TIDMECEL
RNS Number : 8476X
Eurocell plc
01 September 2022
1 September 2022
EUROCELL PLC (Symbol: ECEL)
HALF YEAR REPORT FOR THE SIX MONTHSED 30 JUNE 2022
Good first half, outlook in line with expectations
Eurocell plc is a market leading, vertically integrated UK
manufacturer, distributor and recycler of innovative window, door
and roofline PVC building products
Key financial performance measures H1 2022 H1 2021 Change H1 2019 Change
Revenue (GBP million) 190.5 168.1 13% 136.3 40%
Operating profit (GBP million) 16.6 15.3 8% 11.3 47%
Profit before tax (GBP million) 15.2 14.2 7% 10.4 46%
Basic earnings per share (pence)
(1) 11.2 9.9 13% 8.7 29%
Capital investment (GBP million) 6.4 7.3 (0.9) 8.8 (2.4)
Net debt (GBP million) (2) 71.9 52.3 19.6 69.3 2.6
Net debt/(cash), pre-IFRS 16 (GBP
million) (2) 15.0 (1.3) 16.3 36.7 (21.7)
Interim dividend per share (pence) 3.5 3.2 9% 3.2 9%
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For the purposes of this report, we have compared financial
performance to 2021, but also where appropriate to 2019, in order
to provide a benchmark against pre COVID-19 pandemic activity.
Financial headlines
-- Good first half against strong 2021 comparatives
- Substantial progress in sales and profits vs pre-pandemic period
-- Continued successful deployment of commercial strategies, with sales
up 13% vs H1 2021, including:
- Profiles up 17%: a good performance in new build, where competitor fabricator weakness has
supported our sales, as well as another strong performance from Vista doors
- Building Plastics up 11%: good demand for high value project work and our outdoor living product
range
- Price remains a key driver of sales growth
-- Selling price increases and surcharges successfully recovering unprecedented
input cost inflation
-- Operating profit up 8% vs H1 2021, driven by higher sales and improving
operational efficiency
- Operating profit margin of 8.7% (full year 2021: 8.5%)
-- Profit before tax up 7% vs H1 2021, including impact of successful bank
refinancing on finance costs
-- Continued investment in business growth, with capex of GBP6.4 million
including expansion of manufacturing capacity and development of IT infrastructure
-- Strong balance sheet and liquidity, with pre-IFRS 16 net debt of GBP15.0
million (31 December 2021: GBP11.0 million)
-- Interim dividend of 3.5 pence per share up 9% on H1 2021
Operational headlines
-- Strong on sustainability as the leading UK-based recycler of PVC windows:
- Further improvement in proportion of recycled material used to
28% (full year 2021: 27%)
- Further reduction in waste sent to landfill, with 85% of waste
recycled in H1 (full year 2021: 82%)
- Committed to a c.GBP1.5 million investment in solar panels to
be installed at our primary manufacturing facilities
-- New warehouse and expanded manufacturing capacity delivering improved
operating efficiencies
-- 3-fold increase in value of Profiles account wins - 18 new accounts in
H1, expected to start in Q4 and boost 2023
-- Current estate of 219 branches - a further 6 new sites now commissioned,
to be opened by early next year
Mark Kelly, Chief Executive of Eurocell plc said:
"Demand has moderated from the unprecedented levels experienced
in 2021. In the RMI(3) market, a greater emphasis on higher-value
project specific work is compensating for lower levels of general
maintenance activity, and new build continues to be strong.
"Against this backdrop, and driven by the continued success of
our commercial strategies, it is pleasing to report that H1 sales
volumes have kept pace with an exceptionally strong comparative
period and that we have made substantial progress in sales and
profits compared to the equivalent period of 2019. We also continue
to take effective action to offset input cost inflation and have
therefore delivered good financial results for the first half.
"Our customers are reporting full order books and robust trading
for July and August, and in all sectors, our sales teams continue
to drive demand for our products. We believe we are continuing to
take market share and our pipeline of potential new customers is
strong, supported by recent investments in manufacturing and
warehousing capacity and technology, which are also delivering
improved operating efficiencies.
"As a result, and notwithstanding macroeconomic uncertainty, we
continue to trade in line with expectations and remain confident of
delivering our medium-term ambitions for sales and margins."
Notes
(1) Based on a weighted average number of shares of 112.0
million for H1 2022, 111.5 million for H1 2021 and 100.3 million
for H1 2019.
(2) Net debt is bank overdrafts, borrowings and lease
liabilities less cash and cash equivalents. Pre-IFRS 16 net debt
excludes lease liabilities and is provided as our financial
covenants are measured on this basis.
(3) RMI is repair, maintenance and improvement.
Analyst presentation
There will be an audiocast presentation for analysts and
investors at 9am today. The presentation can be accessed remotely
via a live audiocast link as follows:
https://streamstudio.world-television.com/782-2007-33664/en
Alternatively, you can join via conference call as follows:
United Kingdom (local) 020 3936 2999
United Kingdom (toll free) 0800 640 6441
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United States 1 646 664 1960
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All other locations +44 20 3936 2999
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Participant access code 149640
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A copy of the presentation will be made available from 7am on 1
September on the Group's web site:
https://investors.eurocell.co.uk/investors/
Following the presentation, a recording of the audiocast will
also be made available on the Group's web site (link above).
CHIEF EXECUTIVE'S REVIEW
INTRODUCTION
We entered 2022 well placed to take advantage of the continued
strength in our markets, and the first half has seen strong
price-driven sales growth, with double-digit progression in
earnings per share. However, with increasing macroeconomic
uncertainties, driven by high inflation and the events in Ukraine,
demand has now moderated from the unprecedented levels experienced
in 2021.
In the RMI market, we are seeing a greater emphasis on
project-specific work, rather than the higher levels of maintenance
activity experienced last year. A backlog in planning permissions,
driven by house moves, as well as hybrid working and changing
lifestyle patterns, continue to support sales, partly funded by
elevated levels of consumer savings. In new build, the market
continues to be strong, supported by Government initiatives.
It is pleasing to report that H1 sales volumes have kept pace
with an exceptionally strong comparative period and that we have
made substantial progress in sales and profits compared to the
equivalent period of 2019.
Price remains a key driver of sales growth as we continue to
take effective action to offset input cost inflation, with active
management, including a dynamic approach to selling price increases
and surcharges.
We believe we are continuing to take market share, reflecting
the impact of maturing branches, a widening product offering
(including our outdoor living range of fencing, decking and garden
rooms) and excellent customer service, supported by our recent
investments in manufacturing and warehousing capacity and
technology, where operating efficiencies are improving. Our
pipeline of potential new fabricator customers is also strong.
As a result, we have delivered a good financial performance and
profit growth for the first half.
