Slide 1: Norcros plc Preliminary Results, Year ending March 2016
Norcros plc Year ending March 2016 1 Preliminary Results 1
Slide 2: Introduction
Introduction Martin Towers Chairman 2 1
Slide 3: Highlights
Highlights Revenue1 Seventh consecutive year of growth £235.9m +11.0% Underlying operating profit Underlying operating profit up 25.7% at £21.3m £21.3m +25.7% Underlying EPS Underlying EPS up 31.8% at 27.8p 3 27.8p +31.8% Underlying operating cash flow Underlying ROCE at 18.3% - ahead of str
Slide 4: Financial Review
Financial Review Shaun Smith Group Finance Director 4 1
Slide 5: Income Statement – continuing operations
Income Statement – continuing operations 2016 2015 +/- +/- £m £m Reported Constant Currency Revenue 235.9 222.1 +6.3% +11.0% Underlying1 operating profit 21.3 17.0 +25.7% +30.7% Margin 9.0% 7.6% Finance charges – cash (0.9) (1.2) (18.7%) 5 Underlying1 PBT 20.4 15.8 +29.1% Exceptional operating items
Slide 6: Income Statement – key bridges
Income Statement – key bridges Revenue 1 Underlying operating profit 9.4 1.5 21.3 £m 9.5 13.9 235.9 3.4 £m 222.1 0.6 17.0 6 2015 Currency UK SA 2016 2015 Currency UK SA 2016 Y-o-Y Total Revenue 1, 2 Underlying operating profit / ROS% +11.0% 9.0% 235.9 21.3 10.6% 212.6 7.6% +9.3% 9.2% 17.2 17.0 163.0
Slide 7: Tax, Earnings and Dividends
Tax, Earnings and Dividends Underlying1 Reported2 Diluted underlying EPS (pence) 2016 2015 2016 2015 £m £m £m £m Profit before tax 20.4 15.8 15.4 11.0 21.1 27.8 +31.8% 2015 2016 Tax charge (3.1) (2.8) (2.4) (2.9) Dividend per share (pence) Earnings 17.3 13.0 13.0 8.1 6.6 Effective tax 15.1% 17.7% 15
Slide 8: Cash Flow
Cash Flow 2016 2015 £m £m Underlying EBITDA 26.8 23.0 Underlying Operating Cash Flow / Underlying EBITDA Working capital (7.7) (1.5) Other 1.3 1.4 100% 92% Underlying operating cashflow 20.4 22.9 76% Capital expenditure (6.6) (7.0) Sheffield freehold purchase - (0.9) 2014 2015 2016 Proceeds from pro
Slide 9: Balance Sheet
Balance Sheet £m Strong cash generation leaves net debt at £32.5m Net debt (IFRS) after the acquisitions of Croydex and Abode 32.5 26.9 Leverage 1.2x underlying EBITDA on a pro-forma basis 14.2 2014 2015 2016 times Underlying ROCE at 18.3% above our medium term Leverage - Net debt (IFRS) to EB
Slide 10: UK Pension Scheme
UK Pension Scheme Super-mature scheme • 7,973 members (2015:8,492). 66% pensioners with UK Pension IAS 19R Assets & Liabilities average age 77 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 500 • Annual pensioner payroll near peak at £20m per annum 450 Actions taken to date 400 • April 2013 - scheme closed
Slide 11: Operating Review
Operating Review 1 Nick Kelsall Group Chief Executive
Slide 12: Business Overview
Business Overview UK SA Group Group Revenue (continuing operations): £ 235.9m £ 163.0m £ 72.9m £ 235.9m Triton £ 50.6m Vado £ 33.1m Croydex £ 17.2m Johnson Tiles £ 54.1m Norcros Adhesives £ 8.0m Johnson Tiles £ 9.8m TAL £ 17.9m 1 Tile Africa £ 45.2m Revenue Growth (constant currency): +9.3% +15.0% +
Slide 13: Robust performance in challenging UK market
Robust performance in challenging UK market Overall Revenue - 2.8% • UK - 3.4% • Exports + 0.8% UK market marginally down - decline in DIY sector impacting branded electric shower volumes Triton increased its market leading position in the UK branded shower market UK retail challenging: • Vo
Slide 14: Continued growth momentum
Continued growth momentum Overall Revenue + 8.4% • UK + 13.7% • Exports - 2.0% Further strong progress in UK retail and trade: • Additional resource delivering growth with retail & merchants • Significant growth in specification (house builders & hotel sector) Export revenue stronger in H2 (+2
Slide 15: Excellent performance post acquisition
Excellent performance post acquisition Acquired June 2015 Overall Revenue £17.2m (9 months to March 2016) ; +6.5% (LTM) Further growth in UK and export markets Sustained focus on new product introductions Further extension of Flexi Fix and Stick N Lock technologies to new categories Integr
Slide 16: Excellent strategic fit
Excellent strategic fit Acquired March 2016 Market Position Leading innovative designer/distributor of high quality taps, sinks and bathroom products Strong positions in UK branded and own label segments Focus on design, quality and service Products Kitchen taps, sinks and hot water taps B
Slide 17: Excellent strategic fit
Excellent strategic fit Historic revenue & ebitda of £9.9m & £0.6m respectively (12 months to June 2015) Attractive purchase price – earnings accretive immediately Integration progressing - business as usual Recent launch of ‘PRONTEAU’ hot water tap well received Growth momentum via recent
Slide 18: Significant improvement in profitability
