Good morning. Welcome to this presentation on the interim results of Stelrad Group plc for the six months ending the thirtieth of June 2022. Next slide. My name is Trevor Harvey, and I'm the Group CEO. I am accompanied today by George Letham, our Group CFO. We have a short agenda today, starting with an overview of the business, then followed by a financial review and a business review before we conclude with a summary and outlook. There will be an opportunity for Q&A at the end. Next slide. Our overview. Next slide. Interim 2022 financial performance ahead of expectations. In the first half of 2022, Stelrad has grown revenue and adjusted operating profit across all territories. This was despite lower sales volumes compared to 2021.
Last year was an exceptional comparative as European distributors sought to increase stock due to concerns over global supply chains and the impact of reduced product availability. Stelrad’s margin per unit has continued to improve, driven by the commissioning of a new production line in our low-cost Turkish facility, an improved premium panel rate of mix and proactive margin management. In line with strategy, we acquired DL Radiators in Italy for EUR 28.3 million, and I will expand upon this later in the presentation. Over the longer- term, we remain confident that rising energy costs and security of supply considerations will drive and potentially accelerate market demand for more energy efficient heating solutions to the benefit of Stelrad Group. All in all, our interim 2022 financial performance is ahead of expectations.
I'll now hand over to George, who will talk you through the financials in more detail. Next slide.
Okay. As Trevor says, I’ll now cover the financial review section. Next slide. The main highlights of our 2022 interim financial performance are shown here on the first slide. Group sales increased to just over GBP 150 million in the six-month period, and this represents 17.4% growth over the previous year, despite 12% lower volumes. Group adjusted operating profit also increased by 13.1% to GBP 19 million. Good progress was made in all territories in terms of both sales and adjusted operating profit, which I’ll expand on in the next few slides. Now, leverage at June 30, 2022 was circa 1.1x EBITDA, and that was in line with previous guidance on capital structure. Finally, we are proposing an interim dividend of 2.92 pence per share.
This represents 1/3 of 40% of group adjusted net profit prorated for the full -year, and that's based on adjusted EPS in the period of 10.95 pence. Next slide. Diving a bit deeper into results, firstly, looking at revenue. The 17.4% sales growth is analyzed in the table showing sales growth in each territory. UK and Ireland sales increased by GBP 8.3 million or 13.1%. This improvement relates to the full- year impact of selling prices applied in 2021. Sales volumes in this territory were actually 16% lower than 2021, part of which, at approximately 25%, was due to stock movement in the distribution channels.
UK market share was stable, maintaining the gains that we made in 2021, and that's based on monthly trade association data that we receive. European sales increased by GBP 9.7 million or 17.7%. Selling prices were increased in the second half of 2021 and in the first quarter of 2022. Sales volumes here were also lower, 11% lower than 2021, and that was mainly in Belgium and Netherlands. Higher value premium panel sales remained very robust in the period, improving the product mix. Sales in Turkey and international increased in the period by GBP 4.2 million or 42.9%. Again, selling price increases in late 2021 and early 2022 contribute to the increase, but sales volumes were also 6% higher than in 2021 in this territory.
In fact, sales to the Turkish domestic market increased as capacity limitations we experienced in the first half of 2021 were eliminated with the commissioning of a new production line. Next slide. This next slide analyzes some of the key drivers of our financial performance. As I said before, sales volumes decreased by 12% compared to prior year, as you can see in the left-hand graph. First half 2021 was an exceptionally strong comparative due to supply chain and pandemic-related issues in that period.
Sales volumes were actually 8% higher than 2019, which was the last year not impacted by these issues. Premium panel sales volume, looking at the middle graph, they were 9% more than 2021, but this still gave rise to a product mix improvement as the decrease was lower than for standard panel volumes and penetration increased. Premium panel sales were actually 16% higher than 2019. Looking at the graph on the right, contribution per radiator figures show that our margins continue on a strong upward trajectory. Our contribution per radiator increased to GBP 16.06. This is enabled by the ongoing optimization of our manufacturing footprint as additional capacity came online in Turkey.
Our strong market position in all our major markets also enables us to be proactive in our margin management, ensuring all increases in input costs are addressed promptly. Next slide. Adjusted operating profit also improved in all territories. As you can see in the table here, UK and Ireland increased by GBP 2 million, that's 19% higher than last year. Europe increased by GBP 0.8 million, 12% higher than last year. Turkey and International increased by GBP 0.5 million, which is 33% higher than last year. Although sales volumes increased in the Turkish domestic markets, all other territories managed to increase their adjusted operating profit despite lower volumes.
