Slide 1: Interim Results: Six Months to 30 September 2020
Click to edit Master title style Interim Results Six Months to 30 September 2020 Inspiring Living Spaces
Slide 2: Introduction
Click to edit Master title style Introduction Nick Kelsall, Chief Executive Officer
Slide 3: Highlights
Click to edit Master title style Highlights Our people responded admirably to the March COVID-19 £135.3m lockdown, reopening & adoption of new normal Revenue1 -17.3% Marked recovery in demand; performance reflecting resilience of our operating model £12.8m Underlying Operating Profit -26.4% Pe
Slide 4: Financial Review
Click to edit Master title style Financial Review Shaun Smith, Chief Financial Officer
Slide 5: Income Statement
Click IncometoStatement edit Master title style H1 H1 FY Sept 2020 Sept 2019 Reported Constant Mar 2020 Currency £m £m LFL4 £m Revenue 135.3 181.2 -25.3% -17.3% 342.0 Underlying1 operating profit 12.8 17.4 -26.4% 32.3 Margin 9.5% 9.6% 9.4% Finance charges – cash (1.2) (0.9) (1.6) Finance charges – l
Slide 6: Income Statement – Key Bridges
Click Incometo Statement edit Master title Bridges – Key style Revenue Underlying operating profit 11.2 - 0.9 6.3 - 1.7 17.6 10.8 2.0 £m £m 181.2 17.4 135.3 12.8 Sept '19 Currency Pro-rating 2 UK SA Sept '20 Sept '19 Currency UK SA Sept '20 Revenue1 Underlying operating profit / ROS% 9.3% 9.6% -17%
Slide 7: Tax, Earnings & Dividends
Click to edit Master Tax, Earnings title style & Dividends Diluted underlying EPS1 (pence) Underlying1 Reported H1 H1 FY H1 H1 FY Sept Sept Mar Sept Sept Mar 28.2 2020 2019 2020 2020 2019 2020 £m £m £m £m £m £m 15.1 10.6 Sep-20 Sep-19 Mar-20 FY Profit before Tax 10.7 15.6 28.8 3.4 13.3 15.0 Tax char
Slide 8: Strong Cash Conversion
Click StrongtoCash edit Conversion Master title style H1 H1 FY Sept Sept Mar 2020 2019 2020 £m £m £m Underlying EBITDA 14.9 20.6 38.6 Working capital 19.9 (3.1) (4.8) Cash conversion1 Depreciation of right of use assets 2.1 2.2 4.5 Operating profit impact of IFRS16 0.5 0.3 0.5 252% Other 0.2 - (0.4)
Slide 9: Balance Sheet strengthened significantly since March
Click to Sheet Balance edit Master title style strengthened significantly since March 2020 £m Net debt 41.1 Net debt £7.3m 36.4 (March 20: £36.4m, Sept 19: £41.1m) 7.3 Sep-20 Sep-19 Mar-20 times Leverage – Net debt to underlying EBITDA Leverage 0.2 times underlying EBITDA 0.9* 0.9 0.2 Sep-20 Sep-19
Slide 10: UK Pension Scheme Update
Click to editScheme UK Pension MasterUpdate title style IAS 19R deficit £48.9m (March 20: £48.9m, UK Pension Scheme IAS 19R September 19: £29.0m) Assets, Liabilities and Membership 10000 Assets increased by £36.0m to £397.9m 9500 Liabilities increased by £36.0m to £446.8m 9000 8500 Contribut
Slide 11: COVID-19 – Decisive action taken - focus on cost alignment and cash generation
Click to edit COVID-19 Master action – Decisive title style taken - focus on cost alignment and cash generation Decisive action taken to safeguard employees and to ensure liquidity, reduce costs and preserve cash Underlying operating profit includes £4.9m of COVID-19 government job retention ass
Slide 12: Operating Review
Click to edit Master title style Operating Review Nick Kelsall, Chief Executive Officer
Slide 13: Key Messages
Click to edit Master title style Key Messages Strong Recovery Q2 LfL revenue +4.5% ahead of prior year & return to profitability Excellent cash generation Experienced management, resilient business model and channel diversity Ongoing investment driving share gains & market outperformance
Slide 14: Business Overview
Click to edit Business Master title style Overview Group H1 % Revenue Market leader in the manufacture and marketing of showers in the UK £23.3m 17.3 Market leading supplier of shower enclosures and trays £18.1m 13.4 Leading manufacturer and supplier of taps, mixer showers, bathroom accessories and
Slide 15: Trading Progress
Click toProgress Trading edit Master title style Through Covid-19 – Significant Momentum Health and safety of our staff and customers remains key priority Q2 LfL trading ahead of prior year Decisive action to adapt to CV-19 operating model Flexibility of fixed capital-light model successfull
Slide 16: UK Operations
Click to edit Master title style UK Operations Nick Kelsall, Chief Executive Officer
