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Eurocell plc  -  ECEL   

Half year results

Released 07:00 02-Aug-2017

RNS Number : 8186M
Eurocell plc
02 August 2017
 

2 August 2017

 

EUROCELL PLC (Symbol: ECEL)

HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2017

A good first half - gaining share in a flat RMI market

Eurocell plc is a market leading, vertically integrated UK manufacturer, distributor and recycler of innovative window, door and roofline PVC products

 

H1 2017

 H1 2016

Change

Key financial performance measures

 

 

 

Revenue (£ million)

108.1

97.2

11%

Gross margin %

51.4%

52.1%

(0.7%)

Adjusted EBITDA (£ million) (1) (4)

14.9

14.2

5%

Adjusted profit before tax (£ million) (2)

11.3

10.7

6%

Adjusted basic earnings per share (pence) (3)

9.4

8.7

8%

Interim dividend per share (pence)

3.0

2.8

7%

Net debt (£ million) (5)

20.8

31.3

(£10.5m)

Other statutory accounting measures

 

 

 

Profit before tax (£ million)

10.8

10.3

5%

Basic earnings per share (pence)

8.9

8.4

6%

 

Financial Highlights

·    Good sales growth of 9% (excluding acquisitions)

·    Gross margin reduction reflects the impact of raw material price inflation

·    Robust cash flow and net debt performance, despite significant investment in business expansion

 

Operational Highlights

·    On track to open 30 new branches this year, with 15 new sites in H1 2017

·    Initiatives driving strong growth in private sector new build business

·    Increased use of recycled material in manufactured products to 15% (H1 2016: 13%)

 

Mark Kelly, Chief Executive of Eurocell plc said:

"Eurocell has enjoyed a good first half, gaining share in a flat RMI market. We reported robust financial results, delivered another consistent operational performance and continued to invest in the growth of our business.

 

We are implementing selling price increases to mitigate raw material pricing pressure where possible, but the market does lag supplier price rises. We continue to manage underlying operating costs tightly, whilst progressing further our strategic priorities.

 

As a result, despite some signs of market hesitancy, our expectations for the full year remain unchanged. We believe that our proven strategy and capabilities will enable Eurocell to deliver value to our customers and shareholders throughout the remainder of 2017 and beyond."

 

NOTES FOR ANALYSTS AND EDITORS

Financial Review

·    Revenue growth of 9% (excluding acquisitions) includes:

-     Underlying(6) sales growth of 6%

Profiles division organic sales growth of 6%

Building Plastics division like for like(7) sales growth of 6%

-     Sales from branches opened in 2016 and 2017 of £2.3 million

·    Gross margin 51.4% (H1 2016: 52.1%)

-     Raw material price pressure, including resin prices up 11% in 2017 (17% in the last 12 months)

-     Larger fabricators growing strongly, taking a greater share of the available volume mix

·    Operating costs include the impact of acquisitions and investment in new branches

-     Underlying(6) operating cost increase of 4%

·    Tax rate on adjusted profit before tax of 17.2% includes the benefit of Patent Box(8) relief

·    Capital investment of £3.6 million (H1 2016: £2.7 million)

·    Interim dividend of 3.0 pence per share (H1 2016: 2.8 pence per share) up 7%

 

Business Review

·    Building customer prospect pipeline in the Profiles division

-     Moving a number of new trade fabricators on to Eurocell systems in H2

·    Increased sales of windows through branches to £3.8 million (H1 2016: £3.3 million)

-     Implementing configuration software across the branch network, with common pricing and specifications

·    Warehouse operations back in-house from February 2017 to enhance customer service

-     Improved on-time in-full deliveries to 96% (full year 2016: 91%)

·    Security Hardware acquired in February 2017 for consideration of £1.3 million

-     Supplier of locks, hardware and spares to the RMI market, with annual sales of £3 million

-     Developing the spares proposition for our branches

 

Notes:

(1)   Adjusted EBITDA represents earnings before interest, tax, depreciation, amortisation and non-recurring costs.

(2)   Adjusted profit before tax represents profit before tax and non-recurring costs.

(3)   Adjusted basic earnings per share excludes non-recurring costs and the related tax effect.

(4)   Non-recurring costs for H1 2017 of £0.5 million comprise professional fees and earn out costs related to the acquisition of Security Hardware, as well as the redundancy and settlement costs of a staff reorganisation. Non-recurring costs for H1 2016 of £0.5 million comprise duplicated costs relating to the handover period during which the Company employed two CEO's, as well as professional fees related to the acquisition of Vista Panels.

(5)   Net debt is cash and cash equivalents less bank overdrafts, other loans and borrowings.

(6)   Underlying sales and operating costs exclude acquisitions and branches opened in 2016 and 2017.

(7)   Like for like branch sales exclude branches opened in 2016 and 2017.

(8)   An HMRC approved scheme, allowing a 10% tax rate on profits derived from products that incorporate patents.

 

 

Enquiries:

 

Eurocell plc

Teneo Blue Rubicon

Mark Kelly, Chief Executive Officer

Ben Foster

+44 (0) 1773 842 105

+44 (0) 20 3603 5221

 

 

