Slide 1: Preliminary Results Year ended 31 March 2017
Preliminary Results Year ended 31 March 2017
Slide 2: Introduction
Introduction Martin Towers Chairman 2
Slide 3: Highlights
Highlights Revenue1 Eighth consecutive year of growth £271.2m +15.0% Underlying operating profit Underlying operating profit up 11.7% at £23.8m £23.8m +11.7% (2016: £21.3m) Underlying EPS Strong cash generation – net debt reduced by 27.8p £9.3m to £23.2m Underlying operating cash flow £29.8m +
Slide 4: Financial Review
Financial Review Shaun Smith Group Finance Director 4
Slide 5: Income Statement
Income Statement 2017 2016 +/- +/- Constant £m £m Reported Currency Revenue 271.2 235.9 +15.0% +10.6% Underlying1 operating profit 23.8 21.3 +11.7% +7.2% Margin 8.8% 9.0% Finance charges – cash (0.9) (0.9) Underlying1 PBT 22.9 20.4 +12.3% Exceptional operating items2 (2.3) 2.3 IAS19R admin expenses
Slide 6: Income Statement – Key Bridges
Income Statement – Key Bridges Revenue Underlying operating profit 6.8 21.3 19.3 1.4 9.2 271.2 0.2 £m £m 23.8 0.9 235.9 21.3 2016 Currency UK SA 2017 2016 Currency UK SA 2017 Revenue1 +10.6% Underlying operating profit / ROS% 8.8% 271.2 9.0% 23.8 245.1 +11.8% 10.6% 9.5% 21.3 182.3 17.2 17.4 £m 163.0
Slide 7: Tax, Earnings and Dividends
Tax, Earnings and Dividends Diluted underlying EPS (pence) 27.8 27.8 2.2 Underlying1 Reported 2017 2016 2017 2016 25.6 2 £m £m £m £m 2016 2017 Dividend per share (pence) Profit before Tax 22.9 20.4 11.5 15.4 Tax charge (5.3) (3.1) (3.0) (2.4) +9.1% 6.6 7.2 Earnings 17.6 17.3 8.5 13.0 Effective Tax r
Slide 8: Cash Flow
Cash Flow 2017 2016 £m £m Underlying EBITDA 30.2 26.8 Underlying Operating Cash Flow Working capital (1.8) (7.7) / Underlying EBITDA Other 1.4 1.3 99% 100% 76% Underlying operating cashflow 29.8 20.4 Capital expenditure (8.0) (6.6) Pension deficit recovery (2.5) (2.1) 2015 2016 2017 Tax (1.9) (1.0)
Slide 9: Balance Sheet
Balance Sheet £m Net debt (IFRS) 32.5 23.2 14.2 Strong cash generation leaves net debt at £23.2m 2015 2016 2017 Leverage 0.8x underlying EBITDA times Leverage - Net debt (IFRS) to EBITDA Underlying ROCE at 18.4% above our medium term 1.2 strategic target of 12-15% 0.8 0.6 2015 2016 2017 Underl
Slide 10: UK Pension Scheme
UK Pension Scheme Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 500 IAS 19R deficit £62.7m (March 2016: £55.7m) 450 Assets increased by £38.5m to £404.4m Liabilities increased by £45.5m to £467.1m; lower 400 discount rate of 2.60% (March 2016: 3.55%) 350 Discount rate sensitivity: 10bp rise = £6.7m def
Slide 11: Operating Review
Operating Review Nick Kelsall Group Chief Executive 11
Slide 12: 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 13: Norcros' DNA
Norcros’ DNA Leading Market Positions & Brands Autonomous Business Units Innovation & New Product Development Complementary Products & Market Synergies Channel Management Expertise Best in Class Sourcing & Assembly Successful Acquisition Strategy 13
Slide 14: Market Focused Synergies
Market Focused Synergies Successful launch of Vado & Croydex in Tile Africa 14
Slide 15: UK Operations
UK Operations Nick Kelsall Group Chief Executive 15
Slide 16: Strong recovery in H2
Strong recovery in H2 Overall Revenue - 3.8% UK - 6.1% Exports + 9.0% Maintained market leading position in the UK UK – significant improvement in H2 after H1 destocking UK retail – more stable and market share gains Export growth – successful new product launches Significant investm
Slide 17: UK growth sustained. Strong recovery in exports
UK growth sustained. Strong recovery in exports Overall Revenue + 12.4% UK + 17.5% Exports + 1.0% Continued progress in UK retail & trade: Market share gain in independents & merchants Expansion in specification (house builders & hotels) Strong specification pipeline NBG group suppli
Slide 18: Strong growth in UK and export
Strong growth in UK and export Overall Revenue + 10.8% (versus 12 months to March 2016 1) UK + 8.5% Exports + 64.0% Excellent performance in first full year of ownership UK Retail – strong performance in DIY and high street accounts Export growth – new blue-chip accounts: Amazon, Jacuz
Slide 19: Excellent performance post acquisition
Excellent performance post acquisition Overall Revenue + 5.0% (versus 12 months to March 20161) Strong performance in first full year of ownership Seamless integration Growth in Abode branded sales across all product categories New business wins and new products: Bathstore, Homebase/Bunn
Slide 20: Robust performance in a challenging market