This was a result of our cost improvement initiatives, optimizing the efficiencies at all our plants to mitigate increased input costs while continuing to increase our selling prices in a timely manner. The profit improvement generated by the territories was partially offset by the increased central costs which arise from our listing last November. Next slide. The group reported a small negative free cash flow in the period due to working capital outflows, but this is entirely consistent with our working capital pattern over many years, where the seasonal low point is experienced in the month of December each year, with the highest point in the summer just before the heating season.
2021 was a notable exception to that pattern, but that was due to the group being unable to build stocks in the first half of 2021 due to the exceptional customer demand and the supply chain constraints in that period. The second half of 2022 is expected to show a significant positive cash generation as working capital returns to the seasonal low point in December 2022. Next slide. At June 2022, our leverage was circa 1.1 times EBITDA, with net debt before finance leases of GBP 47.5 million, leaving the group with more than GBP 30 million of available financing. An accordion increase of GBP 20 million was agreed with our banks in July 2022 to fund the EUR 28 million acquisition of DL Radiators in Italy.
Leverage is expected to return to circa one times EBITDA by the year-end 2022, in line with previous capital structure guidance. Next slide. I'd now like to address the subject of the adjustments made to our group statutory profits required by adopting IAS 29. Now, this accounting standard specifically relates to the financial reporting of our Turkish subsidiary, since Turkey was declared a hyperinflationary economy in April 2022. I'd just like to point out, these are accounting adjustments and have no impact on cash. The table on the slide gives further detail on the impact of the accounting standard by reconciling our profit loss account before and after applying the standard. We've excluded IAS 29 adjustments from our adjusted profit figures, as we believe this gives a more meaningful presentation of the group's underlying performance.
That's because more than 80% of our Turkey subsidiary's assets and liabilities and its revenues and costs are denominated in hard currencies. Adjusting these hard currency figures for 42.35% inflation in Turkey in the period does not meet the objective of IAS 29 to provide meaningful financial information. Now, the group's in the process of commissioning two further production lines in Turkey, with the expectation of increasing hard currency revenues even further. As a result of this development, we will review the functional currency of the group's Turkish subsidiary to assess whether Turkish lira remains the functional currency in future years. Next slide. Finally, looking at current tradings and the outlook for future financial performance. Steel price indices have continued to be extremely volatile in the first half of 2022.
Indices started to fall in late 2021 and early 2022, but they spiked back up to record levels in April 2022, but there have been 3 consecutive decreases between May and July 2022. The group has implemented further selling price increases in all major markets in July 2022, and these range between 6% and 12%. We've also witnessed volatility in currency rates recently. Our currency gains and losses largely arise in our Turkish subsidiary. Again, these are not cash impacts. Again, just like to stress, our business model is robust. We have no exposure to Turkish lira due to natural hedging. Natural hedging of our Turkish lira revenues and costs, they equate to about TRY 450 million per annum. That's about 22 million, 22.5 million pounds in the first half of the year.
Our Turkish lira assets and liabilities are about TRY 150 million, that's about GBP 7.5 million, which again, is significantly less than 20% of our total assets. These are naturally hedged. DL Radiators is expected to contribute EBITDA in the second half of 2022 at a similar level to 2021, pro rata to our period of ownership, which is five and a half months. We completed the deal in the middle of July. As I said before, leverage is expected to return to 1x EBITDA by the year-end. In summary, the impact of lower volumes is being more than offset by higher revenues and margins per radiator.
Despite some caution over the impact of inflation on future market demand, our expectations for 2022 remain unchanged due to the resilience of our business. Hand back to Trevor with the next slide.
Now moving on to the business review. Next slide. In 2021, Stelrad Group's market share increased by 1.7 percentage points versus 2020, from 16.6% to 18.3%. A key strategic objective for Stelrad is growing market share. Share data for the majority of European countries was released by BRG Building Solutions in June. This showed significant share gains for Stelrad in 2021. The UK steel panel radiator market, one of Europe's largest, was most affected by COVID-19 in 2020. With over 50% share of the UK market, Stelrad's overall European market share was impacted by the UK's 2020 volume reduction. However, 2021's UK market recovery and Stelrad share gains in other key territories means that we have outperformed all of our major competitors in the countries reported to date.
These represent 91% of total European volume. As a result, in 2021, Stelrad not only recovered share lost in 2020 due to the impact of a reduced UK market volume, but increased overall market share to 18.3%. This represents growth of 1.7 percentage points versus 2020 and 0.5 percentage points higher relative to 2019, the last pre-pandemic comparison. Next slide. In 2021, Stelrad made important gains in share and market position across key countries, providing a strong foundation to meet future market challenges. Strong 2021 share growth positions Stelrad well for the future, despite the challenging conditions the market is facing in 2022 and beyond.
