Epwin_Group (EPWN)

On course to hit full-year expectations

Epwin Group 22 November 2022 Update
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Epwin Group

On course to hit full-year expectations

Interims and M&A

Construction and materials

22 November 2022

Price

73p

Market cap

£106m

Covenant net debt (£m) at 31 December 2022 (estimated)

22.4

Shares in issue

144.9m

Free float

67%

Code

EPWN

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(4.7)

(8.4)

(37.2)

Rel (local)

(10.8)

(6.1)

(36.0)

52-week high/low

113.0p

68.0p

Business description

Epwin Group supplies functional low-maintenance exterior building products (including windows, doors, roofline and rainwater goods) into a number of UK market segments and is a modest exporter. It has a vertically integrated model in windows and doors and a leading market position in roofline products.

Next events

H2 update

December 2022

2022 preliminary results

March 2023

Analyst

Andy Murphy

+44 (0)20 3077 5700

Epwin Group is a research client of Edison Investment Research Limited

Epwin is well placed to leverage off a number of well-established growth trends that are set to continue to drive long-term demand for its energy efficient and low-maintenance building products. The recent interims highlighted how well management is coping with cost inflation, while the acquisition of Poly-Pure underscores the company’s ambition and ability to self-finance accretive expansion. Epwin trades on a P/E of 8.2x for FY23e versus a long-term average of 10.2x with clear potential to be valued at a higher level if margins can be raised, and/or further M&A is evident.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/20

241.0

5.0

4.0

1.0

18.3

1.4

12/21

329.6

13.7

9.2

4.1

8.0

5.6

12/22e

349.5

14.6

8.2

4.2

8.9

5.8

12/23e

356.0

16.3

8.9

4.5

8.2

6.2

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Solid trading points to a robust full-year outcome

The interim results highlighted well-known underlying market trends as well as the success of management action in difficult markets. Revenue increased largely due to raw material led price rises and M&A, and profits rose by a slightly greater proportion despite the sharp increase in input and labour costs, which led to the maintenance of the underlying operating margin. Furthermore, the balance sheet at the end of the period was in good shape, which gave Epwin the capacity to purchase PVC reprocessor Poly-Pure in September while still retaining substantial balance sheet headroom. Along with the results, management confirmed that it expected to achieve FY22 market expectations and we have revised our estimates accordingly.

Key drivers intact despite near-term uncertainty

Despite the short-term market uncertainty, Epwin is well placed to benefit from numerous medium- and long-term growth drivers. These include a growing population and a declining residential occupancy rate that is driving an increase in the housing stock, underinvestment in the existing and ageing housing stock as well as an increasing demand for thermally efficient products that are capable of reducing carbon emissions. In addition to these drivers, Epwin has consistently made steady progress on strategic initiatives that contribute to additional growth.

Valuation: FY23e P/E of 8.2x highlighting value

Epwin currently trades on FY23e P/E of just 8.2x, which is materially below its long-term average P/E of 10.2x. The company is acquisitive and has more than £50m of investment headroom on its balance sheet, which offers considerable potential for value enhancing M&A activity. Furthermore, even without M&A, Epwin is a cash generative company; we expect debt to fall rapidly over FY23–24e and note that the shares offer an attractive 6.2% yield from a dividend that is twice covered.

Epwin’s investment case

Epwin has a near 50-year history since it began as the first PVC-U window fabrication business in 1976. It now sells a wide range of additional products, including doors and door frames, conservatories, cladding and rainwater systems, to name a few. It has developed a number of well-known brands in numerous product segments and fostered numerous routes to market that include selling direct to business customers such as the national housebuilders, social housing providers, builders merchants and general builders as well as specialist stockists, wholesalers and installers.

In support of Epwin’s robust market position, it continues to invest in innovation and new products and systems. Its Stellar window range and Dekboard are two examples of this. It also continues to focus on operational efficiencies that will drive medium-term margin improvements, potentially to levels in excess of the long-term average. Finally, its cash-generative characteristics and low levels of gearing allow it to participate in M&A when the right opportunities arise. Poly-Pure, the PVC reprocessor recently acquired, is an example of this.