Michael Scott, Chief Financial Officer

Camilla Cunningham

+44 (0) 1773 842 140

+44 (0) 20 3757 9235

 

~~~~~~~~~~~~~~~~~~~~~~~

 

CHIEF EXECUTIVE'S REVIEW

I am pleased to report a good performance in the first half of the year. The RMI market has remained broadly flat, but we have continued to take share and delivered higher revenues and profits. Overall, sales were up 9% (excluding acquisitions) and adjusted EBITDA was up 5% and in line with our expectations. Further information on financial performance is provided in the Group Financial Review.

 

STRATEGIC PRIORITIES

As reported earlier this year, in January we conducted a full review of the Company's strategy and the fundamental elements of our markets and activities. At the conclusion of this process, we reaffirmed that our overall objective remains to deliver sustainable growth in shareholder value by increasing sales and profits at above market level growth rates.

 

We have five clear strategic priorities to help us achieve our overall objective:

·          Target growth in market share

·          Expand the branch network

·          Develop innovative new products

·          Increase the use of recycled materials

·          Explore potential bolt-on acquisition opportunities

 

We have made further progress with these priorities during H1, with the key aspects described below.

 

OPERATIONAL PERFORMANCE

Health and safety

The safety and well-being of our employees and contractors is our first operational priority. We continue to maintain good safety performance and recorded no major injuries in H1 2017 under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013 (RIDDOR).

 

We have however recently received notification from the Health and Safety Executive ('HSE') that they intend to prosecute the Company under the Health and Safety at Work Act, following a minor accident to an employee in August 2016. We are taking legal advice on the matter, with proceedings due to commence in August.

 

Production

We delivered another consistent production performance in H1 2017. Across our various sites we are working to standardise processes and share best practice wherever possible. This, together with judicious capital investment, on-going work on lean manufacturing techniques and continuous improvement driven by our Kaizen team, supports the delivery of on-going manufacturing efficiencies.

 

Warehouse logistics

We reported at our preliminary results in March that, following a period of outsourcing to DHL, the operation of our main warehouse facility was brought back in-house with effect from February 2017.

 

We have worked, with the full cooperation of DHL, to understand how the arrangements could be better structured to deliver a more efficient operation and improved customer service levels. We have made good progress, with on-time in-full deliveries increased to 96%, compared to 91% for full year 2016.  Initiatives include shorter production run times and revised warehouse shift patterns, with picking and relationship teams assigned to specific key accounts.

 

Recycling

The project to expand the capacity of our recycling facility remains on track. Use of recycled materials in our primary extrusion manufacturing processes increased to 15% in the first half, compared to 13% in H1 2016.

 

Our efforts to secure increased supplies of in-feed stock for the recycling plant are proving successful, with collections up 26% so far this year, compared to H1 2016. These initiatives include back-hauling material from our fabricator, installer and branch networks. This is an important programme, which should support our objective to continue to increase our use of recycled materials. 

 

PROFILES DIVISION REVIEW

 

H1 2017

£m

H1 2016

£m

Change

%

3rd party revenue

46.4

42.4

9

      Organic

41.7

39.3

6

Vista Panels(1)

4.7

3.1

52

Inter-segmental revenue

21.8

18.9

15

Total revenue

68.2

61.3

11

Adjusted EBITDA

11.7

11.4

3

(1) Acquired March 2016

 

Profiles revenue

Profiles third party revenue was up 9% in H1 to £46.4 million (H1 2016: £42.4 million), which includes an organic sales increase of 6%. The remaining growth was driven by the acquisition of Vista Panels in March 2016.

 

We have continued to gain share, with the RMI market (the most significant external driver of our performance) remaining broadly flat during H1 2017.

 

Our larger trade fabricators are still growing strongly, taking a greater share of the available volume mix. Generally, the larger trade fabricators have been increasing their capacity, by extending or adding factory units and investing in new plant and machinery. As such, they are benefiting from economies of scale and automation, which is allowing them to grow share at the expense of smaller fabricators.

 

In addition, on a number of trade accounts we have become a second supplier, which delivers some limited volume growth but importantly serves to protect margin, by avoiding excessive selling price competition. We are building our customer prospect pipeline and will be moving a number of new trade fabricators on to Eurocell systems during H2.

 

We have also continued to see good growth in the private new build sector, where our specifications teams have been successful in generating demand, well supported by our ability to supply excellent products through the new build fabricator network.

 

Finally, Vista Panels (acquired in March 2016) continues to perform in line with our expectations, with 39% of door sales now channelled through our branch network (H1 2016: 36%).

 

Profiles adjusted EBITDA

Adjusted EBITDA in H1 2017 was £11.7 million (H1 2016: £11.4 million), an increase of 3%.

 

Gross margin and return on sales in the Profiles division are lower in H1 2017, largely as a result of increasing raw material price pressure, particularly for resin. We are implementing selling price increases to mitigate this where possible, but the market does lag supplier price rises. In addition, margins have been impacted by a shift in sales mix towards larger fabricators at the expense of smaller customers as described above. The increase in adjusted EBITDA is therefore a function of sales growth.

 

BUILDING PLASTICS DIVISION REVIEW

 

H1 2017

£m

H1 2016

£m

Change

%

3rd party revenue

61.8

54.8

13

      Organic

60.7

54.8

11

Security Hardware(1)

1.1

-

n/a

Inter-segmental revenue

0.3

0.3

-

Total revenue

