Final Results

RNS Number : 5180V

Epwin Group PLC

15 April 2021

 

15^th April 2021

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 2020

Well positioned after strong H2 recovery

Epwin Group Plc (AIM: EPWN) ("Epwin" or the "Group"), the leading manufacturer of low maintenance building products, supplying the Repair, Maintenance and Improvement ("RMI"), new build and social housing sectors, announces its full year results for the year ended 31 December 2020.

2020 Financial highlights

£m	2020		2019
Revenue	241.0		282.1
Underlying operating profi t 1	9.4		21.2
Underlying operating margin 1	3.9%		7.5%
Statutory operating profit	6.3		17.2
Adjusted profit before tax 1	5.0		16.4
Profit before tax	1.9		12.4
Adjusted EPS 1	3.99p		10.29p
Basic EPS	1.82p		7.49p
Dividend per share	1.00p		1.75p
Covenant net debt 2	(18.5)		(16.4)
Net debt (including IFRS 16: Leases)	(96.9)		(80.4)
Covenant net debt to adjusted EBITDA 2	1.3x		0.6x
Underlying operating cash conversion 3	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

· Results impacted by COVID-19 closure in H1

· Strong H2 performance, gaining momentum:

o  Revenues up 4% on H2 2019

o  H2 2020 underlying operating profit £11.2 million (H2 2019 £11.8 million)

· RMI demand quicker to return and stronger than newbuild and social housing

· Robust financial position maintained:

o  Net debt 1.3x adjusted EBITDA

o  Strong cash generation

o  Significant headroom in banking facilities of over £50 million at the year end, facilities now extended to June 2024

o  All pre-COVID banking covenants met with no variation or waivers

o  No additional funding has been sought from shareholders or banks

· Recommencement of dividend payments, with proposed final dividend of 1.00 penny per share

Operational and strategic headlines

· Health and safety prioritised in response to the COVID-19 pandemic

· Levels of demand were very high for extruded products in H2, particularly window profile systems, where capacity was exceeded for much of H2

· GRP moulding and other new build activities slower to return and at more modest levels. Now returning to pre-COVID levels

· Positioned to exit 2021 with leaner operations:

o  Ongoing development of operations to improve processes and efficiency

o  Investment in Telford logistics and finishing facility now complete

§ Construction completed on budget with final receipt of £5.2 million received in Q1 2021 and project generating a pre-tax net cash surplus of £10.0 million

§ Five warehousing and finishing facilities consolidating into one

§ Houses new aluminium window system operations

§ Operating savings and aluminium contribution will offset increase in rent, benefits from end of 2021

· Enhanced product portfolio to augment UK market position

o  Aluminium window system, Stellar, launched Q2 2019

o  Aluminium decking product, Adek, launched Q1 2020

o  PVC decking product launched in 2019

· Acquisition of SBS in Q1 2021

o  A leading and well-established regional distributor of plastic building products, increasing access to the Group's product offer

o  8 trade counters in Cumbria, Northumberland and Southern Scotland

o  4x EBITDA multiple, including synergistic benefits

· New ESG framework is being established

Current trading and outlook

· H2 2020 recovery has continued into 2021 with stronger than anticipated demand across most of the business in Q1 2021:

o  Revenues in the first three months of the year ahead of 2020 and 2019

o  Encouraging progress, gaining momentum with anticipated growth from new products, which have been well received. Robust demand from customers serving the RMI market (c.70% of Group revenues)

o  New build market continues to improve following a slower recovery from the initial pandemic lockdown, with some Local Authorities and Housing Associations experiencing delays to contract starts

· Supply chains have been and continue to be under pressure as a result of the pandemic and subsequent acceleration of demand

· PVC raw materials supply remains under pressure with shortages from global events driving up the price of resin significantly to all-time highs.  Steps are being taken to recover these costs in the market in an equitable manner

· COVID-19 period has stimulated demand for home, garden and leisure space spending as it has highlighted the need for improvements, addressing maintenance and more recently for creating workspace.  These trends seem set to continue. Medium and long-term drivers for the RMI market remain positive:

o  An ageing, underinvested and historically poorly maintained housing stock

o  Environmental and safety concerns driving legislation that will require improvements to homes on a larger scale than just basic maintenance

o  New build is anticipated to grow through underlying demand and government incentives

o  Social new build is also likely to see growth

· The Group is reviewing opportunities to accelerate capex following the 'super deduction' announcement in the March 2021 budget

· Potential M&A opportunities emerging

Jon Bednall, CEO of Epwin, commented:

"Our performance this year and the strong underlying demand from our markets have been encouraging against the backdrop of the disruption caused by the pandemic.

The Board is grateful for the hard work and continual effort of all of our people in what has been a very difficult period for everyone to adjust and cope with. Their combined efforts have demonstrated the resilience of our business - from the closure of operations and uncertainties of the second quarter through to the supply chain challenges and unprecedented increases in demand for our extruded products in the second half. Their health and safety, along with that of our customers and suppliers, is and remains our utmost priority.

Despite the continued uncertainties in the wider economy, we look forward to a more positive 2021. With a strong balance sheet, buoyant demand and robust operations supported by the medium and long-term drivers of our markets, we will refocus our efforts on delivering on our strategic priorities for the business and our shareholders."

Contact information

Epwin Group Plc Jon Bednall, Chief Executive Chris Empson, Group Finance Director	0203 128 8168
Shore Capital Limited (Nominated Adviser and Joint Broker) Corporate Advisory Edward Mansfield / Daniel Bush / Hugo Masefield Corporate Broking Fiona Conroy Zeus Capital Limited (Joint Broker) John Goold / Dominic King	0207 408 4090 0203 829 5000
MHP Communications Reg Hoare / Charlie Barker / Florence Mayo / Pandora Yadgaroff	0203 128 8168
	[e-mail]

Forthcoming dates:

Ex-dividend date  13 May 2021

Dividend record date  14 May 2021

Annual General Meeting  25 May 2021 

Dividend payment date                7 June 2021 

About Epwin

Epwin is the leading manufacturer of 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

People

Firstly, I would like to acknowledge and thank all of our dedicated employees during what has been an unprecedented period. Our employees were critical to the resilient performance of the Group over the past year and their expertise and commitment are what makes Epwin a market-leading business and will drive its future success. Our overriding principle during the pandemic has been to keep our employees and their families safe whilst protecting the business and following the Government's guidance.

