Slide 1: Norcros plc Interim Results Six months to 30 September 2016
1 Norcros plc Interim Results Six months to 30 September 2016
Slide 2: Introduction
2 Introduction 1 Martin Towers Chairman
Slide 3: Highlights
Highlights Revenue1 Robust first half performance £128.8m +9.2% Underlying operating profit Revenue increased by 9.2% on a constant currency basis £11.0m +11.1% Underlying operating profit increased by 11.1% to £11.0m Underlying profit before tax Underlying profit before tax increased by 11.
Slide 4: Financial Review
Financial Review Shaun Smith Group Finance Director 4 1
Slide 5: Income Statement
Income Statement H1 H1 +/- +/- FY Sept 2016 Sept 2015 Reported Constant Mar 2016 £m £m Currency £m Revenue 128.8 118.7 +8.5% +9.2% 235.9 Underlying1 operating profit 11.0 9.9 +11.1% 21.3 Return on Sales 8.5% 8.3% 9.0% Finance charges – cash (0.5) (0.5) (0.9) 5 Underlying1 PBT 10.5 9.4 +11.7% 20.4 Ex
Slide 6: Income Statement – key bridges
Income Statement – key bridges Revenue Underlying operating profit 3.8 1.1 21.3 128.8 11.0 7.0 £m £m 9.9 0.7 118.7 Sept '15 Currency UK SA Sept '16 Sept '15 SA Sept '16 6 Revenue1 +9.2% Underlying operating profit / ROS% 128.8 8.5% +8.8% 118.0 8.3% 11.0 10.0% 9.2% 9.9 86.9 8.0 8.0 79.9 £m +10.0% £m
Slide 7: Tax, Earnings and Dividends
Tax, Earnings and Dividends Underlying1 Reported Diluted underlying EPS (pence) H1 H1 FY H1 H1 FY Sept Sept Mar Sept Sept Mar 2016 2015 2016 2016 2015 2016 £m £m £m £m £m £m 27.8 12.9 11.8 Profit before Tax 10.5 9.4 20.4 7.7 7.0 15.4 Sep-16 Sep-15 Mar-16 FY Tax charge (2.4) (2.1) (3.1) (1.6) (1.6) (
Slide 8: Cash Flow
Cash Flow H1 H1 FY Sept 2016 Sept 2015 Mar 2016 £m £m £m Underlying Operating Cash Flow / Underlying EBITDA 14.1 12.8 26.8 Underlying EBITDA Working Capital 1.2 (0.2) (7.7) 113% 104% Other 0.7 0.7 1.3 76% Underlying operating cash 16.0 13.3 20.4 Capital Expenditure (4.0) (3.2) (6.6) Sep-16 Sep-15 Ma
Slide 9: Balance Sheet
Balance Sheet £m Net debt (IFRS) Strong cash generation reduced Net debt to £27.5m (March 16: 32.5 £32.5m) 29.2 27.5 Sep-16 Sep-15 Mar-16 Leverage 1.0 times pro-forma underlying EBITDA times Leverage - Net debt (IFRS) to pro-forma EBITDA IAS19R deficit increased to £97.8m (Mar 16: £55.7m) Di
Slide 10: UK Pension Scheme
UK Pension Scheme UK Pension IAS 19R Assets & Liabilities IAS 19R deficit £97.8m (March 2016: £55.7m) 600 Assets increased by £37.8m to £403.7m Liabilities increased by £79.9m to £501.5m mainly as a result of lower discount rate of 2.25% (March 2016: 3.55%) 500 Interest rate sensitivity anal
Slide 11: UK Pension Scheme Cashflows
UK Pension Scheme Cashflows Cashflows Payments Payments Annual progression commencing 27 October Deferreds Actives Pensioners 1 Payroll in payment almost at peak Cashflow significantly less volatile than balance sheet liability (measured on a mark to market basis) 11
Slide 12: Operating Review
Operating Review Nick Kelsall Group Chief Executive 1
Slide 13: Business Overview
Business Overview UK SA Group Group Revenue (6 months to September 2016) £86.9m £41.9m £128.8m Triton £22.9m Vado £16.6m Croydex £12.2m Abode £5.6m Johnson Tiles £25.4m Norcros Adhesives £4.2m Johnson Tiles £5.3m TAL £10.1m 1 Tile Africa £26.5m Revenue Growth (constant currency): +8.8% +10.0% +9.2%
Slide 14: Destocking in H1
Destocking in H1 Overall Revenue - 12.6% UK - 14.2% Exports - 4.5% Significant destocking; more recently in trade channels Maintained market leading position in the UK and Ireland Increased market share in electric and mixers Ireland impacted by destocking prior to T90SR launch Growi
Slide 15: UK growth sustained
UK growth sustained Overall Revenue + 4.4% UK + 14.3% Exports - 19.1% Strong performance in the UK sustained: Specification – progress with housebuilders and hotel groups Retail – growth into independent merchants and boutiques Revised Middle East + Africa export strategy: New ME dis
Slide 16: Unique offering driving strong growth
Unique offering driving strong growth Overall Revenue + 11.9% (versus 6m to September 2015*) UK + 10.7% Exports + 33.3% Continued strong growth across UK retail Strong growth in Croydex branded ranges Good growth in export markets e.g. Germany and USA Hang ‘n’ Lock cabinets & mirrors e
Slide 17: Excellent performance post acquisition
Excellent performance post acquisition Overall Revenue £5.6m (6 months contribution*); + 2.2% LfL Business seamlessly integrated Strong growth in branded sales – new customer wins OEM sales robust despite short-term destocking Long term supply agreement signed with key account ‘PRONTEAU’
Slide 18: Robust performance in a challenging environment
