It may have gone under the radar for many of you, but I spotted a tweet on Wednesday which announced that systems company Eurocell is to float on the London Stock Exchange. This news comes after one of the industry’s biggest installation companies, Safestyle UK, floated on the FTSE AIM All-Share stock market.
A growing trend?
Eurocell in 2014 posted sales of £173m and an operating profit of £20m. These are healthy figures for Eurocell and displayed that 2014 was a good year not just for them, but for our industry in general.
According to quote from chief executive Patrick Batemen via a report from business website City AM:
We have a clear strategy to drive future growth by maximising benefit from our vertically integrated model, continuing to roll out our branch network, driving greater cross-selling of our full range within these branches and converting our customer insight and in-house development capacity into new products.
Read full article from City AM
This is the second big industry business to float on the stock market in a relatively short period of time, after Safestyle UK did it the summer of 2014. So is this a sign of a growing trend for big window and door companies to float on stock markets?
It is of course worth pointing out that there has been companies within our industry on stock markets before, and still are. Many will know that conservatory roof makers Ultraframe were once on the FTSE 100. Also in mid-2014, the Epwin Group entered on the AIM London stock market with an expected size offer of just under £94m. It could be argued that there is a growing trend.
Raising extra cash
One of the main reasons any company floats on the stock market is to generate lots of extra cash. What the company then does with that cash is to usually bolster the company finances, innovate and invent new products and generally use it to help grow the company and it’s presence.
So when you look at the Eurocell floatation, you have to assume that the reason is to help generate extra cash. Now according to that statement above, it’s fair to assume that this extra cash is going to go towards boosting the branch network Eurocell has. This would mean growing the existing ones, and setting up new ones boosting their reach into more parts of the UK. You would also assume that the extra money would go towards producing new products and improving the current product portfolio.
On the surface a move like this could be good for Eurocell. They are already an established, respected name in our industry and I am sure that everyone would wish them well in this venture, especially their fabricator customers! One word of warning though and that is about performance. Once on a stock market the pressure to perform is far greater than it was before the company was private. Each set of results are scrutinised to the N’th degree. Revenues and profits come under the spotlight even more. And of course shareholders expect the company they bought into to be reliable and worthy of their hard earned cash.