Eurocell Regulatory News (ECEL)

Eurocell PLC ("Eurocell" or the "Company")

2015 Half Year Report

ROBUST H1 PERFORMANCE; STRONG PROFITABILITY IN LINE WITH FULL YEAR EXPECTATIONS

25 August 2015

Highlights

Eurocell PLC, a market leading, vertically integrated UK manufacturer and distributor of innovative window, door and roofline PVC products, today announces its unaudited results for the six months ended 30 June 2015.

Notes

(1) Gross margin represents sales less materials, electricity and consumables

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

(3) Adjusted PBT represents profit before tax and non-recurring costs

(4) During the current half year period, non-recurring costs relate to the cost of the IPO

(5) Adjusted EPS excludes non-recurring costs

(6) Underlying operating cash conversion is cash generated from underlying operations as a % of adjusted EBITDA

Financial Highlights

· Revenue flat in line with the Repair, Maintenance and Improvement ('RMI') market

· Gross margin improvement from 48% to 52% due to lower material prices, enhanced procurement and improved manufacturing performance

· Adjusted EBITDA up by 14% to £13.0m (2014: £11.4m)

· Adjusted PBT up 35% to £9.6m (2014: £7.1m)

· Reported PBT decreased by 14% to £6.3m (2014: £7.3m) due to non-recurring IPO costs

· Adjusted EPS growth of 46% from 5.2p to 7.6p

· Net debt reduced by £2.2m to £33.3m at 30 June 2015 after the payment of non-recurring IPO costs of £4.4m

· Cash generated from underlying operations up £3.1m to £12.2m (2014: £9.1m)

· Continued investment in manufacturing and branch network with capital expenditure of £3.2m (2014: £2.0m)

· Maiden interim dividend of 2.7p per share

Operational Highlights

· 6 new branches opened in the period with a further 4 opened since the period end and 25 refurbished year to date

· Branch sales of higher margin Eurocell manufactured products increased by 4%

· Operating efficiency up 2% and scrap levels down 6%

· 45% increase in use of recycled uPVC in manufactured products

· Bolt on acquisition of injection moulding business successfully completed in July 2015

Commenting on the Group's first half performance, Bob Lawson, Chairman of Eurocell, said:

"Eurocell has reported a strong set of maiden results, against a challenging market backdrop, which have seen an acceleration of our underlying profit growth since IPO. Importantly, this has been achieved during a period when we continued to invest in the future growth of the business to deliver on our IPO strategy.

The market is forecast to return to growth in the second half, driven by the decisive election result, the pension reform and unemployment that remains low. With our additional branches and reinforced management structure we are in a good position to optimise this opportunity. We are confident that our current strategy will deliver growth and continued improvement in profits in line with management expectations for the full year."

Bob Lawson

Chairman

24 August 2015

Enquiries:

Chief Executive's Statement

Summary of Performance

I am pleased to report our maiden interim results as a public company following our successful IPO in March 2015, which are in-line with full year expectations.

In this period Eurocell has shown significant progress, including the opening of 6 new branches, increasing the gross margin through manufacturing and operational efficiencies, continual investment in people and the successful completion of the IPO in March 2015. The slowdown in the core RMI market (0.9%)(1) has led to a reduction in revenue of 0.7% to £82.5m (2014: £83.1m). Profiles division like for like customer sales growth of 3% and outperformance in the new build sector (15% sales growth vs. market growth of 11%) have been positives and with sales just in front of market growth, we have retained market share whilst increasing margins.

Continual operational efficiencies in our business including lowering scrap levels and increasing operating equipment efficiency ("OEE"), together with the improved terms of the new resin contract and general reduction in market resin prices, resulted in a strong improvement in gross margin to 52.2%, an increase of 4.2ppts from 2014.

Adjusted profit before tax increased 35.3% to £9.6m (2014: £7.1m), reflecting the improved gross and net margins, with adjusted earnings per share up 46.3% from 5.2p to 7.6p. Adjusted EBITDA was up 14.0% year on year to £13.0m.

Our robust cash flow management resulted in a £3.1m improvement in cash generated from underlying operations to £12.2m and as a result the Group's balance sheet is strong, with cash of £7.4m at 30 June 2015. The business continues to convert profit into cash, with underlying cash conversion for the period at 93%, against 80% for 2014. The Group maintains an acute focus on working capital and with our tight control over debtors, an improvement in creditors due to the new resin contract and a focus on stock management, our working capital has remained steady.

