TIDMNXR
RNS Number : 0017S
Norcros PLC
11 November 2021
11 November 2021
Norcros plc
Results for the six months ended 30 September 2021
'Sustained outperformance leading to record underlying operating
profits.'
Norcros, a market leading supplier of high quality and
innovative bathroom and kitchen products, today announces its
results for the six months ended 30 September 2021.
Financial Summary
Six months Six months Six months % change % change
ended ended ended 2021 constant
Vs. 2019
30 September 30 September 30 September currency
2021 2020 2019 2021
Vs. 2019
LFL(3)
26 Weeks 26 Weeks 27 Weeks(2)
Revenue GBP200.9m GBP135.3m GBP181.2m 10.9% 18.4%
-------------- -------------- -------------- ---------- -----------
Underlying operating
profit(1) GBP22.0m GBP12.8m GBP17.4m 26.4%
-------------- -------------- -------------- ---------- -----------
Underlying profit before
taxation(1) GBP20.9m GBP10.7m GBP15.6m 34.0%
-------------- -------------- -------------- ---------- -----------
Diluted underlying EPS(1) 20.0p 10.6p 15.1p 32.5%
-------------- -------------- -------------- ---------- -----------
Operating profit GBP19.2m GBP7.4m GBP14.3m 34.3%
-------------- -------------- -------------- ---------- -----------
Underlying net cash/(debt)(1) GBP1.0m (GBP7.3m) (GBP41.1m)
-------------- -------------- -------------- ---------- -----------
Interim dividend per
share 3.1p - 3.1p
-------------- -------------- -------------- ---------- -----------
(1) Definitions and reconciliations of alternative performance
measures are provided in note 3
(2) 2019 period data presented to provide a more meaningful
pre-COVID-19 baseline for performance comparisons
(3) LFL (like for like) at constant currency and adjusting pro
rata 2019 from a 27-week period to a 26-week period
Highlights
-- Strong market outperformance with a significant increase in
revenue compared to 2019; 10.9% on a reported basis and 18.4% on a
constant currency like for like basis
-- Performance reflects increased activity in the UK and South
African RMI markets and the strength of our customer
proposition
-- Record underlying operating profit of GBP22.0m; an increase of 26.4% compared to 2019
-- Balance sheet remains very strong with GBP1.0m net cash
(pre-IFRS 16) with significant liquidity and funding headroom
-- Interim dividend of 3.1p per share, reflecting the Board's
confidence in the Group's prospects
Nick Kelsall, Chief Executive Officer, commented:
"The strength of our leading customer proposition and our
focussed operating model has resulted in an excellent performance
during the first half, with the Group benefitting from increased
activity in the UK and South African RMI markets and also winning
market share. Notwithstanding the ongoing uncertainty created by
supply chain challenges, increased energy costs, inflationary cost
pressure and a normalisation of consumer spending patterns, the
Board remains confident our proven business model and customer
proposition will lead to further progress, in line with its
expectations, for the year to 31 March 2022."
There will be a presentation today at 9.00 am for analysts via a
conference call. The supporting slides will be available on the
Norcros website at http://www.norcros.com later in the day.
Enquiries
Norcros plc Tel: 01625 547700
Nick Kelsall, Chief Executive
Officer
James Eyre, Chief Financial Officer
Hudson Sandler Tel: 0207 796 4133
Nick Lyon
Sophie Miles
Notes to Editors
Norcros is a market leading supplier of high quality and
innovative bathroom and kitchen products with operations primarily
in the UK and South Africa.
-- Based in the UK, Norcros operates under seven brands:
-- Triton - Market leader in the manufacture and marketing of showers in the UK
-- Merlyn - The UK and Ireland's No.1 supplier of shower
enclosures and trays to the residential, commercial and hospitality
sectors
-- Vado - A leading manufacturer and supplier of taps, mixer
showers, bathroom accessories and valves
-- Croydex - A market leading, innovative designer, manufacturer
and distributor of high quality bathroom furnishings and
accessories
-- Abode - A leading niche designer and distributor of high
quality kitchen taps, bathroom taps, and kitchen sinks
-- Johnson Tiles - The leading manufacturer and supplier of ceramic tiles in the UK
-- Norcros Adhesives - Manufacturer of tile and stone adhesives, grouts and related products
-- Based in South Africa, Norcros operates under four brands:
-- Tile Africa - Chain of retail stores focused on ceramic and
porcelain tiles, and associated products such as sanitaryware,
showers and adhesives
-- Johnson Tiles South Africa - Manufacturer of ceramic and porcelain tiles
-- TAL - The leading manufacturer of ceramic and building adhesives
-- House of Plumbing - Market leading supplier of specialist plumbing materials
-- Norcros is headquartered in Wilmslow, Cheshire and employs
around 2,100 people. The Company is listed on the London Stock
Exchange. For further information please visit the Company website:
http://www.norcros.com
Overview of Results
The Board is pleased to record an excellent performance for the
six months ended 30 September 2021, reflecting the strength of the
Group's focussed operating model, our market leading brands, broad
distribution channels, well-developed supply chain infrastructure
and financial strength. As a result, our leading customer
proposition has meant that the Group has capitalised on both the
increased activity in the UK and South African RMI markets combined
with market share gains in the period.
Our UK business has performed strongly with revenue of GBP130.8m
(2020: GBP93.7m, 2019: GBP115.6m), 17.5% above 2019 on a like for
like basis. Merlyn, Triton and Croydex experienced a marked
increase in revenue relative to 2019, benefitting from their
leading market positions, stock availability and superior
service.
Our South African business also performed strongly with revenue
of GBP70.1m (2020: GBP41.6m, 2019: GBP65.6m), 20.0% above 2019 on a
constant currency like for like basis as the business continued to
benefit from higher demand and market share gains in the retail
renovation market.
We achieved a record level of underlying operating profit of
GBP22.0m for the period (2020: GBP12.8m, 2019: GBP17.4m) reflecting
our strong recovery in trading compared to last year and the
sustained momentum in revenue growth.
Results
Group revenue for the 26-week first half was GBP200.9m (2020:
GBP135.3m, 2019: GBP181.2m) (2020: 26 weeks, 2019: 27 weeks), a
10.9% increase on 2019 on a reported basis, a 14.0% increase on a
constant currency basis and a 18.4% increase on a constant currency
like for like basis adjusting 2019 from a 27 week to a 26-week
period. The performance reflected increased activity in the UK and
South African RMI markets and the strength of our customer
proposition.
Underlying operating profit was GBP22.0m (2020: GBP12.8m, 2019:
GBP17.4m) principally reflecting the increased revenue in the
period and the ability to recover increased freight, raw material
and energy costs principally through the management of selling
prices. The underlying operating profit margin was 11.0% (2020:
9.5%, 2019: 9.6%).
Operating profit was GBP19.2m (2020: GBP7.4m, 2019: GBP14.3m)
principally reflecting the increase in underlying operating profit.
Acquisition related costs of GBP1.9m (2020: GBP2.1m, 2019: GBP2.2m)
relate to acquired intangible amortisation. IFRS 19R administration
expenses were GBP0.9m (2020: GBP0.9m, 2019: GBP0.9m) in the
period.
Underlying profit before taxation was GBP20.9m (2020: GBP10.7m,
2019: GBP15.6m) reflecting the increase in underlying operating
profit and a decrease in bank interest costs (2021: GBP0.3m, 2020:
GBP1.2m, 2019: GBP0.9m) due to a reduction in bank borrowings in
the period. The application of IFRS 16 has reduced underlying
profit before taxation by GBP0.1m (2020: GBP0.4m, 2019: GBP0.6m).
IFRS 16 interest costs in the period on lease liabilities were
GBP0.8m (2020: GBP0.9m, 2019: GBP0.9m).
