TIDMNXR
RNS Number : 6211T
Norcros PLC
16 November 2023
16 November 2023
Norcros plc
Results for the six months ended 30 September 2023
Robust performance - share gains reflecting the strength and
positioning of our market leading brands
Norcros is a market leading group of brands providing design
led, high quality bathroom and kitchen products. The Group today
announces its results for the six months ended 30 September
2023.
Financial Summary
6 months to 6 months to % change
30 September 30 September 2023 v 2022
2023 2022
Revenue GBP201.6m GBP219.9m (8.3%)
-------------- -------------- -------------
Revenue constant currency
LFL(1) (4.1%)
-------------- -------------- -------------
Underlying operating
profit(2) GBP21.4m GBP22.0m (2.7%)
-------------- -------------- -------------
Underlying profit before
taxation(2) GBP18.1m GBP19.9m (9.0%)
-------------- -------------- -------------
Diluted underlying EPS(2) 15.6p 17.8p (12.4%)
-------------- -------------- -------------
Operating profit GBP15.3m GBP16.1m (5.0%)
-------------- -------------- -------------
Underlying net debt(2) (GBP46.6m) (GBP58.9m)
-------------- -------------- -------------
Interim dividend per
share 3.4p 3.4p
-------------- -------------- -------------
Highlights
-- Robust trading performance with further market share growth
driven by successful new product launches and best in class service
levels
-- Revenue of GBP201.6m (2022: GBP219.9m) and underlying
operating profit of GBP21.4m (2022: GBP22.0m) with a record UK
performance at GBP18.7m
-- Excellent cash generation at 121% of underlying EBITDA and
low leverage at 1.0x underlying EBITDA
-- Successful launch of market leading sustainable products across our brands
-- Interim dividend of 3.4p per share, reflecting the Board's
confidence in the Group's prospects
-- Good progress in the refinement and execution of strategic priorities
Thomas Willcocks, Chief Executive Officer, commented:
"We have delivered a robust first half performance against a
challenging macroeconomic backdrop. Although market conditions
remain uncertain, we are confident that the ongoing refinement and
execution of our strategy, backed by the strength of our design led
market leading brands, will continue to deliver market share gains
for the year ending 31 March 2024. We continue to expect full year
underlying operating profit to be in line with market expectations
(3) ."
There will be a presentation today at 9.00 am GMT for analysts
at the offices of Hudson Sandler, 25 Charterhouse Square, London,
EC1M 6AE. The supporting slides will be available on the Norcros
website at
http://www.norcros.com later in the day.
(1) LFL (like for like) basis, adjusted for Grant Westfield
(acquired 31 May 2022) and Norcros Adhesives
(2) Definitions and reconciliations of alternative performance
measures are provided in note 3
(3) Norcros compiled market consensus for the year to 31 March
2024, as at 16 November 2023, is for an underlying operating profit
of GBP43.4 million
Enquiries
Norcros plc Tel: 01625 547700
Thomas Willcocks, Chief Executive
Officer
James Eyre, Chief Financial Officer
Hudson Sandler Tel: 0207 796 4133
Nick Lyon
Sophie Miles
Notes to Editors
Norcros is a design and service led bathroom and kitchen
business with market leading brands operating primarily in the UK
and South Africa.
In the UK, Norcros operates under seven brands: Triton, Merlyn,
Multipanel (Grant Westfield), Vado, Croydex, Abode and Johnson
Tiles.
In South Africa, Norcros operates under four brands: Tile
Africa, House of Plumbing, TAL and Johnson Tiles.
Norcros is headquartered in Wilmslow, Cheshire and employs
around 2,400 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 report another robust set of results for
the six months ended 30 September 2023. Market share growth and
targeted cost management saw the Group deliver an underlying
operating profit of GBP21.4m for the period (2022: GBP22.0m). Group
operating margins increased to 10.6% (2022: 10.0%), reflecting the
successful execution of our strategy and improvements made to our
business portfolio. Cash generation was excellent at 121% of
underlying EBITDA, benefiting from the focus on working capital in
the period.
The UK business delivered a strong performance with revenue of
GBP143.9m (2022: GBP142.8m), 0.8% above the prior year, and just
0.8% below on a like for like basis, adjusting for the acquisition
of Grant Westfield and closure of Norcros Adhesives. Our brands,
which include market leaders Triton, Merlyn, and Grant Westfield,
again demonstrated our proven ability to profitably grow share
through the cycle, driven by our in-house product design
capabilities and market leading service levels.
Our South African business performed resiliently despite
heightened energy disruption which adversely impacted market demand
in the period. Revenue of GBP57.7m (2022: GBP77.1m) was down 11.0%
on a constant currency basis and 25.2% lower on a reported basis.
Our experienced management team are adept at managing these
challenges by controlling costs and leveraging our brands and
financial strength to take share from weaker competitors.
