Slide 1: Interim Results
Interim Results Click to edit Master title style Six Months to 30 September 2019
Slide 2: Introduction
Click to edit Master title style Introduction Martin Towers, Chairman
Slide 3: Highlights
Click to edit Master title style Highlights Revenue increased by 11.4% on a reported basis, 12.8% £181.2m on a constant currency basis, and 0.9% on a like for like3 Revenue1 +12.8% basis Underlying operating profit2 increased by 12.5% to £17.1m £17.1m Underlying Operating Profit2 +12.5% Strong
Slide 4: Financial Review
Click to edit Master title style Financial Review Shaun Smith, Group Finance Director
Slide 5: Income Statement
Click IncometoStatement edit Master title style H1 H1 H1 +/- +/- FY Sept 2019 Sept 2019 Sept 2018 Pre Constant Mar 2019 Pre IFRS16 IFRS16 Currency £m £m £m £m Revenue 181.2 181.2 162.6 +11.4% +12.8% 331.0 Underlying1 operating profit 17.4 17.1 15.2 +12.5% 34.4 Margin 9.6% 9.4% 9.3% 10.4% Finance cha
Slide 6: Income Statement – Key Bridges
Click Incometo Statement edit Master title Bridges – Key style Revenue Underlying operating profit2 0.0 1.0 12.5 1.0 - £m - 1.4 £m 0.1 17.1 181.2 6.7 2.0 15.2 162.6 Sept '18 Currency Pro- UK HoP SA Sept '19 Sept '18 Currency UK SA Sept '19 rating3 Revenue1 Underlying operating profit2 / ROS% 9.3% +1
Slide 7: Tax, Earnings & Dividends
Click to edit Master Tax, Earnings title style & Dividends Diluted underlying EPS2 (pence) Underlying1 Reported H1 H1 H1 FY H1 H1 H1 FY Sept Sept Sept Mar Sept Sept Sept Mar 2019 2019 2018 2019 2019 2019 2018 2019 31.7 £m £m £m £m £m £m £m £m 15.7 13.9 Pre Pre IFRS16 IFRS16 Sep-19 Sep-18 Mar-19 FY P
Slide 8: High Cash Conversion
Click to edit High Cash Master title style Conversion H1 H1 H1 FY Sept Sept Sept Mar 2019 2019 2018 2019 £m £m £m £m Pre-IFRS16 Underlying EBITDA 20.6 20.6 18.6 41.3 Working capital (3.1) (3.1) (7.9) (2.1) Depreciation of right of use assets 2.2 - - - Cash conversion1 Operating profit impact of IFRS
Slide 9: Strong Balance Sheet
Click StrongtoBalance edit Master Sheet title style times Leverage – Net debt to EBITDA 1.4* Leverage 0.9 times underlying EBITDA 0.9* 0.8 Sep-19 Sep-18 Mar-19 £m Net debt 53.5 Net debt £41.1m (March 19: £35.0m, Sept 18: £53.5m) 41.1 35.0 Sep-19 Sep-18 Mar-19 £m IAS 19R UK Pension Deficit 28.8 31.6
Slide 10: UK Pension Scheme
Click to editScheme UK Pension Master title style IAS 19R deficit £29.0m (March 19: £31.6m, September UK Pension IAS 19R Assets & Liabilities 18: £28.8m) Assets increased by £22.0m to £418.4m Liabilities increased by £19.4m to £447.4m Triennial valuation as at 1 April 2018 finalised New re
Slide 11: Operating Review
Click to edit Master title style Operating Review Nick Kelsall, Group Chief Executive
Slide 12: Key Messages
Click to edit Master title style Key Messages Strong Performance Robust revenue and earnings growth in challenging markets Proven business model delivering market outperformance & share gains Winning strategy – focus & strong execution; further growth opportunities o UK o Solid UK growth - t
Slide 13: 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 £24.5m 13.5 Market leading supplier of shower enclosures and trays £21.9m 12.1 Leading manufacturer and supplier of taps, mixer showers, bathroom accessories and
Slide 14: UK Operations
Click to edit Master title style UK Operations Nick Kelsall, Group Chief Executive
Slide 15: UK Revenue Outperformance & Share Gains
Click to edit –Master UK Revenue title Outperformance UK Market style & Share Gains % Revenue Change 1 Overall UK Export -12.3% -12.9% Q1 destocking in both UK and Eire markets – impact stabilised -9.6% 8.2% 10.0% Excellent overall UK performance; French export growth offset by Eire -4.0% 3.0% 5.0%
