Epwin Group PLC (LON:EPWN) is investing in both divisions and this organic development strategy was complemented by two acquisitions in FY15. In this way, management is building business momentum despite flat markets and this should become increasingly apparent in FY16. As it does so, we see scope for a re-rating based on the delivery of strong earnings progress.
Strategic progress in a mixed year
FY15 was a mixed year for Epwin both in terms of market conditions and divisional performance. Extrusion & Moulding (E&M) saw strong progress in H1 but this did not really follow through over and above seasonal effects in H2, while Fabrication & Distribution recovered from weak H1 trading to deliver improved profitability in the second half. The acquisitions of Stormking and Vannplastic in the year, for a combined initial consideration of £32.2m (in a mixture of cash and shares), broaden E&M’s product offering and should make a material contribution to both divisional and group profitability. Epwin’s end FY15 £14.4m net debt position was influenced by these deals, but also saw good underlying cash flow.
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