We experienced a cyber incident towards the end of July, which
resulted in some temporary disruption, but is now substantially
resolved. We detected the incident promptly and our core systems
were restored quickly, with the business remaining operational
throughout the period and trading normally from mid-August. We
expect our cyber insurance will largely cover the financial impact
of the disruption. In addition, we have built on our recent
investments in IT infrastructure and implemented further resilience
and security in this area.
FINANCIAL RESULTS
Sales for H1 were GBP190.5 million, 13% up on H1 2021 and 40% up
on H1 2019, representing excellent growth compared to the pre-COVID
period. Although price is a key component of growth this year, the
three-year compounded annual growth in sales volumes of 11%
demonstrates the continued success of our commercial strategies and
market share gains over this period.
Profit before tax for H1 was GBP15.2 million, up 7% compared to
H1 2021 and 46% higher than H1 2019.
Further information on our financial performance is included in
the Divisional and Chief Financial Officer's Reviews.
SUSTAINABILITY
Our objective is to continue to improve the sustainability of
the Group. We have defined a suite of environmental and social
targets and KPIs against which to measure our progress, which are
set out in our 2021 Annual Report.
Central to our environmental targets, which cover both the
circular economy as well as emissions and energy management, is
reducing the carbon footprint of the business and our products. Our
social objectives are broad and cover areas such as health &
safety, diversity and education. In addition to the matters covered
by these KPIs, we are progressing similar work on related topics
such as transport emissions, employee well-being and community
engagement. Our objectives align well with several relevant UN
Sustainable Development Goals, as well the UK's transition towards
a net zero carbon economy. We intend to report our progress against
these KPIs on an annual basis.
Looking forward there are four key themes to our work on
sustainable development:
-- Carbon, energy and water - defining our pathway to carbon neutrality
and net zero, which will be driven primarily by reducing Scope 1 and
2 emissions in extrusion and recycling.
-- Waste minimisation and circularity - further strengthening materials
recovery and process optimisation.
-- People and places - becoming a regional employer of choice and stepping
up community engagement.
-- Governance - reporting progress against published ESG targets and
aligning with sustainability indices.
As a measure of commitment to achieving our goals, our new GBP75
million sustainable Revolving Credit Facility (refinancing
completed in May, see Chief Financial Officer's Review) contains
annual recycling, emissions and waste reduction targets, with
modest adjustments to the margin based upon performance.
In May this year, we also approved a c.GBP1.5 million investment
in solar panels to be installed at our primary manufacturing
facilities, which will supply more than 5% of the energy used in
the manufacture of our extruded products.
OPERATIONAL PERFORMANCE
Health & safety
The safety and well-being of our employees and contractors is
our first operational priority and we continue to maintain a good
safety performance. We improved our procedures for incident
reporting last year, leading to more incidents being included in
the data. In addition, several COVID-19 safe working practices have
been retained and continue to operate well across the business.
Our Lost Time Injury Rate ('LTIR') was 0.7 in H1 2022, compared
to 0.8 in 2021 (full year). There were no major injuries and 11
minor injuries reported under the Reporting of Injuries, Diseases
and Dangerous Occurrences Regulations 2013 (RIDDOR) in the period
(full year 2021: 28 minor injuries).
Production
In the first half of 2022 we manufactured approximately 27.4k
tonnes of rigid and foam PVC profiles, down 3% compared to the very
high levels of production in H1 2021, reflecting our work to start
reducing stocks of manufactured product now that resin supplies
have stabilised. Overall Equipment Effectiveness ('OEE', a measure
which takes into account machine availability, performance and
yield) was 71% in H1 2022, up from 68% in FY 2021 and closer to our
target of 75%, reflecting the benefit of the swift action taken in
H2 2021 to address supply chain disruption (including intermittent
resin supply and labour shortages), as well as improving
operational efficiencies .
Recycling
We are the leading UK-based recycler of PVC windows, now saving
the equivalent of c.3 million window frames from landfill each
year. We have made further progress in H1 2022, with usage
increasing to 28% (8.3k tonnes) of materials consumed, compared to
27% for the full year in 2021, driving significant cost and carbon
savings compared to the use of virgin material.
We have also made good progress securing additional sources of
feedstock for the recycling plants, to support our medium-term
ambition to increase the proportion of recycled material used to
33%, whilst also keeping pace with increasing sales volumes.
Furthermore, we are finding more ways of using all the product
generated by our plants and expect to progressively reduce waste
sent to landfill to less than 5% in the near term.
SUPPLY CHAIN, LABOUR AND INFLATION
Strong demand in our markets over the last 18 months has put
sector supply chains under pressure, and we have experienced
tighter supply and an inflationary environment, with prices of
certain raw materials, particularly PVC resin, and wages rising
significantly over this period.
We continue to take effective action to offset ongoing input
cost inflation, including a dynamic approach to selling prices and
surcharges. Higher resin costs are also partially offset by our
market-leading recycling plants. In addition, our progressive
forward hedging policy for electricity has provided some protection
from rising energy costs in 2022.
We believe resin costs have now plateaued, as industry output
increases and sector demand stabilises, and we have continued to
secure the raw materials required throughout the first half.
Availability of the operational labour we needed to service
strong demand in 2021 was tight. However, the decisive action we
took in H2 last year to secure more labour, which included a
substantial increase in pay rates for operational and branch staff,
ensured that we have the resources necessary to operate efficiently
and support our growth aspirations for revenue and margins.
PROFILES DIVISION REVIEW
Profiles strategy
In 2018 we became the leading supplier of rigid PVC profile to
the UK market, with a share of c.15%. We continue to consolidate
our position and believe we now have a share of around 18%. Our
strategic objective is to increase this to at least 22% over the
medium term.
There is a compelling case for larger trade fabricators to
switch to Eurocell. This includes a strong product range and
continued product development e.g. better aesthetics (such as flush
windows), a more contemporary look to roofing and door products and
improved environmental characteristics. In addition, the benefits
of pull-through profile and hardware specifications and increasing
opportunities to supply our branches, all delivered via improving
service, remain attractive to prospective fabricator accounts.
In the Profiles division, new build represents approximately
one-third of sales. Expanding our share of the new build market has
been a key driver of recent growth, driven by sales of cavity
closures where we are the clear market leader, and we believe
favourable new build market dynamics are set to continue.
Building regulations for windows are becoming increasingly
complicated and our technical teams are working with our larger
customers to enable them to conform to the regulations, including
development of new product applications to meet changing
requirements. This includes the Future Homes Standard, which
requires new build homes to be future-proofed with low carbon
heating and world-leading levels of energy efficiency by 2025,
where we are leading the fenestration industry's response for both
windows and doors.
We have strong relationships with large and medium-sized
housebuilders, maintained by our specification and technical teams.
We now plan to target regional housebuilders and have a strong
pipeline of potential new accounts, which will further consolidate
our position of strength within the new build sector.