On behalf of the Board and our shareholders, I would like to thank all of our employees and their families for the commitment and flexibility they have shown during these difficult times.

Impact of COVID-19

Following a strong start to 2020, with trading ahead of the Board's expectations, the pace at which COVID-19 emerged from being an issue on the other side of the world to one that would impact our daily lives took everyone by surprise, including Governments, businesses and wider communities.

In the third week of March, the Group suspended operations following the Government's COVID-19 announcements, which also resulted in a significant reduction in demand from the Group's customers. The majority of operations remained suspended throughout April, only starting to recommence during May.

During this period the Board took swift action to protect the business and its balance sheet, fully drawing down on facilities and engaging with suppliers, landlords and HMRC on a transparent basis.  The cash management measures taken meant that the Group was able to maintain its strong balance sheet and significant headroom on its banking facilities, without raising additional funds from shareholders or other financial institutions. At 31 December 2020, all payment deferrals, with the exception of the 31 March 2020 VAT balance which all businesses have been allowed to defer by HMRC, had been caught up. The VAT balance will be cleared by the end of 2021.

One of the most challenging aspects of the year was judging the timing and phasing of the restart of the Group's operations. As a capital-intensive manufacturing business with a significant overhead base, there was a risk of restarting our operations too early and incurring significant costs; however, restarting too late could have led to an inability to service customers. Again, the divisional management teams judged this well, helping the business control costs whilst also attempting to meet the extraordinary demand levels experienced in the second half of the year.

Resilient performance with strategic progress

As well as adapting to the trading and operational challenges the COVID-19 pandemic posed, the Group has been able to continue to progress its strategy of operational improvement, broadening the product portfolio and capabilities, selective acquisitions, cross-selling and market-share growth.

Operational improvement

The Group completed the construction of its new, purpose-built warehousing and finishing facility in Telford on time and on budget. The transfer and commencement of warehousing operations has been delayed as a result of both the impact of the pandemic and the extremely high levels of demand in our Window Systems business during the second half of the year.

Having consolidated the window profile extrusion operations in 2018, all finishing, warehousing and logistics operations will now also be consolidated on one site, reducing the Window Systems footprint from seven sites to two. This new facility will further enhance Group operations, with the benefits expected to start being delivered from the second half of 2021.

Product development

The Group continues to invest in and broaden its product portfolio with the launch of the Adek aluminium decking product in Q1 2020, supplementing the 2019 launches of the Stellar aluminium window system and the Dekboard PVC decking product.

The full impact of the Stellar aluminium window system was affected by the inability to set up customers' factories to fabricate the product during the pandemic, however this process started to pick up pace in the second half of 2020 and demand grew through Q4.

Dekboard volumes continued to grow year on year, up 22% despite the pandemic, supported through the acquisition of the PVS decking installation business in 2019.

Acquisitions

In line with the Group's strategic objectives, on 5 January 2021 the Group acquired the trade and related assets of SBS (Cumbria) Limited ("SBS"), a leading and well-established distributor of plastic building products operating across eight branches in Cumbria and Southern Scotland.

SBS was acquired for £3.8 million on a cash and debt free basis. In the year to February 2020, SBS revenues were around £6 million.  Including synergistic benefits, we anticipate an EBITDA multiple of four times, with the full benefits of the acquisition being realised from the end of 2021. This acquisition further increases the geographical coverage of the Group's plastic distribution business and offers the opportunity for synergies and wider expansion over time alongside the Group's key partnerships with independent distributors.

Financing

The Group's banking facilities comprise of a revolving credit facility of £65.0 million and an overdraft of £10.0 million, recently extended through to June 2024. The strength of the Group's balance sheet, available facilities and the cash management measures implemented during the course of the pandemic have meant that the Group has been able to manage within its funding headroom and without the need to waive or vary its banking covenants, or require to raise additional funds from debt providers or shareholders. With covenant net debt to adjusted EBITDA of 1.3x at 31 December 2020, 0.7x based on the normalised FY19 audited results, the Group has the facilities and significant flexibility to continue to pursue its strategy during these unprecedented times.

Results

Both revenues and profit were lower than their 2019 comparatives due to the decision to close the business during April 2020 in response to the pandemic. Revenue for the year to 31 December 2020 was £241.0 million (2019: £282.1 million) and underlying operating profit was £9.4 million (2019: £21.2 million). Statutory operating profit was £6.3 million (2019: £17.2 million).

The cash generation of the Group continued to be strong despite the volume and profit impact of the pandemic. Pre-tax operating cash flow was £23.7 million (2019: £34.8 million), demonstrating the continued strong cash generation of the business, with a cash conversion rate of 252% (2019: 164%). The Group finished the year with covenant net debt of £18.5 million (2019: £16.4 million), 1.3x adjusted EBITDA , and well within covenant levels.

Dividends

As previously reported, the Board continues to be mindful of the importance of dividends to shareholders. Based on the performance for the year, cash generation of the business and year end net debt position, as well as recognising that no final dividend was declared in respect of the year ended 31 December 2019, the Board intends to recommend a modest final dividend of 1.00 penny per share in respect of the financial year ending 31 December 2020.

ESG

Launch of ESG framework

As detailed in the Strategic report, this year we have aligned our operations with the United Nations (UN) Sustainable Development Goals ("SDGs"), providing an ESG framework to benchmark our operations against.

Sustainability

Minimising our impact on the environment is a priority for the Group - in terms of compliance with relevant legislation and accreditations, as well as working across our supply chain to maximise production efficiency, recycle where possible and reduce packaging, waste, power and water consumption and emissions.

The Group will continue to use its influence and resources to challenge outdated industry attitudes to drive the move from high maintenance unsustainable products to sustainable long-life alternatives like Epwin's.

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 the Annual Report as well as on the corporate website.

We regret that current COVID-19 restrictions once again mean that shareholders will not be able to attend the Company's AGM. Further details (including in relation to shareholders' questions and proxies) are set out in the Annual Report and Accounts.

Summary and outlook

The Group's trading performance during the second half of 2020 and the strategic progress it has made are extremely encouraging as the business adapted to the unprecedented circumstances and trading environment.

The Group completed a critical step in its site consolidation and rationalisation programme. The completion of construction at the new Telford site will streamline the Window Systems logistics operations and improve customer service, whilst increasing capacity and providing a base for our new aluminium operation. Completing the consolidation and integration of Window Systems logistics operations during 2021 will put the Group in a strong position; allowing it to focus on servicing its customers from well invested core operations where it has market-leading positions and benefits from significant barriers to entry.