Slide 17: UK Revenue – Q2 Outperformance & Share Gains Driving Recovery
Click to edit –Master UK Revenue title style Q2 Outperformance & Share Gains Driving Recovery % Revenue Change Q1 Q2 LfL1 H1 LfL1 8% Retail and Online growth; increasing Q2 Trade momentum; and stable Irish market -1% -14% 16% Stock availability and NPD driving account wins and increased share of wal
Slide 18: UK Channels – New Accounts & Share Gains in Trade & Independents
Click to edit Master UK Channels title style – New Accounts & Share Gains in Trade & Independents UK Norcros - H1 FY211 versus FY202 Trade Continued focus on attractive trade segment 1% Sustained sales growth across “Small Format” e.g. Screwfix and Toolstation (FY20 - 1%) 14% Triton – project
Slide 19: UK Channels – Increasing DIY Share of Wallet; Export Recovery
Click to edit Master UK Channels title style – Increasing DIY Share of Wallet; Export Recovery UK Norcros - H1 FY211 versus FY202 (FY20 - 1%) 1% (FY20 - 1%) DIY Retail (FY20 - 1%) (FY20 - 14%) 14% Strong RMI and DIY demand driving buoyant trading (FY20 - 14%) (FY20 - 14%) Triton – strong B&Q gro
Slide 20: UK – Resilient Performance in Unprecedented Period
Click to edit Master UK – Resilient title style Performance in Unprecedented Period Revenue £225.4m 11.8 41.7 14.8 23.7 £115.6m 6.3 42.3 £93.7m 21.5 5.6 8.6 14.0 11.7 6.5 42.5 10.1 21.1 16.1 21.9 18.1 48.6 24.5 23.3 H1 Sept 19 H1 Sept 20 FY Mar 20 Triton Merlyn Vado Croydex Abode Johnson Tiles Adhes
Slide 21: South Africa
Click to edit Master title style South Africa Nick Kelsall, Chief Executive Officer
Slide 22: South Africa Investment Fundamentals
Click South to edit–Master Africa title Fundamentals Investment style Norcros South Africa South African Economy Strong heritage, market leading positions & strong brands Large economy & business friendly environment Sustained robust financial performance & profitability in Long-term socio-e
Slide 23: South Africa Revenue – Retail Driven Recovery; Commercial Market Subdued
Click South to editRevenue Africa Master title style – Retail Driven Recovery; Commercial Market Subdued 1 % Revenue Change £ Reported Constant Currency Q1 Q2 LfL 1 H1 LfL 1 6% 2 -13% -21% Significant Q2 progress as economy reopened from strict Q1 lockdown -34% -58%-50% 16% -5% Retail renovation dem
Slide 24: South Africa – Q2 Retail & Export Momentum; Improving Housebuilding Outlook
Click South to edit–Master Africa title Q2 Retail & style Export Momentum; Improving Housebuilding Outlook TAF DIY and renovations driving Q2 recovery Improved product ranging – growth in sub-R100 tiles, brassware & plumbing Construction Alternative flooring category building momentum Retail
Slide 25: South Africa – Resilient Performance in Unprecedented Period
Click South to edit–Master Africa title Resilient style Performance in Unprecedented Period Revenue 1 Underlying Operating Profit 2 £101.2m 20.6 12.1 £54.4m 19.2 10.8 £41.6m 6.9 7.4 10.4 4.8 7.9 49.3 26.3 21.5 H1 Sept 19 H1 Sept 20 FY Mar 20 Tile Africa TAL Johnson Tiles HoP 1 On a constant currency
Slide 26: Group Outlook & Strategy
Click to edit Master title style Group Outlook & Strategy Nick Kelsall, Chief Executive Officer
Slide 27: Economic Indicators
Click to edit Economic Master title style Indicators UK South Africa Covid-19 impact; tentative recovery Subdued market further impacted by Covid-19 Key Housing Stats Dwellings Completed & Plans submitted (MAT) Sources: GOV.UK (Oct) & HMRC (Oct) 2020 120,000 Source: SA stats (Oct) 2020 55,000 500,00
Slide 28: Group Strategy – 2023 Vision Remains Valid
Click Groupto edit Master Strategy – 2023title style Vision Remains Valid 2023 VISION “A leading supplier of bathroom and kitchen products in selected geographies, offering strong brands, contemporary designs, trusted quality, outstanding service, innovation and a wide product range.” STRATEGIC TARG
Slide 29: Group Strategy – UK Industry Fragmentation & Consolidation Opportunity
Click Groupto edit Master Strategy title style – UK Industry Fragmentation & Consolidation Opportunity UK Bathroom – Selective Markets @ MSP £220m £221m £440m £350m £405m £472m £2.1bn 100% 90% 80% 70% 60% Rest of Market 50% Top Players 40% 30% 20% 10% 0% Showers Enclosures & Trays Adhesives Tiles Br
Slide 30: Group Strategy – Continued NPD Driving Organic Market Share Growth
