Slide 1: Norcros plc Interim Results Six Months to 30 September 2014
Norcros plc Interim Results Six Months to 30 September 2014
Slide 2: Introduction
Introduction Martin Towers Chairman
Slide 3: Highlights
Highlights Underlying operating profit 2 increased by 10.8% to £7.4m Revenue1 £108.6m + 3.3% Revenue increased by 3.3% on a constant currency basis Strong underlying operating cash 3 generation : 112% of underlying EBITDA Underlying operating profit2 £7.4m + 10.8% Refinancing July 2014 - £70
Slide 4: Financial Review
Financial Review Martin Payne Group Finance Director
Slide 5: Income Statement – continuing operations
Income Statement – continuing operations 26 weeks 26 weeks +/- +/- 52 weeks Sept 2014 Sept 20133 Reported Constant Mar 2014 £m £m Currency £m Revenue 108.6 111.2 -2.3% +3.3% 218.7 Underlying1 operating profit 7.4 6.6 +10.8% +13.7% 16.1 Margin 6.8% 6.0% 7.3% Finance charges – cash (0.7) (0.7) (1.5) U
Slide 6: Income Statement – key bridges
£m Sep 13 - reported 116.7 Australia (5.5) Sep 13 - restated 111.2 Currency (6.1) Revenue UK SA 3.5 Income Statement – key bridges Sep 14 108.6 £m Sep 13 - 6.8 reported Australia (0.2) Sep 13 - 6.6 restated Currency (0.2) UK 0.5 Underlying operating profit SA 0.5 Sep 14 7.4 6
Slide 7: Tax, Earnings and Dividends
Tax, Earnings and Dividends Underlying1 Reported Basic underlying EPS (pence) Sept Sept Mar Sept Sept Mar EPS Pre tax EPS 2014 2013 2014 2014 2013 2014 £m £m £m £m £m £m 2.9 2.5 0.8 1.1 0.9 1.0 Profit before Tax 6.7 5.9 14.6 6.3 0.3 5.8 Sep-14 Sep-13 Mar 14 FY Tax (1.7) (0.8) 2.4 (1.6) - 4.3 (charge
Slide 8: Cash Flow
Cash Flow 26 weeks 26 weeks 52 weeks Sept 2014 Sept 2013 Sept 2014 £m £m £m Underlying EBITDA 10.4 9.6 22.0 Underlying Operating Cash Flow / Working Capital 0.6 0.2 (2.6) Underlying EBITDA Other 0.6 0.4 0.9 112% 106% 92% Underlying operating cash 11.6 10.2 20.3 Capital Expenditure (3.4) (2.1) (4.2)
Slide 9: Balance Sheet and Surplus Property
Balance Sheet and Surplus Property Balance Sheet Net debt (IFRS) Strong cash generation leaves debt at £20.0m £m 28.8 26.9 Leverage 0.9x underlying EBITDA 20.0 Sep 14 Sep 13 Mar 14 Refinanced July 2014 • £70m RCF plus £30m accordion • 5 years to July 2019 Leverage (Net Debt (IFRS) to EBITDA) •
Slide 10: Legacy leasehold obligations
Legacy leasehold obligations Sheffield - Warehousing / Distribution Units • Lease exit and freehold purchased in November 2014 for £3.4m • Original lease expiry in 2082 with outstanding rentals amounting to £14m • Aim to sell freehold in short term • Reduces ongoing cash outflow by £0.4m per ann
Slide 11: Operating Review
Operating Review Nick Kelsall Group Chief Executive
Slide 12: Business Overview
Business Overview Group revenue from continuing operations : £108.6m UK SA £72.8m £35.8m Norcros UK revenue Norcros SA revenue £14.8m £5.2m £29.2m £8.4m £25.4m £22.2m £3.4m Vado Triton Norcros Adhesives Johnson Tiles TAL Tile Africa Johnson Tiles Revenue growth @ constant currency: Group + 3.3% UK -
Slide 13: Triton – Continued progress in challenging markets
Triton – Continued progress in challenging markets Overall revenue +1.2% • UK -1.0% • Exports +14.9% Flat market, momentum building in Q2 Maintained high share Strong recovery in Ireland Share gain in growing thermostatic electric shower market New Safeguard+ range well received - gainin
Slide 14: Vado – Continued progress in challenging markets
Vado – Continued progress in challenging markets Overall revenue + 0.3% • UK +17.9% • Exports -21.7% Continued strong performance in UK trade and retail • Account wins in specification • Sales momentum with merchant buying groups Export impacted by timing of commercial contracts and distributo
Slide 15: Johnson Tiles – Continued progress in challenging markets
Johnson Tiles – Continued progress in challenging markets Overall revenue -3.7% • UK -1.8% • Exports -16.1% UK trade business growing strongly (+8.3%) • Benefit of housebuilder specifications UK retail revenue impacted by market performance of key accounts Export revenue lower – phasing of p
Slide 16: Norcros Adhesives – Continued progress in challenging markets
Norcros Adhesives – Continued progress in challenging markets Overall revenue +27.5% Share gains in trade and retail Benefits of national housebuilder specifications Further penetration of DIY multiples Investment made in additional powder capacity Realising benefits of increasing scale
Slide 17: UK Operations – Continued progress in challenging markets
UK Operations – Continued progress in challenging markets Revenue Underlying operating profit £72.8m £72.8m £148.0m 16.0 12.0% 29.1 14.0 10.0% 5.3 12.0 8.0% 10.0 61.7 8.0 6.0% 14.7 14.8 £m 2.7 3.4 6.0 4.0% 30.3 29.2 4.0 51.9 2.0% 25.1 25.4 2.0 26 wks Sept 13 26 wks Sept 14 52 wks 0.0 26 weeks 26 wee