In the commercial sector, energy efficiency and lower cost
underpin a strong case for the benefits of using PVC profile over
aluminium, particularly in sub-sectors such as private rentals,
build-to-rent, purpose-built student accommodation, education and
local authority refurbishment - all habitual users of aluminium. We
have strengthened our sales and technical teams to provide an
added-value service to both our fabricator base and installer
networks that is unmatched in this sector.
As part of our objective to increase closed-loop recycling of
PVC windows, we have been collecting more post-industrial waste
(e.g. factory off-cuts) from our fabricator customers. With a sharp
focus on sustainability, we believe our use of recycled material is
becoming increasingly attractive to housebuilders.
Profiles summary income statement
H1 2022 H1 2021 Change H1 2019 Change
GBPm GBPm % GBPm %
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Third-party revenue 80.1 68.5 17% 57.6 39%
Inter-segmental revenue 37.9 35.9 6% 28.2 34%
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Total revenue 118.0 104.4 13% 85.8 38%
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Operating profit 12.2 11.6 5% 10.2 20%
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Third-party revenue for H1 was GBP80.1 million, 17% higher than
H1 2021 and 39% up on H1 2019. We have seen a good first half
performance in new build, where sales have been supported by
competitor fabricator weakness, high levels of mortgage approvals
and ongoing Government initiatives, as well as a strong performance
from Vista doors.
During the last four years we have added c.75 new accounts, and
our prospect pipeline remains strong. A futher 18 accounts were
added in H1 2022, which we expect to come on line progressively in
Q4 and provide a boost for 2023.
Operating profit for H1 was GBP12.2 million, compared to GBP11.6
million in H1 2021 and GBP10.2 million in H1 2019, reflecting
increased sales and improved operating efficiencies.
BUILDING PLASTICS DIVISION REVIEW
Building Plastics strategy
Our strategic objective for Building Plastics is to achieve
world class operations from 270-300 sites. The growth will come
mostly from independent operators, who currently have more than 60%
market share.
Our goal is to be recognised as first for service for the
tradesperson, seamlessly connecting the customer shopping journey
from online through to the branches, with clear data-driven
customer engagement plans (including targeting lapsed customers)
and through the development of a sector-leading digital
platform.
In terms of products, we are creating a market leading
proposition, including a redesigned best-in-class conservatory
offering, and exploiting a significant market opportunity to extend
our outdoor living product range, including decking, fencing and
garden rooms.
In the existing estate, we are now testing an improved format
for standard size branches, which better showcases the breadth of
our product range. We will also continue to identify opportunities
for large format stores, with an expanded trade counter and
showroom-style displays designed to engage customers and drive
big-ticket purchases, such as windows and doors. This follows
successful trials of this format in 2019/20.
Building Plastics summary income statement
H1 2022 H1 2021 Change H1 2019 Change
GBPm GBPm % GBPm %
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Third-party revenue 110.4 99.6 11% 78.7 40%
Inter-segmental revenue 0.1 0.7 (86)% 0.7 (86)%
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Total revenue 110.5 100.3 10% 79.4 39%
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Operating profit 6.6 6.1 8% 3.4 94%
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Third-party revenue for H1 was GBP110.5 million, 11% higher than
H1 2021 and 40% up on H1 2019. We have seen good demand for high
value project work (such as our roof lanterns, conservatory roofs,
windows and bi-fold doors) and our outdoor living range (fencing,
decking and garden rooms), where sales of GBP6.4 million are up 36%
compared to H1 2021 .
The 12 new branches opened in 2021 added sales of GBP3.6 million
in H1 2022. At 30 June 2022, w e had a total of 219 branches
providing national coverage across the UK, which offers a
significant competitive advantage. We are also making good progress
reducing the time taken to reach break-even in new stores. We have
now commissioned a further 6 branches, which will be opened by
early next year.
Operating profit for H1 was GBP6.6 million, compared to GBP6.1
million in H1 2021 and GBP3.4 million in H1 2019, driven by higher
sales, new branches and good cost control.
BOARD CHANGES
As previously announced, Derek Mapp was appointed to the Board
in May as an Independent Non-executive Director and Chair
Designate. Following a handover period, Derek assumed the role of
Chair of the Board, and Chair of the Nomination Committee on 1
July, at which point Bob Lawson retired. Also on 1 July, Kate Allum
and Alison Littley joined the Board as Independent Non-executive
Directors. On 31 July, Sucheta Govil stepped down as an Independent
Non-executive Director.
Derek, Kate and Alison bring a wealth of commercial,
operational, ESG and board committee experience and we are looking
forward to working closely with them. We would also like to thank
Bob for his tremendous contribution to the development of Eurocell
since our IPO in 2015, and to thank Sucheta for her valuable work
with the Group.
SUMMARY AND OUTLOOK
Demand has moderated from the unprecedented levels experienced
in 2021. In the RMI market, a greater emphasis on higher-value
project work is compensating for lower levels of general
maintenance activity, and new build continues to be strong.
Against this backdrop, and driven by the continued success of
our commercial strategies, it is pleasing to report that H1 sales
volumes have kept pace with an exceptionally strong comparative
period and that we have made substantial progress in sales and
profits compared to the equivalent period of 2019. We also continue
to take effective action to offset input cost inflation and have
therefore delivered good financial results for the first half.
Our customers are reporting full order books and robust trading
for July and August, and in all sectors, our sales teams continue
to drive demand for our products. We believe we are continuing to
take market share and our pipeline of potential new customers is
strong, supported by recent investments in manufacturing and
warehousing capacity and technology, which are also delivering
improved operating efficiencies.
As a result, and notwithstanding macroeconomic uncertainty, we
continue to trade in line with expectations and remain confident of
delivering our medium-term ambitions for sales and margins.
Mark Kelly
Chief Executive Officer
CHIEF FINANCIAL OFFICER'S REVIEW
H1 2022 H1 2021
GBPm GBPm
--------------------------------- ------- -------
Revenue 190.5 168.1
Gross profit 96.5 84.4
Gross margin % 50.7% 50.2%
Overheads (68.0) (58.3)
IFRS 9 impairments - 0.5
EBITDA 28.5 26.6
Depreciation and amortisation (11.9) (11.3)
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Operating profit 16.6 15.3
Finance costs (1.4) (1.1)
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Profit before tax 15.2 14.2
Tax (2.7) (3.2)
Profit after tax 12.5 11.0
Basic earnings per share (pence) 11.2 9.9
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We delivered good financial results for the first half against
strong 2021 comparatives and have made substantial progress in
sales and profits compared to the pre-pandemic period.
REVENUE
Revenue for H1 was GBP190.5 million, 13% up on H1 2021 (GBP168.1
million), representing a good performance right across the
business, where we have done well to keep pace with a very strong
comparative period. S ales growth includes the significant impact
of selling price increases and the surcharge levied to offset cost
inflation.