Click Groupto edit Master Strategy title style - Continued NPD Driving Organic Market Share Growth “Rock-Tite” external Push button “Wave” elbow operated Level 25 slip resistant patio system adhesive mixer showers dispenser sanitisation shower tray stations Tablet and Pronteau Prothia Stored water h
Slide 31: Group Strategy – Complementary Acquisitions Creating Value
Group Strategy Click to – Complementary edit Master title style Acquisitions Creating Value O Consolidator in Large and Fragmented Markets N Ventilation Shower trays Decorative E Radiators & drains Many opportunities across product sub sectors and channels Significant organic and acquisition g
Slide 32: Key Messages
Click to edit Master title style Key Messages Resilient H1 Performance Strong recovery & momentum – Q2 LfL revenue ahead of prior year Leading market positions & strong brands driving market outperformance Investment in stock, customer service & NPD driving organic share gains Proven busin
Slide 33: Appendix
Click to edit Master title style Appendix
Slide 34: Exceptional items and acquisition related costs
Click to edititems Exceptional Master andtitle style related costs acquisition Exceptional items H1 Sept H1 Sept FY Mar 2020 2019 2020 £m £m £m (2.4) - - COVID-19 related restructuring - - (9.0) COVID-19 related impairment (2.4) - (9.0) Acquisition related costs H1 Sept H1 Sept FY Mar 2020 2019 2020
Slide 35: Net Debt Reconciliation
Click to edit Net Debt Master title style Reconciliation H1 Sept H1 Sept FY Mar 2020 2019 2020 £m £m £m Net debt – opening (36.4) (35.0) (35.0) Net cash flow (28.5) (6.6) 0.4 Other non-cash movements (0.1) - (0.2) Foreign exchange 0.7 0.5 (1.6) Net debt – closing (7.3) (41.1) (36.4) 35
Slide 36: UK Pension Cashflows
Click to editCashflows UK Pension Master title style Cash outflow close to peak * * * Annual pensioner payroll, excludes non-predicted costs such as transfer out and early retirement payments 36
Slide 37: IFRS16 Reconciliations
Click IFRS16toReconciliations edit Master title style £m 2020 IFRS16 2020 Explanation pre IFRS16 Adjustment Reported Income Statement Lease costs (+£2.6m) replaced with IFRS16 Underlying operating profit 12.3 0.5 12.8 lease depreciation (-£2.1m) Finance charges (1.2) (0.9) (2.1) Interest expense on
Slide 38: Resilient Business Model – Norcros DNA; Key Driver of Outperformance
Click to edit Resilient Master Business title–style Model Norcros DNA; Key Driver of Outperformance Core Competencies EXPERIENCED DESIGN INNOVATION SOURCING MANAGEMENT BRANDS & CHANNEL ASSEMBLY SPECIFICATION MARKETING MANAGEMENT Cohesive portfolio of specialist, well invested, market leading busines
Slide 39: Resilient Business Model – Compelling Acquisition Track Record
Click to edit Resilient Master Business title–style Model Compelling Acquisition Track Record 1 Revenue target strategy Group 2 Underlying ROCE of >15% 3 Geographic fit Acquisition criteria 4 Complementary market 5 Preferred channel mix 6 Export pote
Slide 40: Investment Case – Track Record of Sustained Growth
Click to edit Investment Master Case titleRecord – Track style of Sustained Growth Revenue (1) £m Underlying Operating Profit (2) £m 42 400 Pre CV-19 355.2 Pre CV-19 37 36.4 RoW UK South Africa Covid-19 Impact 34.4 350 331.0 UK South Africa Rest of World Covid-19 Impact 300.1 £342.0m Reported 32 £31
Slide 41: Investment Case – Track Record of Sustained Progress
Click to edit Investment Master Case titleRecord – Track style of Sustained Progress pence pence Dividends per share (p) Diluted underlying EPS (p)# 9.0 Interim Final 8.4 35.0 7.8 31.7 8.0 7.2 30.0 29.5 29.5 6.6 27.8 27.8 7.0 Final 5.6 dividend 25.0 6.0 22.0 5.1 5.6 cancelled 21.0 4.6 5.2 due to 5.0
Slide 42: Group Strategy – SA Industry Fragmentation & Consolidation Opportunity
Click Groupto edit Master Strategy title style – SA Industry Fragmentation & Consolidation Opportunity South Africa Bathroom – Selective Markets @ MSP £149m £426m £325m# £312m# £1.2bn 100% 90% 80% 70% 60% Rest of Market 50% 40% Top 3 Players 30% 20% 10% 0% Adhesives & Floor Tiles Bathroom Retail Plu
Slide 43: Interim Results: Six Months to 30 September 2020
Click to edit Master title style Interim Results Six Months to 30 September 2020 Inspiring Living Spaces