Profit before taxation was GBP17.7m (2020: GBP3.4m, 2019:
GBP13.3m). During the period there were no exceptional costs (2020:
GBP2.4m, 2019: nil). In prior periods the fair value financial
derivative gains and losses were taken to the income statement
(2020: GBP1.3m loss, 2019: GBP1.3m gain), however, in the current
period hedge accounting has been applied with the fair value
financial derivative gains and losses recognised in comprehensive
income and the hedge reserve.
Diluted underlying earnings per share was 20.0p (2020: 10.6p,
2019: 15.1p), principally reflecting the increase in underlying
profit before taxation.
The Group generated an underlying operating cash flow of GBP8.0m
(2020: GBP37.6m, 2019: GBP20.0m) reflecting a working capital
outflow of GBP19.3m (2020: GBP19.9m inflow, 2019: GBP3.1m outflow)
as inventory levels were replenished and revenue growth was
sustained in the period. The comparative underlying operating
cashflow in 2020 benefitted from the COVID-19 related deferral of
VAT, rates and rent in the period. Capital expenditure was GBP2.5m
in the first half (2020: GBP0.9m, 2019: GBP3.1m), reflecting a
return to pre-COVID-19 levels.
Financial Position
Group net cash (pre-IFRS 16) was GBP1.0m at the half year (31
March 2021: GBP10.5m net cash) as the Group replenished inventory
levels and paid the prior year declared dividend during the period.
Inclusive of IFRS 16 lease liabilities, net debt is GBP22.7m (31
March 2021: GBP13.7m). IFRS 16 has no impact on cash flow nor on
the Group's existing bank covenants. The Group continues to be in a
strong financial position with significant headroom within its
committed GBP120m RCF financing facility.
Pension Scheme
The gross deficit relating to our UK defined benefit pension
scheme as calculated under IAS 19R has reduced from GBP18.3m at 31
March 2021 to GBP6.1m. This decrease is primarily due to a strong
investment performance which more than offset the marginal increase
in pension liabilities. The inflation assumption increased to 3.45%
(31 March 2021: 3.25%) and the discount rate remained at 2.05% (31
March 2021: 2.05%). All asset investments are managed by
professional fund managers and we remain confident that our pension
obligations continue to be appropriately funded and well managed.
The Company is due to pay GBP3.3m this financial year into the
scheme in accordance with the agreement made with the Trustee in
June 2019 based on the triennial valuation dated 1 April 2018. The
1 April 2021 triennial valuation process is progressing with the
Company and the Trustee working constructively together on
this.
Dividend
The Board is declaring an interim dividend of 3.1p per share
reflecting the strong first half performance and its confidence in
the Group's prospects. The dividend is payable on 11 January 2022
to shareholders on the register on 26 November 2021. The shares
will be quoted ex-dividend on 25 November 2021.
Environment, social and governance
The Board is committed to high standards of corporate
responsibility, employee engagement and sustainability. We continue
to prioritise a number of activities that look to reduce the
Group's impact on the environment and support the communities in
which we operate and we strive to provide our employees with a safe
and positive working environment. During the first half of the year
our environmental strategy has continued to develop with the Carbon
Trust working with all divisions to gain "Taking Steps"
accreditation. Further environmental activities included the
continuation of the drive to reducing packaging and single use
plastics, electric cars for our sales fleet, LED lighting in
warehouses and a move to online installation booklets. During the
period, the Board continued its focus on employee engagement and
charitable contributions in our local communities including
donations to the UK Pink Ribbon Foundation and further support for
the South African "Project Yes" (Youth Employment Service)
initiative to provide work experience for unemployed young
people.
Board and senior management appointments
Good progress has been made in the search for a new
Non-Executive Director as Board Chair and we will update on this in
due course. David McKeith will continue to act as Board Chair until
any appointment is concluded.
As separately announced, Thomas Willcocks was appointed to the
Group senior executive team as Group Business Director - UK, with
effect from 1 August 2021. Thomas joined Norcros South Africa in
2006 and was promoted to Managing Director of Norcros South Africa
in 2009. He has overseen the sustained and profitable growth of our
South African business. Kevin Swan succeeded Thomas as Managing
Director of Norcros South Africa, also from 1 August 2021, having
joined Norcros in March of this year. He was previously Chief
Executive of Bidvest Packaging.
The Group senior executive committee now comprises our CEO (Nick
Kelsall), CFO (James Eyre), Group Counsel/Company Secretary
(Richard Collins) and Group Business Director - UK (Thomas
Willcocks).
Operating Review
UK
Our UK businesses achieved first half revenue of GBP130.8m
(2020: GBP93.7m, 2019: GBP115.6m), representing growth of 17.5%
against 2019 on a like for like basis reflecting increased demand
in the RMI sector and market share gains, with Triton and Merlyn
continuing to perform extremely well. Revenues were 39.6% higher
than the COVID-19 impacted half year period to 30 September 2020
when our first quarter was impacted by lockdowns and the suspension
of our manufacturing and assembly facilities and the scaling back
of our operations.
Underlying operating profit for the first half was GBP17.0m
(2020: GBP10.8m, 2019: GBP12.5m), the improvement on 2019 largely
reflecting the significant increase in revenue and the recovery of
significantly higher freight, raw material and energy costs through
the implementation of increases in selling prices and
surcharges.
Triton
Triton, the UK's market leader in showers, recorded revenue for
the first half of GBP30.9m (2020: GBP23.3m, 2019: GBP24.5m), 31.5%
up against 2019 on a like for like basis as the business enhanced
and grew its overall market share and leadership position across
all major shower categories. Triton's customers continue to benefit
from a robust and proven supply chain, ongoing customer service
responsiveness and market leading products.
Retail sector revenue in the first half was up 51.5% on 2019 on
a like for like basis, benefitting from a significant uplift in
demand for DIY, home renovation and maintenance projects. The
growth was supported by a significant increase in online sales
which were up circa 70% on the corresponding 2019 pre-pandemic
period.
Trade sector revenue in the first half was up 12.0% on 2019 on a
like for like basis with most contract, housing and local authority
business having been paused during lockdown, now recommencing.
As in the UK, export market revenue also recovered strongly
through the first half and was 34.0% higher than 2019 on a like for
like basis.
During the first half of the year Triton introduced a number of
new products, including the new Omnicare(TM) Ultra Thermostatic
Electric Shower to extend the existing and successful contract
range. Triton has recently been awarded Product of the Year
(Plumbing & Heating), for its Enrich Electric Shower, as voted
for by Screwfix customers and has been shortlisted by the Bathrooms
Manufacturers Association, for two categories in its 2021
Sustainability Awards.
Triton delivered strong underlying operating profit growth
compared to 2019 along with improved cash conversion in the
period.
Merlyn
Merlyn, the UK and Ireland's No. 1 supplier of shower enclosures
and trays to the residential, commercial and hospitality sectors
continued to perform strongly during the first half recording
revenue of GBP29.1m (2020: GBP18.1m, 2019: GBP21.9m), a 37.9%
increase on 2019 on a like for like basis. Merlyn benefitted from
an uplift in RMI activity and also gained market share as some UK
competitors faced more extreme supply chain difficulties allowing
Merlyn to capitalise on its superior stock availability and leading
customer service.
Retail revenue in the first half was up 20.7% on 2019 on a like
for like basis driven by the significant increase in demand for
home renovation products leading to strong growth with the
independent retailers and buying groups.
Trade revenue in the first half was up 61.8% on 2019 on a like
for like basis, mainly reflecting strong growth with the National
Merchant sector and a continued high level of completions from
housebuilder customers including Barratt Homes. New customers in
the period included Vistry, St Modwen, Anwyl Homes and IHG with
contract extensions also concluded with McCarthy & Stone, David
Wilson Homes and Bloor Homes.
Export revenue in the first half increased by 41.7% on 2019 on a
like for like basis reflecting growth in Ireland and France.
NPD has continued and helped drive revenue growth with the
launch of the Arysto luxury shower enclosure and anti-slip trays
that have been well received in the market.
Merlyn delivered strong underlying operating profit growth
compared to 2019 with a reduction in cashflow reflecting the
investment in working capital aligned with the strong trading
momentum.
