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Polypipe Group plc Strong first half performance

Polypipe Group PLC (LON:PLP), a leading provider of sustainable water and climate management solutions for the built environment, today announced its unaudited interim results for the six months ended 30 June 2019.

Financial Results

Statutory Measures   
Operating Profit£35.2m£33.5m+5.1%
Profit before tax£31.4m£30.1m+4.3%
Earnings per share (basic)12.9p12.4p+4.0%
Cash generated from operations£21.7m£22.3m-2.7%
Dividends per share (pence)4.0p3.7p+8.1%
Alternative Performance Measures1   
Underlying operating profit£39.3m£36.3m+8.3%
Underlying operating margin17.6%17.3%+30bps
Underlying profit before tax£35.6m£32.9m+8.2%
Underlying earnings per share (basic)14.7p13.5p+8.9%
Leverage (times pro forma EBITDA2)1.81.7+0.1

Financial Highlights

·      Revenue 6.2% higher at £223.3m with strong contribution from recent acquisitions

·      Underlying operating profit 8.3% higher at £39.3m

·      Continued focus on returns with underlying operating margin 30 basis points higher at 17.6%

·      Underlying basic earnings per share 8.9% higher at 14.7 pence

·      Cash generated at £21.7m reflecting the normal first half increase in working capital

·      Net debt3 of 1.8 times pro forma EBITDA2 in line with expectations

·      Interim dividend increased 8.1% to 4.0 pence per share

Operational Highlights

·      Residential Systems revenue growth of 8.4%, with a strong contribution from Manthorpe

·      Commercial and Infrastructure Systems revenue 3.4% higher despite challenging markets

·      Integration of 2018 acquisitions progressing well

·      Resolution of H2 2018 operating inefficiencies and selective cost reductions implemented

·      Product launches in both Residential Systems and Commercial and Infrastructure Systems continue to exploit strategic growth drivers

Martin Payne, Chief Executive Officer at Polypipe Group plc, commented

“The business has performed well in the first half with good revenue growth and improved margins through selective cost reductions and acquisitions. The medium-term fundamentals of our markets remain strong. Whilst we are mindful of current political and economic uncertainty, management continues to focus on self-help measures and together with an encouraging start to the second half, the Board’s profit expectations for the year remain unchanged.”

1 Underlying profit and earnings measures are from continuing operations and exclude certain non-underlying items (see note 6) and where relevant, the tax effect of these items.  The Directors consider that these measures provide a better and more consistent indication of the Group’s underlying financial performance and more meaningful comparison with prior and future periods to assess trends in our financial performance. 

Pro forma EBITDA is defined as underlying operating profit before depreciation for the twelve months preceding the balance sheet date, excluding operating profit before depreciation from discontinued operations, adjusted where relevant to include a full year of EBITDA from acquisitions made during those twelve months.

Net debt is defined as loans and borrowings net of unamortised issue costs less cash excluding the effects of IFRS16.

The results for the six months ended 30 June 2019 have been prepared in accordance with IFRS16. As we have adopted the simplified
approach on transition, we have not restated prior year comparatives.

Leverage is defined as Net Debt divided by pro forma EBITDA.

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