Exhibit 1: Epwin’s product range

Source: Epwin Group

Over the last 10 years, Epwin has maintained a steady revenue stream despite the multiple headwinds that have been thrown at the sector including Brexit, COVID-19 and now the implications of a highly inflationary environment. During most of this extended period, both profits and margins were on an upward trend until 2020. Recovery was seen in 2021 and is expected again in 2022. Thereafter, short-term trends are less clear, but longer-term trends are arguably more encouraging when one considers Epwin’s position in the market and other long-term drivers.

Firstly, Epwin is the largest UK manufacturer of PVC window profile systems, roofline and cladding products and glass reinforced plastic (GRP) mouldings used in housebuilding. It has around a 20% market share in the former, a c 40% share of the cellular roofline market and around a 50% share of the GRP market.

Secondly, the construction and repair, maintenance and improve (RMI) markets have positive long-term trends. For example, the UK has a growing population and an increasing tendency for people to live alone, so there is likely to be underlying demand for new homes to be built. An increasing and ageing stock of housing also points towards increased requirements for building materials to address RMI demand.

Exhibit 2: Epwin revenue 2012–22e

Exhibit 3: Epwin operating profit and margins

Source: Epwin, Edison Investment Research. Note: R = restated.

Source: Epwin, Edison Investment Research. Note: R = restated.

Exhibit 2: Epwin revenue 2012–22e

Source: Epwin, Edison Investment Research. Note: R = restated.

Exhibit 3: Epwin operating profit and margins

Source: Epwin, Edison Investment Research. Note: R = restated.

Furthermore, political impetus to improve the thermal efficiency of both new and existing housing, driven by newer thermally efficient products and carbon reduction targets, suggests that those companies like Epwin that have value adding products should be able to take market share from others.

Strategic initiatives progress steadily

Epwin has consistently made steady progress on its five strategic initiatives over the last few years. These include the introduction of new products and materials, a drive for greater operational efficiency and a drive to cross-sell products via a range of subsidiaries and channels. Furthermore, its active M&A pipeline has delivered success over the years since the flotation in 2014 and it has significantly contributed to the company’s drive to reduce emissions and address other ESG targets. The initiatives are discussed in more detail below.

Product and materials development continues

Epwin has a strategic aim to broaden its product portfolio, to widen its material and technical capabilities as well as to continuously improve its products and offerings. In 2019 and 2020 it launched new aluminium window and decking systems, and also launched a new PVC decking system that satisfied its strategic aim.

In 2021 and 2022, Epwin has continued to develop and grow these new systems and enhance the product offer. Stellar, its new aluminium window system, and Dekboard, its PVC decking system, accounted for c 1.5% of group revenue in H1 from a standing start three years ago.

The key selling points of the Stellar aluminium system are that it is the slimmest system on the market, has ‘true’ flush lines both inside and out (see Exhibit 4), is quicker to manufacture and is simpler to install. The advantages of Dekboard are that it is easier to clean than timber and does not promote the growth of mould compared to timber, it does not warp, has no sharp edges or splinters and is wear and impact resistant.

Exhibit 4: Cross-section of Stellar window

Exhibit 5: Installed Dekboard

Source: Epwin Group

Source: Epwin Group

Exhibit 4: Cross-section of Stellar window

Source: Epwin Group

Exhibit 5: Installed Dekboard

Source: Epwin Group

Drive for operational leverage and efficiency making progress

Epwin has been working on a major project to consolidate its Epwin Window Systems warehousing and finishing operations at its purpose-built facilities in Telford. Construction of the site was completed on time and on budget, with the final relocation of the inventories and logistics operations to be completed by the end of 2022. This would allow Epwin to extract the expected synergies as a far more streamlined operation; it was previously spread across seven sites in the UK, and will be down to just two. We estimate that there is around £0.5m of synergies to be realised from the final move. Following the consolidation, Epwin will enjoy around 20% spare capacity.

Furthermore, it also took the decision to phase out the production of a window system that had become uneconomic as input costs rose.