GROSS MARGIN
Gross margin was 50.7% in H1, up from 50.2% in H1 2021. We have
experienced further inflationary pressure on raw material cost
prices in H1, with PVC resin prices again increasing significantly.
We continue to offset higher costs through our market-leading
recycling plants, with selling price increases and through a
surcharge adjusted monthly in response to cost changes.
The surcharge has successfully recovered higher raw material
costs on a pound-for-pound basis. It is therefore neutral to
profit, but dilutive to gross margin percentage.
Selling price increases were implemented in H1 to recover
overhead and other cost inflation (see below). Selling price
increases have therefore contributed to an improved gross margin
percentage.
DISTRIBUTION AND ADMINISTRATIVE EXPENSES (OVERHEADS)
Overheads for H1 were GBP68.0 million, 17% higher than H1 2021
(GBP58.3 million). We experienced significant overhead cost and
wage inflation in H1 2022, which has been recovered via selling
prices increases as described above. Higher overheads also includes
the impact of 12 new branches opened in 2021, additional
operational headcount secured in H2 2021 to support growth and the
benefit to 2021 of the Government's COVID-19 rates relief
scheme.
DEPRECIATION AND AMORTISATION (D&A)
D&A for H1 was GBP11.9 million, compared to GBP11.3 million
in H1 2021.
ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures are used alongside statutory
measures to facilitate a better understanding of financial
performance and comparison with prior periods, and in order to
provide financial information against which our financial
covenants, which are all measured on a pre-IFRS 16 basis, can be
assessed.
Pre-IFRS 16 EBITDA is stated inclusive of operating lease
rentals under IAS 17 Leases. Pre-IFRS 16 net debt is defined as
total borrowings and lease liabilities less cash and cash
equivalents, excluding the impact of IFRS 16 Leases.
FINANCE COSTS AND TAXATION
Finance costs for H1 were GBP1.4 million (H1 2021: GBP1.1
million) and include GBP0.3 million of accelerated non-cash
amortisation charges related to our previous Revolving Credit
Facility, following a refinancing in May (see below).
The tax charge for H1 2022 was GBP2.7 million (H1 2021: GBP3.2
million). The effective tax rate on profit before tax for H1 2022
of 18% is lower than the standard corporation tax rate of 19% for
the period due to the benefit of Patent Box relief.
The effective rate of 22% in H1 2021 was greater than the
standard rate of 19% due to the remeasurement of deferred tax
liabilities following the announcement of a future increase in the
standard rate of tax from 19% to 25% in April 2023.
PROFIT BEFORE TAX AND EARNINGS PER SHARE
Profit before tax for H1 was GBP15.2 million, compared to a
profit before tax of GBP14.2 million in H1 2021, an increase of 7%.
Basic earnings per share for H1 2022 were 11.2 pence (H1 2021: 9.9
pence) and diluted earnings per share were 11.1 pence (H1 2021: 9.8
pence), both representing an increase of 13%.
Increased profits and earnings in H1 2022 reflect higher sales,
improved operating efficiencies and a lower effective tax rate.
DIVIDS
On 31 August 2022, the Board approved an interim dividend for
the six months ended 30 June 2022 of 3.5 pence per share (GBP3.9
million), representing an increase of 9% compared to H1 2021. The
interim dividend will be paid on 7 October 2022 to shareholders on
the register at the close of business at 16 September 2022 and
shares will be marked ex-dividend on 15 September 2022.
CAPITAL EXPITURE
Capital expenditure for H1 2022 was GBP6.4 million (H1 2021:
GBP7.3 million). H1 2022 includes c.GBP1.5 million to expand
extrusion capacity across a number of key product lines and c.GBP1
million on initiatives to drive further efficiencies in our new
warehouse (e.g. specialist carousel racking for smaller products
such as hardware), as well as c.GBP1.5m on improving our IT
infrastructure. Other capital expenditure in the period of c.GBP2.4
million includes critical spares for the recycling business,
progress payments for solar panels at our extrusion sites and
maintenance capex.
CASH FLOW
Net cash generated from operating activities was GBP18.1 million
for the period, compared to GBP24.2 million in H1 2021.
This includes a net outflow from working capital for H1 2022 of
GBP9.6 million, comprised of an increase in stocks (GBP10.1
million), an increase in trade and other receivables (GBP10.7
million) and an increase in trade and other payables (GBP11.2
million). This compares to a net outflow from working capital of
GBP0.9 million in H1 2021. Higher stocks, receivables and payables
reflect the impact of significant inflation (c.GBP8 million) and
seasonality. Having experienced significant supply chain disruption
in Q3 2021, we built stocks towards the end of last year and
earlier in 2022 in order to protect the business from further
interruption. However, now that our raw material supply chain has
stabilised, we have started a controlled stock reduction
programme.
Net cash generated from operating activities also includes net
tax paid of GBP1.7 million (H1 2021: GBP1.9 million).
Other cash flow items include payments for capital investments
of GBP7.4 million (H1 2021: GBP7.3 million) and financing costs of
GBP1.2 million (H1 2021: GBP0.3 million), including GBP0.7m of
arrangement fees and other costs incurred in the refinancing of the
Group's Revolving Credit Facility, which have been capitalised and
will be amortised over the life of the facility.
Dividends of GBP7.2 million were paid to shareholders during the
period (H1 2021: GBPnil).
The principal elements of lease payments of GBP6.3 million (H1
2021: GBP5.0 million) are presented within cash flows arising from
financing activities. The finance elements of lease payments were
GBP0.6 million (H1 2021: GBP0.6 million).
NET DEBT
Net debt on a pre-IFRS 16 basis at 30 June 2022 was GBP15.0
million (30 June 2021: net cash of GBP1.3 million, 31 December
2021: net debt GBP11.0 million). Reported net debt on a post-IFRS
16 basis at 30 June 2022 was GBP71.9 million (30 June 2021: GBP52.3
million, 31 December 2021: GBP69.7 million).
BANK FACILITIES
In May, we completed a refinancing of our GBP75 million
unsecured, sustainable Revolving Credit Facility. The facility is
provided by Barclays, NatWest and Bank of Ireland, and is
competitively priced with the key terms remaining unchanged. In
terms of sustainability, modest adjustments to the margin will be
applied based on our achievement against annual recycling,
emissions and waste reduction targets. The facility matures in 2026
and includes an option to extend for an additional year.