Slide 16: UK Channels – Strong Performance & Share Gains in Trade & Independents
Click to edit Master UK Channels – Strongtitle style Performance & Share Gains in Trade & Independents UK Revenue - H1 FY201 Trade (v FY192) Increasing orientation to trade segment 1% (FY19 - 2%) Strong Screwfix Q2 growth – Triton, Adhesives and Croydex (FY19 - 2%) 14% Significant new account
Slide 17: UK Channels – Robust DIY Performance; Export Mixed
Click to edit Master UK Channels – Robusttitle DIYstyle Performance; Export Mixed UK Revenue - H1 FY201 (v FY192) 1% (FY19 -(FY19 2%) - 2%) DIY Retail 14% (FY19 (FY19 - 15%) - 17%) Triton – Q2 recovery following Q1 destocking (FY19 - 17%) Croydex – Homebase growth despite credit limitations Ab
Slide 18: UK – NPD & Brand Investment – Key Driver of Differentiation
Click to edit UK – NPD Master & Brand title style– Key Driver of Differentiation Investment Launch of classic Launch of instantaneous 100th Anniversary “Individual” range of traditional style by Vado water heaters Success through special finishes innovation & NPD d INNOVATION IN DESIGN awards KITCHE
Slide 19: UK – Sustained Revenue & Profit Growth in Tough Markets
Click to edit Master UK – Sustained title&style Revenue Profit Growth in Tough Markets Revenue Underlying Operating Profit £228.1m 11.3 £26.5m 41.4 16.2 21.7 £115.6m £109.9m 41.4 6.3 5.5 £12.4m 21.5 £11.4m 20.2 8.6 11.6% 7.3 10.7% 11.7 39.5 10.4% 10.8 19.7 21.1 19.5 21.9 56.6 26.9 24.5 H1 Sept 18 H1
Slide 20: South Africa
Click to edit Master title style South Africa Nick Kelsall, Group Chief Executive
Slide 21: South Africa – Sustained Revenue Performance in Challenging Markets
Click South to editRevenue Africa Master title style Performance in Challenging Markets – Sustained 3 % Revenue Change £ - Reported Constant Currency 2 -3.8% 0.0% Continued resilient performance in a tough market -5.0% Share gains despite challenging macro environment -1.3% -4.0% Growth in core Sout
Slide 22: South Africa – Expanded Product Offer, Increasing Focus on Trade
Click South to edit–Master Africa Producttitle Offerstyle Expanded – Increasing Focus on Trade Segment Construction TAF Driving growth through improved retail operational execution Retail Trialling flooring “store-within-a-store” concept – positive feedback TAL Families, interior Designers &
Slide 23: South Africa NPD and Operational Highlights
Click South to edit–Master Africa NPD andtitle style Operational Highlights Seamlessly integrated & Investment in VFM Cape Town plant upgrade 71 new SKUs performing in line with store format increased capacity +25% launched in H1 expectations Ongoing development Flooring “store-within-a- Jo’burg pla
Slide 24: South Africa Revenue and Profit Growth Enhanced by HoP Acquisition
Click South to edit–Master Africa Revenuetitle andstyle Profit Growth Enhanced by HoP Acquisition Revenue 1 Underlying Operating Profit 2 £7.9m £100.2m 14.5 23.4 £65.6m £4.7m £50.7m 13.0 £3.8m 7.6 8.3 12.1 12.6 62.3 7.2% 7.7% 7.2% 31.0 31.7 H1 Sept 18 H1 Sept 19 FY Mar 19 H1 Sept 18 H1 Sept 19 FY Ma
Slide 25: South Africa – Sizeable Market and Medium Term Opportunity
Click South to edit- Sizeable Africa Master title style Market and Medium Term Opportunity Annual Population Growth v Dwellings Completed South Africa total market size ~ £1.3bn (MSP) 1,000,000 90,000 No. of dwelling completed annually 900,000 80,000 Annual Net Growth in Population 800,000 Pent-up 7
Slide 26: Group Outlook & Strategy
Click to edit Master title style Group Outlook & Strategy Nick Kelsall, Group Chief Executive
Slide 27: Outlook