Vado
Vado, our leading manufacturer of taps, mixer showers, bathroom
accessories and valves, recorded first half revenue of GBP 22.4 m
(2020: GBP16.1m, 2019: GBP21.1m), 10.3% up on 2019 on a like for
like basis .
Retail sector revenue in the first half was up 12.7% on 2019 on
a like for like basis, driven by a strong start to the year from
increased renovation activity which was partially offset by a
softer summer as consumers and fitters caught up with holidays.
Vado particularly benefitted from strong growth across buying
groups driven by superior service and inventory levels.
Trade sector revenue in the first half was 2.2% lower than 2019
on a like for like basis as the lack of availability of building
materials and labour impacted the speed of build programmes in
quarter two. Despite this, overall consumer demand remains very
strong with our housebuilder customers reporting strong order
books. Vado has retained all key customers during the period and
seen significant growth with Telford Homes and Redrow.
Export revenue in the first half increased by 37.1% on 2019 on a
like for like basis benefitting from increased sales in Europe.
Investment in NPD has continued to support revenue growth with
the launch of the "Knurled X Fusion" range during the period, which
has been well received in the retail sector.
Vado contributed strong underlying operating profit growth
compared to 2019 with reduced cashflow reflecting the investment in
inventory levels in line with the improvement in trading.
Croydex
Croydex, our market leading, innovative designer, manufacturer
and distributor of high-quality bathroom furnishings and
accessories, recorded first half revenue of GBP14.2m (2020:
GBP10.1m, 2019: GBP11.7m), 25.7% up on 2019 on a like for like
basis.
Retail sector revenue in the first half was up 30.0% on 2019 on
a like for like basis driven by increased DIY renovation activity,
E-commerce growth, and new range listings in both Wickes and
B&Q.
Trade sector revenue in the first half was up 22.7% on 2019 on a
like for like basis mainly reflecting continued strong performances
from Screwfix and Toolstation together with our enhanced on-line
service proposition and digital presence driving growth across a
number of customers including Plumbworld.
Export revenue in the first half increased by 23.5% on 2019 on a
like for like basis, mainly driven by growth in the USA of cabinets
and mirrors into Home Depot.com and new wall mounted accessory
ranges at Better Living Products.
A number of new Metlex and Croydex branded products were
launched in August 2021 which included new patented solutions
within the shower rod, toilet seat and medicine cabinet
categories.
Croydex's underlying operating profit was ahead of 2019,
although cash generation was lower due to the investment in working
capital.
Abode
Abode, our leading designer and distributor of high-quality hot
water taps, bathroom mixers, kitchen sinks and taps, recorded
revenue of GBP9.3m for the first half (2020: GBP6.5m, 2019:
GBP8.6m), 12.0 % up on 2019 on a like for like basis.
The business continued to benefit from its strong market
positions with key customers after the reopening of kitchen
showrooms in April. An 'Approved Retailer' scheme and investment in
point-of-sale display aids were launched to further differentiate
the premium 'Distinctly Abode' range. Sales of Pronteau hot water
taps were also strong, benefitting from the award of WRAS approval,
a pre-requisite for new build markets.
NPD remained central to the Abode brand proposition with the
launch of new taps in the successful 'Hex' family of industrial
designs, plus the 'Agilis', an innovative kitchen hygiene solution.
Retail sales of consumables and spare parts online achieved record
levels, including Pronteau supplied direct to consumers, supported
by installation and servicing provided by Triton.
Abode's underlying operating profit was ahead of 2019 with
cashflow reflecting the investment in working capital in the
period.
Johnson Tiles
Johnson Tiles, our UK leading ceramic tile manufacturer and
market leading supplier of both own manufactured and imported tiles
recorded first half revenue of GBP 17.6 m (2020: GBP14.0m, 2019:
GBP21.5m), 15.0% down against 2019 on a like for like basis .
Whilst retail markets continued to perform relatively well, both
private new build housing, social housing and commercial contract
markets operated at below pre-COVID-19 levels. Post the initial
COVID-19 lockdown, we restructured our manufacturing capacity and
closed one of our kilns facilitating both the exit of a number of
low margin products, particularly in the DIY and Trade channels and
a reduction in overall stock levels. After taking account of this
change in product offering, adjusted like for like revenue was 4.8%
lower than 2019.
Retail sector revenue in the first half grew 2.2% on 2019 on an
adjusted like for like basis through growing our space and
increasing our share of wallet in major national retailers
including Wickes and Tile Giant.
Trade sector revenue in the first half was down 4.7% on 2019 on
an adjusted like for like basis, mainly reflecting new build
housing market activity being below pre-COVID-19 construction
levels with the commercial specification and social housing
refurbishment markets remaining sluggish. Despite this, we supplied
a number of major contracts in the period including Porsche, Ikea,
Wasps RFC, Nike Store in Glasgow, Wembley Stadium, Alexander
Stadium and the University of York.
Export revenue in the first half was down 29.4% on 2019 on a
like for like basis. Softer revenue in the EU, particularly France,
were partly offset by strong revenue into Russia and the Tamale
Airport project in Ghana.
During the period Johnson Tiles continued to develop its product
range launching 19 new ranges and 14 range upgrades including our
Southbank range which recently won the Mixology Surfaces Product of
the Year. Additionally, Johnson Tiles further differentiated our
service levels to our customers by further enhancing our market
leadership in sustainability by increasing the recycling of kiln
waste heat, scrap tiles and water.
Johnson Tile's underlying operating profit was marginally behind
2019 due to the impact of rising energy costs, albeit a significant
improvement on the underlying operating loss in the first half of
2020 whilst cashflow was ahead of pre-pandemic levels.
Norcros Adhesives
Norcros Adhesives, our UK manufacturer and supplier of tile and
stone adhesives and ancillary products, recorded first half revenue
of GBP7.3m (2020: GBP5.6m, 2019: GBP6.3m), 19.7% up on 2019 on a
like for like basis.
Retail sector revenue in the first half was up 82.8% on 2019 on
a like for like basis driven by significant growth of product lines
across the DIY multiples.
Trade sector revenue in the first half was 13.0% lower than 2019
on a like for like basis mainly reflecting a much slower recovery
in the larger private and public commercial specification
projects.
The Middle Eastern operations were closed at the end of the
previous financial year and as a result there were no sales in the
region during this period.
During the period Norcros Adhesives maintained the "Gold
Standard" from the Supply Chain Sustainability School in addition
to launching two new leveller lines in Screwfix .
Norcros Adhesives' underlying operating profit was ahead of 2019
and cashflow was in line.
South Africa
Our South African business achieved first half revenue of
GBP70.1m (2020: GBP41.6m, 2019: GBP65.6m), representing growth of
20.0% against 2019 on a like for like constant currency basis with
Tile Africa continuing to benefit from higher demand and market
share gains in the retail renovation market. Revenues were 52.4%
higher on a constant currency basis than the COVID-19 impacted 2020
revenues when our first quarter was impacted by lockdowns and the
suspension of manufacturing and closure of retail operations.
Underlying operating profit was GBP5.0m (2020: GBP2.0m, 2019:
GBP4.9m) in the period, in line with pre-pandemic 2019 levels.
Johnson Tiles South Africa
Johnson Tiles South Africa, our tile manufacturing business
delivered first half revenue of GBP8.2m (2020: GBP4.8m, 2019:
GBP8.3m), 10.8% higher than 2019 on a constant currency like for
like basis as the business benefitted from increased housing
renovation market demand, partially offset by subdued activity in
the commercial sector including the new housing and corporate
renovations segments.
During the period, our manufactured tile range was consolidated,
reducing the complexity of the portfolio to improve our in-stock
and customer service levels whilst we increased the depth of some
ranges by the introduction of the Simende, Sima, Chisel and Kgosi
manufactured tile ranges and the Etosha range of factored tile
products.
Johnson Tiles South Africa's underlying operating profit was
marginally behind 2019, with cashflow reflecting the investment in
stock.