Our strategy continues to be based on operational improvement, broadening the product portfolio and capabilities, selective acquisitions, cross-selling and market share growth in key sectors to build a sustainable, resilient business, prepared for growth as market conditions improve and pent-up demand takes effect.

2021 has started well, with trading u p to the middle of March slightly ahead of the Board's expectations despite the poor weather experienced in January and early February. However, we are mindful of uncertainties that remain, particularly the impact COVID-19 will have on the economy and employment.

PVC resin prices will be a headwind, certainly in the short term, following force majeure and planned plant maintenance at two of the largest PVC resin producers with operations in Europe during Q4. This has severely restricted supply in the final quarter of 2020 and continued to put pressure on resin availability and prices during the first quarter of 2021. The Group's strong relationships with PVC resin suppliers, and enhanced contracts, have enabled it to secure material supply, however, the tightened market conditions have driven the price of PVC to its highest ever levels. The Group remains confident of its ability to work with customers to manage cost inflation in an equitable manner.

In the longer term, the outlook remains favourable, driven by an ageing and underinvested housing stock and environmental and safety concerns driving legislation and initiatives that will require improvements to homes on a larger scale than solely essential maintenance.

Andrew Eastgate

Chairman

14 April 2021

Business review

Strategic and operational review

Trading was ahead of the Board's expectations up until the third week of March 2020 when the Group suspended operations following the Government's COVID-19 announcements, which also resulted in a significant reduction in demand from the Group's customers.

Throughout the first lockdown the Group maintained a low level of supply from inventories, where it was safe to do so, for those customers that continued to operate. However, the majority of operations remained suspended throughout April, only recommencing during May; albeit at much reduced levels of activity and after the implementation of enhanced health and safety procedures in line with Government guidance. The Group scaled up operations in line with increased market demand and by the end of June all operations were active to varying degrees.

In order to protect the Group's balance sheet and maintain liquidity, in response to the March 2020 lockdown, the Board immediately drew down on the Group's £75.0 million of banking facilities. The Group also sought to leverage its strong relationship with its suppliers and landlords by engaging in dialogue and agreeing payment deferrals, as opposed to a number of other business and competitors that closed operations and immediately stopped making supplier payments. This ensured that when operations recommenced, the Group was in a strong position to ensure continuity of supply from suppliers whose own supply chain and stock levels would be under pressure. In line with the arrangements made with suppliers, by the end of the year the Group had ensured all accounts had been paid up to date, with the exception of the Q1 2020 VAT balancing payment which HMRC has allowed all taxpayers to defer through 2021.

During this period, with large parts of its operations closed, the Group made use of the Government's Coronavirus Job Retention Scheme ("CJRS") and other reliefs. The CJRS was invaluable as it ensured, as far as possible, that the Group was able to retain its committed and knowledgeable workforce, one of its key, market-leading assets, during this uncertain time. The Group continued to make use of the CJRS throughout the first lockdown and continued to do so through some of H2, albeit at a much reduced level. As of November 2020 the Group was no longer making use of the scheme. Unfortunately, in parts of the business where volumes have not returned to 2019 levels during H2, the business has had to take a view on short to medium-term volumes and the efficiency of operations and as a result some restructuring and redundancies were required, particularly at those businesses servicing new build and social housing markets.

The Group began the cautious restart of its operations in May. Due to uncertainty around the returning level of activity in our markets, the decisions made around the timing, order and scale of the restart of operations was critical to the second half performance and profit. The risk, as a large manufacturing business which is expensive and time consuming to restart, was that underlying demand may have deteriorated following the initial pent-up volumes.

In this regard the Group took a cautious approach, our national network of distribution operations acting as a good barometer of the level of market activity, particularly in RMI and newbuild. Our extrusion operations were able to initially supply from stock before restarting the infrastructure feeding the extrusion lines. The extrusion lines and other operations were then restarted in a phased manner as demand built and was established to be underlying, not just an initial burst of pent-up demand.

By the end of June 2020, all operations were back up and running to varying degrees according to demand levels in the markets they supply.

Demand levels in the RMI market were very high throughout H2, in excess of 2019 levels. It is believed this was due to household savings increasing as a result of being unable to spend on items such as holidays and eating out, whilst at the same time people were at home more and spending on repairs and maintenance, as well as wanting to improve their home environment.

The levels of RMI demand during H2 put significant pressure on our capacity and operations. Our market-leading cellular extrusion operations were able to capitalise on their expertise, good stock levels and strong relationship with suppliers to ensure operations restarted smoothly with minimal disruption. This was particularly an issue for businesses that use PVC due to instances of force majeure and plant outages at a number of the main European PVC suppliers. However, our relationships with these suppliers enabled us to minimise the impact of the market-wide PVC resin shortage, which was not the case for all of our competitors. The ability to have stock on the shelves and our service offering enabled our cellular extrusion businesses to meet these high levels of demand and take market share during H2 as our competitors struggled to restart their operations and then secure PVC resin supply.

Window profile extrusion had a more challenging H2, having not had the seasonal H1 stock build, and off the back of our success in recent years with the Optima window system and new customer wins, demand, particularly from the RMI market, far outstripped capacity and 2019 levels for a number of months following the restart of operations. This was further compounded by the force majeure and planned plant maintenance at the PVC resin suppliers, as well as the continuing movement in market trend towards foiled profile, which adds a further complexity to operations through an additional production stage and the need to hold further stock. As a result, as well as additional COVID-19 safe operating costs and processes, operational inefficiencies crept into the Window Systems operations as the business was challenged to keep up with significant increases in customer demand levels.

Although the Group has been able to secure the material it required during the industry-wide shortage of PVC resin, with the risk around Brexit at the year end, during H2 the Group sought to further enhance the supply arrangements it has in place. This has enabled it to largely overcome the raw materials shortages faced by the industry as market demand spiked in H2 2020, particularly for the supply of PVC resin.

The new build market was slower to return following the first lockdown and the phased restart of our Stormking GRP moulding operation reflected this. Housebuilders looked to maximise liquidity by selling plots nearing completion that required minimal external works/components, as opposed to commencing the development of new plots which utilise our externally fitted building components. However, by Q4 volumes in our newbuild facing businesses had returned to 2019 levels.