Operational Review

Profiles Division

We continued our strong performance in the new build market, with sales increasing 15% over the prior period and significantly outperforming the market increase of 11%. The underlying demand for new houses in the UK is likely to continue to drive growth in the market for a number of years. Our products complement this market well with the Modus window system meeting current and foreseeable building regulations. Modus has attractive aesthetics, excellent thermal characteristics and good sustainable credentials.

Manufacturing performance has continued to improve with operating efficiency up 2% and scrap rate levels down 6%. Since the period end we have successfully negotiated a supply deal with a new fabricator which will come on-line later in the year, further expanding the customer base and strengthening our national supply and distribution.

In accordance with the Group strategy of long term sustainability through recycling of post-consumer windows, we are pleased to report that the use of recycled uPVC has increased by 45%. This has been achieved through strategic investment in tooling and extruders as well as improved performance at the recycling plant in Ilkeston. This further increases the gap between us and our competitors in demonstrating our long term, sustainable, integrated solution. Our capital investment program will deliver further manufacturing improvements and drive growth.

Building Plastics Division

The branch roll out accelerated post IPO with 10 new branches opened in the current financial year to date, with a further 3 planned by 31 December 2015. Additionally, we have internally promoted two regional directors and brought in a number of relief managers to support continued branch growth.

We have had considerable success with higher priced made to order products resulting in window sales through the branch network increasing 22%, sales of the Skypod and Equinox roof products increasing 15% and composite doors increasing 4%. The Equinox roof, a solid conversion for old conservatory roofs, addresses a strong and growing market and we have completed the insourcing of the Equinox roof manufacture resulting in a new and improved design and better margins.

Acquisitions

In July 2015, post the period end, we successfully completed a small bolt-on acquisition of S&S Plastics which specialises in injection moulding, predominately in the windows market. The acquisition will allow us to expand our customer base in addition to providing further cross-selling opportunities of Eurocell's extruded product range. The acquired business, and its leadership team, is innovative in much the same way as Merritt Plastics (the recycling company acquired in 2009) was and they will bring additional expertise into the business.

Current Trading and Outlook

Sales for July 2015 and August 2015 (month to date) are 1.8% ahead of the same period last year. In addition, supply to a new window fabricator with 3 manufacturing sites is expected to commence in the last quarter of 2015.

The Construction Products Association ("CPA") indications are strong for the second half and with the election result, pension reforms and low unemployment, we expect the market to improve in the second half albeit more cautiously than the CPA figures. Our additional branches and reinforced management structure means we are in a good position to optimise this opportunity. With the improved factory performance and well balanced stock levels we are in a robust position to satisfy demand whilst continuing to keep costs and working capital under control.

We are confident that our current strategy will deliver growth and continued improvement in profits in line with management expectations for the full year.

(1) CPA forecasts

Financial Review

Income Statement

Adjusted EBITDA for the period was up 14% to £13.0m (2014: £11.4m), driven by: 

· Margin impact of reduction in Revenue of £0.3m;

· Improvements to gross margin of £3.5m (including saving on resin procurement of £1.9m);

· Logistics savings of £0.3m;

· Investment in people of £1.2m;

· Additional costs from new branches of £0.2m; and

· £0.5m of other costs including ongoing PLC costs of £0.4m.

Revenue was £82.5m (2014: £83.1m) representing a decline of 0.7%. This result reflects the decrease in the RMI market of 0.9% leading to a like for like sales (1) decline of 1.1% across the branch network (2014: +17%).

Gross margin for the period increased to 52.2% (2014: 48.0%), primarily due to raw material price reductions driven by a combination of market prices and improved procurement, including the new resin contract which came into effect in January 2015. Other factors contributing to this include increased use of recycled material (increased by 45%), a more favourable mix of Eurocell-manufactured products sold through the branch network (Eurocell-manufactured product sales up 4%), better OEE (up 2%) and improved scrap rates (down 6%).

Distribution and selling costs were £7.0m (2014: £4.5m). This increase includes the impact of outsourcing warehousing and logistics in the second half of 2014. The costs previously incurred by the Group were reported in administrative expenses in 2014. The Directors consider the logistics outsourcing project is performing as expected.

Administrative expenses (excluding non-recurring costs) were £25.7m compared to £26.3m in 2014. The reduction reflects the outsourcing of warehousing and logistics, partly offset by headcount growth and additional costs incurred post the IPO. The company has continued to invest in its people, the majority of which was in support of the growing branch network and an enhanced sales function.