We operate comfortably within the terms of the new facility and
in compliance with our financial covenants, which are measured on a
pre-IFRS 16 basis.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties faced by the Group are set
out in the 2021 Annual Report (pages 58-65). These risks remain
unchanged and are as follows:
-- Macroeconomic conditions
-- Cyber security
-- Regulatory risks, including health & safety
-- Raw material supply
-- Raw material and traded goods prices
-- Customer credit risk
-- Sustainability
-- Manufacturing capacity constraints
-- Warehousing and distribution capacity constraints
-- Unplanned plant downtime
-- Ability to attract and retain key personnel and highly skilled individuals
-- Shortages or increased costs of appropriately skilled labour
-- Failure to develop new products
-- Competitor activity
-- Failure to identify, complete and integrate acquisitions
-- Digital and IT systems development
Michael Scott
Chief Financial Officer
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF
YEAR REPORT
We confirm that to the best of the Directors' knowledge:
-- The condensed set of financial statements has been prepared in accordance
with UK-adopted International Accounting Standard 34 and;
-- The interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal risks
and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first six months of
the current financial year and that have materially affected the financial
position or performance of the entity during that period; and any
changes in the related party transactions described in the last Annual
Report that could do so.
By Order of the Board
Mark Kelly Michael Scott
Chief Executive Officer Chief Financial Officer
31 August 2022 31 August 2022
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 June 2022
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
Note GBPm GBPm GBPm
Revenue 5 190.5 168.1 343.1
Cost of sales (94.0) (83.7) (169.7)
Gross profit 96.5 84.4 173.4
Distribution costs (12.5) (10.1) (23.8)
Administrative expenses (67.4) (59.0) (120.6)
Operating profit 5 16.6 15.3 29.0
Finance expense (1.4) (1.1) (2.0)
Profit before tax 15.2 14.2 27.0
Taxation 6 (2.7) (3.2) (5.9)
Profit for the period and
total comprehensive income 12.5 11.0 21.1
-------------------------------- ----- -------------- -------------- --------------
Basic earnings per share 7 11.2p 9.9p 18.9p
Diluted earnings per share 7 11.1p 9.8p 18.8p
-------------------------------- ----- -------------- -------------- --------------
CONDENSED COnsolidated Statement of Financial Position
As at 30 June 2022
30 June 2022 30 June 2021 31 December 2021
(Unaudited) (Unaudited) (Audited)
Note GBPm GBPm GBPm
------------------------------------------------------ ---- ------------ ------------ ----------------
Assets
Non-current assets
Property, plant and equipment 8 61.0 54.0 59.2
Right-of-use assets 8 52.8 50.9 54.8
Intangible assets 8 17.9 19.0 18.6
Total non-current assets 131.7 123.9 132.6
------------------------------------------------------ ---- ------------ ------------ ----------------
Current assets
Inventories 66.0 41.2 55.9
Trade and other receivables 55.2 47.9 44.5
Corporation tax 0.3 0.1 -
Cash and cash equivalents 9.0 7.9 6.6
Total current assets 130.5 97.1 107.0
------------------------------------------------------ ---- ------------ ------------ ----------------
Total assets 262.2 221.0 239.6
------------------------------------------------------ ---- ------------ ------------ ----------------
Liabilities
Current liabilities
Trade and other payables (59.0) (54.8) (48.7)
Lease liabilities (11.8) (9.9) (11.9)
Bank overdrafts (2.7) - (5.9)
Provisions (0.5) (0.5) (0.7)
Total current liabilities (74.0) (65.2) (67.2)
------------------------------------------------------ ---- ------------ ------------ ----------------
Non-current liabilities
Borrowings (21.3) (6.6) (11.7)
Trade and other payables (0.3) (0.3) (0.3)
Lease liabilities (45.1) (43.7) (46.8)
Provisions (1.1) (0.6) (0.8)
Deferred tax (7.9) (5.6) (6.6)
Total non-current liabilities (75.7) (56.8) (66.2)
------------------------------------------------------ ---- ------------ ------------ ----------------
Total liabilities (149.7) (122.0) (133.4)
------------------------------------------------------ ---- ------------ ------------ ----------------
Net assets 112.5 99.0 106.2
------------------------------------------------------ ---- ------------ ------------ ----------------
Equity attributable to equity holders of the Parent
Share capital 0.1 0.1 0.1
Share premium account 22.1 21.5 21.9
Share-based payment reserve 1.8 1.0 1.1
Retained earnings 88.5 76.4 83.1
Total equity 112.5 99.0 106.2
------------------------------------------------------ ---- ------------ ------------ ----------------
CONDENSED Consolidated Cash Flow Statement
For the period ended 30 June 2022
Six months ended 30 June Six months ended 30 June Year
2022 2021 ended 31 December 2021
(Unaudited) (Unaudited) (Audited)
Note GBPm GBPm GBPm
---------------------------- ---- --------------------------- ---------------------------- -----------------------
Cash generated from
operations 10 19.8 26.1 33.1
Income taxes paid (1.7) (1.9) (3.5)
Net cash generated from
operating activities 18.1 24.2 29.6
Investing activities
Purchase of property, plant
and equipment (7.2) (7.0) (15.1)
Purchase of intangible
assets (0.2) (0.3) (0.4)
Net cash used in investing
activities (7.4) (7.3) (15.5)
Financing activities
Proceeds from issue of
ordinary share capital 0.2 0.3 0.5
Repayment of bank borrowings (22.0) (6.0) (1.0)
Proceeds from bank
borrowings 32.0 - -
Bank borrowings arrangement
costs (0.7) - -
Principal elements of lease
payments (6.3) (5.0) (10.1)
Finance elements of lease
payments (0.6) (0.6) (1.2)
Finance expense paid (0.5) (0.3) (0.6)
Dividends paid to equity
Shareholders (7.2) - (3.6)
Net cash used in financing
activities (5.1) (11.6) (16.0)
Net increase/(decrease) in
cash and cash equivalents 5.6 5.3 (1.9)
---------------------------- ---- --------------------------- ---------------------------- -----------------------
Cash and cash equivalents at
beginning of period 0.7 2.6 2.6
Cash and cash equivalents at
end of period 6.3 7.9 0.7
---------------------------- ---- --------------------------- ---------------------------- -----------------------
CONDENSED Consolidated Statement of Changes in Equity
Share Share-based
For the six months ended 30 June 2022 (Unaudited) Share premium payment Retained Total
capital account reserve earnings equity
GBPm GBPm GBPm GBPm GBPm
------------------------------------------------------------- ------- ------- ----------- -------- -------
Balance at 1 January 2022 0.1 21.9 1.1 83.1 106.2
Comprehensive income for the period
Profit for the period - - - 12.5 12.5
Total comprehensive income for the period - - - 12.5 12.5
Contributions by and distributions to owners
Share capital issued - - - - -
Share-based payments - - 0.8 - 0.8
Exercise of share options - 0.2 (0.1) 0.1 0.2
Dividends paid - - - (7.2) (7.2)
Total transactions with owners recognised directly in equity - 0.2 0.7 (7.1) (6.2)
------------------------------------------------------------- ------- ------- ----------- -------- -------
Balance at 30 June 2022 0.1 22.1 1.8 88.5 112.5
------------------------------------------------------------- ------- ------- ----------- -------- -------
Share Share-based
For the six months ended 30 June 2021 (Unaudited) Share premium payment Retained Total
capital account reserve earnings equity
GBPm GBPm GBPm GBPm GBPm
