uPVC manufacturer extends headroom as it raises £18m
Eurocell, the listed Derbyshire manufacturer of uPVC windows and doors, has raised £17.6m after completing a share placing.
The firm issued a over 10 million further shares and will use the proceeds to provide additional liquidity headroom during the period of uncertainty relating to Covid-19, as well as to fund ongoing investment in a new warehouse facility to allow the company to capitalise once markets re-open.
In its results for the year ended 31 December 2019, Eurocell revealed that its turnover rose by 10% last year, up to £279.1mn from £253.7m in 2018.
Its adjusted pre-tax profits also increased slightly, rising from £22.5m to £23.1m.
David O’Brien, equity analyst at Goodbody, said: “In our view, while there is an argument that Eurocell was absolutely fine from a financial capacity point of view, this move really places the company in a very strong position for the recovery.
“We estimate that Eurocell’s net debt is circa £40m, implying gross debt of circa £45m, which based on an RCF of £75m leaves headroom of approximately £30m. Given all the various mitigation measures (both internal and Government led), the run rate of operating costs is approximately £3m per month. Therefore, the fund raising provides for headroom for a prolonged shutdown, while at the same time providing financial capacity to continue to invest in a bigger more efficient new warehouse facility and have the firepower to fund working capital when activity levels start to rebound.
“Over the last couple of years Eurocell has demonstrated it has the model to gain market share, this latest fund raising will drive such gains even more against a competitive market backdrop where there was already financial stress before the crisis.”