Robust performance in a challenging market Overall Revenue - 1.7% UK - 1.3% Exports - 4.8% UK market – trade more resilient than retail; both sectors stronger in H2 UK trade +1.3% - house builder gains offset weak social housing market UK retail -3.8% - weak DIY channel but stronger H2
Slide 21: Solid performance despite market challenges
Solid performance despite market challenges Overall Revenue - 1.3% UK - 7.6% Exports + 500.0% UK trade – growth in merchants offset by decline in specialists UK retail – loss of low margin customer Middle East – revenue growth & specification pipeline momentum Product development inves
Slide 22: 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 £13.8m 6.8 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 23: SA Operations
SA Operations Nick Kelsall Group Chief Executive 23
Slide 24: Continuing strong operating performance
Continuing strong operating performance R Overall revenue - 1.8% at constant currency1 Continuing to operate manufacturing facility at full capacity Decline in independent revenue offset by increased inter-company demand into Tile Africa Good revenue growth in export accounts Additional hi
Slide 25: Strong performance, continued profit growth
Strong performance, continued profit growth Overall revenue + 4.5% at constant currency1 Market leadership maintained Revenue growth in domestic and export markets Further progress made in sub-Saharan Africa – c.17% of revenue Tile adhesive – ranges continuing to perform strongly Focus o
Slide 26: Improved store offer driving performance
Improved store offer driving performance Overall revenue + 12.0% at constant currency Focus on store experience and supply chain Success of in-stock and on-display programme Solid growth across all product categories – tiles, adhesives, taps, showers, sanitary ware and bathroom fittings CX
Slide 27: 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
Slide 28: Group Outlook & Strategy
Group Outlook & Strategy Nick Kelsall Group Chief Executive 28
Slide 29: UK and South Africa market outlook
UK South Africa Subdued growth Growth forecast despite downgrade Housing Transactions GDP (% change) 200,000 Source: HMRC- May 2017 Source: Investec Q2 2017 2.5% 160,000 2.0% 120,000 1.5% 80,000 1.0% 40,000 0.5% 0 0.0% 2014 2015 2016 2017 2018 2019 2020 2021 2022 Gradual recovery in transaction leve
Slide 30: Group Strategy – Key Targets
Group Strategy – Key Targets Growth Target Organic • Double revenues to £420m by 2018 Acquisition • Organic and • Market leading acquisition positions Returns Target • Maintain 50% • Complementary revenue derived industry segments/ • Strong trade and from overseas geographical consumer brands • Sust
Slide 31: Excellent Post Acquisition Performance – Revenue Growth
Excellent Post Acquisition Performance – Revenue Growth Vado FY17 12.4% FY16: FY16 FY16 8.5% FY15 4.8% Note: Pre-acquisition revenue to 31st December 2012 FY14 13.7% Pre-acquisition £m 15 20 25 30 35 40 Croydex FY17 10.8% Notes: FY16 revenue includes 3 months pre Norcros ownership FY16 12.1% Pre-acq
Slide 32: Group Strategy – Delivering growth
Group Strategy – Delivering growth Strategic clarity Resilient performance despite market volatility Excellent acquisition track record: Abode integrated and performing well Driving group synergies Improving financial performance Focused and increasingly developed acquisition pipeline
Slide 33: Summary
Summary Solid Full Year Results Clear & Focused Growth Strategy Organic Growth Opportunities Developed Pipeline of Acquisition Opportunities Medium Term Indicators Favourable 33
Slide 34: Appendix
NOrcros Appendix 34
Slide 35: Exceptional items and acquisition related costs
Exceptional items and acquisition related costs 2017 2016 £m £m Exceptional operating items Business unit restructuring (2.3) - Highgate settlement - 1.9 Pension settlement gain - 0.4 (2.3) 2.3 Acquisition related costs Acquisition related deferred remuneration (earn out) (0.4) (2.5) Intangible asse
Slide 36: Net debt reconciliation
Net debt reconciliation 2017 2016 £m £m Net debt (IFRS) – opening (32.5) (14.2) Net cash flow 7.8 (17.1) Other non cash movements (0.2) (0.2) Foreign exchange 1.7 (1.0) Net debt (IFRS) - closing (23.2) (32.5) 36
Slide 37: Subdued growth
UK Subdued growth House Building (Quarterly England) Source: National Statistics – February 2017 55,000 50,000 45,000 Starts Completed 40,000 35,000 30,000 25,000 20,000 15,000 10,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Gradual recovery from financial crisis Key indicator for RMI