62.1

55.1

13

Adjusted EBITDA

3.2

2.7

19

(1) Acquired February 2017

 

Building Plastics revenue

Building Plastics revenue was up 13% to £61.8m (H1 2016: £54.8m), which includes an increase in like for like sales of 6%, as well as the impact of branch openings and the acquisition of Security Hardware.

 

Like for like sales includes growth from branches opened in 2015 and prior, as the more recent sites from that vintage begin to mature. Growth was bolstered by increased sales of windows through the branch network, which were £3.8 million in H1 2017, compared to £3.3 million last year. We are implementing configuration software across the network, using common pricing and specifications for windows supplied to all Eurocell branches. This is proving successful and we will develop the software to incorporate products such as Skypod and doors.

 

Like for like growth also includes some benefit from an initiative to improve our proposition as a one-stop shop for customers, via the roll-out of an additional 500 product lines in 2016. In addition, the acquisition of Vista Panels has supported growth in the sales of doors through the branches, which reached £3.1 million in H1 2017 (H1 2016: £2.6m).

 

In terms of new branches, we opened 15 in H1, compared to 7 in the first half of last year. We now have a total of 174 branches providing national coverage across the UK, which offers a significant competitive advantage, and remain on track to open a total of 30 new sites this year. Branches opened in 2016/17 added £2.3 million to sales in H1 2017.

 

Building Plastics adjusted EBITDA 

Adjusted EBITDA for H1 2017 was £3.2 million (H1 2016: £2.7 million), an increase of 19%.

 

Gross margin and return on sales were both slightly improved during the first half compared to H1 2016. Although we continue to experience price pressure on raw materials and some traded goods, this has to date been substantially mitigated with a selling price increase implemented in April 2017. The increase in adjusted EBITDA is therefore driven largely by sales growth.

 

Higher overheads in Building Plastics includes important investment to accelerate the pace of expansion of our branch network described above. New branches are a key driver of future sales and profit growth, but they do create downward pressure on profitability in the short-term due to investment in central infrastructure and in our teams at new sites. However, we are making good progress with initiatives to support new branches reaching profitability sooner, which now include a more comprehensive and sustained marketing campaign.

 

Looking to the future, following trials in the first quarter, we have now rolled-out Peer Pricing across the full branch network. This is a mechanism which displays to branch staff at point of sale the average historic selling prices for products sold by their branch, region and nationally across the Eurocell Group. We expect Peer Pricing to support margin in the branches.

 

Security Hardware

The Building Plastics division also includes Security Hardware, acquired in February 2017 for consideration (net of cash acquired) of £1.3 million. Security Hardware is a supplier of locks and hardware, primarily to the RMI market, with annual sales of approximately £3 million.

 

Security Hardware stocks around 3,000 products, covering the major hardware brands and an own label offering. This extensive product range enables the business to supply a significant proportion of the replacement parts routinely required by the RMI market.

 

The acquisition means we can offer the full product range throughout our branch network, allowing Eurocell to better engage with facilities management companies and other large maintenance contractors. This forms another part of our objective to become a one-stop shop for anything window related for our customers. We also plan to develop a range of hardware to complement our window profile. This will enable our fabricator customers to offer a fully certified common specification of window (including hardware), allowing us to target a greater share of the new build market and grow sales of windows through the branches.

 

The business is performing in line with our expectations and the integration is on track, with inventory now available in every branch.

 

OUTLOOK

Eurocell has enjoyed a good first half, gaining share in a flat RMI market. We reported robust financial results, delivered another consistent operational performance and continued to invest in the growth of our business.

 

We are implementing selling price increases to mitigate raw material pricing pressure where possible, but the market does lag supplier price rises. We continue to manage underlying operating costs tightly, whilst progressing further our strategic priorities.

 

As a result, despite some signs of market hesitancy, our expectations for the full year remain unchanged.

We believe that our proven strategy and capabilities will enable Eurocell to deliver value to our customers and shareholders throughout the remainder of 2017 and beyond.

 

 

Mark Kelly

Chief Executive Officer

 

 

GROUP FINANCIAL REVIEW

Group

H1 2017 £000

H1 2016 £000

Revenue

108,129

97,220

Gross profit

55,607

50,661

Gross margin %

51.4%

52.1%

Overheads (1)

(40,667)

(36,441)

Adjusted EBITDA

14,940

14,220

Depreciation and amortisation

(3,312)

(3,069)

Adjusted operating profit

11,628

11,151

Finance costs

(282)

(403)

Adjusted profit before tax

11,346

10,748

Tax on adjusted profit

(1,949)

(2,029)

Adjusted profit after tax

9,397

8,719

Adjusted basic earnings per share (pence)

9.4

8.7

 

 

 

Non-recurring costs

(539)

(455)

Reported profit before tax

10,807

10,293

Reported basic earnings per share (pence)

8.9

8.4

(1) Overheads represent distribution and administrative expenses excluding depreciation and amortisation.

 

REVENUE

Revenue for H1 2017 was £108.1 million (H1 2016: £97.2 million), which represents growth of 11%, or 9% excluding acquisitions. Underlying sales growth (i.e. excluding the impact of acquisitions and branches opened in 2016/17) was 6%.

 

As described in the Divisional Reviews, sales have been driven by strong like for like growth in the Building Plastics branch network (£3.5 million, or 6% for the division) and the positive impact from branches opened in 2016/17 (£2.3 million, or 4% for the division). We have also delivered good organic growth in Profiles (£2.4 million, or 6% for the division). Together, the acquisitions of Vista Panels and Security Hardware added £2.7 million to sales in H1 2017. 

 