TAL
TAL, our market leading adhesives business recorded revenue of
GBP11.3m (2020: GBP7.9m, 2019: GBP12.6m) 0.9% higher than 2019 on a
constant currency like for like basis. This performance reflects
TAL's exposure to the commercial new build project sector which
continues to track behind the home renovation post-pandemic
recovery. Revenue of our specialist construction products were also
held back by the delay in the recovery of this sector.
Notwithstanding market conditions, TAL remains the leading
supplier, with the business supplying market-leading products and
technical expertise into several construction projects during the
first half of the year including residential projects in Gauteng
and Cape Town, the Life St George's Hospital and Radisson Hotels in
the Eastern Cape. Investment in NPD continued during the period
with the launch of a construction waterproofing product, "Sureproof
Shower", generating further momentum.
TAL's underlying operating profit and cash generation during the
period were in line with 2019.
Tile Africa
Tile Africa, our leading retailer of wall and floor tiles,
adhesives, showers, sanitaryware and bathroom fittings, recorded
first half revenue of GBP37.8m (2020: GBP21.5m, 2019: GBP31.7m),
34.0% higher than 2019 on a constant currency like for like basis
after benefitting from stronger retail demand from increased
renovation activity and ongoing improvements in retail operating
disciplines and superior stock availability.
The successful, exclusive Evox range of bathroomware and
sanitaryware was expanded with the addition of several new bath
ranges and four new tap ranges; and an exclusive upmarket range,
Nuvo, will launch early in the second half of the year. Despite the
slow commercial sector, several large retail floor covering
installations for Pick n Pay, Boxer and Spar were completed during
the period.
Tile Africa currently operates from thirty-two owned stores and
two franchise stores. Ongoing capital investment continues,
mirroring the successful flagship Greenstone store and Ballito
store concepts, incorporating both a bathroom store-within-a-store
concept and a bespoke alternative floorcoverings department.
Tile Africa's underlying operating profit was substantially
ahead of 2019 with cashflow reflecting the investment in inventory
to support the revenue growth.
House of Plumbing
House of Plumbing, our market leading supplier of specialist
plumbing materials into the commercial segment, recorded first half
revenue of GBP12.8m (2020: GBP7.4m, 2019: GBP13.0m), 10.3% higher
than 2019 on a constant currency like for like basis. Despite the
slow recovery of the commercial sector post-COVID-19 pandemic, the
additions to the branch network contributed to increased revenues
compared to prior periods. During the period, three new branches
were added in Nelspruit, Secunda and City Deep focused on the
civils product ranges used in the infrastructure, mining,
engineering and irrigation projects in addition to the traditional
commercial plumbing offering.
House of Plumbing now operates out of seven branches with the
focus being on providing expert technical advice and consistent
stock availability with the business planning to continue to extend
its geographical expansion to further establish a national
footprint.
House of Plumbing's underlying operating profit and cashflow
were lower than 2019 reflecting the slower recovery of the
commercial sector and the investment in new branches.
Summary and outlook
Our market outperformance in the first half reflects the
strength of our focussed operating model, our market leading
brands, broad distribution channels, well-developed supply chain
infrastructure and stock availability. The fragmented nature of our
markets continues to provide growth opportunities for the Group as
we continue to focus on winning market share and complementing our
product offer.
Supply chain challenges, increased energy costs, inflationary
cost pressure and a normalisation of consumer spending patterns
mean that uncertain market conditions are likely to prevail during
the remainder of the financial year. Notwithstanding these factors
and based on the excellent first half performance and the Group's
revenue momentum, the Board remains confident our proven business
model and leading customer proposition will lead to further
progress, in line with its expectations, for the year to 31 March
2022.
Nick Kelsall James Eyre
Chief Executive Officer Chief Financial Officer
11 November 2021 11 November 2021
Condensed consolidated income statement
Six months to 30 September 2021
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
-------------------------------------------------- ------ -------------- -------------- -----------
Revenue 200.9 135.3 324.2
-------------------------------------------------- ------ -------------- -------------- -----------
Underlying operating profit 22.0 12.8 33.8
IAS 19R administrative expenses (0.9) (0.9) (1.4)
Acquisition related costs 4 (1.9) (2.1) (3.7)
Exceptional operating items 4 - (2.4) (3.8)
-------------------------------------------------- ------ -------------- -------------- -----------
Operating profit 19.2 7.4 24.9
Finance costs 7 (1.3) (3.5) (5.4)
IAS 19R finance cost (0.2) (0.5) (1.0)
-------------------------------------------------- ------ -------------- -------------- -----------
Profit before taxation 17.7 3.4 18.5
Taxation 6 (4.4) (0.9) (3.5)
-------------------------------------------------- ------ -------------- -------------- -----------
Profit for the period from continuing operations 13.3 2.5 15.0
-------------------------------------------------- ------ -------------- -------------- -----------
Earnings per share attributable to equity
holders of the Company
Basic earnings per share:
From profit for the period 5 16.4p 3.1p 18.6p
-------------------------------------------------- ------ -------------- -------------- -----------
Diluted earnings per share:
From profit for the period 5 16.1p 3.1p 18.6p
-------------------------------------------------- ------ -------------- -------------- -----------
Weighted average number of shares for basic
earnings per share (millions) 5 80.9 80.4 80.6
-------------------------------------------------- ------ -------------- -------------- -----------
Alternative performance measures
Underlying profit before taxation (GBPm) 3 20.9 10.7 30.6
Underlying earnings (GBPm) 3 16.5 8.6 25.1
Basic underlying earnings per share 5 20.4p 10.7p 31.2p
Diluted underlying earnings per share 5 20.0p 10.6p 31.1p
-------------------------------------------------- ------ -------------- -------------- -----------
Condensed consolidated statement of comprehensive income
Six months to 30 September 2021
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------------------------------- -------------- -------------- -----------
Profit for the period 13.3 2.5 15.0
-------------------------------------------------- -------------- -------------- -----------
Other comprehensive income and expense:
Items that will not subsequently be reclassified
to the Income Statement
Actuarial gains/(losses) on retirement
benefit obligations 9.4 (0.2) 24.1
Items that may be subsequently reclassified
to the Income Statement
Cash flow hedges - fair value gain/(loss)
in year net of taxation 2.1 - (1.5)
Foreign currency translation adjustments - 3.5 5.3
-------------------------------------------------- -------------- -------------- -----------
Other comprehensive income for the period 11.5 3.3 27.9
-------------------------------------------------- -------------- -------------- -----------
Total comprehensive income for the period 24.8 5.8 42.9
-------------------------------------------------- -------------- -------------- -----------
Items in the statement are disclosed net of tax.