Significant improvement in profitability Overall Revenue - 9.4% • UK - 7.8% • Exports - 20.2% UK market - trade continues to outperform retail UK trade +0.5% (excluding FY15 “Poppy” revenue) - H2 impact of decline in social housing refurbishment markets UK retail -12.5% - weak performance in
Slide 19: Further year of strong progress
Further year of strong progress Overall Revenue + 18.5% Increase in market share – progress in UK retail and trade Further development of key accounts in DIY and distribution New product development investment sustained: • Fast track levelling system, ‘Pro 30 Fast’, • Ultim8 B+ for bituminou
Slide 20: UK Operations - Solid profit performance in challenging markets
UK Operations - Solid profit performance in challenging markets Revenue Underlying operating profit £17.2m £163.0m 8.0 £148.0m £149.1m 5.3 6.8 £14.2m £13.8m 54.1 61.7 59.7 10.6% 9.6% 9.2% 17.2 1 20 29.1 30.5 33.1 51.9 52.1 50.6 1 2014 2015 2016 2014 2015 2016 1 Triton Vado Croydex Johnson Tiles Adhe
Slide 21: Further year of strong progress
Further year of strong progress Overall revenue + 9.6% at cc Good growth across key customers Growth driven through NPD – higher value added + new sizes Strong manufacturing performance sustained Cost increases in raw materials mitigated by process improvements Continuing to sell 100% of
Slide 22: Strong progress driven by share gain
Strong progress driven by share gain Overall revenue + 19.9% at cc Share gain in domestic market supported by export growth Tile adhesives growth reflecting investment in NPD programme Building and construction products – strong performance in flooring offer Opportunities being sought to d
Slide 23: Share gain driven by improved store offering
Share gain driven by improved store offering Overall revenue + 14.4% at cc Improved product range offering & on display and in stock Continued investment in store presentation and consistency of offer Further success of store upgrade model and new CX store format (bathroom store-within-store
Slide 24: South Africa Operations – Further year of strong progress
South Africa Operations – Further year of strong progress Revenue1 Underlying operating profit £4.1m £72.9m 9.8 £63.5m 9.0 £3.2m £55.3m 5.6% 17.9 8.3 14.9 4.4% 13.4 24 £1.9m 2.7% 45.2 39.6 33.6 2014 2015 2016 2014 2015 2016 1 Profit ROS% Tile Africa TAL Johnson Tiles 24 1 On a constant currency basi
Slide 25: Group Outlook & Strategy
Group Outlook & Strategy Nick Kelsall Group Chief Executive 1 2 5
Slide 26: Lead UK indicators – A sluggish recovery
Lead UK indicators – A sluggish recovery Mortgage Loan Approvals (seasonally adjusted) 80,000 60,000 40,000 Loan approvals remain relatively static 20,000 0 Dec-13 Dec-14 Dec-15 Source: Bank of England Housing Transactions 200,000 26 160,000 120,000 Stamp duty increases 80,000 for buy-to-let caused
Slide 27: Lead SA indicators – Moderate medium term outlook
Lead SA indicators – Moderate medium term outlook GDP (% change) 3 2.5 GDP downgraded in the short term due to 2 low commodity prices and weakened 1.5 trade growth. Long term growth 1 forecasts remain above the UK 0.5 Source: Investec 0 2014 2015 2016 2017 2018 2019 2020 Hardware/Paint/Glass Retail
Slide 28: Group Strategy – Key Targets Retained
Group Strategy – Key Targets Retained Growth Target Organic Acquisition • Double revenues to £420m by 2018 Returns Target • Organic and acquisition • Market leading positions • Complementary • Maintain 50% revenue derived industry segments/ geographical • Sustainable pre-tax from overseas • Strong t
Slide 29: Group Strategy – Year of further strong progress
Group Strategy – Year of further strong progress Clear, consistent, and focused growth strategy Croydex acquisition integrated and performing well Abode acquisition – excellent strategic fit Organic growth and Group synergies remain a key focus Well developed and focused acquisition pipeli
Slide 30: Summary
Summary Clear & Focused Growth Medium Term Strategy Indicators Focused Favourable Pipeline of Acquisition Organic Opportunities Growth Opportunities Solid Full Year Results 1
Slide 31: Appendix
croydex Bisode JOHNSON-TiLes (7 MOMCTOS \ JIS ADHESIVES
Slide 32: Exceptional items and acquisition related costs
Exceptional items and acquisition related costs 2016 2015 £m £m Exceptional operating items Pension settlement gain 0.4 1.7 Exit of Sheffield lease - (2.5) - (1.5) Loss on disposal of freehold property portfolio Business unit restructuring - (0.3) Profit on disposal of residual property at Braintree
Slide 33: Net debt reconciliation
Net debt reconciliation 2016 2015 £m £m Net debt (IFRS) – opening (14.2) (26.9) Net cash flow (17.1) 12.7 Other non cash movements (0.2) 0.1 Foreign exchange (1.0) (0.1) Net debt (IFRS) - closing (32.5) (14.2) 1 33