GROSS MARGIN 

We have experienced increasing price pressure for raw materials and traded goods, with resin in particular up 11% so far this year and 17% over the last 12 months. In addition, margins have been impacted by the sales mix, with stronger growth in sales to larger fabricators relative to smaller customers.

 

As described in the Divisional Reviews, these factors have been mitigated by the implementation of selling price increases where possible, and the increased use of recycled materials in our primary extrusion operations.

 

Overall, this has resulted in a reduction in our gross margin from 52.1% in H1 2016 to 51.4% in H1 2017.

 

OVERHEADS

Overheads for the half year were £40.7 million compared to £36.4 million in H1 2016, representing a very similar percentage of sales for both periods. The increase includes £1.6 million as a result of new branches opened in 2016/17 and £1.4 million from acquisitions. The balance of £1.3 million relates to an increase of 4% in the underlying business, where sales growth was 6% as described above. We continue to focus on the tight control of underlying overheads, with the increase driven largely by the impact of the Minimum Wage legislation and higher volume related distribution costs.

 

DEPRECIATION AND AMORTISATION 

Depreciation and amortisation for H1 2017 is £3.3 million (H1 2016: £3.1 million), with the increase due to amortisation of acquired intangibles relating to the acquisitions of Vista and Security Hardware.

 

FINANCE COSTS

Finance costs for H1 2017 were £0.3 million (H1 2016: £0.4 million), reflecting lower average net debt in 2017.

 

ADJUSTED PROFIT MEASURES

Adjusted EBITDA, adjusted operating profit and adjusted profit before tax all exclude non-recurring costs (see below). Adjusted profit after tax and adjusted earnings per share exclude non-recurring costs and the related tax effect.

 

Adjusted profit measures are provided as additional guidance to statutory measures to help better describe the underlying performance of the Group.

 

NON-RECURRING COSTS

Non-recurring costs for H1 2017 of £0.5 million comprise professional fees and earn out costs related to the acquisition of Security Hardware, as well as the redundancy and settlement costs of a staff reorganisation. Non-recurring costs for H1 2016 of £0.5 million comprise duplicated costs relating to the handover period during which the Company employed two CEO's, as well as professional fees related to the acquisition of Vista Panels.

 

TAX

The effective tax rate on adjusted profit before tax for H1 2017 of 17.2% was lower than the standard corporation tax rate for this year due to the benefit of Patent Box relief. The effective rate on adjusted profit before tax for H1 2016 of 18.9% was close to the standard rate for that period. The effective tax rate on reported profit before tax for H1 2017 was 17.4% (H1 2016: 18.8%).

 

The full year tax rate for 2016 of 17.7% was lower than the standard rate due to the beneficial impact on deferred tax of future reductions in the corporation tax rate enacted in the period, as well as adjustments to prior year taxes.

 

EARNINGS PER SHARE

Taking into account all of the factors described above, adjusted basic earnings per share for the period was 9.4 pence (H1 2016: 8.7 pence). Reported basic earnings per share was 8.9 pence (H1 2016: 8.4 pence). The dilutive impact of outstanding share options is not significant.

 

ACQUISITIONS 

As previously described, the Group acquired Security Hardware in February 2017 for an initial consideration of £1.3 million (net of cash acquired, see also Cash Flow below). The impact of Security Hardware on Group earnings for 2017 is not expected to be material. 

 

DIVIDENDS 

On 1 August 2017, the Board approved an interim dividend for the six months ended 30 June 2017 of 3.0 pence per share (£3.0 million), representing an increase of 7% on the corresponding period. This is in line with the policy set out at our IPO, to target initially a dividend of approximately 40% of adjusted earnings, with a progressive policy in future years, and with interim and final dividends in the approximate proportions of one-third and two-thirds.

 

The interim dividend will be paid on or before 6 October 2017 and shares will be marked ex-dividend on 8 September 2017.

 

CAPITAL EXPENDITURE 

We continue to invest in our future, with capital expenditure for H1 2017 of £3.6 million (H1 2016: £2.7 million). Capital expenditure includes investment to increase our recycling capacity of £0.6 million and in new branches opened in H1 2017 of £1.0 million. Investment of £0.8 million in Operations includes new tooling costs and general maintenance capex. Other capital expenditure of £1.2 million includes branch refurbishments and various IT related costs.

 

CASH FLOW 

Net cash generated from operating activities was £10.3 million for the period, compared to £9.7 million in H1 2016.

 

This includes a net outflow from working capital for H1 2017 of £1.8 million, comprised of an increase in stocks (£2.5 million), an increase in trade and other receivables (£5.8 million) and an increase in trade and other payables (£6.5 million). This compares to a net outflow from working capital of £3.3 million in H1 2016. It also includes tax paid of £2.6 million (H1 2016: £1.2 million).

 

The increase in stocks so far this year has been driven largely by the 15 new branches, as well as the introduction of new product lines to the branch network. However, stock days were 58 at 30 June 2017, compared to 67 at 30 June 2016 and 58 at 31 December 2016. The changes to trade receivables and payables reflect normal business seasonality, alongside increased activity and growth in 2017.

 

Other payments include acquisitions of £1.3 million (H1 2016: £6.3 million), capital investment of £3.6 million (H1 2016: £2.7 million) and financing costs of £0.3 million (H1 2016: £0.3 million).

 

Dividends paid in H1 2017 represent the final dividend for 2016 of 5.7 pence per share (or £5.7 million). (H1 2016: 2015 final dividend of £5.2 million)

 

Taking all of these factors into account, net debt increased by £0.5 million during the first half to £20.8 million at 30 June 2017 (31 December 2016: £20.3 million).

 