The social housing market continued at levels lower than 2019 throughout H2 with Local Authorities and Housing Associations seeking to complete projects. However, new contracts are seeing their commencement delayed.

Strategic progress

Construction of the Group's new logistics and product finishing facility in Telford was completed on time and on budget in 2020, realising a pre-tax net cash surplus of £10.0 million across the development period. The facility commenced operations at the end of the year. Full commissioning of this facility was delayed as a result of the impact of the pandemic and then due to the extremely high levels of demand in our Window Systems business during H2.  Having consolidated the window profile extrusion operations in 2018, all finishing, warehousing and logistics operations will now also be consolidated on one site, reducing the Window Systems footprint from seven sites to two.  This new facility will further enhance Group operations, with the benefits expected to be delivered by the end of 2021.

On 5 January 2021, the Group acquired the trade and related assets of SBS (Cumbria) Limited ("SBS"), a leading and well-established distributor of plastic building products operating across eight branches in Cumbria and Southern Scotland. SBS was acquired for £3.8 million on a cash and debt free basis. In the year to February 2020, SBS revenues were around £6 million.  Including synergistic benefits, we anticipate an EBITDA multiple of four times, with the full benefits of the acquisition being realised from the end of 2021. This acquisition further increases the geographical coverage of the Group's plastic distribution business, offers the opportunity for synergies and wider expansion over time alongside the Group's key partnerships with independent distributors.

Product development activities also continued during the period with the launch of the Adek aluminium decking product in Q1 2020, supplementing the 2019 launches of the Stellar aluminium window system and the Dekboard PVC decking product.

Health and safety

As a manufacturing business the Group is committed to ensuring a safe, clean and healthy working environment for all of its employees. The Group actively promotes health and safety and the continuous improvement in health and safety standards across all operations.

During the COVID-19 pandemic, the health, safety and wellbeing of our employees, as well as their families, has been the primary concern. Our overriding principle has been to follow the Government's guidance whilst ensuring that the Group is protected and can continue trading in order to secure employment for our committed workforce.

As well as COVID-19 safe and compliant working practices and social distancing, work from home measures were utilised where feasible for the employee and business. Frequent communication from the Chief Executive Officer updated all employees on the latest situation, the measures being taken by the business and reconfirmed the current Government guidance. The communications were also an opportunity to provide practical guidance to employees during these uncertain and stressful times, either through directing them to Government and Local Authority guidance or the Group's own health and wellbeing support.

Market overview and outlook

Government measures and the success of the vaccine rollout, as well as the potential for new variants of the virus, may have a significant impact on trading in 2021. Further increases in the infection rate of the virus, or the introduction of new variants to the UK, could require the Government to take stricter measures that would require the closure of part or all of the Group's operations, although this is considered unlikely as closure of construction and manufacturing businesses has not been required under the last two lockdowns. The end of the Government's CJRS grants and the self-employed income support scheme could also result in a sharp increase in unemployment that in turn could decrease consumer confidence and consequently demand.

Having encouraged businesses in the construction and building products sectors to continue trading, the more recent lockdowns of November 2020 and January 2021 have more significantly impacted the services, retail and hospitality sectors of the economy. Workers in these sectors are typically a younger demographic, lower paid and more likely to rent properties rather than own their own home. It is likely that redundancies in this demographic will have less impact on demand for the Group's products.

For homeowners who have retained their jobs, disposable incomes and savings have increased due to decreased commuting and less expenditure on holidays, eating out and leisure activities. In addition, many of these households have had to spend significantly more time in their properties due to working from home and lack of availability of other leisure opportunities, which has meant more of their funds have been redirected to repair and maintenance as well as improving their homes.

It is possible that as the lockdown measures decrease towards the second half of the year then consumers may switch their spending priorities to holidays and leisure activities at the expense of repair and maintenance.

The Construction Products Association winter forecast's main assumption, assuming a V-shaped recovery, anticipates RMI to be up 13% in 2021 against 2020, albeit still being 11% behind 2019. The latest Experian outlook anticipates RMI to be up 10% in 2021 against 2020 and 3% behind 2019.

There is a level of uncertainty that continues to impact consumer confidence; however, current demand is strong, particularly in the Group's core RMI market. Whether this continues in the short term is unknown.

Private housing RMI

The Group experienced very high levels of RMI demand during the second half of 2020 as a result of pent-up demand due to the first national lockdown as well as households reprioritising spend from holidays, eating out and other activities towards the repair, maintenance and improvement of their properties. The Group was well positioned to capitalise on this demand as competitors struggled to restart operations and then suffered from material shortages.

The RMI market is expected to continue to recover during 2021, albeit without the pent-up demand of 2020, and is expected to be slightly below 2019 volume levels.

Social housing RMI

The social housing market continued at a steady, but lower than 2019, level throughout H2 2020 as Local Authorities and Housing Associations sought to complete projects. However, new contracts are seeing their commencement date delayed.

The current focus and prioritisation of public sector funding is towards the replacement of cladding on high-rise buildings, following Grenfell. Given the importance of these works, other maintenance expenditure such as the replacement of windows and doors is being deferred.

Private new build housing

New build was one of the worst-affected sectors during the initial lockdown, and although transactions recovered quickly, the housebuilders focused on plots nearing completion, as opposed to commencing building on new plots that require our external building components. However, after a slower ramp-up of operations following the first lockdown, new build demand for our products had returned to pre-COVID levels by Q4 2020. This level of demand is expected to continue through the early part of 2021, before moderating, as homebuyers and housebuilders take advantage of the Stamp Duty holiday and Help to Buy. In the March 2021 budget, the Stamp Duty holiday was extended to 30 June 2021, with a lower rate announced through to 30 September 2021. The Help to Buy scheme has also been extended until 31 May 2021.

Social Housing New Build  

Spending could increase as the Government responds to pressure and implements measures to increase the supply of affordable rented and shared ownership social housing. Longer-term prospects are more positive following the removal of constraints on local authority borrowing in respect of housing delivery.

Brexit

As seen with previous Brexit deadlines, EU-based customers ensured they stocked up in advance of the end to the transition period on 31 December 2020. As a consequence, trade with our EU-based customers started 2021 more slowly as these stock levels are unwound and a more normal trading pattern resumed.

The agreement reached is tariff and quota free, however, the administration and practical implementation of trading across borders may have a significant impact on the time required and cost to move goods. However, to date we have seen no significant impact from Brexit.

