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Highlights

Our purpose

We always work to provide the best solutions for our customers through our technical expertise, our collaborative and supportive services, and by offering the widest product range.

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Revenue £279.1m 10% (excluding acquisitions) (2018: £253.7m)
Gross Margin 51.2% 1.7% (2018: 49.5%)
Adjusted EBITDA1,2 £42.4m 40% (2018: £30.3m)
Adjusted Profit Before Tax1,2 £22.7m 0.9% (2018: £22.5m)
Profit Before Tax2 £22.7m 2.7% (2018: £22.1m)
Adjusted EPS2 19.3p 1.0% (2018: 19.1p)
EPS 19.3p 1.5% (2018: 19.6p)
Total Dividends (per share) 9.6p 3.2% (2018: 9.3p)
Net Debt £34.6m £11.1m (2018: £23.5m)
1 Adjusted measures are before non-underlying income and costs, and the related tax effect. We use adjusted profit measures to assess business performance
and they are provided here in addition to statutory measures to help describe the underlying results of the Group.
2 2019 figures are stated after the impact of IFRS16.

Distribution network

We distribute through our nationwide network.

Number of branches
206

Manufacturing expertise

We manufacture both PVC rigid and foam products in our centrally located extrusion facilities.

Total amount of profile produced (tonnes)
55K

Sustainable sourcing

We have two recycling facilities which puts recycling at the heart of our operation.

Recycled product used in our rigid PVC profile (tonnes)
13.4K

Complementary acquisitions

We have three operating subsidiaries which manufacture and distribute products to complement the Eurocell core business.

Total operating profit (pre IFRS 16) generated from operating subsidiaries in 2019
£2.1m
What we do

A sustainable business

We operate our business through two divisions that reflect the principal routes to market for our products: Profiles and Building Plastics.

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CHAIR'S REPORT

Progressing to a sustainable future

In 2019 we made good progress with our strategic priorities and, against generally weak or subdued end markets, continued to consolidate our strong market positions in both divisions. The substantial investments we have made in recycling leave Eurocell as the leading UK-based recycler of PVC windows, demonstrating clearly that sustainability sits right at the heart of our business.

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chairman
Our substantial investments in recycling demonstrate that sustainability sits right at the heart of our business. Bob Lawson Chair

Distribution

Profile customers

c.375 fabricators

38k tonnes1

of rigid profile

Branch customers

Owner managed businesses and contractors

Our markets

RMI2

Proportion of revenue in RMI market

>80%
New Build

Proportion of revenue in new build housing market

>10%
Public Sector

Proportion of revenue in public new build housing market

<5%

Recycling

Eurocell Recycle
13.4k tonnes1

of recycled compound consumed
(23% of profile raw material consumed)

Manufacturing

Eurocell Profiles
55k tonnes1

of profile produced

Eurocell Building Plastics
17k tonnes1

of foam profile

1 Tonnages shown are approximate based on 2019 volumes.
2 Repairs, Maintenance and Improvements.
Our operation

A vertically integrated model to maximise efficiency

The coordination of our manufacturing, distribution processes and recycling activities, help us to be efficient throughout all stages of our value chain.

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business model

We endeavour to deliver sustainable growth in shareholder value by increasing sales and profits at above market level growth rates; leveraging the Eurocell brand and the advantages of our vertically integrated business model.

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We manufacture

We are a leading manufacturer of rigid and foam PVC profiles, composite and PVC entrance doors for the window and building home improvement sectors. Our manufacturing process uses raw materials including PVC resin and our own produced recycled material.

55k tonnes produced in 2019

We distribute

The Profiles division supplies our manufactured profile to a network of fabricators, who in turn supply end products to installers, retail outlets and house builders.

The Building Plastics division sells, through its network of branches, our manufactured foam products and entrance doors, along with a range of third-party related products, as well as windows fabricated by third parties using products manufactured by the Profiles division. Customers are mainly installers, small builders, roofing contractors and independent stockists.