The finance expense was £0.9m (2014: £2.0m). The reduction reflects the refinancing completed as part of the IPO in March 2015.

The effective tax rate for the 6 months to 30 June 2015 was 28.0% (2014: 26.5%). The increase is primarily due to non-deductible costs associated with the IPO. Management expect the effective rate for the full year to be closer to the headline UK Corporation Tax rate.

Basic earnings per share were 4.57p (2014: 5.45p). Adjusted basic earnings per share (which excludes non-recurring costs) were 7.61p (2014: 5.20p).

Financial Position

· Refinancing as part of IPO - £45m revolving credit facility

· Reduction in net debt of £2.2m after non-recurring payments of £4.4m

· Continuing investment in the business with capex up £1.2m to £3.2m (2014: £2.0m)

· Strong focus on working capital management

Net assets increased by £6.5m from £11.5m at 31 December 2014 to £18.0m at 30 June 2015. The main movements in the balance sheet relate to seasonal fluctuations in inventories, trade and other receivables and trade and other payables. The Group also refinanced its borrowings during the period.

At the period end cash and cash equivalents for the Group were £7.4m (31 December 2014: £2.8m) and borrowings were £40.7m (31 December 2014: £38.3m), giving a net debt position of £33.3m (31 December 2014: £35.5m). The reduction of £2.2m is after payment of non-recurring costs of £4.4m (2014: Nil) and corporation tax payments of £3.6m (2014: £1.2m).

Following the refinancing at the time of the IPO, the Group has £45.0m of loan facilities in place of which £4.0m was undrawn at 30 June 2015. Management expect the amount undrawn to increase during the second half as a result of cash generated through operations.

Capital expenditure in the period amounted to £3.2m (2014: £2.0m). The increase has been driven by investment in manufacturing and recycling equipment, new branches, and branch refurbishments.

At the period end net working capital as a percentage of annual revenue was 9.1% (2014: 9.8%). This reduction reflects improvements in all areas of working capital management partly offset by the increased working capital requirement of new branches.

Dividend

The Board is pleased to declare a maiden interim dividend of 2.7 pence per share. This represents a yield slightly above indications at the IPO. The shares will trade ex-dividend on 10 September 2015 and the dividend will be paid on 9 October 2015 to shareholders on the register at 11 September 2015.

Key Performance Indicators

The Board uses many performance indicators to monitor performance. The key indicators which are monitored by the Board have been set out in the table below.

Strategic and Operational Review

Eurocell's overall strategy is to grow sales and profits at an above-market rate through leadership in products, operational efficiency, sales, marketing and distribution. The overall strategy aims to deliver growth in three ways:

Sales growth

Branch roll out: in the current financial year to 24 August 2015 the Group has opened 10 new branches taking the total to 138. The number of branches expected at 31 December 2015 is 141. We have also refurbished 25 branches in the current financial year to date. There have been no price increases in 2015.

New products: the Group continues to invest in new products. In the current financial year to date we have commenced the manufacture and sale of a new solid conservatory roof, and have plans to launch other new products in the next twelve months.

Cross selling of Eurocell product range within its branches: the mix of Eurocell manufactured products, which are also higher margin, sold through its branches has increased 4% compared to the prior interim period. This includes sales through the branches of 'made to order' products such as windows and conservatories, which have increased by 11%.

Margin enhancing operational improvements

The Group continues to seek ways to improve its operations and profitability, including continuous focus on enhancing the manufacturing processes and product design, and on supply chain optimisation to provide competitive product solutions to customers and to reduce operating costs. 

Results for the six months ended 30 June 2015 reflect improvements in the distribution network, lower levels of manufacturing waste (down 6%), more competitive pricing on key raw material supplies, and improved OEE (up 2%). In addition, the increase in sales of Eurocell-manufactured products through the branches has supported the margin expansion.

Acquisitions

The Group will continue to assess and consider potential bolt-on acquisition opportunities in the markets in which it operates. The focus will be principally on businesses that add value through range extension, operational efficiencies or added value products, or to satisfy a make or buy decision.

On 31 July 2015 the Group completed the acquisition of an injection moulding business operating principally in the glazing market. This acquisition is expected to provide range extension, operational efficiencies and capability to manufacture added value products.

Notes

(1) Like for like revenue in Profiles represents sales excluding the impact of customer gains and losses

Like for like revenue in Building Plastics represents sales excluding the impact of branch openings and closures in the current and previous year

(2) Net working capital is defined as inventory, trade and other receivables, and trade and other payables, but excluding corporation tax of £2.0m (2014: £2.3m) and deferred consideration of Nil (2014: £10.4m)

(3) Interest cover is adjusted EBITDA divided by net interest payable for the preceding twelve months. In the period ended 30 June 2015, the interest cover is based on the post IPO level of borrowings and the annualised interest thereon.