Outlook

Up to the middle of March, trading was ahead of the Board's expectations despite the poor weather experienced in January and early February.

In the near term, there continues to be significant COVID-19 related uncertainty, n onetheless, we are more optimistic for trading prospects and expect to make further gains in market share and continue to make strategic progress, whilst continuing to manage and adapt to the challenges that the pandemic presents.

PVC resin prices will be a headwind, certainly in the short-term, following force majeure and planned plant maintenance at two of the largest PVC resin producers with operations in Europe during Q4. This has severely restricted supply in the final quarter of 2020 and continues to put pressure on resin availability and prices during the first quarter of 2021. The Group's strong relationships with PVC resin suppliers, and enhanced contracts, have enabled it to secure material supply, however, the tightened market conditions have driven the price of PVC to its highest ever levels with a resultant impact on margins. Prices are expected to return to more normal levels once capacity has been restored in the market.

The medium and long-term drivers for the RMI market remain positive and the longer-term outlook remains favourable, driven by the following:

· The UK's existing housing stock is ageing and the underinvestment in recent years is building up an increasing backlog of properties that will require essential repairs and maintenance in the future

· Increasing UK population driving demand for new houses that will require maintaining

· Environmental and safety concerns will continue to drive legislation and initiatives that will require improvements to homes on a larger scale than just essential maintenance. The Committee on Climate Change has stated that it wants the Government to treat renovating the UK's housing stock as a national infrastructure priority. With insulation being key, the installation of new windows with better thermal properties would support this goal

· Changing structural trends with increased time spent at home, including working from home, could lead to increased focus on RMI spending

Jonathan Bednall

Chief Executive Officer

14 April 2021

Financial review

Financial review

Total revenue for the year ended 31 December 2020 was £241.0 million (2019: £282.1 million). The lower revenue was as a result of the COVID-19 related business closure at the end of March 2020. The closure of the business throughout April 2020 and then phased restart and ramp-up of activity during May and June resulted in H1 2020 revenues being £46.7 million lower than the same period in 2021. Revenue in H2 2020 was 4% ahead of prior year driven by strong demand, particularly in RMI.

As a result of the business closure during H1 2020, as well as the increased costs of working in a COVID secure manner, underlying operating profit was £9.4 million. The Group was also impacted by operational inefficiencies during H2, particularly in the Fenestration businesses, as they were unable to complete their seasonal stock build in H1. RMI demand then significantly outstripped plant capacity during H2. 

PVC prices remained relatively benign for most of 2020 until the final quarter when a force majeure and planned plant maintenance at two of the largest PVC resin producers with operations in Europe severely restricted supply. Though the Group's strong relationship with these suppliers has enabled it to secure material supply, the tightened market conditions have driven the price of PVC to its highest ever levels.

Key financials	H1 20 £m	H2 20 £m	FY 20 £m	H1 19 £m	H2 19 £m	FY 19 £m
Revenue	93.3	147.7	241.0	140.0	142.1	282.1
Underlying operating profit	(1.8)	11.2	9.4	9.4	11.8	21.2
Amortisation of acquired intangible assets	(0.2)	(0.1)	(0.3)	(0.1)	(0.2)	(0.3)
Other non-underlying items	(0.5)	(2.3)	(2.8)	(0.1)	(2.2)	(2.3)
Share-based payments expense	-	-	-	(0.4)	(1.0)	(1.4)
Operating profit	(2.5)	8.8	6.3	8.8	8.4	17.2
Underlying operating margin (*)	(1.9)%	7.6%	3.9%	6.7%	8.3%	7.5%
Operating margin	(2.7)%	6.0%	2.6%	6.3%	5.9%	6.1%

 (*) Underlying operating profit and margin are before amortisation of acquired other intangible assets, share-based payments expense and other non-underlying items.

Reportable segments

	H1 20	H2 20
			FY 20	H1 19	H2 19	FY 19
	£m	£m	£m	£m	£m	£m
Revenue
Extrusion and Moulding	60.7	93.6	154.3	87.8	89.8	177.6
Fabrication and Distribution	32.6	54.1	86.7	52.2	52.3	104.5
Total	93.3	147.7	241.0	140.0	142.1	282.1
Underlying segmental operating profit
Extrusion and Moulding	(0.3)	8.6	8.3	8.6	10.1	18.7
Fabrication and Distribution	(0.4)	3.6	3.2	1.8	2.8	4.6
Underlying segmental operating profit before corporate costs	(0.7)	12.2	11.5	10.4	12.9	23.3
Corporate costs	(1.1)	(1.0)	(2.1)	(1.0)	(1.1)	(2.1)
Underlying operating profit	(1.8)	11.2	9.4	9.4	11.8	21.2
Amortisation of acquired other intangible assets	(0.2)	(0.1)	(0.3)	(0.1)	(0.2)	(0.3)
Other non-underlying items	(0.5)	(2.3)	(2.8)	(0.1)	(2.2)	(2.3)
Share-based payments expense	-	-	-	(0.4)	(1.0)	(1.4)
Operating profit	(2.5)	8.8	6.3	8.8	8.4	17.2

Extrusion and Moulding

· Revenue decreased to £154.3 million (2019: £177.6 million) as a consequence of the volumes lost as a result of the COVID-19 enforced closure of the business during H1 2020.

· H2 revenues of £93.6 million, 4.2% higher than the equivalent period in 2019, reflecting the significant spike in demand from the RMI sector following lockdown, offset by a slower return in the new build housing market.

· Underlying segmental operating profit of £8.3 million was mainly impacted by the reduction in volumes as a result of the business closure during H1 2020 as well as increased costs of working and operational inefficiencies meeting extraordinary demand on parts of the business during H2.

Fabrication and Distribution

· Revenues decreased to £86.7 million (2019: £104.5 million) as a consequence of the volumes lost as a result of the COVID-19 enforced closure of the business during H1 2020.

· H2 revenues of £54.1 million, 3.4% higher than the equivalent period in 2019, reflecting the significant demand from the RMI sector following lockdown.

· Underlying segmental operating profit of £3.2 million was mainly impacted by the reduction in volumes as a result of the business closure during H1 2020 as well as increased costs of working during H2, although profit in H2 was higher than the comparative period, mainly due to strong trade demand.

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, and significant one-off incomes or costs that are not part of the underlying trading performance of the business.

