Eurocell raises £17.6m through placing of 10m shares for additional liquidity
On the 1st April, the substantial placing of 10m shares @ 175p each has resulted in the raising of proceeds of £17.6m for Eurocell, the Derbyshire-based, vertically integrated manufacturer, supplier and recycler of windows, doors, rooflines and conservatory products for the trade, specifiers and homeowners.
The placing of the shares immediately resulted in the rise of the shares closing at 198.18p at the end of the day’s trading and Eurocell’s share capital will now comprise 110.4m shares.
The accelerated bookbuilding process employed, allowed shares to be offered in a short period of time and in this case the proceeds are to provide firstly, additional liquidity headroom following the unpredictable situation of the Covid-19 pandemic and secondly, to provide funding for investment in Eurocell’s new warehouse facility which will allow the company to capitalise once markets re-open. The warehouse is expected to be operational in 2021 following investment of around £8m.
A sizeable number of shares, totalling 8.1m were subscribed for by the following substantial shareholders:
• SFM UK Management LLP, 4.6m at the placing price of £8.1m
• Atlantra EQMC Asset Management SGIIC SA, 1.2m for £2.1m
• J.O.Hambra Capital Management, 1.3m for £2.2m
Additional subscribers were all of Eurocell’s executive team:
• Bob Lawson, Chairman, 14,285 shares for £24,998
• Chief Executive, Mark Kelly, 14,285 shares for £24,998
• Chief Financial Officer, Michael Scott, 5714 shares for £9,999
• Senior Non-Executive Director, Frank Nelson, 5714 shares for £9,999
• Non-Executive Director, Martyn Coffey, 5714 shares for £9,999
• Non-Executive Direcor, Sucheta Govil for 5714 shares at £9,999
In total, the executive team subscribed for 51,426 shares.
The raising of funds followed the release of Eurocell’s preliminary results for the year ended 31 December 2019. The company reported strong sales growth and good progress with plans to drive operating efficiency. Revenue increased by 10% from £253.7m in 2018 to £279.1m in 2019. Gross margin increased from 49.5% in 2018 to 51.2% in 2019. The revenue growth of 10% (8% excluding acquisitions) included 5% like-for-like sales growth for the profiles division and 8% like-for-like sales growth for the building plastics division.
Mark Kelly, Chief Executive of Eurocell plc said: “We have reported robust financial results for 2019 and, despite Brexit-related and political uncertainty, delivered another year of strong sales growth and a good improvement in gross margin.
“Over the last 4 years, successful deployment of our commercial strategies has led to sales substantially exceeding our expectations. However, profits have been impacted more recently as we build the operating capacity to service our sales and we have experienced inefficiencies and extra costs. With manufacturing constraints now resolved, our focus for 2020 will be on executing the warehouse transition successfully, thereby facilitating future growth and the delivery of further operating efficiencies. As a result, looking forward we see good potential to outperform our markets.
“As yet, there has been no discernible impact on our business from COVID-19, although we remain very alert to this possibility. We have a strong balance sheet, and in March 2020 we were pleased to increase our bank facility to £75 million. We maintain a conservative approach to debt, in order to ensure good liquidity and to manage any emerging risks.
“Despite the impact of very wet weather so far this year, we have made a good start to 2020. Sales and margins for the first two months are in line with our expectations, and notwithstanding macroeconomic and political uncertainty, we expect to deliver further progress this year.”