Epwin generates c 94% of its revenue in the UK and most of its cost base is accounted for in sterling, so the recent weakness of the currency versus the euro and the US dollar are of little direct concern. However, the rising cost of raw materials, which accounts for c 70% of the cost of goods sold, has been a far greater issue. The primary raw material is polyvinyl chloride (PVC). Its price rose from c £1,300/tonne at the start of 2021 to a peak (all-time high) of c £1,750/tonne in July 2022. The price of PVC has abated since but remains elevated.

Epwin is usually able to pass on price increases to customers, but there is usually a lag of about two to three months, so as costs rise, margins tend to be squeezed. Labour and energy costs account for a further combined 20% of the cost base and these have both been under pressure, especially the latter in the absence of a price cap.

Exhibit 6: Revenue destination FY21

Exhibit 7: Breakdown of cost of goods sold; H122

Source: Epwin Group, Edison Investment Research

Source: Epwin Group, Edison Investment Research

Exhibit 6: Revenue destination FY21

Source: Epwin Group, Edison Investment Research

Exhibit 7: Breakdown of cost of goods sold; H122

Source: Epwin Group, Edison Investment Research

Cross-selling and business development drive

One of Epwin’s key strategic drives is a push to sell more existing and new products to its current customers via differing channels and markets. It also wants to develop the use of existing brands to increase market coverage and penetration. In the last few years this has been achieved by supplying group decking products into PVS, which previously had a third-party supplier, by selling Stellar aluminium windows systems into existing and new fabricators and in 2021 by substituting Epwin products into the acquired SBS business. In 2022, Epwin plans to bring more supply in house.

M&A set to remain a feature of growth

Just ahead of the interim results release, Epwin announced the acquisition of Poly-Pure for £15m. Poly-Pure is a leading materials reprocessor and recycler of used PVC building materials, notably UPVC window frames. It was established in 2018 in Norwich and has 25 employees. For the year to July 2022, Poly-Pure is expected to report revenue of £10m (2021: £4.7m) and an adjusted EBITDA of £2.5m (2021: £0.4m) implying a purchase multiple of 6x. There is an earn-out in place that could see the purchase price double to £30m, but, after synergies, Epwin believes that the implied purchase multiple in 2025 would fall to just 3x. The initial £15m of cash consideration will be funded from existing group facilities, where the company enjoyed headroom of c £65m as at 30 June.

The acquisition of Poly-Pure is immediately earnings enhancing and has a strong strategic fit with the existing business. The deal offers a good growth opportunity for Epwin, bringing a diverse range of customers and an expanding processing capacity. It brings cost synergy opportunities due to the supply of recycled PVC into the group, which also enhances the sustainability credentials of Epwin’s products and aligns well with Epwin’s ESG strategy. Finally, the supply of post-industrial and post-consumer materials enhances the robustness of the material supply chain, reducing risk.

Poly-Pure is the latest and second largest in a line of deals that have contributed to volume and revenue growth stretching back to 2015. We believe it will not be the last and that Epwin will continue to develop relationships with potential targets. Very often, opportunities arise due to succession issues and Epwin maintains a robust balance sheet, which enables it to take advantage when an opportunity arises.

Exhibit 8: M&A since 2014

Date

Company

Country

Activity

November 2015

Vannplastic, T/A Ecodek

UK

Manufacturer of building products

January 2016

Stormking Plastics

UK

Supplier of building components

June 2016

Specialist Plastics Distribution, T/A National Plastics

UK

Distributor

March 2016

Amicus Building Products

UK

Distribution

April 2019

Premier Distribution T/A PVS

UK

Decking installation

January 2021

SBS (Cumbria) Limited

UK

Distributor

June 2021

Plastic Building Supplies

UK

Distributor

November 2021

Accrington Plastics Limited

UK

Distributor

September 2022

Poly-Pure

UK

Reprocessor of PVC

Source: Epwin Group data, Edison Investment Research

Epwin typically pays 3–6x EBITDA depending on the business and synergies. Often there is an earnout in the arrangements that is payable if profits hit or exceed targets, but again the resulting post-earnout multiple will fall between 3x and 6x EBITDA post synergies. Most senior managers will be retained in the business to maintain the status quo. Currently Epwin is trading on an EV/EBITDA of c 5x, versus a five-year average of c 6.5x.

