Slide 1: Norcros plc - Interim Results, Six months to 30th September 2011
Norcros plc - Interim Results Six months to 30th September 2011
Slide 2: Introduction
Page 2 Introduction Nick Kelsall Group Chief Executive
Slide 3: Business Overview
Business Overview Page 3 Supplier of high quality and innovative showers, ceramic wall and floor tiles and adhesive products Three complementary UK businesses: • Triton Showers – Market leader in the manufacture and marketing of showers in the UK • Johnson Tiles – Leading manufacturer of ceramic
Slide 4: 2011 H1: Financial Highlights
2011 H1 : Financial Highlights Page 4 Revenue growth +8.6% (LFL¹ at constant currency) Trading profit of £6.3m (2010: £6.4m, £6.2m on LFL¹ basis) Benchmark PBT² of £5.4m (2010: £5.6m, £5.4m on LFL¹ basis) Benchmark EPS3 of 0.9 p (2010: 0.9 p) Net debt (before prepaid finance costs) of £18.
Slide 5: 2011 H1: Key achievements
2011 H1 : Key achievements Page 5 Solid performance from UK operations and South African Retail & Adhesive businesses Resolved Springwood Drive legacy lease; cost £7.8m, cash saving £3.3m p.a Sale of surplus land to Morrisons subject to planning consent, anticipated net proceeds £2.6m New £5
Slide 6: Financial Review
Page 6 Financial Review Martin Payne Group Finance Director
Slide 7: Financial Summary
Financial Summary Page 7 Revenue • Revenue of £102.4m, +5.3% (2010: £97.3m) – as reported • Revenue of £102.4m, +8.6% (2010: £94.3m) – LFL at constant currency Profit • Trading profit of £6.3m, -1.6% (2010: £6.4m) – as reported • Trading profit of £6.3m, +2.2% (2010: £6.2m) – LFL at constant cur
Slide 8: Summary Income Statement
Summary Income Statement Page 8 26 weeks 27 weeks Change 26 weeks Change September September % March % 2011 2010 2011 £m £m £m Revenue 102.4 97.3 +5.3 98.8 +3.6 Group trading profit 6.3 6.4 -1.6 5.3 +22.1 Finance charges – cash (0.9) (0.8) (0.7) Benchmark PBT 5.4 5.6 -4.0 4.6 +20.5 Exceptional opera
Slide 9: Revenue by Geographic Segment
Revenue by Geographic Segment Page 9 At constant currency, like for like basis¹ +8.6% LFL revenue growth in constant currency SA £39.2m RoW £4.8m (£36.0m) (£5.4m) • Group +£8.1m; +8.6% • UK +£5.5m; +10.3% UK £58.4m • SA +£3.2m; +9.0% (£52.9m) • RoW -£0.6m; -9.6% Reconciliation to reported growth
Slide 10: Summary Cash Flow
Summary Cash Flow Page 10 26 weeks 27 weeks 26 weeks 53 weeks September September March March 2011 2010 2011 2011 £m £m £m £m Cash generated before lease exit costs 8.4 3.8 7.0 10.8 Springwood Drive Lease exit costs (7.8) - - - Cash generated from operations 0.6 3.8 7.0 10.8 Capex (3.1) (2.0) (4.3)
Slide 11: Balance Sheet Highlights
Balance Sheet Highlights Page 11 26 weeks 27 weeks 26 weeks 53 Weeks September September March March 2011 2010 2011 2011 Capex (£m) 3.1 2.0 4.3 6.3 Depreciation (£m) 3.2 3.2 3.4 6.6 Capex / Depreciation 0.98x 0.63x 1.26x 0.95x Net bank debt - before prepaid finance costs (£m) 18.1 13.0 12.4 12.4 Net
Slide 12: Re-financing
Re-financing Page 12 New £51m revolving credit facility through to October 2015 Flexible and lower cost terms • Leverage < 3x EBITDA, reducing to 2.75x from March 15 onwards • Interest cover > 4x EBITDA • Semi annual testing • £0.5m p.a. lower borrowing costs Net debt and covenant compliance •
Slide 13: Operating Review
Page 13 Operating Review Nick Kelsall Group Chief Executive
Slide 14: UK Operations – Strong revenue growth reflecting market share gains
UK Operations – Strong revenue growth reflecting market share gains Page 14 • Overall revenues +2.2%¹ - UK +1.5%¹; Exports +6.4%¹ • Strong growth in UK retail; share gains in key accounts • Market share gain in electric showers, particularly in the thermostatic sector • Export growth - robust perfor
Slide 15: UK Operations – Strong revenue growth reflecting market share gains
UK Operations – Strong revenue growth reflecting market share gains Page 15 • Overall revenues +17.4%¹ - UK +21.2%¹; Exports -5.6%¹ • UK overall – market share gains across all sectors • UK retail – substantial revenue growth; ink-jet product, service and financial strength • UK trade – market share
Slide 16: UK Operations – Strong revenue growth reflecting market share gains
