Norcros Plc · LSE:NXR
Norcros — H1 FY2023 Earnings Presentation
43 slides from Norcros's earnings presentation, November 2022
Slide 1: Interim Results
Click to edit Master title style Inspiring Living Spaces Interim Results 6 months to 30 September 2022 Featured in the Red Dot Yearbook 2022/23
Slide 2: Introduction
Click to edit Master title style Inspiring Living Spaces Introduction Nick Kelsall, Chief Executive Officer
Slide 3: Highlights
Click to edit Master title style Highlights Revenue £219.9m +9.5% Resilient H1 performance Record revenue & underlying operating profit Underlying Operating Profit £22.0m +0% Grant Westfield – integrated & trading strongly Net Debt £58.9m Strong financial position – low leverage & £130m of c
Slide 4: Financial Review
Click to edit Master title style Inspiring Living Spaces Financial Review James Eyre, Chief Financial Officer
Slide 5: Income Statement
Click to edit Master title style Income Statement H1 H1 H1 % % FY Sept 2022 Sept 2021 Sept 2019 v Sept v Sept Mar 2022 £m £m £m 2021 2019 £m Revenue 219.9 200.9 181.2 +1.1%4 +19.8%4 396.3 Underlying1 operating profit 22.0 22.0 17.4 - +26.4% 41.8 Margin 10.0% 11.0% 9.6% 10.5% Finance charges – cash (
Slide 6: Income Statement Key Bridges
Click to edit Income Master title–style Statement Key Bridges Revenue Underlying Operating Profit -0.7 0.7 6.8 - 12.0 0.2 £m £m 219.9 22.0 22.0 200.9 Sep-21 Currency UK SA Sep-22 Sep-21 UK SA Sep-22 Revenue1 Underlying Operating Profit & RoS% 9.3% 11.0% 10.0% +9.3% 22.0 22.0 10.4% +16.5% 13.0% 11.4%
Slide 7: Tax, Earnings & Dividends
Click to Tax, edit Master Earnings & title style Dividends Underlying1 Reported H1 H1 FY H1 H1 FY Diluted underlying EPS (p) Sept Sept Mar Sept Sept Mar 2022 2021 2022 2022 2021 2022 H1 Sep-22 17.8 £m £m £m £m £m £m H1 Sep-21 20.0 Profit before tax 19.9 20.9 39.3 14.0 17.7 33.0 FY Mar-22 38.2 Tax ch
Slide 8: Strong Cashflow – Cash Conversion & Grant Westfield Acquisition
Click to edit – Cashflow Master titleCash Strong style Conversion & Grant Westfield Acquisition H1 H1 FY Sept Sept Mar 2022 2021 2022 £m £m £m Cash conversion1 Underlying EBITDA 23.6 23.8 45.4 H1 Sep-22 68% Working capital (11.0) (19.3) (23.6) Depreciation of right of use assets 2.4 2.1 4.1 H1 Sep-2
Slide 9: Balance Sheet – Significant Liquidity & Funding Headroom
Click to edit Balance Master– title Sheet style Significant Liquidity & Funding Headroom £m Net (debt) / cash 8.6 1.0 Net (debt) / cash H1 Sep 22 H1 Sep 21 FY Mar 22 Net debt £58.9m Sept 22 (March 22: £8.6m net cash, Sept 21: £1.0m net cash) (58.9) Leverage (times) 1.1 Leverage 1.1x leverage post Gr
Slide 10: UK Pension Scheme Update
ClickPension UK to edit Master title style Scheme Update IAS 19R surplus £8.2m (March 2022: surplus £19.6m) Super-mature scheme: Liabilities reduced by £89.2m to £279.1m 5,867 members (March 2022: 6,002) Assets reduced by £100.6m to £287.3m 73% pensioners with average age 77 Scheme close
Slide 11: Operating Review
Click to edit Master title style Inspiring Living Spaces Operating Review Nick Kelsall, Chief Executive Officer
Slide 12: Key Messages
Click Messages Key to edit Master title style Resilient performance – record revenue & profit Success of strategy Geographic exposure & distribution channel breadth Grant Westfield integrated – performing strongly Proven business model Focussed commercial strategy Diversified geographi
Slide 13: Resilient Business Model
Click to edit Master title style Inspiring Living Spaces Resilient Business Model Nick Kelsall, Chief Executive Officer
Slide 14: Business Model – Norcros DNA Driving Resilience
Click to editBusiness Resilient Master title Model style – Norcros DNA Driving Resilience FOCUSED OPERATING NEW PRODUCT CLEAR & FOCUSED DIVERSIFIED CHANNELS MODEL DEVELOPMENT & STRATEGY & BUSINESS PORTFOLIO INNOVATION EXPERIENCED GROUP SCALE LEADING MARKET FLEXIBLE & CAPITAL MANAGEMENT ADVANTAGES PO
Slide 15: Resilient Business Model – Diversified channels but Trade bias
Click to editBusiness Resilient Master title Model style – Diversified channels but Trade bias 1 2 House Building – Dwellings Completed Housing Transactions 200,000 190,000 250,000 177,930 Stamp Duty Holiday 180,000 175,690 173,640 & Extension 170,000 164,930 200,000 Stamp Duty Holiday 162,120 160,0