We understand that Epwin maintains a good pipeline of potential M&A targets and that further deals are likely, although of course the timing and size of any deal is very unpredictable. Epwin currently has banking facilities totalling £75m and we estimate that it will end FY22 with net debt of c £22m, implying a net bank debt to EBITDA ratio of 0.8x. It also implies over £50m of potential M&A headroom.

Environmental, social and governance progress achieved

Epwin is making good progress on its ESG targets, which include promotion of the sustainability credentials of its products to customers, the creation of sustainable value and minimising its environmental impact. Furthermore, it prioritises the wellbeing of staff while maintaining high standards of governance and transparency for investors.

In 2021, Epwin was accredited the Fair Tax Mark, which is an award for companies that enter into the spirit of fair taxation, rather than adopting ‘sharp’ practices that may lead to lower taxation costs. It also commissioned a ‘carbon balance sheet’ to establish a baseline for its carbon footprint and reduced its greenhouse gas (GHG) emissions by 20% y-o-y as measured by GHG emissions per pound of revenue.

In September, Epwin bought Poly-Pure, a recycler and reprocessor of PVC. This means the company will be able to use more recycled product, which can be substituted for virgin material, thus reducing the group’s GHG emissions.

Tangible initiatives to reduce emissions have been taken and include the introduction of a wider range of hybrid and electric vehicles to the employee vehicle offering and the installation of charging points at Epwin’s main offices. It has also taken steps to increase energy efficiency via LED lighting and reducing maximum vehicle speeds, as well as reducing water usage.

Reassuring interims point to unchanged FY22 outcome

The interim results highlighted well-known underlying market trends as well as the success of management action in difficult markets. Revenue increased largely due to raw material led price rises and M&A, and profits rose by a slightly greater proportion despite the sharp increase in input, energy and labour costs, which led to the maintenance of the underlying operating margin. Furthermore, the balance sheet at the end of the period was in good shape, which gave Epwin the capacity to purchase PVC reprocessor Poly-Pure in September while still retaining substantial balance sheet headroom. Along with the results, management confirmed that it expected to achieve FY22 market expectations.

Robust interim results

Epwin recorded a good half year with revenue up 12.8% to £178m largely driven by M&A and input cost related price increases. Underlying operating profit increased 13.8% to £10.7m, implying a flat margin at 6.0%. Diluted adjusted EPS rose from 4.0p to 4.6p and the company declared a dividend of 1.90p (2021: 1.75p), which was more than 2x covered. It ended the period with ‘covenant’ net debt of £7.3m, implying a net debt to EBITDA ratio of 0.3x, down from 0.6x at the same point last year.

Exhibit 9: Interim results summary

£m

H119

H120

H121

H122

Y-o-y % chg

Total revenues from external customers

140.0

93.3

157.8

178.0

12.8%

Underlying operating profit

9.4

(1.8)

9.4

10.7

13.8%

Underlying operating margin

6.7%

-1.9%

6.0%

6.0%

-

Adjusted PBT (£m)

7.3

(4.1)

7.1

8.3

16.9%

Profit before tax (post exceptionals and other)

6.7

(4.8)

6.6

7.9

19.7%

EPS - diluted, adjusted (p)

4.2

(2.2)

4.0

4.6

14.8%

Dividend per share (p)

1.8

0.0

1.8

1.9

8.6%

Underlying net cash/(debt)

(29.2)

(21.3)

(15.8)

(7.3)

-53.8%

Source: Epwin Group data, Edison Investment Research

The first half was typified by lower underlying volume demand and input cost inflation, which led to sales price rises. Overall revenue increased by £20.2m, which was a combination of price increases and surcharges of £26.2m and M&A revenue of £2.6m, offset by modest volume declines. In the period, PVC resin, Epwin’s key input raw material, hit an all-time high having almost doubled in price since the start of 2021. The company also had to deal with other rising input costs including wage inflation.

