Norcros Plc · LSE:NXR
Norcros — H1 2009 Earnings Presentation
25 slides from Norcros's earnings presentation, Nov 12, 2009
Slide 1: Norcros plc - Interim Results
Norcros plc - Interim Results Six months to 30th September, 2009
Slide 2: Introduction
Introduction John Brown Chairman 2
Slide 3: 2009 H1: Highlights
2009 H1 : Highlights Revenue growth +5.6% Performance of the UK business and SA Adhesive operation very promising Conditions remain tough in SA tile manufacturing and retail operations Trading profit of £3.5m (2008: £4.7m) Ongoing cost reduction programme yielding annualised savings of c. £5m Bank r
Slide 4: Financial Review
Financial Review Nick Kelsall Group Finance Director 4
Slide 5: Financial Highlights
Financial Highlights Revenue and profit • Revenue of £83.0m, +5.6% (2008: £78.6m) • Trading profit of £3.5m, -25.5% (2008: £4.7m) Rigorous cash management • Cash generated from operations £4.8m (2008: £4.1m) • Working capital positive; inventory reduction £2.9m • Capex c. 60% of depreciation; focus
Slide 6: Summary Income Statement
Summary Income Statement H1 2009 H1 2008 Change H2 2008 Change £m £m % £m % Revenue 83.0 78.6 +5.6 75.6 +9.8 Group trading profit* 3.5 4.7 - 25.5 2.3 +52.2 Other operating income / costs 0.1 - - Group operating profit* 3.6 4.7 - 23.4 2.3 +56.5 Share of results from associates (1.2) (0.4) (2.1) Finan
Slide 7: Revenue
Revenue RoW £3.8m (£3.9m) Revenue growth in UK offset by decline, at constant currency, in overseas businesses SA £29.5m (£31.7m) Underlying revenue change in constant currency UK £49.7m (£47.7m) • UK +£2.0m; +4.2% • SA -£2.2m; -6.9% At constant currency -0.4 % • RoW -£0.1m; -0.4% RoW £3.8m (£3.7m)
Slide 8: Cost Saving Measures from March 2008 to September 2009
Cost Saving Measures from March 2008 to September 2009 Actions to date: Annualised 08/09 H1 09/10 Restructuring – hard cost savings £5.0m £2.2m £2.4m Headcount reduction 374 260 94 Associated one-off cash cost / spend £4.5m £1.5m £0.6m 8
Slide 9: Summary Cash Flow
Summary Cash Flow 6 months 6 months 6 months 12 months September September March March 2009 2008 2009 2009 £m £m £m £m Cash generated from operations 4.8 4.1 2.7 6.8 Capex (2.1) (2.5) (2.2) (4.7) Disposal of businesses - 4.0 - 4.0 Net asset disposals & Div’s rec’d 0.1 1.0 1.0 2.0 Free cash flow, pre
Slide 10: Cash Conversion
Cash Conversion 6 months 6 months 6 months 12 months September September March March 2009 2008 2009 2009 £m £m £m £m Cash generated from operations 4.8 4.1 2.7 6.8 Trading profit 3.5 4.7 2.3 7.0 Cash conversion 137% 87% 117% 97% 10
Slide 11: Balance Sheet Highlights
Balance Sheet Highlights 6 months September 6 months 6 months 12 months 2009 September March March 2008 2009 2009 Capex 2.1 2.5 2.2 4.7 Depreciation 3.3 3.0 3.4 6.4 Capex / Depreciation 0.6x 0.8x 0.6x 0.7x Net bank debt (£m) 45.3 45.2 45.8 45.8 Net bank debt/ Ebitda* 3.8x 2.6x 3.3x * covenant basis
Slide 12: Capital Raising Highlights
Capital Raising Highlights Nick Kelsall Group Finance Director 12
Slide 13: Capital Raising: Banking Terms Pre and Post Refinancing
Capital Raising: Banking Terms Pre and Post Refinancing Pre-refinancing . . . Post-refinancing . . . Facility A Facility A • £80m RCF • £60m RCF (inc all ancilliaries) • Margin: LIBOR +0.9% • Margin: LIBOR +3.0% to 5.0% Facility B Covenants • £20m Term Loan • Leverage < 3x • Margin: LIBOR + 6% cash