UK Operations – Strong revenue growth reflecting market share gains Page 16 • Overall revenues +32.0%¹ - Full period effect of key accounts gained in H2 10/11 - National contract specification gains - Benefit of increased sales and marketing investment • Profits maintained - Margin pressure from hig
Slide 17: UK – Strong performance; Trading profit increased
UK – Strong performance; Trading profit increased Page 17 Revenue Growth Trading Profit +10.3%¹ 27 weeks 26 weeks 26 weeks Sept March Sept 2010 2011 2011 Trading Profit 5.9 5.7 6.5 (£m) Triton ROS % 10.7 8.9 11.1 HRJ Adhesives H1 2010 H1 2011 ¹ Adjusted for the current interim period of 26 weeks com
Slide 18: South Africa – Revenue and market share growth driven by sector focus
South Africa – Revenue and market share growth driven by sector focusPage 18 • Overall revenues +4.5%¹ • LFL same store retail sales +6.8%¹ • Focussed product offer & refinement of store operating model • 20 stores now upgraded to Lifestyle format; target to convert remaining 11 by FY 2014 • Retur
Slide 19: South Africa – Revenue and market share growth driven by sector focus
South Africa – Revenue and market share growth driven by sector focusPage 19 • Revenues +43.1%¹ in independent sector • Success of sector, focussed sales resource - Revenue growth in the independent merchant segment - Strong export growth • Increased investment in new product development • Trading l
Slide 20: South Africa – Revenue and market share growth driven by sector focus
South Africa – Revenue and market share growth driven by sector focusPage 20 • Adhesives revenues +9.7%¹ • Strong growth in Tile Adhesives and Building Products segments • Driven by new products & new listings • Significant growth into Namibia & other sub-Saharan countries • Trading profits marginal
Slide 21: South Africa – Improvement initiatives in JTSA impact short term profit
South Africa – Improvement initiatives in JTSA impact short term profit Page 21 Revenue Growth Trading Profit +9.0%¹ 27 weeks 26 weeks 26 weeks Sept March Sept 2010 2011 2011 Trading 0.5 (0.3) (0.3) Profit (£m) ROS % 1.3 (0.9) (0.8) TAF TAF JTSA JTSA TAL TAL H1 2010 H1 2011 ¹ At constant currency an
Slide 22: Growth Drivers
Growth Drivers Page 22 Long term growth in UK shower market Penetration only c.70% Electric shower replacement cycle strong UK tile penetration low by European standards Long term growth in South African tile market Current penetration is significantly below comparable climates Emergin
Slide 23: Growth Strategy
Growth Strategy Page 23 Increase share of UK shower market Expand SA product offer into sub-Saharan Africa Increase revenues and profitability through ongoing self help and operational improvement programmes in UK and South Africa Continue investment in product and brand development Build
Slide 24: UK - Operational Initiatives
UK - Operational Initiatives Page 24 • Continue to drive share gains across all product segments and customer channels Triton • Comprehensive new product programme in Trade, Retail and Exports • Drive share growth in specification sector • Continue to offset commodity price increases and inflation t
Slide 25: South Africa - Operational Initiatives
South Africa - Operational Initiatives Page 25 • New tile manufacturing management team to drive efficiency and cost improvements • Continue to improve retail product offer, store upgrade and improvement South Africa programme • Deliver benefits of new Adhesive facility in Durban • Broaden building
Slide 26: Summary & Outlook
Summary & Outlook Page 26 Solid trading performance Strong financial position and new bank facility through to October 2015 Significant increase in free cash flow following legacy lease exit Interim dividend increased 16% to 0.14p / share Market conditions expected to remain challenging in
Slide 27: Appendices
Appendices Page 27 NOFCFOS
Slide 28: UK Pension Scheme
UK Pension Scheme Page 28 Assets under management - £350m Mature Scheme; 10,400 members £m • Pensioners (62%), Deferred (34%), 20.0 Actives (4%) • Average age of pensioners is 75 10.0 Investment Strategy • Conservative asset allocation; 39% absolute return funds, 20% equities, 21% 0.0 gilts, 2
Slide 29: Net Debt Reconciliation
Net Debt Reconciliation Page 29 September September March 2011 2010 2011 £m £m £m Net debt – statutory (17.3) (10.6) (10.6) Prepaid finance costs (0.8) (2.4) (1.8) Net debt before prepaid finance costs (18.1) (13.0) (12.4)