(4) Leverage is net debt divided by adjusted EBITDA for the preceding twelve months. Net debt is the aggregate of cash and cash equivalents and borrowings

(5) Return on capital employed is annual operating profit before non-recurring costs divided by the aggregate of property, plant and equipment and trade working capital

(6) Operating cash conversion is cash generated from underlying operations divided by adjusted EBITDA

Directors' Responsibility Statement

The half year financial report is the responsibility of the Directors who confirm that to the best of their knowledge: the interim financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as endorsed and 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 2014 Annual Report that could do so.

The Directors of Eurocell PLC are listed in the Eurocell IPO prospectus.

The principal risks and uncertainties are contained in the 2014 Annual Report. These remain unchanged and are expected to remain unchanged for the second half of the financial year.

Approved by the board and signed on its behalf by:

Bob Lawson

Chairman

24 August 2015

Consolidated Income Statement

For the 6 months ended 30 June 2015

Consolidated Statement of Comprehensive Income

For the 6 months ended 30 June 2015

Consolidated Statement of Financial Position

As at 30 June 2015

Consolidated Statement of Changes in Equity

For the 6 months ended 30 June 2015

Consolidated Statement of Changes in Equity

For the 6 months ended 30 June 2014

Consolidated Statement of Changes in Equity

For the 12 months ended 31 December 2014

Consolidated Statement of Cash Flows

For the 6 months ended 30 June 2015

Notes to the half year report

For the 6 months ended 30 June 2015

1. Basis of preparation

The half year report of Eurocell PLC for the 6 months ended 30 June 2015 comprises the Company and its subsidiaries (together referred to as "the Group"). The report 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.

The half year report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. It does not include all the information required for full annual statements and should be read in conjunction with the full annual report for the 12 months ended 31 December 2014.

The comparative figures for the 12 months ended 31 December 2014 are extracted from the Group's audited statutory accounts for that financial year, which 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 half year report is unaudited, but has been reviewed by the auditors in accordance with the Auditing Practices Board guidance on Review of Interim Financial Information.

2. Going concern

The half year report is prepared on a going concern basis. This is considered appropriate given that 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 half year report has been prepared applying the accounting policies and presentation that were applied in the preparation of Group's published financial statements for the 12 months ending 31 December 2014. Adoption of new standards, amendments or interpretations to publish standards have no material impact on the Group.

The preparation of the half year report 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. Actual results may differ from estimates.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation in the consolidated financial statements for the 12 months ended 31 December 2014, remain unchanged in the current period. The half year report for the 6 months ended 30 June 2015 also includes estimates in respect of the employee share options issued during the period.

Date of approval:

These financial statements were approved by the Board of Directors on Monday 24 August 2015.

4. Seasonality of operations

The Group's sales are subject to seasonal variation with the strongest sales months occurring between June and October when construction activity is at its highest due to more favourable weather conditions. Historically the period between December and the end of February has lower sales as a result of the slowdown for Christmas and adverse weather during the winter months.

5. Segmental information (unaudited)

The Group has two reportable segments; Profiles and Building Plastics.

5. Segmental information (unaudited) (continued)

5. Segmental information (unaudited) (continued)

6. Non-recurring costs

Amounts included in the income statement are as follows:

7. Taxation

Amounts included in the income statement are as follows:

The reasons 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:

The effective rate of tax for the year ended 31 December 2014 is high as a result of disallowed loan note interest.

The effective rate of tax for the 6 months ended 30 June 2015 is higher than the expected full year rate as a result of the disallowable IPO costs incurred during the period.

Changes to the UK corporation tax rates were announced in the Chancellor's Budget on 8 July 2015. These include reductions to the main rate to reduce the rate to 19% from 1 April 2017 and to 18% from 1 April 2020. As the changes had not been substantively enacted at the balance sheet date their effects are not included in these financial statements. 

8. Interim dividend

No dividends were paid during the period (2014: Nil)

9. Earnings per share

10.  Borrowings

On 9 March 2015, as part of the listing process, the company refinanced its borrowings. As a result of this, from 9 March 2015, the company has a £45m committed multi-currency revolving credit facility with Barclays Bank plc and Santander UK plc which expires in 2020.