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

i.  Amortisation of acquired other intangible assets

Amortisation of £0.3 million was charged during the year (2019: £0.3 million), relating to the brand and customer relationship intangible assets recognised on acquisitions.

ii.  Other non-underlying items

Other non-underlying items in 2020 relate to business reorganisation costs as a result of COVID-19 and the consolidation of Window Systems warehousing and finishing operations into the new Telford development. These costs are partially offset by a further profit on the sale and leaseback transaction undertaken in 2019, which completed in 2020. As a consequence the associated asset under construction was disposed, deferred income released and a right of use asset and lease liability recognised.

The COVID-19 related redundancies were as a consequence of  lower volumes in parts of the business, particularly those supplying new build, where activity was slower to return following the first lockdown.

The business reorganisation costs relating to the new Telford development comprise the write-off of leasehold improvements and fixtures and fittings associated with sites exited as part of the consolidation of operations, as well as provision for ongoing onerous costs associated with these properties.

Other non-underlying items in 2019 included the profit recognised on the sale and leaseback of the new warehousing and finishing facility in Telford. Site consolidation and redundancy costs comprise onerous lease provisions associated with sites exited as operations are consolidated into the new facility.

	Year ended  31 December 2020	Year ended 31 December 2019
	£m	£m
Acquisition costs	-	(0.1)
Profit on sale and leaseback	1.1	0.6
Site consolidation and redundancy	(3.9)	(2.8)
Other non-underlying expense	(2.8)	(2.3)

iii.  Share-based payments expense

Share-based payments include the IFRS 2: Share-based payments charge in respect of the Long-Term Incentive Plan and Save As You Earn ("SAYE") scheme. The charge for the year was £nil as a result of the expiry of the Long-Term Incentive Plan in 2019.

Cash flow

	Year ended  31 December 2020	Year ended 31 December 2019
	£m	£m
Pre-tax operating cash flow	23.7	34.8
Tax paid	(0.8)	(3.3)
Acquisitions	-	(2.2)
Net capital expenditure	(3.2)	(8.6)
Net site development cash flow	(4.8)	10.1
Net interest paid	(1.4)	(1.6)
Borrowings	(15.1)	1.3
Lease payments	(13.4)	(12.3)
Dividends	-	(7.1)
(Decrease)/increase in cash	(15.0)	11.1
Opening cash	17.2	6.1
Closing cash	2.2	17.2
Borrowings	(17.3)	(32.3)
Lease assets	2.4	5.7
Lease liabilities	(84.2)	(71.0)
Closing net debt	(96.9)	(80.4)
Covenant net debt*	(18.5)	(16.4)

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

Pre-tax operating cash flow was impacted by the loss in contribution as a result of the COVID-19 related temporary closure of the business, offset by working capital management measures implemented to maximise facility headroom during this period of uncertainty. The Group also made use of the Government's CJRS until October 2020 as well as deferral of the March 2020 VAT liability to 2021.

In addition, the Board took measures including deferring non-essential capital expenditure and suspending dividend payments (£7.1m in 2019) in order to preserve cash and further increase facility headroom during this period of COVID-19 related uncertainty.

Net capital expenditure

Net capital expenditure of £3.2 million represents ongoing replacement expenditure as well as investment in plant, fixtures and fittings for the new warehousing and logistics facility in Telford.

Site development

The net site development cash outflow of £4.8 million represents costs for the completion of the construction of the new warehousing and logistics facility in Telford.  The final £5.2 million from the sale and leaseback has been received in the first quarter of 2021.

Financing

The Group has banking facilities on a two bank, syndicated basis with Barclays and HSBC which have recently been extended through to June 2024. The facilities comprise a revolving credit facility of £65.0 million and overdraft of £10.0 million. With covenant net debt at 31 December 2020 of £18.5 million and covenant net debt to EBITDA of 1.3x, 0.7x based on the normalised FY19 audited results, these facilities provide the Group with significant headroom to pursue its strategy.

Finance costs for the period comprise £1.5 million interest on borrowings and arrangement fee amortisation as well as £2.9 million of discount unwind associated with IFRS 16 lease liabilities. Interest costs decreased in comparison to the same period in the prior year as, although the Board took the decision to fully draw down its borrowing facilities as a precaution when the impact of COVID-19 became apparent, the cost of borrowing was lower due to the lower prevailing interest rates.

Lease assets and liabilities

Lease assets and liabilities represent IFRS 16: Leases balances in respect of properties leased and properties sublet by the Group. The decrease in lease assets is as a result of a tenant entering administration. The increase in lease liabilities is predominantly due to the completion of the construction of the warehousing and logistics facility in Telford, and the consequent commencement of the lease and recognition of the lease liability.

Christopher Empson

Group Finance Director

14 April 2021

Consolidated Income Statement and Other Comprehensive Income

for the year ended 31 December 2020

		2020	2019
	Note	£m	£m
Revenue	2	241.0	282.1
Cost of sales		(168.8)	(193.3)
Gross profit		72.2	88.8
Distribution expenses		(30.7)	(33.7)
Administrative expenses		(35.2)	(37.9)
Underlying operating profit		9.4	21.2
Amortisation of acquired other intangible assets	3	(0.3)	(0.3)
Other non-underlying items	3	(2.8)	(2.3)
Share-based payments expense	3	-	(1.4)
Operating profit		6.3	17.2
Net finance costs		(1.5)	(2.1)
IFRS 16 discount unwind on lease liabilities		(2.9)	(2.7)
Profit before tax		1.9	12.4
Taxation	4	0.7	(1.7)
Profit for the year and total comprehensive income		2.6	10.7
Earnings per share		pence	pence
Basic	5	1.82	7.49
Diluted	5	1.82	7.47

Consolidated Balance Sheet

as at 31 December 2020

		2020 £m	2019 £m
Assets
Non-current assets
Goodwill		72.2	72.2
Other intangible assets		2.8	3.5
Property, plant and equipment		29.5	46.1
Right of use assets		66.4	51.4
Lease assets		2.2	5.3
Deferred tax		3.8	3.8
		176.9	182.3
Current assets
Inventories		29.6	30.3
Trade and other receivables		44.3	43.6
Lease assets		0.2	0.4
Income tax receivable		0.5	-
Cash and cash equivalents		2.2	17.2
		76.8	91.5
Total assets		253.7	273.8
Liabilities
Current liabilities
Other interest-bearing loans and borrowings		-	-
Lease liabilities		9.3	9.0
Trade and other payables		57.6	75.2
Income tax payable		-	1.0
Provisions		1.2	1.1
		68.1	86.3
Non-current liabilities
Other interest-bearing loans and borrowings		17.3	32.3
Lease liabilities		74.9	62.0
Contingent consideration		1.0	1.0
Provisions		3.1	3.4
		96.3	98.7
Total liabilities		164.4	185.0
Net assets		89.3	88.8
Equity
Ordinary share capital		0.1	0.1
Share premium		12.5	12.5
Merger reserve		25.5	25.5
Retained earnings		51.2	50.7
Total equity		89.3	88.8

The financial statements were approved by the Board of Directors and authorised for issue on 14 April 2021.