BANK FACILITIES 

We have an unsecured, multicurrency, revolving credit facility of £45 million, provided by Barclays and Santander. The Group operates comfortably within the terms of the facility and related financial covenants. The facility matures in 2020.

 

SEASONALITY OF TRADING

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 our peak sales period. In addition, the new build markets are typically slow during the first quarter of the year.

 

PRINCIPAL RISKS AND UNCERTAINITIES

The principal risks and uncertainties faced by the Group are set out in the 2016 Annual Report (pages 36-39). These risks remain unchanged and are as follows:

·      Macro-economic conditions

·      EU Referendum

·      Raw material prices

·      Raw material supply

·      Unplanned plant downtime

·      Corporate and regulatory risks

·      Unsuccessful branch openings

·      Customer credit risks

·      Failure to develop new products

·      Ability to attract and retain key personnel and highly skilled individuals

·      Cyber security

·      Failure to identify, complete and integrate bolt-on acquisitions

 

 

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 International Accounting Standard 34 'Interim Financial Reporting' (IAS 34) as adopted by the EU 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

1 August 2017                                                                                     1 August 2017

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ending 30 June 2017

 

 

6 months ended 30 June 2017

 

6 months ended 30 June 2016

 

Year ended 31 December 2016

 

 

 

Recurring

Non-recurring

 

Total

 

 

Recurring

Non-recurring

 

Total

 

 

Recurring

Non-recurring

 

Total

 

 

£000

£000

£000

 

£000

£000

£000

 

£000

£000

£000

 

Note

(Unaudited)

(Unaudited)

(Unaudited)

 

(Unaudited)

(Unaudited)

(Unaudited)

 

(Audited)

(Audited)

(Audited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

5

108,129     

-

108,129

 

97,220     

-

97,220

 

204,816

-

204,816

Cost of sales

 

(52,522)

-

(52,522)

 

(46,559)

-

(46,559)

 

(98,251)

-

(98,251)

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

55,607

-

55,607

 

50,661

-

50,661

 

106,565

-

106,565

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution costs

 

(8,158)

-

(8,158)

 

(7,145)

-

(7,145)

 

(15,517)

-

(15,517)

Administrative expenses

 

(35,821)

(539)

(36,360)

 

(32,365)

(455)

(32,820)

 

(66,096)

(455)

(66,551)

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

11,628

(539)

11,089

 

11,151

(455)

10,696

 

24,952

(455)

24,497

Finance expense

 

(282)

-

(282)

 

(403)

-

(403)

 

(677)

-

(677)

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before tax

 

11,346

(539)

10,807

 

10,748

(455)

10,293

 

24,275

(455)

23,820

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxation

7

(1,949)

66

(1,883)

 

(2,029)

89

(1,940)

 

(4,299)

81

(4,218)

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

9,397

(473)

8,924

 

8,719

(366)

8,353

 

19,976

(374)

19,602

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share (pence)

 

9

9.4

 

8.9

 

8.7

 

8.4

 

20.0

 

19.6

 

 

The group has no other comprehensive income in the current or prior year.

 

  

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2017

 

 

 

30 June 2017

30 June 2016

31 December 2016

 

 

£000

£000

£000

 

Note

(Unaudited)

(Unaudited)

(Audited)

Assets

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

11

29,876

27,713

29,294

Intangible assets

11

20,151

20,119

19,713

 

 

 

 

 

Total non-current assets

 

50,027

47,832

49,007

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

20,846

18,886

17,404

Trade and other receivables

 

34,267

31,255

28,123

Cash and cash equivalents

 

4,993

2,580

5,559

 

 

 

 

 

Total current assets

 

60,106

52,721

51,086

 

 

 

 

 

Total assets

 

110,133

100,553

100,093

 

 

 

 

 

Liabilities

 

 

 

 

Current liabilities

 

 

 

 

Bank overdrafts and other loans

 

(18)

(53)

(42)

Trade and other payables

 

(36,478)

(29,964)

(29,042)

Provisions

 

(48)

(48)

(48)

Corporation tax

 

(2,185)

(1,980)

(2,873)

 

 

 

 

 

Total current liabilities

 

(38,729)

(32,045)

(32,005)

 

 

 

 

 

Non-current liabilities

 

 

 

 

Borrowings

 

(25,818)

(33,832)

(25,785)

Trade and other payables

 

(350)

(355)

(520)

Provisions

 

(1,351)

(1,442)

(1,463)

Deferred tax

 

(2,182)

(3,020)

(2,194)

 

 

 

 

 

Total non-current liabilities

 

(29,701)

(38,649)

(29,962)

 

 

 

 

 

Total liabilities

 

(68,430)

(70,694)

(61,967)

 

 

 

 

 

Net assets

 

41,703

29,859

38,126

 

 

 

 

 

Equity attributable to equity holders of the parent

 

 

 

 

Share capital

 

100

100

100

Share premium

 

1,926

1,926

1,926

Other reserves

 

701

530

348

Retained earnings

 

38,976

27,303

35,752

 

 

 

 

 

Total equity

 

41,703

29,859

38,126

 

CONSOLIDATED CASH FLOW STATEMENT

For the six months ending 30 June 2017

 

 

 

6 months ended

6 months ended

Year

ended

 

 

30 June 2017

30 June 2016

31 December 2016

 

 

£000

£000

£000

 

Note

(Unaudited)

(Unaudited)

(Audited)

 

 

 

 

 

Cash generated from operations

12

12,677

10,711

31,782

Non-recurring costs

6

539

455

455

 

 

 

 

 

Cash generated from underlying operations

 

13,216

11,166

32,237

 

 

 

 

 

Income taxes paid

 

(2,610)

(1,158)

(3,537)

Non-recurring costs paid

 

(332)

(273)

(273)

 

 

 

 

 

Net cash generated from operating activities

 

10,274

9,735

28,427

 

 

 

 

 

Investing activities

 

 

 

 

Acquisition of subsidiary, net of cash acquired

10

(1,260)

(6,332)

(6,332)

Purchase of property, plant and equipment

11

(3,046)

(2,129)

(6,342)

Purchase of intangible assets

11

(535)

(567)

(877)

 

 

 

 

 

Net cash used in investing activities

 

(4,841)

(9,028)

(13,551)

 

 

 

 

 

Financing activities

 

 

 

 

Proceeds from bank borrowings

 

-

8,000

8,000

Repayment of bank borrowings

 

(24)

(485)

(8,523)

Finance costs paid

 

(275)

(291)

(643)

Dividends paid to equity shareholders

8

(5,700)

 (5,200)

(8,000)

 

 

 

 

 

Net cash (used in)/generated from financing activities

 