Slide 14: Capital Raising: Purpose and Rationale
Capital Raising: Purpose and Rationale Proposed capital raising of approx £30m gross / £27.7m net of fees Strong case for raising capital to reduce leverage from c. 3.3x to 1.3x at 31 March 2009 on a pro-forma basis Use of proceeds: repay all of expensive B debt and PIK; balance used to paydown Faci
Slide 15: Operating Review
Operating Review Joe Matthews Group Chief Executive 15
Slide 16: Market Environment
Market Environment Shower Market • Rate of retail destocking slowed • Overall market –13% • Electric showers –7% • Mixer shower –20% Tile Market • Overall UK market –10% • Lower consumer demand, reduced housing transactions South Africa • GDP -6.4% in Q1 and -3% in Q2 • Tile market –15% • Significan
Slide 17: UK Revenue
UK Revenue +4.2% Triton • Overall revenue -0.8% UK +4.1%; Exports -20.5% • UK driven by strong performance in Trade and significant improvement in Retail • Leading position in Electrics and Mixer market Triton share maintained • Exports reflect weak market conditions in Ireland H&R Johnson • Overall
Slide 18: UK Financials
UK Financials Triton - robust trading performance and significant Sept 09 Sept 08 Change cash generation % • Volume increase mitigated by customer mix • New product development programme • Tight control of discretionary expenditure Trading Profit 5.9 5.0 +18.0 • Adverse FX impact on input costs (£m)
Slide 19: South Africa Revenue
South Africa Revenue -6.9%* Tile Africa revenues -5.2%* • Like for like retail sales -12.4%*; retail softness • Hardware, paint & glass sales - 15 / 20% • Substantial reduction in building activity -25% Johnson Tiles revenue -13.8%* TAF TAF • Lower volumes and lower average selling prices – Increase
Slide 20: South Africa Financials
South Africa Financials Tile Africa traded at a loss • Increased fixed costs from new stores LY • Headcount reduction -58 heads from Mar 09 Sept 09 Sept 08 Change • Actions taken to improve store layouts, % product offering and pricing • Closure of 4 unprofitable stores; exceptional charge £2.4m, H2
Slide 21: Summary
Summary Market outlook remains tough Emphasis on operational efficiency and market opportunities Opportunities • Benefit of successful product launches at Triton, Johnson Tiles and Adhesives • Full year benefit of latest cost reduction actions • Faster maturity of 2008 and 2009 new store programme F
Slide 22: Appendices
Appendices NOFCFOS ‘ | we mal cm
Slide 23: Capital Raising: Proposed Structure
Capital Raising: Proposed Structure £20m firm placing and £10m placing & open offer to raise approx £30m (gross) Capital raising is fully supported by Lifestyle Investments, a 29.9% shareholder Capital raising is fully supported by all Directors, who, to the extent that circumstances allow, intend t
Slide 24: Capital Raising: Indicative Timetable
Capital Raising: Indicative Timetable Announcement 12 November 2009 Document posted 13 November 2009 Extraordinary General Meeting - anticipated 30 November 2009 Dealing in new shares commences - anticipated 4 December 2009 24
Slide 25: UK Pension Scheme
UK Pension Scheme Mature Scheme; 11,000 members £m • Pensioners (61%), Deferred (35%), Actives 20 (4%) • Average age of pensioners is 74 13.4 Investment Strategy 10 6.6 9.7 • Low risk asset allocation; 35% equities, 35% gilts, 30% corporate bonds 2.3 1.3 • Pensioner liability closely matched 0 Mar-0