Slide 1: Preliminary Results Year ended 31st March 2014
Norcros plc Preliminary Results Year ended 31st March 2014
Slide 2: Introduction
Introduction Martin Towers Chairman
Slide 3: Highlights
Highlights Fifth consecutive year of revenue and underlying Revenue1 operating profit growth £218.7m +16.6% Strong cash performance Underlying2 operating profit Strategy £16.1m +25.5% • Vado acquisition successfully integrated • Disposal of Australian business May 2014 – geographic focus Under
Slide 4: Financial Review
Financial Review Martin Payne Group Finance Director
Slide 5: Income Statement – continuing operations
Income Statement – continuing operations March March +/- +/- Constant 2014 20133 Reported Currency £m £m Revenue 218.7 200.4 +9.2% +16.6% Underlying1 operating profit 16.1 12.8 +25.5% Margin 7.3% 6.4% Finance charges – cash (1.5) (1.3) +14.8% Underlying1 PBT 14.6 11.5 +26.7% Exceptional operating it
Slide 6: Income Statement – key bridges
Income Statement – key bridges Revenue Underlying operating profit 5.9 1.4 (10.3) 2.3 £m £m 25.2 (0.2) (0.4) 218.7 16.1 210.7 (12.8) 200.4 13.0 12.8 Currency restated reported Australia 2014 UK Australia Currency 2014 restated UK reported SA SA 2013 - 2013 - 2013 - 2013 - 6
Slide 7: Revenue Analysis – by business unit
Revenue Analysis – by business unit UK South Africa £122.8m £148.0m £77.6m £70.7m 29.1 £64.8m 11.3 4.4 5.3 10.6 9.4 19.4 17.1 67.3 61.7 16.3 46.9 43.0 39.1 51.1 51.9 2013 2014 2013 2013 2014 reported constant currency Triton Johnson Tiles Norcros Adhesives Vado Tile Africa TAL Johnson Tiles 7
Slide 8: Tax, Earnings and Dividends
Tax, Earnings and Dividends Underlying1 Reported Diluted underlying EPS 2014 2013 2014 2013 (pence) 0.7 £m £m £m £m Effect of Deferred Tax recognition 2.8 Profit before Tax 14.6 11.5 5.8 5.2 2.1 1.9 1.8 Tax (charge)/credit 2.4 (0.7) 4.3 0.2 2012 2013 2014 Earnings 17.0 10.8 10.1 5.4 Dividend per sha
Slide 9: Cash Flow
Cash Flow 2014 2013 £m £m Underlying EBITDA 22.0 18.9 Underlying Operating Cash Flow / Underlying EBITDA Working Capital (2.6) (7.4) Other 0.9 (0.7) 100% 92% Underlying operating cash 20.3 10.8 57% Capital Expenditure - continuing (4.2) (6.5) 2012 2013 2014 Proceeds from property disposal 1.4 2.5 Pe
Slide 10: Balance Sheet
Balance Sheet £m Net debt (IFRS) Lower debt; leverage 1.2x underlying EBITDA 30.7 26.9 ROCE significantly higher at 15% 17.8 IAS19R pension deficit decreased to £21.8m 2012 2013 2014 • Recovery plan payments of £2.0m • 4.3% discount rate times Leverage - Net debt (IFRS) • 3.2% RPI / 2.2% CPI t
Slide 11: Operating Review
Operating Review Nick Kelsall Group Chief Executive
Slide 12: Business Overview
Business Overview Group Revenue from Continuing Operations : £218.7m UK SA £148m £70.7m Norcros UK Sales Norcros SA Sales £29.1m £10.6m £61.7m £17.1m £51.9m £43m £5.3m Vado Triton Norcros Adhesives Johnson Tiles TAL Tile Africa Johnson Tiles Revenue Growth @ Constant Currency: Group +16.6% UK +20.6%
Slide 13: Triton – Outperformance in flat markets
Triton – Outperformance in flat markets Overall Revenue +1.6% • UK +2.4% • Exports -3.4% Outperformance in trade and retail; share gain T80Z fast fit – substantial growth in the Merchants Good performance of thermostatic electric showers for care market Launch of “Inclusive Showering” prod
Slide 14: Vado – Outperformance in flat markets
Vado – Outperformance in flat markets Overall Revenue +16.5% • UK +22.6% • Exports + 9.1% Very strong performance in UK retail and trade: • Retail partnership programme • Stronger relationship with Merchant buying groups • Account wins in specification (eg St George & Redrow) Business successf
Slide 15: Johnson Tiles – Outperformance in flat markets
Johnson Tiles – Outperformance in flat markets Overall Revenue - 8.4% • UK -12.6% • Exports +32.7% UK market flat; trade outperforming retail UK retail revenue decline – B&Q range review prior year and de- stocking UK trade business +3.4%; H2 +6.7% Increased activity from house builders
Slide 16: Norcros Adhesives – Outperformance in flat markets
Norcros Adhesives – Outperformance in flat markets Overall Revenue +21.1% Continued progress in distribution and retail Further 3 years exclusive agreement with Barratt Homes Building presence in DIY via B&Q/Tradepoint Successful launch of new ready mix adhesive Success of new wet room s
Slide 17: UK Operations – Outperformance in flat markets
UK Operations – Outperformance in flat markets Revenue Underlying operating profit £116.8m £122.8m £148.0m 14.5 12.0% 29.1 14.0 10.0% 4.4 4.1 5.3 13.5 8.0% 13.0 59.1 67.3 61.7 12.5 6.0% £m 12.0 4.0% 11.5 53.6 51.1 51.9 2.0% 11.0 2012 2013 2014 10.5 2012 2013 2014 0.0% Profit 12.4 11.9 14.2 Triton Jo
Slide 18: JTSA – Strong progress in flat markets