(5,999)

 2,024

(9,166)

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

(566)

2,731

5,710

Cash and cash equivalents at the beginning of the period

 

5,559

(151)

(151)

Cash and cash equivalents at the end of the period

 

4,993

2,580

5,559

 

 

 

 

 

Net debt

 

 

 

 

Cash and cash equivalents

 

4,993

2,580

            5,559

Bank overdrafts and other loans

 

(18)

(53)

(42)

Bank loans

 

(25,818)

(33,832)

(25,785)

 

 

 

 

 

 

 

(20,843)

(31,305)

(20,268)

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

 

£000

£000

£000

£000

£000

 

 

 

 

 

 

Balance at 1 January 2017

100

1,926

35,752

348

38,126

 

 

 

 

 

 

Comprehensive income for the period

 

 

 

 

 

Profit for the period

-

-

8,924

-

8,924

 

 

 

 

 

 

Total comprehensive income for the period

-

-

8,924

-

8,924

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

Share based payments

-

-

-

289

289

Deferred tax on share based payments

-

-

-

64

64

Dividends paid (note 8)

-

-

(5,700)

-

(5,700)

 

 

 

 

 

 

Total contributions by and distributions to owners

-

-

(5,700)

353

(5,347)

 

 

 

 

 

 

Balance at 30 June 2017

100

1,926

38,976

701

41,703

 

 

 

 

 

 

 

£000

£000

£000

£000

£000

 

 

 

 

 

 

Balance at 1 January 2016

100

1,926

24,150

380

26,556

 

 

 

 

 

 

Comprehensive income for the period

 

 

 

 

 

Profit for the period

-

-

8,353

-

8,353

 

 

 

 

 

 

Total comprehensive income for the period

-

-

8,353

-

8,353

 

Contributions by and distributions to owners

 

 

 

 

 

Share based payments

-

-

-

127

127

Deferred tax on share based payments

-

-

-

23

23

Dividends paid (note 8)

-

-

(5,200)

-

(5,200)

 

 

 

 

 

 

Total contributions by and distributions to owners

-

-

(5,200)

150

(5,050)

 

 

 

 

 

 

Balance at 30 June 2016

100

1,926

27,303

530

29,859

 

For the year ended

31 December 2016 (Audited)

Share capital

Share premium

Retained earnings

Other reserves

Total equity

 

£000

£000

£000

£000

£000

 

 

 

 

 

 

Balance at 1 January 2016

100

1,926

24,150

380

26,556

 

 

 

 

 

 

Comprehensive income for the year

 

 

 

 

 

Profit for the year

-

-

19,602

-

19,602

 

 

 

 

 

 

Total comprehensive income for the year

-

-

19,602

-

19,602

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

Share based payments

-

-

-

239

239

Release of share based payments

-

-

-

(221)

(221)

Deferred tax on share based payments

-

-

-

(50)

(50)

Dividends paid (note 8)

-

-

(8,000)

-

(8,000)

 

 

 

 

 

 

Total contributions by and distributions to owners

-

-

(8,000)

(32)

(8,032)

 

 

 

 

 

 

Balance at 31 December 2016

100

1,926

35,752

348

38,126

 

 

 

1.

BASIS OF PREPARATION

 

The half year report for the 6 months ended 30 June 2017 reflects the results of the Company and its subsidiaries (together the 'Group'). It has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union and the Disclosure and Transparency rules of the Financial Conduct Authority, and includes the half year condensed consolidated 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 2016 Annual Report.

 

The comparative figures for the year ended 31 December 2016 have been extracted from the Group's audited financial statements for that year. Those financial statements are included in the 2016 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 half year report was approved by the Board of Directors on 1 August 2017.

 

2.

GOING CONCERN

 

The interim financial statements have been prepared on a going concern basis. The Directors are satisfied that the Group has adequate resources to continue in operation for the foreseeable future; a period of not less than 12 months from the date of this report.

 

3.

ACCOUNTING POLICIES AND ESTIMATES

 

The interim financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of Group's audited financial statements for the year ended 31 December 2016. Adoption of new standards, amendments or interpretations to published standards since that date have had no material impact on the interim financial statements. 

 

IFRS 15 'Revenue from Contracts with Customers' becomes effective from 1 January 2018. Management expects to complete its analysis of the expected impact on revenue recognition by the end of 2017. IFRS 16 'Leases' becomes effective from 1 January 2019. Management has yet to assess the impact of IFRS 16. However, with a significant number of operating leases, the implementation of IFRS 16 is likely to have a material impact on the Group's balance sheet.

 

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 pages 77 to 81 of the 2016 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

·      Bank overdrafts

·      Borrowings

·      Trade and other payables

 

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 81 to 83 of the 2016 Annual Report.

 

5.

SEGMENT INFORMATION

 

The Group has the following reportable segments: Profiles, Building Plastics and Corporate.

 

 

 

The Profiles division manufactures extruded rigid and foam PVC profiles. Rigid PVC profiles are sold to third party fabricators, who produce windows, trims, cavity closer systems, patio doors and conservatories for installers, retail outlets and house builders. Foam products are used for roofline (e.g. fascias and soffits) and are supplied to customers through the nationwide branch network in the Building Plastics division. The Profiles division also includes S&S Plastics and Vista; businesses acquired in 2015 and 2016 respectively.

 

 

 

Building Plastics distributes a range of Eurocell manufactured and branded PVC foam roofline products and Vista doors, as well as third party manufactured ancillary products. These include windows manufactured by the Group's fabricator customers using products manufactured by Profiles, sealants, tools and rainwater products. Distribution is through a network of 174 branches to installers, small and independent builders, house builders and nationwide maintenance companies. The branches also sell roofline products to independent wholesalers. The Building Plastics division also includes Security Hardware; acquired in February 2017.

 

 

 

6 months ended 30 June 2017

(Unaudited)

 

Profiles

Building Plastics

 

Corporate

 

Total

 

 

