Norcros Plc · LSE:NXR
Norcros — Merger or Acquisition (November 2017)
20 slides from Norcros's merger presentation, November 2017
Slide 1: Investor Presentation: Proposed Acquisition of Merlyn Industries Limited by Norcros plc
Investor Presentation Proposed Acquisition of Merlyn Industries Limited by Norcros plc
Slide 2: Important Notice
IMPORTANT NOTICE THIS PRESENTATION IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION. THIS PRESENTATION HAS BEEN PREPARED BY NORCROS PLC (THE "COMPANY") IN CONNECTION WITH A POTENTIAL PLACING (THE "PLACING") OF THE ORDINARY SHARES OF THE COMPANY (THE "ORDINARY SHARES"
Slide 3: Key messages
Key messages − Proposed acquisition of Merlyn Industries Limited (“Merlyn”): − Market leading position in mid to high end branded shower enclosures in the UK − Acquisition consistent with Norcros’ strategy to enhance its bathroom product portfolio − Revenue of £30.7m and EBITDA of £6.8m (Y/E 31 Marc
Slide 4: Group strategy – key targets
Group strategy – key targets Growth Target − Double revenues to £420m by 2018 Organic − Organic and acquisition − Market leading positions − Maintain 50% Acquisition revenue derived − Strong trade and from overseas consumer brands − Complementary − Focus on sectors industry segments/ − Breadth of Re
Slide 5: Acquisition criteria and track record
Acquisition track record and proposed acquisition Vado Croydex Abode Merlyn 1 Revenue target strategy Group 2 Underlying ROCE of 12%-15% 3 Geographic fit Acquisition criteria 4 Complementary market 5 Preferred channel mix 6 Export potential 7 Growth po
Slide 6: Norcros financial highlights and current trading
Norcros financial highlights and current trading Financial highlights Current trading: H1 trading update (12 October 2017) Revenue (£m) Underlying operating profit (£m) - Group revenue and underlying operating profit in 271.2 23.8 the first half is expected to be in line with the 235.9 21.3 Board's
Slide 7: Overview of Merlyn
Overview of Merlyn Product(1) 1 Leading position in growing shower enclosure market Doors & Enclosures 81% Trays 10% 2 Premium branded proposition Bath screens 9% 3 Culture of innovation and product development 4 Successful multi-channel sales strategy Geography(1) 5 Track record of organic growth;
Slide 8: Market growth drivers
Market growth drivers Merlyn’s total current addressable market – enclosures, bath screens and trays in UK and Ireland(1) Growing emphasis on the bathroom within the home CAGR Growing consumer preference for showering 6% £213m £266m 2016 2020F Ongoing premiumisation trend Increase in number of bathr
Slide 9: Well established brands
Well established brands New luxury range of Fast and easy installation Mid-to-high end shower The Series Collection, Merlyn’s Range enclosures launched in May products designed for enclosures most well-known range of mid- description 2016, utilising high quality use by contractors and to-high end pr
Slide 10: Culture of innovation and product development
Culture of innovation and product development Number of new/evolved product range launches Average 5.5 per year 10 6 6 5 5 4 2 FY11A FY12A FY13A FY14A FY15A FY16A FY17A 38 Consistent pipeline of 6-7 NEW/EVOLVED PRODUCT RANGES LAUNCHED IN LAST 7 YEARS new product ranges 10-20% 24 month AVERAGE OF TOT
Slide 11: Multi channel strategy
Multi channel strategy % revenue (1) Independent Largest and most established of Retail / Regional Merlyn's sales channels, with the Business serving this market since inception in 2000. 62% Merchants Recognising the opportunity to develop in the new build market, Specification Merlyn began specific
Slide 12: Strong track record of growth and cash generation
Strong track record of growth and cash generation P&L 2015 2016 2017 (£m) (£m) (£m) Revenue growth driven by: Revenue 21.4 26.4 30.7 - Market growth % growth 23.4% 16.3% - New product ranges - Recent customer wins (e.g. Barratt) - Increased share of wallet Operating profit 2.7 4.4 6.4 % growth 63.0%
Slide 13: Significant growth opportunities
Significant growth opportunities Existing ranges and new product innovations Significant opportunities to continue to grow by focusing Expansion of established routes to markets on current core activities Increased “share of wallet” within the current customer base New geographies: driving further i
Slide 14: Funding and post deal balance sheet
Funding and post deal balance sheet − Capital structure of enlarged group maintains strong capital discipline − Norcros net debt of £23.2m (as at 31 March 2017) − Pro forma net debt / EBITDA as at 31 March 2018 expected to be approximately 1.3x − New debt facilities have been arranged: − Quantum inc
Slide 15: Summary
Summary − Proposed acquisition of Merlyn: − Market leading position in mid to high end branded shower enclosures in the UK − Acquisition consistent with Norcros’ strategy to enhance its bathroom product portfolio − Revenue of £30.7m and EBITDA of £6.8m (Y/E 31 March 2017) − Cash consideration of £60
Slide 16: Appendix
APPENDIX 16
Slide 17: Transaction and timetable details
Transaction and timetable details − Size of issue: c.£31.4m − Expected issue structure − Firm placing: c.£10.6m − Placing & Open offer: c.£20.8m − Issue price: 172p − Expected timing: − Interim results: 16 November 2017 − Open offer closes: 21 November 2017 − General Meeting: 22 November 2017 − Deal
Slide 18: Business Overview
Business Overview UK SA Group Revenue Growth (constant currency – 12 months to 31st March 2017) +11.8% +8.3% £+10.6% Triton £ 48.7m Vado £ 37.2m Croydex £ 24.7m Abode £ 10.6m Johnson Tiles £ 53.2m Adhesives £ 7.9m Johnson JohnsonTiles Tiles £ 10.8m TAL TAL £ 21.1m Tile £ 57.0m TileAfrica Africa Grou
Slide 19: UK: Revenue and profit growth in challenging markets
UK: Revenue and profit growth in challenging markets Revenue Underlying Operating Profit £182.3m £17.4m £17.2m 10.6 £163.0m 7.9 8.0 £149.1m 6.8 £13.8m 53.2 54.1 10.6% 59.7 9.5% 9.2% 24.7 17.2 30.5 33.1 37.2 52.1 50.6 48.7 2015 2016 2017 2015 2016 2017 1 Triton Vado Croydex Underlying Operating Profi
Slide 20: South Africa: Further year of excellent progress
South Africa: Further year of excellent progress Revenue 1 Underlying Operating Profit £88.9m £6.4m £82.1m 10.8 £71.3m 11.0 10.1 21.1 20.2 £4.1m 16.8 7.2% £3.2m 5.6% 4.4% 57.0 50.9 44.4 2015 2016 2017 2015 2016 2017 Tile Africa TAL Johnson Tiles Underlying Operating Profit Return on Sales % 1 On a c