JTSA – Strong progress in flat markets Overall Revenue +12.3% at cc Gains in the DIY sector; strategy of creating “one-stop shop” Manufacturing performance significantly improved Energy and raw material costs impacted by weak rand Significantly reduced operating loss Focus on Phase 2 of
Slide 19: TAL – Strong progress in flat markets
TAL – Strong progress in flat markets Overall Revenue + 5.2% at cc • Like for like +16.7% (Exc Nortec disposal) • Export +60.7% Tile Adhesive sales driven by share gains in major accounts Building and Construction products performed well • Waterproofing • Flooring Export growth - strong perf
Slide 20: Tile Africa – Strong progress in flat markets
Tile Africa – Strong progress in flat markets Overall Revenue +9.9% at cc Impacted by shipping delays from China in Q3 Benefits of improved in-stock levels in store Gross margin and underlying operating profits higher New store model delivering higher sales productivity 23 of 29 stores n
Slide 21: SA Operations – Strong progress in flat markets
SA Operations – Strong progress in flat markets Revenue1 Underlying operating profit 2.5 3.0% £54.3m £64.8m £70.7m 2.0 2.5% 10.6 9.4 2.0% 1.5 6.0 17.1 1.5% 16.3 1.0 13.3 1.0% £m 0.5 0.5% 43.0 0.0 39.1 35.0 0.0% (0.5) (0.5%) 2012 2013 2014 (1.0) 2012 2013 2014 (1.0%) Profit (0.5) 0.9 1.9 ROS% (0.7%)
Slide 22: Group Outlook and Strategy
Group Outlook and Strategy Nick Kelsall Group Chief Executive
Slide 23: Key indicators in UK show good recovery
Key indicators in UK show good recovery 120000 Source: HM Treasury May 2014 110000 100000 90000 Mortgage Loan Approvals 80000 70000 Rising trend since 60000 Jan 13 50000 40000 30000 0 Rising trend but -5 -10 still in negative -15 territory GfK Consumer Confidence -20 -25 -30 -35 160,000 140,000 120,
Slide 24: South Africa indicators are also on an improving trend
South Africa indicators are also on an improving trend Source: Investec May 2014 8 7 6 5 4 3 2 GDP % change 1 Construction GDP % change 0 2012 2013 2014 2015 2016 2017 -1 24
Slide 25: Positioned for Growth
Key growth drivers for Norcros markets Positioned for Growth 25
Slide 26: Group Strategy – Key Targets
Group Strategy – Key Targets Growth Target * Double revenues to Organic ...£420m by 2018 ….- Organic and * Market leading Acquisition ……acquisition ..positions .- Maintain 50% * Complementary .. Returns Target revenue derived * Strong trade and ..industry segments/ from overseas ..consumer brands ..
Slide 27: Group Strategy - Update
Group Strategy - Update Vado integration complete and performance on track Johnson Australia non-core asset disposed of, as planned Growth criteria • Build scaleable presence in “sweetspot” areas via product line and focussed geographic extension Pipeline of acquisition targets identified an
Slide 28: Summary
Summary 5th year revenue and profit growth Good organic Pipeline of growth Acquisition opportunities opportunities Market conditions improving Clear Growth Strategy – On Track 28
Slide 29: Appendices
Appendices
Slide 30: UK Pension Scheme
UK Pension Scheme Assets under management - £384m Scheme closed to new entrants and future accrual from April 13 - stops future build up of liabilities UK Pension IAS 19R Assets & Liabilities 440 Mature Scheme; 9,485 members • Pensioners (61%), Deferred (39%) • Average age of pensioners is 76
Slide 31: Exceptional and non-underlying operating items
Exceptional and non-underlying operating items 2014 2013¹ £m £m Exceptional operating items Increase in legacy leasehold provision - (3.0) Business unit restructuring (1.5) (0.2) Disposal of Nortec in TAL business 0.5 (0.3) Acquisition related deferred remuneration (Earn out) (0.3) - Vado acquisitio
Slide 32: Legacy leasehold obligations
Legacy leasehold obligations Swindon - Light Industrial Units • Lease expiry December 2014 • Occupied to lease expiry : No dilapidations • FY 2015 cash shortfall against rental income c. £0.5m p.a. Swindon - Warehousing / Distribution Unit • Lease expiry 2022 • Sublet from September 2013 to 31 D
Slide 33: Net debt reconciliation
Net debt reconciliation 2014 2013 £m £m Net debt (IFRS) – opening (30.7) (17.8) Net cash flow 5.0 (12.8) Other non cash movements (0.4) - Foreign exchange (0.8) (0.1) Net debt (IFRS) - closing (26.9) (30.7) 33
Slide 34: Restatement of 2013 Income Statement
Restatement of 2013 Income Statement March IAS 19R Discontinued March 2013 - Operations 2013 - reported £m £m restated £m £m Revenue 210.7 - (10.3) 200.4 Underlying1 operating profit 13.0 - (0.2) 12.8 Margin 6.2% 0.2% 6.4% Finance charges – cash (1.3) - - (1.3) Underlying1 PBT 11.7 - (0.2) 11.5 Exce
Slide 35: CPA Spring 2014/15 forecasts by sector
CPA Spring 2014/15 forecasts by sector Source: CPA April 2014 15 6 10 4 2 5 % 0 % 2012 2013 2014 2015 2016 2017 0 2012 2013 2014 2015 2016 2017 -2 -5 -4 Private Housing RMI Private New Housing -6 Public Housing RMI -10 New Commercial -8 -15 Recovery seen across most sectors but led by private sect