£000

£000

£000

£000

 

Revenue

 

 

 

 

 

Total revenue

68,171

62,078

-

130,249

 

Inter-segmental revenue

(21,807)

(313)

-

(22,120)

 

 

 

 

 

 

 

Total revenue from external customers

46,364

61,765

-

108,129

 

 

 

 

 

 

 

Adjusted EBITDA

11,660

3,194

86

14,940

 

Amortisation

(80)

(56)

(669)

(805)

 

Depreciation

(1,915)

(364)

(228)

(2,507)

 

 

 

 

 

 

 

Operating profit/(loss) before

non-recurring costs

9,665

2,774

(811)

11,628

 

 

 

 

 

 

 

Non-recurring costs

 

 

 

(539)

 

Finance expense

 

 

 

(282)

 

 

 

 

 

 

 

Profit before tax

 

 

 

10,807

 

 

 

 

 

6 months ended 30 June 2016

(Unaudited)

 

Profiles

Building Plastics

 

Corporate

 

Total

 

 

£000

£000

£000

£000

 

Revenue

 

 

 

 

 

Total revenue

61,254

55,132

-

116,386

 

Inter-segmental revenue

(18,862)

(304)

-

(19,166)

 

 

 

 

 

 

 

Total revenue from external customers

42,392

54,828

-

97,220

 

 

 

 

 

 

 

Adjusted EBITDA

11,408

2,654

158

14,220

 

Amortisation

(78)

(67)

(511)

(656)

 

Depreciation

(1,928)

(282)

(203)

(2,413)

 

 

 

 

 

 

 

Operating profit/(loss) before

non-recurring costs

9,402

2,305

(556)

11,151

 

 

 

 

 

 

 

Non-recurring costs

 

 

 

(455)

 

Finance expense

 

 

 

(403)

 

 

 

 

 

 

 

Profit before tax

 

 

 

10,293

 

 

 

Year ended 31 December 2016 (Audited)

 

Profiles

Building Plastics

 

Corporate

 

Total

 

 

£000

£000

£000

£000

 

Revenue

 

 

 

 

 

Total revenue

127,171

118,148

-

245,319

 

Inter-segmental revenue

(39,817)

(686)

-

(40,503)

 

 

 

 

 

 

 

Total revenue from external customers

87,354

117,462

-

204,816

 

 

 

 

 

 

 

Adjusted EBITDA

22,657

8,832

(160)

31,329

 

Amortisation

(158)

(123)

(1,091)

(1,372)

 

Depreciation

(3,969)

(609)

(427)

(5,005)

 

 

 

 

 

 

 

Operating profit/(loss) before

non-recurring costs

18,530

8,100

(1,678)

24,952

 

 

 

 

 

 

 

Non-recurring costs

 

 

 

(455)

 

Finance expense

 

 

 

(677)

 

 

 

 

 

 

 

Profit before tax

 

 

 

23,820

                   

6.

NON-RECURRING COSTS

 

Amounts included in the consolidated statement of comprehensive income are as follows:

 

 

 

 

6 months

6 months

Year

 

 

ended

ended

ended

 

 

30 June

30 June

31 December

 

 

2017

2016

2016

 

 

£000

£000

£000

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

 

 

 

 

Acquisition and earn out costs (note 10)

194

112

112

 

Redundancy and settlement costs

345

-

-

 

Duplicated costs related to CEO handover period

-

343

343

 

 

539

455

455

 

7.

TAXATION

 

 

 

 

6 months

6 months

Year

 

 

ended

ended

ended

 

 

30 June

30 June

31 December

 

 

2017

2016

2016

 

 

£000

£000

£000

 

 

(Unaudited)

(Unaudited)

(Audited)

 

Current tax

 

 

 

 

Current tax on profits for the period

1,998

2,021

5,025

 

Adjustments in respect of prior years

-

(1)

75

 

 

 

 

 

 

Total current tax

1,998

2,020

5,100

 

 

 

 

 

 

Deferred tax

 

 

 

 

Origination and reversal of temporary differences

(115)

214

(174)

 

Adjustment in respect of change in rates

-

-

(385)

 

Adjustments in respect of prior years

-

(294)

(323)

 

 

 

 

 

 

Total deferred tax

(115)

(80)

(882)

 

 

 

 

 

 

Tax expense in the consolidated statement of comprehensive income

1,883

1,940

4,218

 

 

 

The reason 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:

 

 

 

Profit before tax

10,807

10,293

23,820

 

 

 

 

 

 

Expected tax charge based on the standard rate of corporation tax in the UK of 19.25% (2016: 20.0%)

2,080

2,059

4,764

 

 

 

 

 

 

Expenses not deductible for tax purposes

110

176

87

 

Adjustments in respect of prior years

-

(295)

(248)

 

Adjustments in respect of change in rates

-

-

(385)

 

Patent Box relief

(307)

-

-

 

 

 

 

 

 

Total tax expense

1,883

1,940

4,218

 

 

 

Changes in tax rates and factors affecting the future tax charge

A reduction in the standard rate of UK corporation tax from 20% to 19% took effect from April 2017. A further reduction to 17% from April 2020 was enacted during 2016.

 

8.

DIVIDENDS

 

 

 

 

6 months

6 months

Year

 

 

ended

ended

ended

 

 

30 June

30 June

31 December

 

 

2017

2016

2016

 

 

£000

£000

£000

 

 

(Unaudited)

(Unaudited)

(Audited)

 

Dividends paid during the period

 

 

 

 

Interim dividend for 2016: 2.8p per share

-

-

2,800

 

Final dividend for 2016: 5.7p per share (2015: 5.2p per share)

5,700

5,200

5,200

 

 

5,700

5,200

8,000

 

 

 

 

 

 

Dividends proposed

 

 

 

 

Interim dividend for H1 2017: 3.0p per share (H1 2016: 2.8p per share)

3,000

2,800

2,800

 

Final dividend for 2016: 5.7p per share

-

-

5,700

 

 

3,000

2,800

8,500

 

9.

EARNINGS PER SHARE

 

Basic earnings per share is calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted 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. Adjusted earnings per share excludes non-recurring costs and the related tax effect from the calculations.

 

 

 

 

6 months

6 months

Year

 

 

ended

ended

ended

 

 

30 June

30 June

31 December

 

 

2017

2016

2016

 

 

£000

£000

£000

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

 

 

 

 

Profit attributable to ordinary shareholders

8,924

8,353

19,602

 

Adjusted profit attributable to ordinary shareholders

9,397

8,719

19,976

 

 

 

 

 

 

 

Number

Number

Number

 

 

 

 

 

 

Weighted average number of shares- basic

100,000,000

100,000,000

100,000,000

 

Weighted average number of shares- diluted

100,412,105

100,000,000

100,227,068

 

 

 

 

 

 

 

Pence

Pence

Pence

 

 

 

 

 

 

Basic earnings per share

8.9

8.4

19.6

 

Adjusted basic earnings per share

9.4

8.7

20.0

 

Diluted earnings per share

8.9

8.4

19.6

 

Adjusted diluted earnings per share

9.4

8.7

19.9

 

10.

ACQUISITION OF SUBSIDIARIES (Unaudited)

 

On 24 February 2017, the Group completed the acquisition of Security Hardware Limited, a supplier of locks and hardware primarily to the RMI market, with annual sales of approximately £3 million. Consideration paid was £1.5 million (or £1.3 million net of cash acquired).

 