Exhibit 10: H1 divisional revenue, last four years

Source: Epwin Group data, Edison Investment Research

In Epwin’s largest division, Extrusion and Moulding, revenue increased 15% to £111.3m, largely due to price increases passed on to recover cost inflation. Window Systems, which account for c 45% of divisional revenue, saw revenue increase 22%, while roofline, rainwater and decking, c 40% of revenue, increased 12%. There was no M&A-led revenue growth. Volumes were down c 5%, largely as a result of clients destocking and the deletion of a third window system. The price increases and other steps taken in the last 18 months led to a recovery in margin, from 6.6% to 7.2%, a level still some way below pre-pandemic levels of c 10%, which remain achievable provided there is a reduction in the price of PVC. Raw material input price rises usually have a lag of two to three months.

In Fabrication and Distribution, revenue increased 10% to £66.7m, of which 6% was accounted for by M&A. Price rises accounted for the rest, offset by c 5% lower volumes. In Fabrication (c 30% of divisional revenue), ‘trade’ revenue was up 10% in H1 while ‘social’ revenue was flat year-on-year, affected by the deferment of some contract start dates as there appears to be a lack of installers in this part of the market. In Distribution (c 55% of divisional revenue), revenue was flat benefiting from £3.6m of M&A income. Although the margin eased from 6.6% to 6.0%, it is in line with revised medium-term expectations, benefiting from efficiency gains as Epwin has consolidated activities.

Exhibit 11: H1 operating profit and operating margins by division, last four years

Source: Epwin Group, Edison Investment Research

Demand in June and July moderated in the RMI sector but August was in line with expectations. Current trading leads management to forecast that it will achieve FY22 expectations, though there are clearly some headwinds in the market. That said, there are structural trends that point towards underlying long-term demand, such as underinvestment in the housing stock and the shortage of new homes in general.

Estimates raised post M&A; >£50m of headroom

Although underlying demand moderated in June and July, August was in line with management expectations. This led management to conclude that Epwin would achieve market profit estimates for the full year. We have revised ‘underlying’ operating profit estimates in both years, reflecting the acquisition of Poly-Pure and the potential for market headwinds, which seem likely. That said, the stock is trading at a very depressed multiple, which arguably is a result of a less certain outlook.

Our revised estimates are detailed in the table below and largely reflect the positive impact of the £15m acquisition of Poly-Pure in September, offset by a little more caution relating to the underlying markets in which Epwin operates. The net result is that our FY22 normalised operating profit estimate remains unchanged at £20.0m, and in FY23 it is lifted 3% to £22m.

The other notable change is to full-year net debt expectations where we were anticipating net debt would fall from £9.4m as at FY21, to £6.9m at the end of FY22e. Now, due to the M&A activity, we anticipate that net debt will rise to £22.4m at the end of the year, before falling again in FY23e. Epwin maintains a debt facility that runs to £75m, which implies that at the year-end it could have M&A headroom of more than £50m, some of which could be deployed if the right assets became available.

Exhibit 12: Revised forecasts

2021

2022e

2023e

Old

New

% chg

Old

New

% chg

Revenue

329.6

349.4

349.5

0.0%

356.4

356.0

(0.1%)

Y-o-y % change

36.8%

6.0%

6.0%

-

2.0%

1.9%

-

EBITDA - Edison basis

36.3

38.0

38.1

0.2%

39.5

40.5

2.6%

Y-o-y % change

26.9%

4.7%

4.9%

-

3.9%

6.5%

-

EBITDA - Reported pre IFRS 16

22.7

28.0

28.1

0.3%

29.5

27.0

(8.3%)

Y-o-y % change

59.9%

23.3%

23.7%

-

5.4%

(3.7%)

-

Normalised operating profit

18.5

20.0

20.0

(0.1%)

21.5

22.0

2.5%

Y-o-y % change

96.8%

8.1%

8.0%

-

7.5%

10.3%

-

PBT (Reported, pre-exceptionals)