In the UK, the group further consolidated its number one position, growing share by 1.9 percentage points relative to 2020 and achieved 52.1% share. In France, Stelrad overtook BDR Thermea to move from number three to number two position relative to 2020. Share increased by 6.6 percentage points to 26.4%, driven by growth across the distribution channel. In Belgium and the Netherlands, we consolidated our market-leading positions in both countries with share growth of 4.7 and 6.4 percentage points respectively, giving Stelrad a 38.2% share in Belgium and 45.8% in the Netherlands. Growth in Scandinavia was also a highlight of 2021's performance. In Denmark, share rose by 5.1 percentage points to 42.6%.
This represents a share growth of 21.4 percentage points since 2019. In Sweden, Stelrad moved from fifth into second position in 2021. Share growth of 12.4 percentage points in 2021 resulted in Swedish market share of 18.2%. Stelrad share has grown year-on-year since 2019 in all these key countries, demonstrating the resilience of our business model and commercial strategy despite the considerable challenges resulting from the COVID-19 pandemic. Next slide, please. The acquisition of DL Radiators is strongly aligned with Stelrad's four key strategic objectives. The addition of DL Radiators to Stelrad Group will enable us to grow market share, improve product mix, optimize routes to market, and position us effectively for decarbonization.
Firstly, in terms of share growth, acquiring DL Radiators provides market consolidation opportunities and will facilitate growth in key geographic markets. DL Radiators’ wider range of radiator types and technologies will improve Stelrad’s product mix, and through leverage in Stelrad Group’s existing channels will further accelerate upselling to higher added value and design products. DL Radiators has a greater retail market orientation than Stelrad, providing increased access to this important residential RMI market. In addition, its presence in France and Germany provides us with increased access to markets and channels within these key European territories. Lastly, DL Radiators electrical heat emitters and its other ranges compatible with decarbonized and low-temperature systems will extend Stelrad’s offer at a time when rising energy costs across Europe are expected to drive increased long-term demand for more energy-efficient heating solutions. Next slide, please.
DL Radiators represents an extremely complementary acquisition for Stelrad. In terms of product types, 40% of 2021 revenue was in steel panel radiators, with over 60% in higher added value and design ranges. As a result, Stelrad’s overall product mix will improve, and there are clear opportunities to develop sales of these products in our core markets through Stelrad’s existing channels. 89% of DL Radiators’ 2021 revenue was in the three countries France, Germany, and Italy. Stelrad’s growing market position in France is clearly reinforced through the addition of electrical ranges and retail market access. In Germany, the addition of DL Radiators steel panel radiator volume will move Stelrad into the number three market position with around 50% share overall. Stelrad will also have presence in the Italian radiator market for the first time.
In terms of routes to market, 47% of DL Radiators’ 2021 revenue was generated through the do-it-yourself and retail channels, significantly increasing Stelrad’s penetration of a route to market which is becoming increasingly important for access to the private residential RMI segment. Next slide, please. To fulfill our purpose of helping to heat homes sustainably, we are developing a strategy to ensure that Stelrad is fit for the future. We set up a task force to develop a comprehensive and well-integrated ESG strategy at the end of last year, and I've concentrated on understanding the needs of Stelrad’s stakeholders through a detailed materiality assessment. Our commitment to sustainability has been developed through the strategic framework Fit for the Future. This has three key elements, all of which help us to fulfill our purpose of helping to heat homes sustainably.
The strategic pillar Enabling an exceptional workforce aims to ensure our people possess the skills and knowledge needed for future growth. Driving better environmental performance is the second strategic pillar, with the goal of understanding and reducing Stelrad’s impacts across the product lifecycle. Both of these strategic pillars are underpinned by the foundation of our framework, Conducting business responsibly. Our goal being to strive for zero harm and high labor standards at all times. Having established this strategic framework, we now intend to develop sustainability targets, including appropriate KPIs during the second half of the year. Next slide, please. Summary and outlook. Next slide, please. Results ahead of expectations are testament to Stelrad’s resilient business model and robust strategy. Stelrad has delivered a strong set of first half results in 2022, underpinning our confidence in our full- year performance.
Revenue and adjusted operating profit have improved across all territories, with lower volume relative to 2021 more than offset by higher revenue and margins. In addition, in line with a key strategic objective, the group achieved meaningful market share growth in 2021. Long-term growth drivers remain favorable as rising energy costs are expected to stimulate demand for more energy-efficient heating solutions. Our purpose, helping to heat homes sustainably, clearly aligns with this future direction and reflects our commitment to be Fit for the Future. The acquisition of DL Radiators is a key component in that strategy, providing opportunities for organic growth fully in line with our stated strategic objectives. As a result, Stelrad remains well positioned to drive shareholder value. Trading results for the first half of 2022 remain in line with our expectations.
We continue to monitor economic conditions closely, but remain confident that our resilient business model and leading market position, supported by considerable sector experience, will enable Stelrad to outperform the market in these challenging times.