Goodwill represents potential synergies arising from the enlarged group. The amount of goodwill deductible for tax purposes is £nil. Goodwill has been calculated as follows:

 

 

 

 

Book value on acquisition

Fair value

adjustment

Provisional values on acquisition

 

 

£000

£000

£000

 

 

 

 

 

 

Intangible assets

20

466

486

 

Property, plant and equipment

43

-

43

 

Inventories

748

153

901

 

Trade and other receivables

297

-

297

 

Cash and cash equivalents

226

-

226

 

Trade and other payables

(501)

(97)

(598)

 

Deferred tax

(8)

(83)

(91)

 

 

 

 

 

 

Identifiable assets and liabilities

825

439

1,264

 

 

 

 

 

 

Cash consideration paid

 

 

1,486

 

 

 

 

 

 

Goodwill on acquisition

 

 

222

 

 

 

Fair value adjustments

  • The adjustment to intangible assets is to recognise intangible assets in respect of customer relationships, and has been valued using discounted cash flows.
  • The adjustment to inventories is to reflect the fair value of finished goods acquired.
  • The adjustment to trade and other payables is to recognise a dilapidation provision in respect of the leased premises occupied by Security Hardware.
  • The adjustment to deferred taxation is to recognise the associated deferred tax liability arising on the intangible assets.
     

 

Subsequent payments

Under the terms of the acquisition agreement, the former shareholders of Security Hardware are entitled to further cash consideration based on financial performance for the year ended 31 December 2017 (the 'earn out'). The Directors estimate the total earn out payable will be in the region of £0.2 million, which will be recognised as a non-recurring expense in the 2017 consolidated statement of comprehensive income. An amount of £0.1 million has therefore been included within the non-recurring charge for H1. The earn out is payable in equal instalments over a three-year period.

 

Acquisition related costs

The Group incurred acquisition related costs of £0.1 million in relation to professional fees and transaction costs arising upon acquisition. These costs have been expensed to the consolidated statement of comprehensive income, also as a non-recurring item.

 

The contribution of Security Hardware to the profits of the Group for the period since acquisition is not material.

 

11.

NON-CURRENT ASSETS (Unaudited)

 

 

 

 

 

 

Property, plant and equipment

Intangible assets

 

 

£000

£000

 

 

 

 

 

Balance at 1 January 2017

29,294

19,713

 

Additions

3,046

535

 

Additions on acquisition (note 10)

43

486

 

Goodwill arising on acquisition (note 10)

-

222

 

Depreciation and amortisation

(2,507)

(805)

 

 

 

 

 

Balance at 30 June 2017

29,876

20,151

 

 

12.

RECONCILIATION OF PROFIT AFTER TAX TO CASH GENERATED FROM OPERATIONS

 

 

 

 

6 months

6 months

Year

 

 

ended

ended

ended

 

 

30 June

30 June

31 December

 

 

2017

2016

2016

 

 

£000

£000

£000

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

 

 

 

 

Profit after tax

8,924

8,353

19,602

 

Add back:

 

 

 

 

Taxation

1,883

1,940

4,218

 

Finance expense

282

403

677

 

 

 

 

 

 

Adjustments for:

 

 

 

 

Depreciation of property, plant and equipment

2,507

2,413

5,005

 

Amortisation of intangible assets

805

656

1,372

 

Loss on sale of property, plant and equipment

-

46

86

 

Share based payments

289

127

18

 

(Increase)/decrease in inventories

(2,541)

153

1,635

 

Increase in trade and other receivables

(5,821)

(3,774)

(616)

 

Increase/(decrease) in trade and other payables

6,461

346

(184)

 

(Decrease)/increase in provisions

(112)

48

(31)

 

 

 

 

 

 

Cash generated from operations

12,677

10,711

31,782

 

13.

RELATED PARTY TRANSACTIONS

 

The remuneration of executive and non-executive Directors and members of the Executive Committee is disclosed in the 2016 Annual Report. Other related party transactions are disclosed below.

 

Transactions with key management personnel

Kalverboer Management UK LLP is controlled by P H L Kalverboer, a non-executive director of Eurocell plc. Kalverboer Management UK LLP has charged the following to the Group.

 

 

 

 

6 months

6 months

Year

 

 

ended

ended

ended

 

 

30 June

30 June

31 December

 

 

2017

2016

2016

 

 

£000

£000

£000

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

 

 

 

 

Fees for management services

20

20

40

 

 

 

The amount outstanding at the end of each period in respect of the above fees was £10,000.

 

 

INDEPENDENT REVIEW REPORT TO EUROCELL PLC

REPORT ON THE HALF YEAR CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Our conclusion

We have reviewed Eurocell plc's half year condensed consolidated financial statements (the "interim financial statements") in the half-year results of Eurocell plc for the 6 month period ended 30 June 2017. 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 International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

 

What we have reviewed

The interim financial statements comprise:

·      the consolidated statement of financial position as at 30 June 2017;

·      the consolidated statement of comprehensive income for the period then ended;

·      the consolidated cash flow statement for the period then ended;

·      the 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 results have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

 

As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

 

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the Directors

The half-year results, 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 results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

 

Our responsibility is to express a conclusion on the interim financial statements in the half-year results based on our review. 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.

 

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board 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 results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

Birmingham

1 August 2017

 

 

a)   The maintenance and integrity of the Eurocell plc website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial statements since they were initially presented on the website.

b)   Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Half year results - RNS