------------------------------------------------------------- ------- ------- ----------- -------- -------
Balance at 1 January 2021 0.1 21.1 0.5 65.5 87.2
Comprehensive income for the period
Profit for the period - - - 11.0 11.0
Total comprehensive income for the period - - - 11.0 11.0
Contributions by and distributions to owners
Share capital issued - - - - -
Share-based payments - - 0.7 - 0.7
Exercise of share options - 0.4 (0.2) (0.1) 0.1
Total transactions with owners recognised directly in equity - 0.4 0.5 (0.1) 0.8
------------------------------------------------------------- ------- ------- ----------- -------- -------
Balance at 30 June 2021 0.1 21.5 1.0 76.4 99.0
------------------------------------------------------------- ------- ------- ----------- -------- -------
Share Share-based
For the year ended 31 December 2021 (Audited) Share premium payment Retained Total
capital account reserve earnings equity
GBPm GBPm GBPm GBPm GBPm
------------------------------------------------------------- ------- ------- ----------- -------- ------
Balance at 1 January 2021 0.1 21.1 0.5 65.5 87.2
Comprehensive income for the year
Profit for the year - - - 21.1 21.1
Total comprehensive income for the year - - - 21.1 21.1
Contributions by and distributions to owners
Exercise of share options - 0.8 (0.6) 0.1 0.3
Share-based payments - - 1.2 - 1.2
Dividends paid - - - (3.6) (3.6)
Total transactions with owners recognised directly in equity - 0.8 0.6 (3.5) (2.1)
------------------------------------------------------------- ------- ------- ----------- -------- ------
Balance at 31 December 2021 0.1 21.9 1.1 83.1 106.2
------------------------------------------------------------- ------- ------- ----------- -------- ------
EXPLANATORY NOTES
1 GENERAL INFORMATION AND BASIS OF PREPARATION
Eurocell plc (the 'Company') and its subsidiaries (together the
'Group') is a publicly listed company incorporated and domiciled in
England, United Kingdom. The registered office is Eurocell Head
Office and Distribution Centre, High View Road, South Normanton,
Alfreton, Derbyshire, DE55 2DT.
The Group is principally engaged in the extrusion of PVC window
and building products to the new and replacement window market and
the sale of building materials across the UK.
The Half Year Report for the six months ended 30 June 2022
reflects the results of the Company and its subsidiaries. It has
been prepared in accordance with UK-adopted IAS 34 Interim
Financial Reporting and the Disclosure and Transparency rules of
the United Kingdom's Financial Conduct Authority, and includes the
condensed consolidated interim financial statements (the 'interim
financial statements').
The interim financial statements do not constitute statutory
accounts as defined in Section 434 of the Companies Act 2006. They
do not include all the information required for full financial
statements and should be read in conjunction with the 2021 Annual
Report, which was prepared in accordance with UK-adopted
international accounting standards and with the requirements of the
Companies Act 2006.
The comparative figures for the year ended 31 December 2021 have
been extracted from the Group's audited financial statements for
that year. Those financial statements are included in the 2021
Annual Report and have been delivered to the Registrar of
Companies. The auditor's report was (i) unqualified, (ii) did not
include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their audit report,
and (iii) did not contain a statement under Section 498 (2) or (3)
of the Companies Act 2006.
The interim financial statements are unaudited, but have been
reviewed by the auditors in accordance with the Auditing Practices
Board guidance on Review of Interim Financial Information.
The Group is affected by seasonality. Demand in the second half
of the year is usually higher than in the first half, with
September to November typically representing the peak sales period
for the Group in the RMI market. In addition, the Group's sales to
the new build market are usually slower during the first quarter of
the year. However, increasing macroeconomic uncertainties, driven
by high inflation and the events in Ukraine, mean that demand is
likely to be more evenly balanced in 2022.
The Half Year Report was approved by the Board of Directors on
31 August 2022.
2 GOING CONCERN
The interim financial statements have been prepared on a going
concern basis.
The Group funds its activities through a GBP75 million Revolving
Credit Facility, provided by Barclays, NatWest and Bank of Ireland,
which matures in May 2026. The facility includes two key financial
covenants, which are tested at 30 June and 31 December on a
pre-IFRS 16 basis. These are that net debt should not exceed 3
times EBITDA (Leverage), and that EBITDA should be at least 4 times
the interest charge on the debt (Interest Cover).
At 30 June 2022 the Group has complied with all of its
covenants, and it expects to do so for the next measurement period,
being 31 December 2022, and going forward.
In assessing going concern, the Directors have considered
financial projections for the period to December 2024, which is
consistent with the Board's strategic planning horizon and reflects
a period of at least 12 months from the date of approval of these
interim financial statements. These forecasts have been compiled
based on the best estimates of our commercial and operational
teams. The various scenarios take into consideration a wide range
of severe but plausible downside risk factors, such as a sustained
period of lower sales and severe cost price inflation that cannot
be recovered in the form of price increases. In all scenarios
tested, the Group operates with significant headroom on its
Revolving Credit Facility and remains compliant with its
covenants.
After reviewing the Group's projected financial performance and
financing arrangements, the Directors consider that the Group has
adequate resources to continue operating and that it is therefore
appropriate to continue to adopt the going concern basis in
preparing this half year report.
3 ACCOUNTING POLICIES AND ESTIMATES
The interim financial statements have been prepared in
accordance with the accounting policies and presentation that were
applied in the Group's audited financial statements for the year
ended 31 December 2021.
A number of new or amended accounting standards became
applicable for the current reporting period. The adoption of these
standards did not lead the Group to change its accounting policies
or make retrospective adjustments. The Group does not intend to
adopt any standard, revision or amendment before the required
implementation date.
Critical accounting estimates and judgements
The preparation of the interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expenses. The
significant judgements, estimates and assumptions relevant to the
preparation of the interim financial statements are consistent with
those described on page 133 of the 2021 Annual Report.
4 FINANCIAL INSTRUMENTS
The Group is exposed to financial risks through its use of the
following financial instruments:
-- Trade and other receivables;
-- Cash and cash equivalents;
-- Trade and other payables;
-- Bank overdrafts;
-- Floating-rate bank loans; and
-- Lease liabilities
The relevant financial risks are: credit risk, market risk,
foreign exchange risk and liquidity risk.
The Group estimates that the fair value of these financial
assets and liabilities is approximate to their carrying amount.
Further information in relation to the Group's exposure to
financial risks is included on pages 133 to 136 of the 2021 Annual
Report.