Condensed consolidated balance sheet
At 30 September 2021
At At At
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
--------------------------------------- ------ -------------- -------------- -----------
Non-current assets
Goodwill 60.8 60.4 60.8
Intangible assets 30.9 34.7 32.8
Property, plant and equipment 27.6 28.1 28.0
Right of use assets 19.4 21.7 19.6
Deferred tax assets 6 - 4.7 -
--------------------------------------- ------ -------------- -------------- -----------
138.7 149.6 141.2
--------------------------------------- ------ -------------- -------------- -----------
Current assets
Inventories 94.6 68.9 78.1
Trade and other receivables 73.6 66.7 64.6
Derivative financial instruments 0.8 0.7 -
Cash and cash equivalents 8 26.8 30.4 28.3
--------------------------------------- ------ -------------- -------------- -----------
195.8 166.7 171.0
--------------------------------------- ------ -------------- -------------- -----------
Current liabilities
Trade and other payables (102.0) (86.8) (95.4)
Lease liabilities (5.4) (6.0) (5.4)
Current tax liabilities (2.8) (1.0) (1.0)
Derivative financial instruments - - (2.3)
(110.2) (93.8) (104.1)
--------------------------------------- ------ -------------- -------------- -----------
Net current assets 85.6 72.9 66.9
--------------------------------------- ------ -------------- -------------- -----------
Total assets less current liabilities 224.3 222.5 208.1
--------------------------------------- ------ -------------- -------------- -----------
Non-current liabilities
Financial liabilities - borrowings 8 (25.8) (37.7) (17.8)
Pension scheme liability 12 (6.1) (48.9) (18.3)
Lease liabilities (18.3) (20.6) (18.8)
Deferred tax liabilities 6 (3.0) - (0.5)
Other non-current liabilities (0.3) (0.3) (0.3)
Provisions (3.5) (4.6) (4.0)
--------------------------------------- ------ -------------- -------------- -----------
(57.0) (112.1) (59.7)
--------------------------------------- ------ -------------- -------------- -----------
Net assets 167.3 110.4 148.4
--------------------------------------- ------ -------------- -------------- -----------
Financed by:
Share capital 9 8.1 8.1 8.1
Share premium 30.2 29.9 30.2
Retained earnings and other reserves 129.0 72.4 110.1
--------------------------------------- ------ -------------- -------------- -----------
Total equity 167.3 110.4 148.4
--------------------------------------- ------ -------------- -------------- -----------
Condensed consolidated statement of cash flow
Six months to 30 September 2021
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
------------------------------------------------ ------ -------------- -------------- -----------
Cash generated from operations 10 6.0 34.4 60.0
Income taxes paid (2.9) (1.1) (3.5)
Interest paid (1.1) (2.0) (3.2)
------------------------------------------------ ------ -------------- -------------- -----------
Net cash generated from operating activities 2.0 31.3 53.3
------------------------------------------------ ------ -------------- -------------- -----------
Cash flows from investing activities
Purchase of property, plant and equipment
and intangible assets (2.5) (0.9) (2.8)
Net cash used in investing activities (2.5) (0.9) (2.8)
------------------------------------------------ ------ -------------- -------------- -----------
Cash flows from financing activities
Net proceeds from issue of ordinary share
capital - - 0.3
Principal element of lease payments (2.4) (1.9) (4.3)
Drawdown/(Repayment) of borrowings 8.0 (46.0) (66.0)
Dividends paid to the Company's shareholders (6.6) - -
------------------------------------------------ ------ -------------- -------------- -----------
Net cash used in financing activities (1.0) (47.9) (70.0)
------------------------------------------------ ------ -------------- -------------- -----------
Net decrease in cash at bank and in hand and
bank overdrafts (1.5) (17.5) (19.5)
Cash at bank and in hand and bank overdrafts
at beginning of the period 28.3 47.2 47.2
Exchange movements on cash and bank overdrafts - 0.7 0.6
------------------------------------------------ ------ -------------- -------------- -----------
Cash and cash equivalents net of overdrafts
at end of the period 26.8 30.4 28.3
------------------------------------------------ ------ -------------- -------------- -----------
Alternative performance measures
Underlying operating cash flow 3 8.0 37.6 65.8
---------------------------------- ---- ----- -----
Condensed consolidated statements of changes in equity
Six months to 30 September 2021 (unaudited)
Ordinary
share Share Treasury Hedging Translation Retained
capital premium reserve Reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
At 31 March 2021 8.1 30.2 (0.1) (1.5) (16.4) 128.1 148.4
Comprehensive income:
Profit for the period - - - - - 13.3 13.3
Other comprehensive income/(expense):
Actuarial gain on retirement
benefit obligations - - - - - 9.4 9.4
Fair value gain on currency
hedges - - - 2.1 - - 2.1
Foreign currency translation - - - - - - -
adjustments
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Total other comprehensive
income - - - 2.1 - 22.7 24.8
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Transactions with owners:
Purchase of treasury shares - - - - - - -
Settlement of share option - - - - - - -
schemes
Dividends paid - - - - - (6.6) (6.6)
Value of employee services - - - - - 0.7 0.7
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
At 30 September 2021 8.1 30.2 (0.1) 0.6 (16.4) 144.9 167.3
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Six months to 30 September 2020 (unaudited)
Ordinary
share Share Treasury Hedging Translation Retained
capital premium reserve Reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
At 31 March 2020 8.1 29.9 (0.4) - (21.7) 88.5 104.4
Comprehensive income:
Profit for the period - - - - - 2.5 2.5
Other comprehensive income/(expense):
Actuarial loss on retirement
benefit obligations - - - - - (0.2) (0.2)
Foreign currency translation
adjustments - - - - 3.5 - 3.5
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Total other comprehensive
income/(expense) - - - - 3.5 (0.2) 3.3
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Transactions with owners:
Purchase of treasury shares - - - - - - -
Settlement of share option - - - - - - -
schemes
Dividends paid - - - - - - -
Value of employee services - - - - - 0.2 0.2
At 30 September 2020 8.1 29.9 (0.4) - (18.2) 91.0 110.4
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Year ended 31 March 2021 (audited)
Ordinary
share Share Treasury Hedging Translation Retained
capital premium reserve Reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
At 31 March 2020 8.1 29.9 (0.4) - (21.7) 88.5 104.4
Comprehensive income:
Profit for the year - - - - - 15.0 15.0
Other comprehensive (expense):
Actuarial gain on retirement
benefit obligations - - - - - 24.1 24.1
Fair value loss on currency
hedges - - - (1.5) - - (1.5)
Foreign currency translation
adjustments - - - - 5.3 - 5.3
-------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Total other comprehensive
(expense)/income - - - (1.5) 5.3 24.1 27.9
-------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Transactions with owners:
Shares issued - 0.3 - - - - 0.3
Dividends paid
Settlement of share option
schemes - - 0.3 - - (0.5) (0.2)
Value of employee services - - - - - 1.0 1.0
-------------------------------- ---------
At 31 March 2021 8.1 30.2 (0.1) (1.5) (16.4) 128.1 148.4
-------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Notes to the accounts
Six months to 30 September 2021
1. Accounting policies
General information
The principal activities of Norcros plc ("the Company") and its
subsidiaries (together "the Group") are the design, manufacture and
distribution of a range of high quality and innovative bathroom and
kitchen products mainly in the UK and South Africa.
The Company is incorporated in England as a public company
limited by shares. The shares of the Company are listed on the
London Stock Exchange market of listed securities. The address of
its registered office is Ladyfield House, Station Road, Wilmslow,
SK9 1BU, UK.
This condensed consolidated interim financial information was
approved for issue on 11 November 2021 and does not comprise
statutory accounts within the meaning of Section 434 of the
Companies Act 2006 and has neither been audited nor reviewed.
Basis of preparation
This condensed consolidated interim financial information for
the six months to 30 September 2021 has been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
Authority and with IAS 34, 'Interim financial reporting', as
adopted by the European Union.
The Directors consider, after making appropriate enquiries at
the time of approving the condensed consolidated interim financial
information, that the Company and the Group have adequate resources
to continue in operational existence and, accordingly, that it is
appropriate to adopt the going concern basis in the preparation of
the condensed consolidated interim financial information.
The condensed consolidated interim financial information should
be read in conjunction with the Annual Report and Accounts for the
year ended 31 March 2021, which has been prepared in accordance
with IFRS as adopted by the European Union. The Annual Report and
Accounts was approved by the Board on 9 June 2021 and delivered to
the Registrar of Companies. The report of the external auditor on
the financial statements was unqualified.
Accounting policies
The principal accounting policies applied in the preparation of
this condensed consolidated interim financial information are
included in the financial report for the year ended 31 March 2021.
These policies have been applied consistently to all periods
presented.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to the expected total annual profits
or losses.
Risks and uncertainties
The principal risks and uncertainties affecting the Group,
together with the approach to their mitigation, remain as set out
on pages 34 to 38 in the 2021 Annual Report, which is available on
the Group's website (www.norcros.com). The principal risks stated
were: coronavirus (COVID-19) pandemic, acquisition risk,
environmental, social and governance (ESG), staff retention and
recruitment, market conditions, loss of key customers, competition,
reliance on production facilities, loss of a key supplier,
information security and cyber risk, exchange rate risk, funding
and liquidity risk and pension scheme risk.
