group prepares, and the Board reviews, detailed budgets and forecasts which it has confidence in achieving in a normal business environment. The Directors have prepared cash flow, facility headroom and financial covenant forecasts for a period of at least 12 months from the date of approval of these financial statements. The Directors considered the financial resources of the Group, as well as its forecasts and severe but plausible stress test scenarios.

The Group starts 2023 with significant headroom on its banking facilities and the forecasts show that there is sufficient liquidity and headroom to ensure compliance with all covenants throughout the going concern period.

Consequently, the Directors are confident that the Group and Parent Company will have sufficient funds to continue to meet their liabilities as they fall due for at least 12 months from the date of approval of the financial statements and therefore have prepared the financial statements on a going concern basis.

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. The Chief Operating Decision Maker is considered to be the Board of Directors.

Operating 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.

	2022		2021
	m		£m
Revenue from external customers
Extrusion and Moulding - total revenue	263.0		240.8
Inter-segment revenue	(41.9)		(38.5)
Extrusion and Moulding - external revenue	221.1		202.3
Fabrication and Distribution - total revenue	134.8		127.3
Inter-segment revenue	(0.1)		-
Fabrication and Distribution - external revenue	134.7		127.3
Total revenue from external customers	355.8		329.6
Segmental operating profit
Extrusion and Moulding	16.8		12.2
Fabrication and Distribution	7.5		8.4
Segmental operating profit before corporate costs	24.3		20.6
Corporate costs	(2.8)		(2.1)
Underlying operating profit	21.5		18.5
Non-underlying items (see note 4)	(4.6)		(0.8)
Operating profit	16.9		17.7

3.  Acquisitions

On 9 September 2022, the Group acquired the entire share capital of Poly-Pure Limited ("Poly-Pure"), a UK-based materials re-processor, recycling post-consumer and post-industrial PVC building materials, for initial consideration of £14.9 million , net of cash acquired. Further contingent consideration may become payable, subject to an annual earnout mechanism, based upon the adjusted EBITDA after tax of Poly-Pure in the three calendar years to 31 December 2023, 31 December 2024 and 31 December 2025 respectively, capped in aggregate at a further £15 million in cash. The fair value of the contingent consideration on acquisition and as at 31 December 2022 was calculated to be £7.6 million. Poly-Pure Limited forms part of the Extrusion and Moulding segment.

On 1 December 2022, the Group acquired the entire share capital of Hampton Decking Holdings Limited, Hampton Decking Limited, Masterjoint Limited and The Mayfield Group Limited (collectively "Mayfield") for initial consideration of £2.9 million, net of cash acquired. Mayfield supplies decking and related products, primarily to the holiday park and park home markets and forms part of the Fabrication and Distribution segment.

The following table summarises the consideration paid for Poly-Pure and Mayfield and the provisional fair values of the assets and liabilities acquired at the acquisition date.

	Fair values on acquisition
	Poly-Pure	Mayfield	Total
	£m	£m	£m
Recognised amounts of identifiable assets and liabilities acquired:
Acquired intangibles - brand	3.0	0.6	3.6
Acquired intangibles - customer relationships	-	1.0	1.0
Property, plant and equipment	3.2	0.1	3.3
Right of use assets	3.6	0.9	4.5
Inventories	0.1	0.3	0.4
Trade and other receivables	1.6	0.7	2. 3
Cash and cash equivalents	0.1	1.9	2.0
Lease liabilities	(3.4)	(0.9)	(4.3)
Trade and other payables	(2.3)	(0.9)	(3. 2 )
Corporation tax liability	(0.1)	(0.1)	(0.2)
Deferred tax liability	(1.0)	(0.4)	(1.4)
Dilapidations provisions	(0.2)	-	(0.2)
Fair value of assets acquired	4.6	3.2	7. 8
Goodwill	18.3	2.4	20.7
Total consideration	22.9	5.6	28. 5
Consideration
Cash consideration	15.0	4.8	19.8
Deferred consideration	0.3	0.8	1.1
Contingent consideration	7.6	-	7.6
Total consideration	22.9	5.6	28. 5

The deferred consideration of £0.3 million in respect of Poly-Pure was settled during the year. The goodwill recognised of £20.7 million represents the know-how of the workforce, plus the potential for cross-selling and synergies that exist as a result of the vertical integration with, and the larger scale of, the Epwin Group.

4.  Non-underlying items

Non-underlying items included within operating profit include:

	2022	2021
	£m	£m
Amortisation of acquired other intangible assets	(0.3)	(0.3)
Share-based payments expense	(0.6)	(0.4)
Acquisition-related costs	(0.7)	(0.1)
Goodwill impairment (see note 9)	(3.0)	-
Non-underlying items	(4.6)	(0.8)

Amortisation of acquired other intangible assets

Amortisation of £0.3 million was charged during the year (2021: £0.3 million), relating to the brand and customer relationship intangible assets recognised on acquisitions.

Share-based payments expense

The share-based payment expense of £0.6 million (2021: £0.4 million) comprises IFRS 2: Share-based payment charges of £0.3 million (2021: £0.1 million) in respect of the Long-Term Incentive Plan and SAYE schemes of £0.3 million (2021: £0.3 million).

