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Highlights

Revenue £257.9m (8%) (excluding acquisitions) (2019: £279.1m)
Gross Margin 49.4% (1.8)% (2019: 51.2%)
Adjusted EBITDA1 £29.8m (30)% (excluding acquisitions) (2019: £42.4m)
Adjusted Profit Before Tax1 £8.5m £(14.2)m (excluding acquisitions) (2019: £22.7m)
(Loss)/Profit Before Tax £(1.5)m £(24.2)m (2019: £22.7m)
Adjusted EPS1 6.5p (12.8)p (excluding acquisitions) (2019: 19.3p)
EPS (2.0)p (21.3)p (excluding acquisitions) (2019: 19.3p)
Net Debt £58.3m £(10.4)m (excluding acquisitions) (2019: £68.7m)
Pre-IFRS 16 Net Debt £9.9m £(24.7)m (excluding acquisitions) (2019: £34.6m)
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1 Adjusted measures are before non-underlying income and costs, and the related tax effect. We use adjusted performance measures to assess business performance and they are provided here in addition to statutory measures to help describe the underlying results of the Group.

What we do

The UK's leading

MANUFACTURER, DISTRIBUTOR AND RECYCLER OF PVC PRODUCTS

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Total amount of profile produced

45.5ktonnes

Number of branches

208

Recycled product used in our rigid PVC profile

12.4ktonnes

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chairman big-arrow-right
Bob Lawson Chair
The business responded well to the unique challenges posed by COVID-19 and we continue to see good potential to outperform our markets and deliver sustainable growth in shareholder value.”
Bob Lawson Chair

Chair’s report

Well positioned

FOR 2021

Our priority was to protect the business and ensure the safety of all our people, customers and suppliers by mandating COVID-safe working practices. We also secured our financial position and substantially completed major investments in new operating capacity. This good work leaves the business well-placed for the future.

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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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Eurocell Building Plastics

14.4ktonnes1
of foam profile

Eurocell Profiles

45.5ktonnes1
of profile produced

Profile customers

c.400 fabricators
31.1k tonnes1 of rigid profile

Branch customers

Owner managed businesses and contractors

RMI2

Proportion of revenue in RMI market
c.85%

New Build

Proportion of revenue in new build housing market
c.10%

Public Sector

Proportion of revenue in public new build housing market
c.5%

Eurocell Recycle

12.4k tonnes1 of recycled compound consumed (23% of profile raw material consumed)

1 Tonnages shown are approximate based on 2020 volumes. 2 Repair, Maintenance and Improvement.
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Our Business Model

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What we do

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.

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.

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.

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 recycler.

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.

Solid profitability

We have a track record of solid profitability. We experienced some challenges with incremental volume in 2018/19, but our continued investment in expanding capacity and improving operational efficiency, coupled with strong sales growth, should drive increased returns.

Expanding the branch network (including larger format branches), whilst dilutive until new branches become established, should deliver healthy medium-term results as new branches mature.

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

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. This has allowed us to invest in working capital to support sales growth and protect the business from any raw material supply interruption that may take place.

Good return on sales

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

Progressive returns to shareholders

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

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.

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Our strategy

We have seven key strategic priorities

Our overall objective is to deliver sustainable growth in shareholder value by increasing sales and profits at above market growth rates through leadership in products, operations, sales, marketing and distribution.

Our key strategic priorities have evolved in-line with business needs:

We have seven key strategic priorities

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Target growth in market share

Increase market share of rigid PVC profiles to drive sales and profit growth in Profiles.

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Expand our branch network

Investment in existing estate and new branches to increase market share of foam PVC profiles, and drive sales and profit growth in Building Plastics.

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Increase the use of recycled materials

Increased use of recycled material to help mitigate raw material pricing pressure, as well as enhance the stability and reduce the carbon footprint of our manufactured products.

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Develop innovative new products

Maintain market leadership by offering the latest in product innovation.

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Explore potential bolt-on acquisitions

Consider acquisition opportunities when they arise.

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Deliver sustained operational excellence

Optimise returns on recent investment in manufacturing and warehousing capacity to enhance profits and return on sales.

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Develop a sector-leading digital proposition

Develop end-to-end digital solutions to enable our strategic priorities and improve the supplier, customer and employee experience.

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260,000 square feet

Our Strategy in action

Delivering

OPERATIONAL EXCELLENCE

Through 2016-19, the success of our commercial strategies resulted in a strong compound annual growth rate in sales of 12%. However, profits for that period were impacted by sales running substantially ahead of our expectations, thereby exceeding the available operating capacity and leading to inefficiencies and extra costs.

However, manufacturing and warehousing constraints have now been resolved through major investments in new capacity

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2020 Capital Expenditure allocation
New warehouse £8.0m
Manufacturing maintenance £2.5m
In Operations, we have been focused on improving our execution and on preparing the business for growth.”
Mark Hemming Chief Operating Officer
chief-operating-officer-img
In Operations, we have been focused on improving our execution and on preparing the business for growth.”
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