This interim statement includes comments on the outlook for the
remaining six months of the financial year.
Forward-looking statements
This interim statement contains forward-looking statements.
Although the Group believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no
assurance that these expectations will prove to be correct. Due to
the inherent uncertainties, including both economic and business
risk factors underlying such forward-looking information, actual
results may differ materially from those expressed or implied by
these forward-looking statements.
The Group undertakes no obligation to update any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Accounting estimates and judgements
The preparation of condensed consolidated interim financial
information requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amount of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing the condensed consolidated interim financial
information, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those applied to the
consolidated financial statements for the year ended 31 March
2021.
2. Segmental reporting
The Group operates in two main geographical areas: the UK and
South Africa. All inter-segment transactions are made on an arm's
length basis. The chief operating decision maker, which is
considered to be the Board, assesses performance and allocates
resources based on geography as each segment has similar economic
characteristics, complementary products, distribution channels and
regulatory environments.
6 months to 30 September
2021 (unaudited)
--------------------------------- ------
South
UK Africa Group
Notes GBPm GBPm GBPm
--------------------------------- ------ -------- ---------- -------
Revenue 130.8 70.1 200.9
--------------------------------- ------ -------- ---------- -------
Underlying operating profit 17.0 5.0 22.0
IAS 19R administrative expenses (0.9) - (0.9)
Acquisition related costs 4 (1.8) (0.1) (1.9)
Operating profit 14.3 4.9 19.2
--------------------------------- ------ -------- ---------- -------
Finance costs (net) (1.5)
--------------------------------- ------ -------- ---------- -------
Profit before taxation 17.7
Taxation 6 (4.4)
--------------------------------- ------ -------- ---------- -------
Profit for the period 13.3
--------------------------------- ------ -------- ---------- -------
Net cash 8 1.0
--------------------------------- ------ -------- ---------- -------
6 months to 30 September
2020 (unaudited)
--------------------------------- ------
South
UK Africa Group
Notes GBPm GBPm GBPm
--------------------------------- ------ -------- ---------- -------
Revenue 93.7 41.6 135.3
--------------------------------- ------ -------- ---------- -------
Underlying operating profit 10.8 2.0 12.8
IAS 19R administrative expenses (0.9) - (0.9)
Acquisition related costs 4 (1.8) (0.3) (2.1)
Exceptional operating items 4 (2.2) (0.2) (2.4)
Operating profit 5.9 1.5 7.4
--------------------------------- ------ -------- ---------- -------
Finance costs (net) (4.0)
--------------------------------- ------ -------- ---------- -------
Profit before taxation 3.4
Taxation 6 (0.9)
--------------------------------- ------ -------- ---------- -------
Profit for the period 2.5
--------------------------------- ------ -------- ---------- -------
Net debt 8 (7.3)
--------------------------------- ------ -------- ---------- -------
Year ended 31 March 2021
(audited)
--------------------------------- ------ -----------------------------
South
UK Africa Group
Notes GBPm GBPm GBPm
--------------------------------- ------ -------- ---------- -------
Revenue 220.2 104.0 324.2
--------------------------------- ------ -------- ---------- -------
Underlying operating profit 26.9 6.9 33.8
IAS 19R administrative expenses (1.4) - (1.4)
Acquisition related costs 4 (3.5) (0.2) (3.7)
Exceptional operating items 4 (3.6) (0.2) (3.8)
--------------------------------- ------ -------- ---------- -------
Operating profit 18.4 6.5 24.9
--------------------------------- ------ -------- ---------- -------
Finance income (net) (6.4)
--------------------------------- ------ -------- ---------- -------
Profit before taxation 18.5
Taxation 6 (3.5)
--------------------------------- ------ -------- ---------- -------
Profit for the period 15.0
--------------------------------- ------ -------- ---------- -------
Net cash 8 10.5
--------------------------------- ------ -------- ---------- -------
There are no differences from the last Annual Report in the
basis of segmentation or in the basis of measurement of segment
profit or loss.
3. Alternative performance measures
The Group makes use of a number of alternative performance
measures to assess business performance and provide additional
useful information to shareholders. Such alternative performance
measures should not be viewed as a replacement of, or superior to,
those defined by Generally Accepted Accounting Principles (GAAP).
Definitions of alternative performance measures used by the Group
and, where relevant, reconciliations from GAAP-defined reporting
measures to the Group's alternative performance measures are
provided below.
The alternative performance measures used by the Group are:
Measure Definition
Underlying operating profit Operating profit before IAS 19R administrative
expenses, acquisition related costs
and exceptional operating items
-------------------------------------------------
Underlying profit before taxation Profit before taxation before IAS 19R
administrative expenses, acquisition
related costs, exceptional operating
items, amortisation of costs of raising
finance, net movement on fair value
of derivative financial instruments,
discounting of property lease provisions
and finance costs relating to pension
schemes
-------------------------------------------------
Underlying taxation Taxation on underlying profit before
tax
-------------------------------------------------
Underlying earnings Underlying profit before tax less underlying
taxation
-------------------------------------------------
Underlying operating margin Underlying operating profit expressed
as a percentage of revenue
-------------------------------------------------
Basic underlying earnings per Underlying earnings divided by the
share weighted average number of shares for
basic earnings per share
-------------------------------------------------
Diluted underlying earnings per Underlying earnings divided by the
share weighted average number of shares for
diluted earnings per share
-------------------------------------------------
Underlying EBITDA Underlying EBITDA is derived from underlying
operating profit before depreciation
and amortisation excluding the impact
of IFRS16 in line with our banking
covenants.
-------------------------------------------------
Underlying net cash/(debt) Underlying net (debt)/cash is the net
of cash, capitalised costs of raising
finance and total borrowings. IFRS16
lease commitments are not included
in line with our banking covenants.
-------------------------------------------------
Underlying operating cash flow Cash generated from continuing operations
before cash outflows from exceptional
items and acquisition related costs
and pension fund deficit recovery contributions
-------------------------------------------------
Underlying profit and underlying earnings per share measures
provide shareholders with additional useful information on the
underlying performance of the Group. This is because these measures
are those principally used by the Directors to assess the
performance of the Group and are used as the basis for calculating
the level of annual bonus and long-term incentives earned by the
Directors. The term 'underlying' is not recognised under IFRS and
consequently the Group's definition of underlying may differ from
that used by other companies.
Reconciliations from GAAP-defined reporting measures to the
Group's alternative performance measures:
Condensed Consolidated Income Statement
(a) Underlying profit before taxation and underlying earnings
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------------------------- -------------- -------------- -----------
Profit before taxation 17.7 3.4 18.5
Adjusted for:
IAS 19R administrative expenses 0.9 0.9 1.4
Acquisition related costs 1.9 2.1 3.7
Exceptional operating items - 2.4 3.8
Amortisation of costs of raising finance 0.1 0.1 0.2
Net movement on fair value of derivative
financial instruments - 1.3 2.0
Discounting of property lease provisions 0.1 - -
IAS 19R finance cost 0.2 0.5 1.0
-------------------------------------------- -------------- -------------- -----------
Underlying profit before taxation 20.9 10.7 30.6
Taxation attributable to underlying profit
before taxation (4.4) (2.1) (5.5)
-------------------------------------------- -------------- -------------- -----------
Underlying earnings 16.5 8.6 25.1
-------------------------------------------- -------------- -------------- -----------
(b) Underlying EBITDA
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------------------ -------------- -------------- -----------
Operating profit 19.2 7.4 24.9
Adjusted for:
Depreciation and amortisation (owned assets) 2.5 2.6 5.4
Depreciation of leased assets 2.1 2.1 4.0
Lease Costs (excluding onerous lease payments) (2.8) (2.6) (5.3)
IAS 19R administrative expenses 0.9 0.9 1.4
Acquisition related costs 1.9 2.1 3.7
Exceptional operating items - 2.4 3.8
------------------------------------------------ -------------- -------------- -----------
Underlying EBITDA 23.8 14.9 37.9
------------------------------------------------ -------------- -------------- -----------
Condensed Consolidated Statement of Cash Flow
Underlying operating cash flow
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Cash generated from continuing operations
(note 10) 6.0 34.4 60.0
Adjusted for:
Cash flows from exceptional items and acquisition
related costs 0.3 1.5 2.5
Pension fund deficit recovery contributions 1.7 1.7 3.3
--------------------------------------------------- -------------- -------------- -----------
Underlying operating cash flow 8.0 37.6 65.8
--------------------------------------------------- -------------- -------------- -----------
4. Acquisition related costs and exceptional operating items
An analysis of acquisition related costs and exceptional
operating items is shown below.