The fair value of the borrowings is equivalent to the carrying value as at 30 June 2015, 30 June 2014 and 31 December 2014.

11. Share capital

On 3 March 2015, in preparation for the IPO, the following share transactions took place:

· The 50,000 preference shares were redeemed at par.

· The company issued the following shares as a bonus issue; 8,056,936 A Ordinary shares, 74,182 B Ordinary shares, 44,506 C Ordinary shares, 6,910 D Ordinary shares, 6,910 E Ordinary shares and 6,910 F Ordinary shares.

· The normal value of A-F Ordinary shares were changed to £0.001. The number of A-F Ordinary shares was changed to ensure that the total share capital and proportion of equity held by each class of share remained unchanged.

· All A-F Ordinary shares were re-designated as Ordinary shares.

· 1,100,140 Ordinary shares were issued at £1.75 in consideration for the satisfaction of shareholder loan notes.

The Ordinary shares carry the rights to attend and vote at general meetings, the right to receive payment in respect of dividends declared and the right to participate in the distribution of capital. The Ordinary shares are not redeemable.

12. Share based payments (unaudited)

The Group has applied the requirements of IFRS2 - Share Based Payments.

On 9 March 2015 the Group has issued equity-settled share-based payments to certain key management personnel. Equity settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based upon the company's estimate of the shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.

Fair value is measured based on the value of charges on the date of grant and the likelihood of all or part of the option vesting.

In the 6 months to 30 June 2015, the charge to the consolidated income statement was £76,000 with a deferred tax credit of £15,000. The overall statement of financial position is unchanged as a result of this.

13. Reconciliation of profit after tax to net cash flows from operating activities

14. Financing Activities (unaudited)

As part of the IPO the company refinanced its borrowings.

Interest on loan notes accrued since 1 September 2013 was paid during this process.

15. Capital commitments (unaudited)

Capital expenditure authorised and committed as at 30 June 2015 but not provided for in the half year report was Nil (as at 30 June 2014 and 31 December 2014 - Nil).

16. Events occurring after the reporting period (unaudited)

On 31 July 2015 the company completed the acquisition of a small bolt-on company which is an expert in injection moulding mainly in the window business but also involved in other industries which will broaden our ability to supply further extruded products into their customers as well as expand our customer base.

17. Contingent assets and liabilities (unaudited)

As at 30 June 2015, the Group had no material contingent assets or liabilities (as at 30 June 2014 and 31 December 2014 - Nil).

18. Related party transactions (unaudited)

The remuneration of executive and non-executive directors and members of the Executive Committee will be disclosed in the 2015 annual financial statements. Other related party transactions have been disclosed below.

Transactions with key management personnel

H2 Equity Partners Limited is considered to be a related party by virtue of a mutual director.

Kalverboer Management UK LLP is controlled by P H L Kalverboer, a non-executive director of Eurocell PLC, and a partner in H2 Equity Partners.

The following management charges have been made by the above companies.

The following amounts are outstanding and included within creditors at the period end.

Prior to the IPO the shareholders held loan notes, with interest payable at 11%. During the period the amounts of interest charged in the profit and loss were as follows.

The loan notes and accrued interest outstanding at the period end were as follows.

On 3 March 2015 at the IPO the loan notes and accrued interest were repaid in full.

Independent review report to Eurocell plc

Report on the condensed consolidated financial statements

Our conclusion

We have reviewed the condensed consolidated financial statements, defined below, in the Half year report of Eurocell plc for the six months ended 30 June 2015. Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

This conclusion is to be read in the context of what we say in the remainder of this report.

What we have reviewed

The condensed consolidated financial statements, which are prepared by Eurocell plc, comprise:

· the consolidated statement of financial position as at 30 June 2015;

· the consolidated income statement and consolidated statement of comprehensive income for the six months then ended;

· the consolidated statement of changes in equity for the six months period then ended;

· the consolidated cash flow statement for the six months period then ended; and

· the notes to the Half year report.

As disclosed in note 1, 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.

The condensed consolidated financial statements included in the Half year report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

What a review of condensed consolidated 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 Ireland) 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 report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated financial statements.

Responsibilities for the condensed consolidated financial statements and the review

Our responsibilities and those of the directors

The Half year report, including the condensed consolidated financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Half year report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express to the company a conclusion on the condensed consolidated financial statements in the Half year report 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 and Transparency Rules of the 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.

PricewaterhouseCoopers LLP

Chartered Accountants

24 August 2015

Birmingham

Notes:

(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 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.