5 SEGMENTAL INFORMATION
The Group organises itself into a number of operating segments
that offer different products and services. They are managed
separately because each business requires different technology and
marketing strategies. Internal reporting provided to the chief
operating decision-maker, which has been identified as the
executive management team including the Chief Executive Officer and
the Chief Financial Officer, reflects this structure.
The Group has aggregated its operating segments into three
reported segments, as these business units have similar products,
production processes, types of customer, methods of distribution,
regulatory environments and economic characteristics:
-- Profiles - extrusion and sale of PVC window and building products
to the new and replacement window market across the UK. This segment
includes Vista Panels, S&S Plastics and Eurocell Recycle North.
-- Building Plastics - sale of building plastic materials across the
UK. This segment includes Security Hardware, Kent Building Plastics
and Trimseal.
-- Corporate - represents costs relating to the ultimate parent company
and includes amortisation in respect of acquired intangible assets.
Inter-segmental sales, which are eliminated on consolidation,
are transacted on an arm's-length basis and relate to manufactured
products distributed by the Building Plastics division.
Six months ended 30 June 2022 (Unaudited) Building
Profiles Plastics Corporate Total
GBPm GBPm GBPm GBPm
---------------------------------------------- -------- -------- --------- -------
Revenue
Total revenue 118.0 110.5 - 228.5
Inter-segmental revenue (37.9) (0.1) - (38.0)
Total revenue from external customers 80.1 110.4 - 190.5
---------------------------------------------- -------- -------- --------- -------
EBITDA 18.2 11.1 (0.8) 28.5
Amortisation of intangible assets - - (0.9) (0.9)
Depreciation of property, plant and equipment (3.4) (0.6) (0.4) (4.4)
Depreciation of right-of-use assets (2.6) (3.9) (0.1) (6.6)
Operating profit 12.2 6.6 (2.2) 16.6
---------------------------------------------- -------- -------- --------- -------
Finance expense (1.4)
Profit before tax 15.2
---------------------------------------------- -------- -------- --------- -------
Six months ended 30 June 2021 (Unaudited) Building
Profiles Plastics Corporate Total
GBPm GBPm GBPm GBPm
---------------------------------------------- -------- -------- --------- -------
Revenue
Total revenue 104.4 100.3 - 204.7
Inter-segmental revenue (35.9) (0.7) - (36.6)
Total revenue from external customers 68.5 99.6 - 168.1
---------------------------------------------- -------- -------- --------- -------
EBITDA 16.9 9.5 0.2 26.6
Amortisation of intangible assets - - (1.2) (1.2)
Depreciation of property, plant and equipment (3.0) (0.5) (0.3) (3.8)
Depreciation of right-of-use assets (2.3) (2.9) (1.1) (6.3)
Operating profit 11.6 6.1 (2.4) 15.3
---------------------------------------------- -------- -------- --------- -------
Finance expense (1.1)
Profit before tax 14.2
---------------------------------------------- -------- -------- --------- -------
Year ended 31 December 2021 (Audited) Profiles Building Plastics Corporate Total
GBPm GBPm GBPm GBPm
---------------------------------------------- -------- ----------------- --------- ------
Revenue
Total revenue 204.6 202.9 - 407.5
Inter-segmental revenue (63.9) (0.5) - (64.4)
Total revenue from external customers 140.7 202.4 - 343.1
---------------------------------------------- -------- ----------------- --------- ------
EBITDA 31.8 20.8 (0.9) 51.7
Amortisation of intangible assets - - (1.9) (1.9)
Depreciation of property, plant and equipment (6.0) (1.0) (0.7) (7.7)
Depreciation of right-of-use assets (5.1) (7.9) (0.1) (13.1)
Operating profit 29.0
---------------------------------------------- -------- ----------------- --------- ------
Finance expense (2.0)
Profit before tax 27.0
---------------------------------------------- -------- ----------------- --------- ------
Building
As at 30 June 2022 (Unaudited) Profiles Plastics Corporate Total
GBPm GBPm GBPm GBPm
Segment assets 146.3 101.5 14.4 262.2
Segment liabilities (63.7) (47.3) (9.5) (120.5)
Borrowings (21.3)
Deferred tax (7.9)
Total liabilities (149.7)
------------------------------- -------- -------- --------- -------
Total net assets 112.5
------------------------------- -------- -------- --------- -------
As at 30 June 2021 (Unaudited) Building
Profiles Plastics Corporate Total
GBPm GBPm GBPm GBPm
Segment assets 133.8 74.1 13.1 221.0
Segment liabilities (61.3) (40.4) (8.1) (109.8)
Borrowings (6.6)
Deferred tax (5.6)
Total liabilities (122.0)
------------------------------- -------- -------- --------- -------
Total net assets 99.0
------------------------------- -------- -------- --------- -------
As at 31 December 2021 (Audited) Building
Profiles Plastics Corporate Total
GBPm GBPm GBPm GBPm
Segment assets 132.6 87.9 19.1 239.6
Segment liabilities (61.2) (45.0) (8.9) (115.1)
Borrowings (11.7)
Deferred tax (6.6)
Total liabilities (133.4)
--------------------------------- -------- --------- --------- -------
Total net assets 106.2
--------------------------------- -------- --------- --------- -------
Geographical information
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
(Unaudited) (Unaudited) (Audited)
Non-current Non-current Non-current
Revenue assets Revenue assets Revenue assets
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- -------- ------------ -------- ------------ -------- ------------
United Kingdom 189.5 131.7 167.5 123.9 341.6 132.6
Republic of Ireland 1.0 - 0.6 - 1.5 -
Total 190.5 131.7 168.1 123.9 343.1 132.6
--------------------- -------- ------------ -------- ------------ -------- ------------
As at 30 June 2022 the Group employed 2,282 people in the UK,
and 8 people in the Republic of Ireland.
6 TAXATION
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
--------------------------------------- ------------ ------------ ------------
Current tax
Current tax on profit for the period 1.4 1.1 2.7
Adjustments in respect of prior years - - 0.1
Total current tax 1.4 1.1 2.8
--------------------------------------- ------------ ------------ ------------
Deferred tax
Origination and reversal of temporary
differences 1.2 1.1 2.2
Adjustment in respect of change in
rates 0.1 1.0 0.9
Total deferred tax 1.3 2.1 3.1
--------------------------------------- ------------ ------------ ------------
Total tax expense 2.7 3.2 5.9
--------------------------------------- ------------ ------------ ------------
The reasons for the difference between the actual tax charge for
the period and the standard rate of corporation tax in the United
Kingdom applied to profits for the period are as follows:
Six months Six months Year
Ended ended ended
30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
------------------------------------------ ------------ ------------ ------------
Profit before tax 15.2 14.2 27.0
Expected tax expense based on the
standard rate of corporation tax in
the UK of 19% (2021: 19%) 2.9 2.7 5.1
Expenses not deductible for tax purposes - (0.2) 0.5
Capital allowance super-deduction
utilised (0.4) - (0.7)
Patent Box claim (0.2) (0.3) -
Adjustments to tax charge in respect
of prior years - - 0.1
Impact of change in rate on deferred
tax in prior year 0.4 1.0 0.9
Total tax expense 2.7 3.2 5.9
------------------------------------------ ------------ ------------ ------------
Changes in tax rates and factors affecting the future tax
charge
An increase in the mainstream rate of UK corporation tax from
19% to 25% from April 2023 was enacted during 2021. Consequently,
deferred taxes have been measured using the higher rate.