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
---------------------------------- -------------- -------------- -----------
Acquisition related costs
Deferred remuneration(1) - 0.2 -
Intangible asset amortisation(2) 1.9 1.9 3.7
1.9 2.1 3.7
---------------------------------- -------------- -------------- -----------
1 In accordance with IFRS 3R, a proportion of the deferred
consideration payable to the former shareholders of certain
acquired businesses is required to be treated as remuneration, and,
accordingly, is expensed to the Income Statement as incurred.
2 Non-cash amortisation charges in respect of acquired intangible assets.
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
----------------------------------- --------------- -------------- -----------
Exceptional operating items
COVID-19 related restructuring(1) - 2.4 3.8
- 2.4 3.8
--------------------------------------------------- -------------- -----------
1. Exceptional costs of GBP2.4m were incurred in the period
ended 30 September 2020 in relation to COVID-19 related
restructuring programmes across the Group comprising of GBP2.0m in
cash costs and GBP0.4m of non-cash costs. GBP3.8m of COVID-19
related restructuring costs were incurred in the year ended 31
March 2021 comprising of GBP2.3m in cash costs and GBP1.5m of
non-cash costs.
5. Earnings per share
Basic and diluted earnings per share
Basic earnings per share (EPS) is calculated by dividing the
profit attributable to shareholders by the weighted average number
of ordinary shares in issue during the period, excluding those held
in the Norcros Employee Benefit Trust. For diluted EPS, the
weighted average number of ordinary shares in issue is adjusted to
assume conversion of all potential dilutive ordinary shares.
The calculation of EPS is based on the following profits and
numbers of shares:
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
----------------------- ---- -------------- -------------- -----------
Profit for the period 13.3 2.5 15.0
----------------------------- -------------- -------------- -----------
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
Number Number Number
--------------------------------------- ---- -------------- -------------- -----------
Weighted average number of shares for
basic earnings per share 80,851,862 80,416,583 80,575,242
Share options 1,542,475 622,623 201,781
--------------------------------------------- -------------- -------------- -----------
Weighted average number of shares for
diluted earnings per share 82,394,337 81,039,206 80,777,023
--------------------------------------------- -------------- -------------- -----------
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
----------------------------- ---- -------------- -------------- -----------
Basic earnings per share:
From profit for the period 16.4p 3.1p 18.6p
----------------------------------- -------------- -------------- -----------
Diluted earnings per share:
From profit for the period 16.1p 3.1p 18.6p
----------------------------------- -------------- -------------- -----------
Basic and diluted underlying earnings per share
Basic and diluted underlying earnings per share have also been
provided which reflect underlying earnings from continuing
operations divided by the weighted average number of shares set out
above.
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------ ---- -------------- -------------- -----------
Underlying earnings for the period
(note 3) 16.5 8.6 25.1
------------------------------------------ -------------- -------------- -----------
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
--------------------------------------- ---- -------------- -------------- -----------
Basic underlying earnings per share 20.4p 10.7p 31.2p
Diluted underlying earnings per share 20.0p 10.6p 31.1p
--------------------------------------------- -------------- -------------- -----------
6. Taxation
Taxation comprises:
6 months 6 months
to to Year ended
30 September 30 September 31 March
2020 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
--------------------------------------------------- -------------- -------------- -----------
Current
UK taxation 1.8 0.6 0.4
Overseas taxation 2.3 0.3 3.7
Prior year adjustment - - (0.2)
--------------------------------------------------- -------------- -------------- -----------
Total current taxation 4.1 0.9 3.9
--------------------------------------------------- -------------- -------------- -----------
Deferred
Origination and reversal of temporary differences 0.3 - (0.4)
--------------------------------------------------- -------------- -------------- -----------
Total tax charge 4.4 0.9 3.5
--------------------------------------------------- -------------- -------------- -----------
Current tax expense is recognised based on management's estimate
of the weighted average annual income tax rate expected for the
full financial year.
In the Spring Budget 2021, the Government announced that from 1
April 2023 the corporation tax rate would increase to 25%. This new
law was substantively enacted on 24 May 2021. Deferred tax balances
have been remeasured to either 19% or 25% depending on when the
Directors expect these timing differences to reverse.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes relate
to the same fiscal authority.
The movement on the deferred tax account is as shown below:
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------------------------------------- -------------- -------------- -----------
Deferred tax (liability)/asset at the beginning
of the period (0.5) 4.7 4.7
(Charged)/credited to the Consolidated Income
Statement (0.3) - 0.5
Charged to the Consolidated Statement of Comprehensive
Income (2.2) - (5.6)
Exchange differences - - (0.1)
-------------------------------------------------------- -------------- -------------- -----------
Deferred tax (liability)/asset at the end of
the period (3.0) 4.7 (0.5)
-------------------------------------------------------- -------------- -------------- -----------
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------------------ -------------- -------------- -----------
Accelerated capital allowances - 0.2 0.1
Other timing differences 1.6 0.7 1.6
Deferred tax liability relating to intangible
assets (6.1) (5.4) (5.7)
Deferred tax asset relating to pension deficit 1.5 9.2 3.5
------------------------------------------------ -------------- -------------- -----------
Deferred tax (liability)/asset at the end of
the period (3.0) 4.7 (0.5)
------------------------------------------------ -------------- -------------- -----------
7. Finance income and costs
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Finance costs
Interest payable on bank borrowings (0.3) (1.2) (1.5)
Interest on lease liabilities (0.8) (0.9) (1.7)
Amortisation of costs of raising debt finance (0.1) (0.1) (0.2)
Discounting of property lease provisions (0.1) - -
Loss on fair value of derivative financial
instruments - (1.3) (2.0)
----------------------------------------------- -------------- -------------- -----------
Finance costs (1.3) (3.5) (5.4)
----------------------------------------------- -------------- -------------- -----------
8. Borrowings
At At At
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
---------------------------------- -------------- -------------- -----------
Non-current
Bank borrowings (unsecured):
- bank loans 26.0 38.0 18.0
- less: costs of raising finance (0.2) (0.3) (0.2)
---------------------------------- -------------- -------------- -----------
Total non-current 25.8 37.7 17.8
---------------------------------- -------------- -------------- -----------
The fair value of bank loans equals their carrying amount as
they bear interest at floating rates.
The repayment terms of borrowings are as follows:
At At At
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Not later than one year - - -
------------------------------ -------------- -------------- -----------
After more than one year:
- between one and two years 26.0 - 18.0
- between two and five years - 38.0 -
- costs of raising finance (0.2) (0.3) (0.2)
------------------------------ -------------- -------------- -----------
Total borrowings 25.8 37.7 17.8
------------------------------ -------------- -------------- -----------
The Group has an unsecured GBP120m revolving credit facility
with a GBP30m accordion facility with Lloyds Bank plc, Barclays
Bank plc and HSBC Bank plc. The banking facility is in place up to
November 2022.
Net debt
The Group's net debt is calculated as follows:
At At At
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
--------------------------- -------------- -------------- -----------
Cash and cash equivalents 26.8 30.4 28.3
Total borrowings (25.8) (37.7) (17.8)
--------------------------- -------------- -------------- -----------
Net cash/(debt) 1.0 (7.3) 10.5
--------------------------- -------------- -------------- -----------
9. Called up share capital
At At At
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------------------ -------------- -------------- -----------
Issued and fully paid
80,975,309 (September 2020: 80,571,654, March
2021: 80,855,464) ordinary shares of 10p each 8.1 8.1 8.1
------------------------------------------------ -------------- -------------- -----------
During the period 119,845 ordinary shares of 10p were issued to
satisfy vesting of options under the Company's SAYE and DBP share
schemes.