Slide 16: Well-established Customer Relationships
Click to editBusiness Resilient Master title Model style – Well-established Customer Relationships UK Channel Revenue H1 FY231 Export 12% 12% Retail DIY 16% Independent, Specialist & Online specification Trade & 59% Strong customer relationships driving share & gains across portfolio 1 Excluding ‘Ot
Slide 17: Award Winning NPD Driving Differentiation
Click to editBusiness Resilient Master title Model style – Award Winning NPD Driving Differentiation Omnicare Ultra ‘Screwfix’ Sustainable product of the year Enrich Best Bathroom Tap Brand Arrondi taps by Conran at the 2020 BKU Awards 6 Series Sleek Shower and Partners https://www.johnson- tiles.co
Slide 18: UK Operations
Click to edit Master title style Inspiring Living Spaces UK Operations Nick Kelsall, Chief Executive Officer
Slide 19: UK Trade Performance, Retail Normalisation
ClickRevenue UK to edit Master title style Trade Performance, Retail Normalisation – Resilient % Revenue Change1 – H1 FY23 v H1 FY22 Overall UK Export -2.9% 0.8% Strong trade recovery offsetting DIY normalisation & soft Irish market -17.5% -2.1% 1.2% House building wins offsetting softer retail & Ir
Slide 20: Resilient UK Performance; Benefits of Trade Exposure
Click–toResilient UK edit Master title style Performance; Benefits of Trade Exposure Revenue Underlying Operating Profit1 £256.7m 14.3 £30.9m 34.2 18.9 27.0 £142.8m £130.8m 7.3 43.9 £17.0m 7.3 19.0 £16.3m £115.6m 6.3 17.6 9.9 21.5 9.3 11.8 £12.5m 14.2 16.5 58.3 8.6 13.0% 11.7 12.0% 22.4 19.8 10.8% 1
Slide 21: South Africa Operations
Click to edit Master title style Inspiring Living Spaces South Africa Operations Nick Kelsall, Chief Executive Officer
Slide 22: South Africa – Retail Driven Recovery; Commercial Market Subdued
Click to Africa South edit Master title style – Retail Driven Recovery; Commercial Market Subdued % Revenue Change H1 FY23 v H1 FY22 £ - Reported Constant Currency 2 10.0% 9.7% Higher demand and market share gains in the retail renovation market 4.5% 4.2% Buoyant retail demand from renovation activi
Slide 23: Resilient South Africa Performance; Market Share Gains
Click to Africa South edit Master title style Performance; Market Share Gains – Resilient Revenue1 Underlying Operating Profit1 £11.1m £141.8m 25.5 16.8 22.8 £77.1m £5.7m £70.3m £5.0m 16.6 £4.5m £60.7m 12.8 12.0 8.3 9.4 7.7 11.3 11.6 76.7 11.6 7.4% 7.4% 7.8% 7.1% 37.9 39.5 29.4 H1 Sept 19 H1 Sept 21
Slide 24: Group Strategy
Click to edit Master title style Inspiring Living Spaces Group Strategy Nick Kelsall, Chief Executive Officer
Slide 25: Group Strategy: Remains Valid
Click to edit Group Master title Strategy: styleRemains Valid Vision 2025 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 TARGETS £6
Slide 26: Complementary M&A: Acquisitions Creating Value
Click toComplementary M&A: edit Master title style Acquisitions Creating Value Consolidator in Large and Fragmented Markets O Well developed acquisition pipeline N Ventilation Shower trays E Decorative Radiators & drains Opportunities across sectors and channels Significant organic & acquisi
Slide 27: ESG – Sustainability Embedding
Click to ESG – edit Master titleSustainability Embedding style Good progress in H1: ESG & TCFD Disclosures – enhanced & compliant Triton & Croydex – Carbon Trust accreditations South Africa – Project YES implemented Croydex – ISO14001 accreditation in July 2022 Triton – Screwfix Sustaina
Slide 28: Key Messages
Click Messages Key to edit Master title style Resilient performance – record revenue & profit Success of strategy Geographic exposure & distribution channel breadth Grant Westfield integrated – performing strongly Proven business model Focussed commercial strategy Diversified geographi
Slide 29: Appendix
Click to edit Master title style Inspiring Living Spaces Appendix
Slide 30: Business Overview
Click to edit Overview Business Master title style H1 % SNAP figures Revenue Market leader in the manufacture and marketing of showers in the UK £30.0m 13.6% Market leading supplier of shower enclosures and trays £28.5m 13.0% Leading manufacturer and supplier of taps, mixer showers, bathroom accesso