>1.5million products delivered in 2019

We recycle

We recycle both customer factory offcuts (‘post-industrial’ waste) and old windows that have been replaced with new ('post-consumer' waste). The recycled material is used to generate brand new extruded plastic products.

>3million windows recycled in 2019

Vertically integrated model

The coordination of our procurement, manufacturing and distribution processes enables us to capture margin throughout all stages of our value chain.

Our recycling activities help lower material costs and improve product stability.

Scale

We operate well-invested and modern extrusion facilities.

We are the UK’s largest window recycling operator.

Our extensive branch network is a driver of sales growth and market share. It also helps improve manufacturing efficiency, with pull-through demand driving higher factory utilisation.

Innovative products

We are committed to a strategy of continually developing new and existing products.

We support the use of Building Information Modelling ('BIM') software, giving architects and contractors access to a library of Eurocell products, making it easier to specify them.

Brand strength

We have a strong brand image and our marketing activities seek to maximise our brand awareness.

People and culture

Our experienced management team have a proven track record of achieving growth.

Our corporate culture is one of openness, trust, encouragement and clarity of purpose. We train and empower our people to help our customers grow their businesses.

Local footprint

Our branches are conveniently located and have readily available inventory, thereby providing excellent service to local customers and national groups alike.

We also strive to help our customers through the provision of technical, business development and marketing support services.

Sales growth

Our initiatives to support sales and deliver high levels of customer service differentiate Eurocell from our competitors. We expect this to drive good sales growth.

Sales growth
(excluding acquisitions)
8%

Solid profitability

We have a track record of solid profitability. We experienced some challenges with incremental volume in 2018/19, but expect our strong sales growth to drive increased profits in the future.

Expanding the branch network, whilst dilutive until new branches become established, should deliver healthy medium-term returns as new branches mature.

Increased use of recycled materials can help mitigate raw material pricing pressure.

Profit before tax £22.7m

Good cash generation

Our operating cash flow conversion is good, particularly in Building Plastics, where a high proportion of customers pay at point of sale or shortly thereafter.

Net cash generated from
operating activities
£26.4m

Good return on sales

Our strong brand, well-invested facilities and capital-light branch expansion programme deliver a good return on sales.

Return on sales1 15%

Progressive returns to shareholders

Our dividend policy, supported by sales growth and cash generation, deliver progressive dividend returns to shareholders.

Total dividends returned to shareholders since IPO in 2015 £38m
1 Return on sales is Adjusted EBITDA/revenue.

Shareholders

Our overall strategic objective is to deliver sustainable growth in shareholder value.

Employees

We work hard to train and develop our people, and provide rewards commensurate with our goal to be an employer of choice.

Fabricators

Through high-quality products and a strong focus on customer service, we have developed a very loyal customer base.

Small builders & installers

The independent sole traders that visit our branches benefit from the one-stop shop offering we provide.

House builders

House builders appreciate the quality of our products and benefit from Eurocell coordinating our fabricators’ offering to meet their requirements.

Installers

We aim to make our products as easy as possible to work with, which is very attractive to our direct or indirect installer base.

Our overall objective is to deliver sustainable growth in shareholder value by increasing sales and profits at above market level growth rates through leadership in products, operations, sales, marketing and distribution. We have five key strategic priorities:

Strategic Priorities

OUR STRATEGY

We intend to leverage the Eurocell brand, and the advantages that our vertically integrated business model with local distribution offers over our competitors, in order to grow our market share.

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Corporate social
responsibility

One team driving world class sustainable solutions

Our CSR focus

People Environment Customers Suppliers Government Non-Financial Information Statement Community
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Our Vision and Values

Our people are at the heart of our success. We believe that engaging all employees and galvanising their efforts in line with the Company’s Vision and Values will set us on a successful path to achieving all our business objectives.

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