10. Consolidated Cash Flow Statements
(a) Cash generated from operations
6 months 6 months
to to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
----------------------------------------------- ---- -------------- -------------- -----------
Profit before taxation 17.7 3.4 18.5
Adjustments for:
- IAS 19R administrative expenses included
in the Income Statement 0.9 0.9 1.4
- acquisition related costs included
in the Income Statement 1.9 2.1 3.7
- exceptional operating items included
in the Income Statement - 2.4 3.8
- cash flows from exceptional items and
acquisition related costs (0.3) (1.5) (2.5)
- settlement of share options - - (0.2)
- depreciation of property, plant and
equipment 2.3 2.5 5.2
- underlying amortisation 0.2 0.1 0.2
- depreciation of right of use assets 2.1 2.1 4.0
- finance costs included in the Income
Statement 1.3 3.5 5.4
- pension fund deficit recovery contributions (1.7) (1.7) (3.3)
- IAS 19R finance cost included in the
Income Statement 0.2 0.5 1.0
- IFRS2 Charges 0.7 0.2 1.0
----------------------------------------------------- -------------- -------------- -----------
Operating cash flows before movements
in working capital 25.3 14.5 38.2
Changes in working capital:
- (increase)/decrease in inventories (18.2) 12.0 3.8
- (increase)/decrease in trade and other
receivables (8.2) (5.5) (5.0)
- increase in trade and other payables 7.1 13.4 23.0
----------------------------------------------------- -------------- -------------- -----------
Cash generated from operations 6.0 34.4 60.0
----------------------------------------------------- -------------- -------------- -----------
Cash flows from exceptional items and acquisition related costs
includes expenditure charged to exceptional provisions relating to
onerous lease costs, acquisition related costs (excluding deferred
remuneration) and other business rationalisation and restructuring
costs.
(b) Analysis of net cash/(debt)
Net cash Underlying
and current Non-current net cash/ Lease
borrowings borrowings (debt) Liabilities Net debt
GBPm GBPm GBPm GBPm GBPm
-------------------------- ------------- ------------ ----------- ------------- ---------
At 1 April 2020 47.2 (83.6) (36.4) (25.1) (61.5)
Cash flow (19.5) 66.0 46.5 6.0 52.5
Non-cash finance costs - (0.2) (0.2) (1.7) (1.9)
Other non-cash movements - - - (1.6) (1.6)
Exchange movement 0.6 - 0.6 (1.8) (1.2)
-------------------------- ------------- ------------ ----------- ------------- ---------
At 31 March 2021 28.3 (17.8) 10.5 (24.2) (13.7)
-------------------------- ------------- ------------ ----------- ------------- ---------
At 1 April 2020 47.2 (83.6) (36.4) (25.1) (61.5)
Cash flow (17.5) 46.0 28.5 2.8 31.3
Non-cash finance costs (0.1) (0.1) (0.9) (1.0)
Other non-cash movements - - - (2.3) (2.3)
Exchange movement 0.7 - 0.7 (1.1) (0.4)
-------------------------- ------------- ------------ ----------- ------------- ---------
At 30 September 2020 30.4 (37.7) (7.3) (26.6) (33.9)
-------------------------- ------------- ------------ ----------- ------------- ---------
At 1 April 2021 28.3 (17.8) 10.5 (24.2) (13.7)
Cash flow (1.5) (8.0) (9.5) 3.2 (6.3)
Non-cash finance costs - - - (0.9) (0.9)
Other non-cash movements - - - (1.8) (1.8)
At 30 September 2021 26.8 (25.8) 1.0 (23.7) (22.7)
-------------------------- ------------- ------------ ----------- ------------- ---------
11. Dividends
A final dividend in respect of the year ended 31 March 2021 of
GBP6.6m (8.2p per 10p ordinary share) was paid on 30 July 2021.
On 11 November 2021 the Board declared an interim dividend in
respect of the year ended 31 March 2022 of 3.1p per 10p ordinary
share. This dividend is payable on 11 January 2022 to shareholders
on the register on 26 November 2021 and is not reflected in this
condensed consolidated interim financial information. The shares
will be quoted ex-dividend on 25 November 2021. Norcros operates a
Dividend Reinvestment Plan (DRIP). If a shareholder wishes to use
the DRIP the latest date to elect for this in respect of this
interim dividend is 17 December 2021.
12. Retirement benefit obligations
(a) Pension costs
Norcros Security Plan
The Norcros Security Plan (the "Plan"), the principal UK pension
scheme of the Group's UK subsidiaries, is funded by a separate
trust fund which operates under UK trust law and is a separate
legal entity from the Company. The Plan is governed by a Trustee
board which is required by law to act in the best interests of the
Plan members and is responsible for setting policies together with
the Company. It is predominantly a defined benefit scheme with a
modest element of defined contribution benefits. The scheme is
closed to new members and future accrual with effect from 1 April
2013, although active members retain a salary link.
The valuation used for IAS 19R disclosures has been produced by
Isio (formerly KPMG), a firm of qualified actuaries, to take
account of the requirements of IAS 19R in order to assess the
liabilities of the scheme at 30 September 2021. Scheme assets are
stated at their market value at 30 September 2021.
(b) IAS 19R, 'Retirement benefit obligations'
The principal assumptions used to calculate the scheme
liabilities of the Norcros Security Plan under IAS 19R are:
At At At
30 September 30 September 31 March
2021 2020 2021
---------------------- -------------- -------------- ----------
Discount rate 2.05% 1.65% 2.05%
Inflation rate (RPI) 3.45% 2.90% 3.25%
Inflation (CPI) 2.55% 1.95% 2.35%
Salary increases 2.80% 2.20% 2.60%
---------------------- -------------- -------------- ----------
The amounts recognised in the Condensed Consolidated Balance
Sheet are determined as follows:
At At At
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------- -------------- -------------- -----------
Total market value of scheme assets 410.5 397.9 397.8
Present value of scheme liabilities (416.6) (446.8) (416.1)
------------------------------------- -------------- -------------- -----------
Pension deficit (6.1) (48.9) (18.3)
------------------------------------- -------------- -------------- -----------
13. Related party transactions
The remuneration of executive and non-executive Directors will
be disclosed in the Group's Annual Report for the year ending 31
March 2022.
14. Financial risk management and financial instruments
Financial risk factors
The Group's operations expose it to a variety of financial
risks: market risk (including currency risk, interest rate risk and
energy price risk); credit risk; and liquidity risk. An explanation
of these risks and how the Group manages them is set out on page
115 of the Group's 2021 Annual Report. The interim financial
information does not include all financial risk management
information and disclosures required in annual financial
statements; they should be read in conjunction with the Group's
2021 Annual Report. There have been no material changes in the risk
management process or in any risk management policies since the
year end.
Statement of Directors' responsibilities
The Directors confirm that this condensed consolidated interim
financial information has been prepared in accordance with
International Accounting Standard 34, 'Interim financial
reporting', as adopted by the European Union and that the Interim
Report includes a fair review of the information required by DTR
4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed consolidated
interim financial information and a description of the principal
risks and uncertainties for the remaining six months of the
financial year; and
-- material related party transactions in the first six months
and any changes in the related party transactions disclosed in the
last Annual Report.
The Directors of Norcros plc and their respective
responsibilities are as presented on our website
www.norcros.com.
By order of the Board
Nick Kelsall James Eyre
Chief Executive Officer Chief Financial Officer
11 November 2021 11 November 2021
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR BLBDBSUBDGBG
(END) Dow Jones Newswires
November 11, 2021 02:00 ET (07:00 GMT)
Norcros (LSE:NXR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Norcros (LSE:NXR)
Historical Stock Chart
From Jul 2023 to Jul 2024