Acquisition-related costs

Other non-underlying items of £0.7 million (2021: £0.1 million) relate to legal and professional fees associated with the acquisitions of Poly-Pure and Mayfield during the year.

5.  Finance costs

		2022	2021
		£m	£m
Interest expense on borrowings		1.6	1.1
Amortisation of loan fees		0.2	0.2
Net interest on lease liabilities		3.2	3.5
Total finance costs		5.0	4.8

6.  Taxation

	2022	2021
	£m	£m
Current tax expense
Current period	1.6	1.4
Prior period	(0.5)	(0.1)
Total current tax charge	1.1	1.3
Deferred tax expense
Current period	1.4	(0.5)
Prior period	1.0	(0.4)
Total deferred tax charge	2.4	(0.9)
Total tax expense	3.5	0.4

UK corporation tax is calculated at 19% (2021: 19%) of the estimated assessable profit for the year.

The Group's total income tax charge is reconciled with the standard rates of UK corporation tax for the year of 19% (2021: 19%) as follows:

	2022	2021
	£m	£m
Profit before tax	11.9	12.9
Tax at standard UK corporation tax rate of 19% (2020: 19%)	2.3	2.4
Factors affecting the charge for the period:
Expenses not deductible	1.0	0.3
Losses utilised for which no deferred tax previously recognised	-	(0.5)
Difference in tax rate	-	(1.2)
Super deduction benefit	(0.3)	(0.2)
Prior period	0.5	(0.4)
Total tax expense	3.5	0.4

Factors that may affect future current and total tax charges

In the Spring Budget 2021, the UK Government announced that from 1 April 2023 the corporation tax rate would increase to 25% (rather than remaining at 19%, as previously enacted). This new law was substantively enacted on 24 May 2021. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in the financial statements.

7.  Earnings per share ("EPS")

Basic earnings per share are calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period. The weighted average number of shares has been adjusted for the issue and cancellation of shares during the period.

Diluted earnings per share are calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the period, plus the dilutive potential ordinary shares arising from share options in issue at the end of the period.

	2022	2021
EPS summary	pence	pence
Basic EPS	5.78	8.61
Diluted EPS	5.71	8.52

Number of shares			2022 No.	2021 No.
Weighted average number of ordinary shares (basic)			145,305,993	145,237,438
Effect of share options in issue			1,832,645	1,550,649
Weighted average number of ordinary shares (diluted)			147,138,638	146,788,087

8.  Dividends

 

	2022	2022	2021	2021
	£m	pence per share	£m	pence per share
Previous year final dividend	3.4	2.35	1.5	1.00
Current year interim dividend	2.8	1.90	2.5	1.75
	6.2		4.0

The Board is recommending a final dividend of 2.55 pence per share in respect of the financial year ended 31 December 2022.

9.  Goodwill

	Goodwill
	£m
Cost
At 1 January 2021	72.2
Acquisitions through business combinations in 2021	3.3
At 31 December 2021	75.5
Acquisitions through business combinations in 2022	20.7
At 31 December 2022	96.2
Accumulated impairment losses
At 1 January 2021 and 31 December 2021	-
Impairment	3.0
At 31 December 2022	3.0
Net book value
At 31 December 2022	93.2
At 31 December 2021	75.5

Impairment

Changes to regulations relating to the fire resistance of materials used on the exterior of high-rise buildings, following the Grenfell Tower fire in 2017, resulted in Ecodek losing a core market for its wood-plastic composite decking. Since then, increased uncertainty regarding future cash flows has resulted in a reduction in the value in use of the CGU. This has resulted in a partial impairment charge of £3.0 million in the year to reflect the fact that the discounted present value of future cash flows did not support the full carrying value of the goodwill.

10.  Cautionary statement

This Report contains certain forward-looking statements with respect of the financial condition, results, operations and business 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 Report should be construed as a profit forecast.

11.  Annual General Meeting

The Annual General Meeting of the Company will be held on 23 May 2023 at 1b Stratford Court, Cranmore Boulevard, Solihull, B90 4QT.

If you wish to attend the AGM in person, please pre-register your intention to do so by emailing [e-mail] . Please state 'Epwin Group Plc: AGM' in the subject line of the email and include your full name and investor code (if available), by no later than 10.30am on 19 May 2023.

To facilitate the answering of any questions that shareholders have, or would normally raise, during the course of the AGM, shareholders are requested to submit any questions that they may have via email, in good time, ahead of the meeting to [e-mail] . Please include a Shareholder Reference Number in any correspondence.

12.  Electronic communications

The full Annual Report and Accounts for the year ended 31 December 2022 are to be published on the Company's website , together with the Notice convening the Company's 2022 Annual General Meeting by 28 April 2023. Copies will also be sent out to those shareholders who have elected to receive paper communications. Copies can be requested by writing to the Company Secretary, Epwin Group Plc, 1b Stratford Court, Cranmore Boulevard, Solihull, B90 4QT or email to [e-mail] . 

 

END

 

 

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