Robust performance in a challenging environment Overall Revenue - 9.0% UK - 10.0% Exports - in line with last year UK trade market more resilient than retail UK trade - 3.9% – robust house builder & specification channel offset by weaker social housing UK retail -16.4% – weak DIY channel
Slide 19: Performance in line with expectations
Performance in line with expectations Overall Revenue + 2.4% Solid performance in UK trade; UK retail softer Traction building in the Middle East: Increased specification approvals Robust H2 pipeline across the Gulf Ongoing NPD – Moisture suppressant product “Pro DPM” Enhancing custome
Slide 20: UK Operations – H1 solid performance
UK Operations – H1 solid performance Revenue Underlying Operating Profit £163.0m 0 £17.2m 17.2 33.1 8.0 £86.9m 1 5.6 £79.9m 0 12.2 5.8 54.1 20 £8.0m £8.0m 15.9 16.6 10.6% 4.1 10.0% 4.2 9.2% 27.9 25.4 50.6 22.9 26.2 H1 Sept 16 H1 Sept 15 FY Mar 16 H1 Sept 16 H1 Sept 15 FY Mar1 16 Triton Johnson Tiles
Slide 21: Solid performance and improved profitability
Solid performance and improved profitability Overall revenue - in line with last year at constant currency Sustained improvement in operating performance and profitability Focus on value added products e.g. large format Solid manufacturing performance sustained; efficiency improved NE Sell
Slide 22: Excellent H1 performance
Excellent H1 performance Overall revenue + 8.6% at constant currency Share gain in domestic market and export growth Tile adhesive and building and construction ranges all robust Implementation of digital and social media marketing strategy Continued improvement in operational performance a
Slide 23: Strong retail performance via improved store offering
Strong retail performance via improved store offering Overall revenue + 12.8% at constant currency CX format performing strongly in new and upgraded stores Boksberg (opened March 2016) performing ahead of expectations Bathroom store-within-a-store format performing strongly Group synergies
Slide 24: South Africa Operations – H1 strong progress
South Africa Operations – H1 strong progress Revenue 1 Underlying Operating Profit £4.1m £78.3m 10.6 £3.0m 19.2 £41.9m £38.1m 24 £1.9m 5.3 7.2% 5.2 10.1 5.6% 9.3 4.9% 48.5 26.5 23.6 H1 Sept 16 H1 Sept 15 FY Mar 16 H1 Sept 16 H1 Sept 15 FY Mar 16 1 Profit ROS% Tile Africa TAL Johnson Tiles 1 On a con
Slide 25: Group Outlook & Strategy
1 Group Outlook & Strategy Nick Kelsall Group Chief Executive
Slide 26: Lead UK indicators – An uncertain backdrop
Lead UK indicators – An uncertain backdrop Mortgage Loan Approvals (seasonally adjusted) 80,000 60,000 40,000 20,000 Loan approvals remain flat 0 Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Source: Bank of England Housing Transactions 200,000 160,000 26 120,000 80,000 Recovery pos
Slide 27: Lead SA indicators – Moderate medium term outlook
Lead SA indicators – Moderate medium term outlook GDP (% change) 2.5 2 GDP growth remains low with an improving 1.5 medium term outlook 1 0.5 Source: Investec 0 2014 2015 2016 2017 2018 2019 2020 Hardware/Paint/Glass Retail Sales (% change) 7 6 5 Key indicator for RMI. Index remains 4 ahead of other
Slide 28: Group Strategy – Sustained progress
Group Strategy – Sustained progress Clear, consistent, and focused growth strategy 2016 • Abode Acquisition All divisions profitable – significant South Africa contribution 2015 • Croydex Acquisition • Disposal of Legacy Property Portfolio Resilient financial performance despite economic volat
Slide 29: Group Strategy – Key targets retained
Group Strategy – Key targets retained Growth Target Organic Double revenues to Acquisition £420m by 2018 Market leading Organic and Returns Target positions acquisition Complementary Maintain 50% industry segments/ revenue derived Strong trade and geographical Sustainable pre-tax from
Slide 30: Summary
Summary Clear & Focused Growth Medium Term Strategy Indicators Well Favourable Developed Acquisition Organic Pipeline Growth Opportunities Solid Half Year Results 1 R
Slide 31: Appendix
Appendix LEZ 5 — — 4 @ . s~ = y Sp = TR C79» ~~ | , SS ® <r abode JOHNSON-TILES (ZAOLCOS JOHNSON-TILES Rats Tal ADHESIVES
Slide 32: Exceptional items and acquisition related costs
Exceptional items and acquisition related costs H1 Sept H1 Sept FY Mar 2016 2015 2016 £m £m £m Exceptional operating items Pension settlement gain - 0.4 0.4 Highgate Park – legal costs - (0.1) (0.1) Highgate Settlement - 2.0 2.0 2.3 2.3 Acquisition related costs Acquisition related deferred remunera
Slide 33: Net debt reconciliation
Net debt reconciliation H1 Sept H1 Sept FY Mar 2016 2015 2016 £m £m £m Net debt (IFRS) – opening (32.5) (14.2) (14.2) Net cash flow 4.0 (14.1) (17.1) Other non cash movements (0.1) (0.1) (0.2) Foreign exchange 1.1 (0.8) (1.0) Net debt (IFRS) - closing (27.5) (29.2) (32.5) 1 33