12.9

14.5

13.9

(4.3%)

16.2

15.6

(3.5%)

Y-o-y % change

578.9%

12.4%

7.6%

-

11.7%

12.7%

-

EPS - Diluted, normalised

9.1

8.5

8.1

(4.3%)

9.1

8.7

(3.8%)

Y-o-y % change

127.5%

-6.2%

(10.2%)

-

7.1%

7.6%

-

DPS

4.1

4.2

4.2

0.0%

4.5

4.5

0.0%

Y-o-y % change

310.0%

2.4%

2.4%

-

7.1%

7.1%

-

Net (debt)/cash (pre IFRS 16)

(9.4)

(6.9)

(22.4)

224.4%

(1.0)

(16.2)

1,517.4%

Y-o-y % change

(49.2%)

(26.6%)

138.1%

-

(85.5%)

(27.7%)

-

Source: Epwin Group data, Edison Investment Research

The assumptions in our forecasts appear somewhat undemanding, in our opinion. For example, after 12.8% revenue growth in H1, we anticipate an H2 revenue decline of 0.2%, which is largely driven by some modest benefit from the acquisition and destocking. In FY23, the only notable growth anticipated is the full year contribution from Poly-Pure. Furthermore, we are anticipating only a very modest increase in the FY22e operating margin, from 5.6% to 5.7%, with a further increase in FY23e, to 6.2%, as price increases wash through. However, even at this level, margins are below the long-term average of c 7.5% (2014–19 range: 6.9% to 8.6%).

We expect that Epwin will remain a fundamentally cash-generative business throughout the forecast period, with debt only increasing in periods where M&A activity is significant, such as the current period. Assuming that no further deals are forthcoming, it is likely that the company would be close to a neutral net debt/net cash position by the end of FY25.

Exhibit 13: Financial summary

£m

2019

2020

2021

2022e

2023e

2024e

Year end 31 March

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

282.1

241.0

329.6

349.5

356.0

361.2

Cost of Sales

(193.3)

(168.8)

(236.9)

(249.9)

(252.7)

(255.6)

Gross Profit

88.8

72.2

92.7

99.6

103.2

105.7

EBITDA

 

 

40.4

28.6

36.3

38.1

40.5

41.5

Normalised operating profit

 

 

21.2

9.4

18.5

20.0

22.0

23.0

Operating profit - Underlying

21.2

9.4

18.5

20.0

22.0

23.0

Amortisation of acquired intangibles

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

(0.3)

Exceptionals

(2.3)

(2.8)

(0.1)

0.0

0.0

0.0

Other

(1.4)

0.0

(0.4)

(0.4)

(0.4)

(0.4)

Reported operating profit

17.2

6.3

17.7

19.3

21.3

22.3

Net Interest

(4.8)

(4.4)

(4.8)

(5.4)

(5.7)

(5.2)

Exceptionals

0.0

0.0

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

16.4

5.0

13.7

14.6

16.3

17.8

PBT - Underlying

 

 

-

-

-

-

-

-

Profit Before Tax (reported)

 

 

12.4

1.9

12.9

13.9

15.6

17.1

Reported tax

(1.7)

0.7

(0.4)

(2.6)

(3.4)

(4.3)

Profit After Tax (norm)

14.7

5.7

13.3

11.9

12.9

14.5

Profit After Tax (reported)

10.7

2.6

12.5

11.2

12.2

12.8

Net income (normalised)

14.7

5.7

13.3

11.9

12.9

14.5

Net income (reported)

10.7

2.6

12.5

11.2

12.2

12.8

Basic average number of shares outstanding (m)

143

143

145

145

145

145

EPS - basic normalised (p)

 

 

10.29

3.99

9.16

8.22

8.88

10.00

EPS - diluted normalised (p)

 

 

10.27

3.98

9.06

8.14

8.75

9.86

EPS - Diluted, underlying

 

 

-

-

-

-

-

-

EPS - basic reported (p)

 

 

7.49

1.82

8.61

7.74

8.39

8.83

Dividend (p)