They were signed on its behalf by:

 

Jonathan Bednall  Christopher Empson

Chief Executive Officer  Group Finance Director  Company number: 07742256

Consolidated Statement of Changes in Equity

for the year ended 31 December 2020

		Share capital	Share premium	Merger reserve	Retained earnings	Total
		£m	£m	£m	£m	£m
Balance as at 1 January 2019		0.1	12.5	25.5	45.7	83.8
Comprehensive income:
Profit for the year		-	-	-	10.7	10.7
Total comprehensive income:		-	-	-	10.7	10.7
Transactions with owners recorded directly in equity:
Issue of shares		-	-	-	-	-
Share-based payments expense		-	-	-	1.4	1.4
Dividends		-	-	-	(7.1)	(7.1)
Total transactions with owners		-	-	-	(5.7)	(5.7)
Balance as at 31 December 2019 and 1 January 2020		0.1	12.5	25.5	50.7	88.8
Comprehensive income:
Profit for the year		-	-	-	2.6	2.6
Total comprehensive income:		-	-	-	2.6	2.6
Transactions with owners recorded directly in equity:
Settlement of share-based payments		-	-	-	(2.1)	(2.1)
Share-based payments expense		-	-	-	-	-
Dividends		-	-	-	-	-
Total transactions with owners		-	-	-	(2.1)	(2.1)
Balance as at 31 December 2020		0.1	12.5	25.5	51.2	89.3

Consolidated Cash Flow Statement

			2020	2019
			£m	£m
Cash flows from operating activities
Profit for the year			2.6	10.7
Adjustments for:
Depreciation and amortisation			19.2	17.3
Loss on disposal of fixed assets			1.1	1.3
Exceptional gain on sale and leaseback			(1.1)	(0.6)
Net finance costs			4.4	4.8
Taxation			(0.7)	1.7
Share-based payments expense			-	1.4
Operating cash flow before movement in working capital			25.5	36.6
Decrease/(increase) in inventories			0.7	(0.9)
(Increase) in trade and other receivables			(0.7)	(4.8)
(Decrease)/increase in trade and other payables			(1.6)	3.3
(Decrease)/increase in provisions			(0.2)	0.6
Pre-tax operating cash flow			23.7	34.8
Tax paid			(0.8)	(3.3)
Net cash inflow from operating activities			22.9	31.5
Cash flow from investing activities
Acquisition of subsidiary, net of cash acquired			-	(2.3)
Acquisition of property, plant and equipment			(3.0)	(8.2)
Acquisition of other intangible assets			(0.2)	(0.4)
Proceeds on sale and leaseback, net of development costs			(4.8)	10.1
Proceeds on disposal of subsidiary			-	0.1
Net cash outflow from investing activities			(8.0)	(0.7)
Cash flow from financing activities
Interest on borrowings			(1.4)	(1.6)
(Repayment)/drawdown of borrowings			(15.1)	1.3
Interest on lease liabilities			(2.9)	(2.7)
Repayment of lease liabilities			(10.5)	(9.6)
Dividends paid			-	(7.1)
Net cash outflow from financing activities			(29.9)	(19.7)
Net (decrease)/increase in cash and cash equivalents			(15.0)	11.1
Cash and cash equivalents at the beginning of year			17.2	6.1
Cash and cash equivalents at end of year			2.2	17.2
Secured bank loans			(17.3)	(32.3)
Lease assets			2.4	5.7
Lease liabilities			(84.2)	(71.0)
Net debt at end of year			(96.9)	(80.4)

for the year ended 31 December 2020

1.  Basis of preparation

Whilst the financial information included in this Preliminary Announcement has been prepared on the basis of international accounting standards in conformity with the requirements of the Companies Act 2006 ("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 May 2021. The financial information set out in this Preliminary Announcement does not constitute the Group's Consolidated Financial Statements for the years ended 31 December 2020 or 2019, but is derived from those Financial Statements which were approved by the Board of Directors on 14 April 2021. The auditor, KPMG 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 2020 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 have been prepared and approved by the directors in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 ("Adopted IFRSs").

The Group's accounting policies are set out in the 2019 Annual Report and Accounts and have been applied consistently in 2020. The financial statements are prepared on the historical cost basis except where Adopted IFRSs require an alternative treatment.

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 and the anticipated impact of COVID-19 on the operations and its financial resources, the Group and Company will have sufficient funds to meet its liabilities as they fall due for that period.

The Board continues to monitor the evolving status of the COVID-19 pandemic. The Group balance sheet remains robust with significant financial headroom on committed banking facilities which have recently been extended through to June 2024. The banking facilities comprise a £65 million Revolving Credit Facility and £10 million overdraft facility. Notes 21 and 25 to the financial statements set out more detail on the undrawn facility headroom and financial covenants.

During 2020 the Group was able to not only remain within its financial facilities but also maintain significant headroom on its covenants following the first lockdown in March 2020, when all operations were closed for the duration of April, and the further lockdowns in November 2020 and January 2021. As a manufacturer supplying the construction industry the Group's operations were able to successfully continue during the second and third lockdowns under COVID safe working practices.

The Group has made use of the Coronavirus Job Retention Scheme ("CJRS") grants during the period, but is no longer making any claims under this scheme.

The Board prepares detailed budgets which it has confidence in achieving in a normal business environment. The unprecedented events are likely to continue to have an impact on the Group's financial performance in the short to medium term, though are not easily forecasted. With the roll out of a vaccine continuing, the Board's view is that a further full lockdown with closure of operations is highly unlikely, and therefore all scenarios prepared assume the Group will be able to continue to operate through further lockdowns. However, in the short-term there could be a dampening of demand as the impact of the virus and the government's measures on the economy, borrowing and jobs reduces consumer confidence and discretionary spend.