Click to edit Master title style Outlook UK South Africa House Building Growth; Fragile Consumer Improving Outlook Key Housing Stats % GDP growth Sources: GOV.UK & HMRC Q3, Sept 2019 Source: Investec Q3 2019 Completions - LHS Transactions - RHS 3.5% 50,000 500,000 3.0% 450,000 45,000 2.5% Quartelry
Slide 28: Group Strategy – 2023 Vision
Click Groupto edit Master Strategy – 2023title style Vision 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 TARGETS £600m reve
Slide 29: Group Strategy – Industry Fragmentation & Consolidation Opportunity
Click Groupto edit Master Strategy title Fragmentation – Industry style & 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 & Adhesives Tiles Brassware F
Slide 30: Group Strategy – Complementary Businesses Creating Value
Click Groupto edit Master Strategy title style Businesses Creating Value – Complementary Shower O Decorative trays N radiators Consolidator in Large and Fragmented Markets & drains E Many opportunities across product sub sectors and channels S Significant organic and acquisition growth potenti
Slide 31: Key Messages
Click to edit Master title style Key Messages Resilient Results in Challenging Markets Proven business model delivering market outperformance Clear, focused and winning strategy o UK o Continued share gains in trade & independents o Q1 destocking now stabilised o Growth in retail despite chall
Slide 32: Appendix
Click to edit Master title style Appendix
Slide 33: Exceptional and acquisition related costs
Click to edititems Exceptional Master andtitle style related costs acquisition Exceptional items H1 Sept H1 Sept FY Mar 2019 2018 2019 £m £m £m - - (3.0) Onerous lease - - (1.0) GMP Equalisation - - (4.0) Acquisition related costs H1 Sept H1 Sept FY Mar 2019 2018 2019 £m £m £m Acquisition related de
Slide 34: Net Debt Reconciliation
Click to edit Net Debt Master title style Reconciliation H1 Sept H1 Sept FY Mar 2019 2018 2019 £m £m £m Net debt – opening (35.0) (47.1) (47.1) Net cash flow (6.6) (5.0) 14.0 Other non-cash movements - (0.1) (0.2) Foreign exchange 0.5 (1.3) (1.7) Net debt – closing (41.1) (53.5) (35.0) 34
Slide 35: Impact of applying IFRS16 on key financial metrics
Click Impacttoofedit Master applying title style IFRS16 on key financial metrics £m H1 Sept 19 IFRS16 H1 Sept 19 Explanation pre IFRS16 Adjustment Income Statement Lease costs (+£2.5m) replaced with IFRS16 Underlying operating profit 17.1 0.3 17.4 lease depreciation (-£2.2m) Finance charges (0.9) (0
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: Investment Case – Decade of Sustained Growth
Click to edit Investment Master Case title style - Decade of Sustained Growth Revenue(1) £m Underlying Operating Profit(2) 40 Total UK Total South Africa TOTAL GROUP UK South Africa Rest of World 34.4 35 260 30 27.4 240 Index FY09/10=100 25 23.8 220 21.3 200 20 16.1 17.0 180 15 12.1 12.8 7.3 11.7 16
Slide 38: Investment Case – A Better Balanced Business
Click to edit Investment Master Case title style - A Better Balanced Business Revenue FY 13 1 Revenue FY 19 1 RoW Discontinued £210.7m £331.0m Strong portfolio of complementary brands; reduced reliance on Triton 1 Financial years ended 31st March 38
Slide 39: Investment Case – Significant Shift To Attractive Channels
Click to edit Investment Master Case title style - Significant Shift To Attractive Channels UK Channel Revenue - FY13 1 UK Channel Revenue - FY19 1 2% 2% 15% 11% 3% 41% £228.1m 50% £122.8m 20% 42% 13% Trade Trade DIY Retail DIY Retail Independent & Specialist Retail Independent & Specialist Retail E
Slide 40: Investment Case – Norcros DNA – Key Driver of Outperformance
Click to edit Investment Master Case title style - 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 businesses ou