In calculating the half year tax charge, the expected effective
tax rate for the full year has been applied to the half year
underlying profit, with the exception of the remeasurement of
deferred tax liabilities, which has been applied in full.
Based on the current investment plans of the Group, and assuming
the rates of capital allowances on capital expenditure continue
into the future, there is little prospect of any significant part
of the deferred tax liability becoming payable over the next three
years.
Tax residency
Eurocell plc and its subsidiaries are all registered in the
United Kingdom and are resident in the UK for tax purposes. The
Group has two branches in the Republic of Ireland, with combined
annual revenues of c.GBP1.5 million, total assets of less than
GBP50,000 and 8 full time employees. For tax purposes these two
trading locations form a single branch within Eurocell Building
Plastics Limited, and therefore any profits generated are subject
to tax in the Republic of Ireland.
The tax charge in relation to the Group's Republic of Ireland
operations in 2021 was EURnil and no tax payments were made during
the year. This is due to utilisation of losses brought forward. No
deferred tax assets are recognised on unutilised losses due to the
uncertainty of future profits in the Republic of Ireland.
7 EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net
profit for the period attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the
period. Diluted earnings per share is calculated by adjusting the
earnings and number of shares for the effects of dilutive
options.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
------------------------------------ ---------------- ----------------- -------------
Profit attributable to ordinary
shareholders 12.5 11.0 21.1
Number Number Number
------------------------------------ ---------------- ----------------- -------------
Weighted average number of shares-
basic 112,030,859 111,538,140 111,709,049
Weighted average number of shares-
diluted 112,771,388 112,057,161 112,219,319
------------------------------------ ---------------- ----------------- -------------
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
Pence Pence Pence
------------------------------------------- --------------- ------------ ------------
Basic earnings per share 11.2 9.9 18.9
Diluted earnings per share 11.1 9.8 18.8
------------------------------------------- --------------- ------------ ------------
8 NON-CURRENT ASSETS (Unaudited)
Property,
plant and Right-of-use Intangible
equipment assets assets
GBPm GBPm GBPm
------------------------------- ----------- ------------- -----------
At 31 December 2021 59.2 54.8 18.6
Additions 6.2 4.6 0.2
Depreciation and amortisation (4.4) (6.6) (0.9)
At 30 June 2022 61.0 52.8 17.9
------------------------------- ----------- ------------- -----------
9 DIVIDS
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
--------------------------------------- ------------ ------------ ------------
Dividends paid
Interim dividend for 2021 of 3.2p per
share - 3.6 3.6
Final dividend for 2021 of 6.4p per
share 7.2 - -
Dividends proposed
Interim dividend for H1 2022 of 3.5p
per share
(H1 2021: 3.2p per share) 3.9 3.6 -
Final dividend for 2021 of 6.4p per
share - - 7.2
--------------------------------------- ------------ ------------ ------------
10 RECONCILIATION OF PROFIT AFTER TAX TO CASH GENERATED FROM
OPERATIONS
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
GBPm GBPm GBPm
----------------------------------------- ------------ ------------ ------------
Profit after tax 12.5 11.0 21.1
Taxation 2.7 3.2 5.9
Finance expense 1.4 1.1 2.0
Operating profit 16.6 15.3 29.0
Adjustments for:
Depreciation of property, plant and
equipment 4.4 3.8 7.7
Depreciation of right-of-use assets 6.6 6.3 13.1
Amortisation of intangible assets 0.9 1.2 1.9
Impairment of right-of-use assets - 0.1 (0.4)
Share-based payments 0.8 0.7 1.2
Increase in inventories (10.1) (3.1) (17.8)
Increase in trade and other receivables (10.7) (9.6) (6.0)
Increase in trade and other payables 11.2 11.8 4.4
Increase/(decrease) in provisions 0.1 (0.4) -
Cash generated from operations 19.8 26.1 33.1
----------------------------------------- ------------ ------------ ------------
11 RELATED PARTY TRANSACTIONS
The remuneration of Executive and Non-executive Directors is
disclosed in the 2021 Annual Report.
Transactions with key management personnel
Kellmann Recruitment Limited is controlled by T Kelly, a close
family member of M Kelly who is a Director of Eurocell plc. The
following amounts were paid to Kellman Recruitment for services
provided during the period:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
(Unaudited) (Unaudited) (Audited)
GBP000 GBP000 GBP000
-------------------------------------------- ------------ ------------ ------------
Kellmann Recruitment Limited - recruitment
services 121 60 147
-------------------------------------------- ------------ ------------ ------------
Amounts outstanding at the period end were GBPnil (30 June 2021:
GBP23,000; 31 December 2021: GBPnil).
12 CAPITAL COMMITMENTS
The Group is committed to a further c.GBP7 million of capital
investment in 2022.
13 EVENTS AFTER THE BALANCE SHEET DATE
The Directors are not aware of any material events that have
occurred after 30 June 2022 which would require disclosure under
IAS 10.
Independent Review Report to Eurocell plc
Report on the Condensed Consolidated Interim Financial
Statements
Our conclusion
We have reviewed Eurocell plc's condensed consolidated interim
financial statements (the "interim financial statements") in the
Half Year Report of Eurocell plc for the 6 month period ended 30
June 2022 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK-adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- The condensed consolidated statement of financial position as at 30
June 2022;
-- The condensed consolidated statement of comprehensive income for the
period then ended;
-- The condensed consolidated cash flow statement for the period then
ended;
-- The condensed consolidated statement of changes in equity for the
period then ended; and
-- The explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year
Report of Eurocell plc have been prepared in accordance with
UK-adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half Year
Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the Directors have inappropriately
adopted the going concern basis of accounting or that the Directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with this ISRE.
However, future events or conditions may cause the group to cease
to continue as a going concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the Directors
The Half Year Report, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The Directors are responsible for preparing the Half
Year Report in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. In preparing the Half Year Report, including the
interim financial statements, the Directors are responsible for
assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors
either intend to liquidate the Group or to cease operations, or
have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Half Year Report based on our review.
Our conclusion, including our conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the basis for conclusion paragraph of
this report. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
Birmingham
31 August 2022
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END
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September 01, 2022 02:02 ET (06:02 GMT)
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