Slide 31: Balanced & Diversified Business Portfolio
Click to edit & Balanced Master title styleBusiness Portfolio Diversified Revenue FY131 Revenue FY23 H12 RoW Discontinued FY13 FY23 H1 3 Balance and diversified portfolio 3 Grant Westfield acquired 31st May (4 months of revenue to 30th September) 1 Financial year ended 31st March 2 Half Year ended 3
Slide 32: Business Portfolio: Diversified Channels
Click to edit & Balanced Master title styleBusiness Portfolio: Diversified Channels Diversified UK Channel Revenue FY131 UK Channel Revenue H1 FY23 2% 1% 11% 12% 3% 41% 16% FY13 FY23 H1 59% 11% 42% Trade Trade DIY Retail DIY Retail Independent & Specialist Retail Independent & Specialist Retail Expo
Slide 33: UK Fragmentation & Share Gain Opportunity
ClickFragmentation UK to edit Master title&style Share Gain Opportunity UK Bathroom – Selective Markets @ MSP £220m £304m £101m £256m £385m £304m £528m £2.1bn 100% 90% 80% 70% 60% Rest of Market 50% Top Players 40% 30% 20% 10% 0% Showers Enclosures & Trays Panels1 Adhesives Floor & Brassware Furnitu
Slide 34: South Africa Fragmentation & Consolidation Opportunity
Click to Africa South edit Master title style Fragmentation & Consolidation Opportunity South Africa Bathroom – Selective Markets @ MSP £166m £521m £370m# £352m# £1.4bn 100% 90% 80% 70% 60% Rest of Market 50% 40% Top 3 Players 30% 20% 10% 0% Adhesives & Floor Tiles Bathroom Retail Plumbing Total Con
Slide 35: Highly Successful Acquisition Record
Click to edit Highly Master titleAcquisition Successful style Record 1 Revenue target strategy Group 2 Underlying ROCE of >15% 3 Geographic fit 4 Complementary market Acquisition criteria 5P Referred channel mix 6 Export potential 7 Growth
Slide 36: Record Track of Sustained Growth
Click toRecord Track edit Master of title style Sustained Growth Revenue1 £m Underlying Operating Profit2 £m 450 UK South Africa 41.8 396.3 42 400 Overseas UK South Africa 342.0 37 34.4 331.0 34.0 350 324.2 32.3 300.1 32 300 271.2 27.4 27 235.9 23.8 250 218.7 222.1 21.3 210.7 22 200 17.0 17 16.1 150
Slide 37: Record Track of Sustained Improvement
Click toRecord Track edit Master of title style Sustained Improvement pence pence Diluted underlying EPS (p) Dividends per share (p) 45.0 12.0 40.0 Update figs 38.2 10 10.0 Interim Final 35.0 31.7 31.1 8.4 8.2 29.5 7.8 30.0 27.8 27.8 28.2 8.0 7.2 6.6 25.0 22.0 5.6 21.0 6.0 5.1 20.0 18.0 15.0 4.0 3.1
Slide 38: Outlook – Market Indicators
Click to edit Outlook – Master Markettitle style Indicators UK – Sustained housing activity South Africa – Post-pandemic recovery Key Housing Stats Dwellings Completed & Plans submitted Sources: GOV.UK (Oct) & HMRC (Oct) 2022 Source: SA stats (Oct) 2022 35,000 Planning 55,000 500,000 30,000 Completi
Slide 39: South Africa – Investment Fundamentals & Flight to Quality
Click to Africa South edit Master title style – Investment Fundamentals & Flight to Quality Norcros South Africa South African Economy Strong heritage, market leading positions & leading brands Regional ‘hub’ economy & business friendly environment Sustained financial performance, profitabilit
Slide 40: Exceptional Items & Acquisition Related Costs
Click to edit Master Exceptional Itemstitle&style Acquisition Related Costs Exceptional items H1 Sept H1 Sept FY Mar 2022 2021 2022 £m £m £m Release of UK Property Provision (Groundwell) - - 0.9 Acquisition related costs H1 Sept H1 Sept FY Mar 2022 2021 2022 £m £m £m Advisory fees (1.5) - (1.1) Inta
Slide 41: Net Debt Reconciliation
ClickDebt Net to editReconciliation Master title style H1 Sept H1 Sept FY Mar 2022 2021 2022 £m £m £m Net cash – opening 8.6 10.5 10.5 Net cash flow (66.8) (9.5) (4.5) Non-cash movements1 (0.2) - 1.0 Foreign exchange (0.5) - 1.6 Net (debt)/cash – closing (58.9) 1.0 8.6 1 Represents the movement in t
Slide 42: Pension UK Scheme – Cash Flows
ClickPension UK to edit Master title style Scheme – Cash Flows 42
Slide 43: Interim Results
Click to edit Master title style Inspiring Living Spaces Interim Results 6 months to 30 September 2022 Featured in the Red Dot Yearbook 2022/23