1.75

1.00

4.10

4.20

4.50

4.80

Revenue growth (%)

0.4

(-14.6)

36.8

6.0

1.9

0.0

Gross Margin (%)

31.5

30.0

28.1

28.5

29.0

29.3

EBITDA Margin (%)

14.3

11.9

11.0

10.9

11.4

11.5

Normalised Operating Margin

7.5

3.9

5.6

5.7

6.2

6.4

BALANCE SHEET

Fixed Assets

 

 

182.3

176.9

177.0

180.4

170.3

160.1

Intangible Assets

75.7

75.0

77.9

77.6

77.3

77.0

Tangible Assets

46.1

29.5

28.5

35.4

28.8

22.1

Investments & other

60.5

72.4

70.6

67.4

64.2

61.0

Current Assets

 

 

91.5

87.2

94.6

101.1

99.0

96.7

Stocks

30.3

29.6

41.0

41.9

42.7

39.7

Debtors

43.6

44.3

43.6

49.2

46.3

47.0

Cash & cash equivalents

17.2

13.1

9.8

9.8

9.8

9.8

Other

0.4

0.2

0.2

0.2

0.2

0.2

Current Liabilities

 

 

(86.3)

(79.0)

(83.0)

(84.9)

(86.3)

(87.4)

Creditors

(75.2)

(57.6)

(71.5)

(73.4)

(74.8)

(75.9)

Tax and social security

(1.0)

0.0

(0.4)

(0.4)

(0.4)

(0.4)

Short term borrowings

0.0

(10.9)

(0.5)

(0.5)

(0.5)

(0.5)

Other

(10.1)

(10.5)

(10.6)

(10.6)

(10.6)

(10.6)

Long Term Liabilities

 

 

(98.7)

(96.3)

(90.3)

(96.5)

(76.8)

(56.9)

Long term borrowings

(32.3)

(17.3)

(14.6)

(27.6)

(21.4)

(15.0)

Other long term liabilities

(66.4)

(79.0)

(75.7)

(68.9)

(55.4)

(41.9)

Net Assets

 

 

88.8

88.8

98.3

100.2

106.3

112.6

Shareholders' equity

 

 

88.8

88.8

98.3

100.2

106.3

112.6

CASH FLOW

Op Cash Flow before WC and tax

40.4

28.6

36.3

38.1

40.5

41.5

Working capital

(1.8)

(1.8)

(1.4)

(5.6)

2.6

2.5

Exceptional & other

(3.8)

(3.1)

0.0

0.0

0.0

0.0

Tax

(3.3)

(0.8)

(0.5)

(2.6)

(3.4)

(4.3)

Net operating cash flow

 

 

31.5

22.9

34.4

29.9

39.7

39.7

Capex

1.6

(8.0)

(0.6)

(10.0)

(11.9)

(11.8)

Acquisitions/disposals

(2.3)

0.0

(5.3)

(15.0)

0.0

0.0

Net interest

(1.6)

(1.4)

(1.5)

(1.7)

(2.0)

(1.5)

Equity financing

0.0

0.0

(0.4)

0.0

0.0

0.0

Dividends

(7.1)

0.0

(4.0)

(6.2)

(6.1)

(6.5)

Other

(13.7)

(15.6)

(13.5)

(10.0)

(13.5)

(13.5)

Net Cash Flow

8.4

(2.1)

9.1

(13.0)

6.2

6.4

Opening net debt/(cash)

 

 

24.8

16.4

18.5

9.4

22.4

16.2

FX

0.0

0.0

0.0

0.0

0.0

0.0

Other non-cash movements

0.0

0.0

0.0

0.0

0.0

0.0

Closing net debt/(cash)

 

 

16.4

18.5

9.4

22.4

16.2

9.8

Source: Epwin Group, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Epwin Group and prepared and issued by Edison, in consideration of a fee payable by Epwin Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

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United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

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Level 4, Office 1205

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Epwin Group and prepared and issued by Edison, in consideration of a fee payable by Epwin Group. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2022 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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