Slide 18: JTSA – Continued progress in challenging markets
JTSA – Continued progress in challenging markets Overall revenue flat – focus on Tile Africa Successful launch of Inkjet ranges ahead of schedule Revenue growth accelerating in Q2 Continued focus on new product development – rectangular formats H2 Second inkjet facility to be commissioned
Slide 19: TAL – Continued progress in challenging markets
TAL – Continued progress in challenging markets Overall revenue +8.7% at cc Tile Adhesive growth driven by rapid set segment Growth in most key accounts Building product revenue +19.3% • Benefit of focusing on waterproofing and flooring Capex investment in H1 – improvements in quality and
Slide 20: Tile Africa – Continued progress in challenging markets
Tile Africa – Continued progress in challenging markets Overall revenue +14.9% at cc Strong performance in retail revenues • Improved stock availability • Product range editing and competitiveness • Upgraded visual merchandising Increased focus to grow commercial segment Purchase of Port Eli
Slide 21: SA Operations – Continued progress in challenging markets
SA Operations – Continued progress in challenging markets Revenue1 Underlying operating profit 2.0 3.0% £32.3m £35.8m £62.6m 1.8 9.3 2.5% 1.6 1.4 15.2 2.0% 1.2 5.2 1.0 1.5% 5.2 £m 8.4 0.8 7.7 38.1 1.0% 0.6 19.4 22.2 0.4 0.5% 0.2 26 wks Sep 13 26 wks Sep 14 52 wks Mar 14 0.0 26 weeks 26 weeks 52 week
Slide 22: Group Outlook & Strategy
Group Outlook & Strategy Nick Kelsall Group Chief Executive
Slide 23: Lead UK indicators have improved
Lead UK indicators have improved Mortgage Loan Approvals 80,000 60,000 40,000 Dip in recent months – new lending regime 20,000 0 Sep-12 Sep-13 Sep-14 Housing Transactions 160,000 120,000 Transactions still 30% below 80,000 peak 40,000 - Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Slide 24: SA indicators show growth in the medium term & stabilising Rand
SA indicators show growth in the medium term & stabilising Rand GDP and Construction GDP change 18 16 14 12 2014 represents low point in GDP 10 growth. Forecasts show improving trend. %8 6 GDP % change 4 2 Construction GDP % change 0 2012 2013 2014 2015 2016 2017 2018 £/Rand Exchange Rate 20 18 16 1
Slide 25: Group Strategy – Key Targets
Group Strategy – Key Targets Growth Target * Double revenues to Organic ...£420m by 2018 ….- Organic and * Market leading Acquisition ……acquisition ..positions .- Maintain 50% * Complementary .. Returns Target revenue derived * Strong trade and ..industry segments/ from overseas ..consumer brands ..
Slide 26: Group Strategy - Update
Group Strategy - Update Clear and focused growth strategy Pipeline of acquisition targets progressing Organic growth initiatives being vigorously pursued Specification segment remains a key focus Vado revenue synergies being realised and gaining momentum Business development resource inc
Slide 27: Summary
Summary Clear & Focused Medium Term Growth Indicators Strategy Focused Favourable Pipeline of Organic Acquisition Growth Opportunities Solid H1 Opportunities Results 27
Slide 28: Appendices
_ JOHNSON-TILES tuesies MOPCLOS fOHN SON TILES VADO.
Slide 29: Positioned for Growth
Key growth drivers for Norcros markets Positioned for Growth 29
Slide 30: UK Pension Scheme
UK Pension Scheme Assets under management - £385m Scheme closed to new entrants and future accrual from April 13 - stops future build up of liabilities UK Pension IAS 19R Assets & Liabilities 440 Mature Scheme; 9,344 members • Pensioners (65%), Deferred (35%) • Average age of pensioners is 76
Slide 31: Exceptional and non-underlying operating items
Exceptional and non-underlying operating items Sept Sept March 2014 2013 2014 £m £m £m Exceptional operating items Profit on sale of land in Braintree,UK 0.4 - - Business unit restructuring - (1.5) (1.5) Disposal of Nortec in TAL business - 0.5 0.5 Acquisition related deferred remuneration (Earn out
Slide 32: Net debt reconciliation
Net debt reconciliation Sept Sept March 2014 2013 2014 £m £m £m Net debt (IFRS) – opening (26.9) (30.7) (30.7) Net cash flow 6.9 2.6 5.0 Other non cash movements 0.1 (0.2) (0.4) Foreign exchange (0.1) (0.5) (0.8) Net debt (IFRS) - closing (20.0) (28.8) (26.9) 32
Slide 33: Restatement of 2013 Income Statement
Restatement of 2013 Income Statement Sept Discontinued Sept 2013 - Operations 2013 - reported £m restated £m £m Revenue 116.7 (5.5) 111.2 Underlying1 operating profit 6.8 (0.2) 6.6 Margin 5.8% 1.2% 6.0% Finance charges – cash (0.7) - (0.7) Underlying1 PBT 6.1 (0.2) 5.9 Exceptional operating Items (1