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The level of UK economic activity, in particular the state of the repair, maintenance and improvement (RMI) and new build housing markets, are important drivers of our performance.

External Market Driversplus

EUROCELL MARKETS AND DRIVERS plus

PRIVATE HOME IMPROVEMENT (RMI)

The RMI market is currently subdued, reflecting: uncertainty over the impact of Brexit, the potential for further increases in interest rates and the relatively weak growth in real wages over the last few years.

  • Demand is influenced by the state of the economy – the resulting impact on the housing market and consumer confidence influence demand.
  • Housing market – home owners may choose to improve or extend their existing property rather than move house, which can be positive for Eurocell.
  • Retirement housing – planned improvements to retirement housing and increased availability of funds following changes to pension scheme rules may.

PUBLIC NEW BUILD HOUSING

This sector represents a very small proportion of the UK housing market, as government policies are targeted towards increasing private sector affordable housing rather than public sector social housing.

  • Right to Buy scheme – enables council and housing association tenants to buy their homes at a discount, therefore a reduction in public sector housing stock is expected as a result of the scheme.
  • Rent caps – may reduce the financing available for new development.
  • Rental property development – housing associations have relied on market sales to raise capital, weaker house price growth and fewer transactions will likely hamper this.

PRIVATE NEW BUILD HOUSING

New build growth has been strong in recent years. However, some of the large house builders have reported a softening in recent months.

  • Macroeconomic environment – uncertainty suggests affordability will likely remain a key issue.
  • Help to Buy scheme – continues to support demand.
  • Housing shortage – on-going positive government intervention remains a possibility.

SOCIAL HOUSING IMPROVEMENT

  • Decent Homes Programme and the Energy Company Obligation (‘ECO’) scheme both ended in 2017 – under these schemes the support typically came in the form of heating packages, insulation and energy efficient windows.

Eurocell Revenue by Market (%)plus

Whilst private home improvement and, increasingly, new build housing are the most important market segments for Eurocell, social housing improvement and public new build are also covered.

MARKETS FOR EUROCELL PRODUCTSplus

The product groups specific to Eurocell are currently expected to be flat over the next two years.

SUMMARY

Despite a subdued RMI market and the prevailing economic uncertainty, we are confident that our strategic initiatives (described in Our Strategy), will deliver above market level growth rates for Eurocell.

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