The Group starts 2021 with a similar level of cash and borrowings as 2020. 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 and do not anticipate the disruption and resulting business closure that occurred in 2020. The Directors considered the financial resources of the Group, as well as its forecasts and COVID-19 stress test scenarios. In arriving at their conclusion, the Directors have considered the following in the severe but plausible downside forecasts:

• The Group's revenue and cash flow forecasts for FY21 and FY22 taking into account:

o  The impact of further COVID-19 restrictions, including lockdowns, on the Group's operations, customers and revenues.

o  Significant increases in raw material costs for an extended duration, particularly PVC, combined with a limited ability to pass on the full impact of these costs through selling price increases.

o  The impact of Brexit on the time required and costs of importing supplies from and exporting products to the EU.

The forecasts show that there is sufficient liquidity and sufficient headroom to ensure compliance with all covenants throughout the going concern period.

The Group also considered the following mitigating actions that could be taken, but concluded that none of these actions are required, even in a severe but plausible scenario, in order for the group to operate within its facilities and therefore these are not included in the forecast scenarios:  deferral of capital expenditure, suspension of the dividend, and the impact of recommencing usage of the Government support schemes such as the COVID-19 Job Retention Scheme.

Consequently, the Directors are confident that the Group and Company will have sufficient funds to continue to meet its 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.

Fabrication and Distribution  Fabrication, marketing and distribution of windows and doors, cellular roofline, cladding, rainwater, drainage and decking products.

		2020	2019
		£m	£m
Revenue from external customers
Extrusion and Moulding - total revenue		181.2	211.6
Inter-segment revenue		(26.9)	(34.0)
Extrusion and Moulding - external revenue		154.3	177.6
Fabrication and Distribution - total revenue		86.7	104.5
Inter-segment revenue		-	-
Fabrication and Distribution - external revenue		86.7	104.5
Total revenue from external customers		241.0	282.1
Segmental operating profit
Extrusion and Moulding		8.3	18.7
Fabrication and Distribution		3.2	4.6
Segmental operating profit before corporate costs		11.5	23.3
Corporate costs		(2.1)	(2.1)
Underlying operating profit		9.4	21.2
Amortisation of acquired other intangible assets		(0.3)	(0.3)
Other non-underlying items		(2.8)	(2.3)
Share-based payments expense		-	(1.4)
Operating profit		6.3	17.2

3.  Non-underlying items

Non-underlying items included within operating profit include:

		2020	2019
		£m	£m
Amortisation of acquired other intangible assets		(0.3)	(0.3)
Other non-underlying items		(2.8)	(2.3)
Share-based payments expense		-	(1.4)
Non-underlying expense		(3.1)	(4.0)

Amortisation of acquired other intangible assets

£0.3 million (2019: £0.3 million) amortisation of brand and customer contract intangible assets acquired through business combinations.

Other non-underlying items

Other non-underlying items are significant one-off incomes or costs that are not part of the underlying trading performance of the business.

Other non-underlying items include:

		2020	2019
		£m	£m
Acquisition costs		-	(0.1)
Profit on sale and leaseback transaction		1.1	0.6
Site consolidation and redundancy		(3.9)	(2.8)
Other non-underlying items		(2.8)	(2.3)

Share-based payments expense

The share-based payment expense of £nil million (2019: £1.4 million) comprises IFRS 2: Share-based payment charges in respect of the Long-Term Incentive Plan £nil million (2019: £1.3 million), which matured on 31 December 2019, and SAYE schemes of £nil million (2019: 0.1 million).

4.  Taxation

	2020	2019
	£m	£m
Current tax expense
Current period	-	3.8
Prior period	(0.7)	(0.3)
Total current tax charge	(0.7)	3.5
Deferred tax expense
Current period	(0.5)	(1.2)
Prior period	0.5	(0.6)
Total deferred tax charge	-	(1.8)
Total tax expense	(0.7)	1.7

UK corporation tax is calculated at 19.00% (2019: 19.00%) 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 19.00% (2019: 19.00%) as follows:

	2020	2019
	£m	£m
Profit before tax	1.9	12.4
Tax at standard UK corporation tax rate of 19.00% (2019: 19.00%)	0.4	2.4
Factors affecting the charge for the period:
Expenses not deductible	0.2	0.1
Losses utilised for which no deferred tax previously recognised	(0.5)	(0.1)
Difference in tax rate	(0.6)	0.2
Prior period	(0.2)	(0.9)
	(0.7)	1.7

Factors that may affect future current and total tax charges

In the Budget held on 3 March 2021, the Government announced that the corporation tax rate will increase to 25% from 1 April 2023. However, this change has not yet been substantially enacted.  As at the 31 December 2020 balance sheet date, the corporation tax rate was 19% and so the deferred tax asset/liability  at this date has been calculated using this rate (2019: 17%).

5.  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.

	2020	2019
EPS summary	Pence	Pence
Basic EPS	1.82	7.49
Diluted EPS	1.82	7.47

Number of shares				2020 No.	2019 No.
Weighted average number of ordinary shares (basic)				143,004,710	142,925,173
Effect of share options in issue				139,770	243,590
Weighted average number of ordinary shares (diluted)				143,144,480	143,168,763

6.  Dividends

 

	2020	2020	2019	2019
	£m	Pence per share	£m	Pence per share
Previous year final dividend	-	-	4.6	3.20
Current year interim dividend	-	-	2.5	1.75
	-		7.1

The Board intends to recommend a final dividend of 1.00 penny per share in respect of the financial year ending 31 December 2020.

7.  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.

8.  Annual General Meeting

The Annual General Meeting of the Company will be held on 25 May 2021 at 1B Stratford Court, Cranmore Boulevard, Solihull, B90 4QT.

Under current COVID-19 restrictions, shareholders, proxies and other attendees are not permitted to attend the AGM in person, and will be refused entry. Shareholders are kindly urged to vote by proxy.

To facilitate the answering of any questions that shareholders have, or would normally raise, during the course of the AGM, a designated questions and answers page has been created by the Company, which can be found at investors.epwin.co.uk . Any questions will be addressed in the normal way, pursuant to an explanatory note in the notices. 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.

In the event that the arrangements for the AGM change due to the evolving COVID-19 situation, the Company will issue a further communication via the regulatory news service.

9.  Electronic communications

The full Annual Report and Accounts for the year ended 31 December 2020 are to be published on the Company's website, together with the Notice convening the Company's 2020 Annual General Meeting by 23 April 2021. 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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