The Group results are a testament to the strength of our design
led market leading brands and their positioning in the more
resilient mid-to-premium market segment. Our individual brands all
employ in-house, sector specialist new product development teams,
with a quarter of our revenue coming from products launched in the
last 36 months. Significant and successful launches in H1 included
ENVi(R) (Triton), Pure (Grant Westfield) and Zone (Vado). These
products are increasingly focused on making a positive difference
to the environment. Although our brands operate separately, we do
collectively take advantage of our scale to deliver revenue and
cost synergies, driving sustained market share growth. Given the
strength of and continued investment in our model we are confident
that we will continue to deliver profitable market share growth as
we consolidate what remain fragmented and attractive bathroom and
kitchen product markets.
Results
Group revenue for the 26-week first half was GBP201.6m (2022:
GBP219.9m), an 8.3% decrease on the prior year on a reported basis
and 4.1% below the prior year on a constant currency like for like
basis. The robust performance driven by the strength of our brands,
their market positioning, and the benefits of our ongoing
investment in new product development, enabled the Group to deliver
further market share gains.
Underlying operating profit was GBP21.4m (2022: GBP22.0m),
reflecting the lower revenue in the period. The underlying
operating profit margin improved to 10.6% (2022: 10.0%).
Operating profit was GBP15.3m (2022: GBP16.1m) after deducting
acquisition related costs of GBP3.9m (2022: GBP4.9m). Acquisition
related costs represent amortisation of acquired intangibles of
GBP3.3m (2022: GBP3.1m), acquisition related advisory fees of
GBP0.1m (2022: GBP1.5m) and deferred remuneration of GBP0.5m (2022:
GBP0.3m). An exceptional cost of GBP1.4m was recognised in the
period in relation to the costs associated with a reduction in
manufacturing capacity at Johnson Tiles (UK). IAS 19R
administration expenses were GBP0.8m (2022: GBP1.0m) in the
period.
Underlying profit before taxation was GBP18.1m (2022: GBP19.9m),
reflecting the increase in bank interest costs to GBP2.5m (2022:
GBP1.2m) primarily due to higher bank base rates. IFRS 16 interest
costs in the period on lease liabilities were GBP0.8m (2022:
GBP0.9m). The application of IFRS 16 had a GBP0.1m improvement on
underlying profit before taxation (2022: nil impact). Profit before
taxation was GBP11.7m (2022: GBP14.0m).
Diluted underlying earnings per share were 15.6p (2022: 17.8p),
predominantly impacted by the reduction in underlying profit before
taxation.
The Group generated an underlying operating cash inflow of
GBP27.4m (2022: GBP16.1m), reflecting our continued focus on
working capital. Capital expenditure was GBP4.2m in the first half
(2022: GBP3.3m), with focused investment in new product
development, systems, and our facilities.
Financial Position
Group net debt (pre-IFRS 16) was GBP46.6m at the half year (31
March 2023: GBP49.9m), reflecting a continued focus on working
capital. Inclusive of IFRS 16 lease liabilities, net debt was
GBP68.9m (31 March 2023: GBP74.6m). The Group remains in a strong
financial position with leverage at circa. 1.0x EBITDA and
significant headroom within its committed GBP130m RCF financing
facility maturing October 2026. IFRS 16 has no impact on cash flow
nor on the Group's existing bank covenants.
Pension Scheme
The gross surplus relating to our UK defined benefit pension
scheme as calculated under IAS 19R has increased from GBP14.9m at
31 March 2023 to GBP15.7m. This increase in the surplus is
primarily due to an increase in the discount rate to 5.60% (31
March 2023: 4.90%), offset by a reduced value of assets. The
Group's UK defined benefit pension scheme obligations continue to
be appropriately funded and well managed.
Dividend
The Board recognises the importance of dividends to shareholders
and is declaring an interim dividend of 3.4p (H1 2022: 3.4p) per
share, reflecting the robust first half performance and its
confidence in the Group's prospects. The dividend is payable on 16
January 2024 to shareholders on the register on 1 December 2023.
The shares will be quoted ex-dividend on 30 November 2023.
NORCROS UK OPERATING REVIEW
Our UK business achieved first half revenue of GBP143.9m (2022:
GBP142.8m), representing growth of 0.8% on a reported basis and
achieved a record level of underlying operating profit in the
period. On a like for like basis, adjusting for Grant Westfield
(acquired on 31 May 2022) and Norcros Adhesives in the period,
revenue was just 0.8% lower than the previous year. Reductions in
volume were broadly offset by price increases.
Triton, Merlyn, and Grant Westfield all performed strongly,
driven by new product launches, excellent stock availability and
outstanding customer service. Vado's performance was impacted by a
delay in new product launches, although the second quarter was
stronger than the first. Our other UK brands continued to grow
market share and performed in line with our expectations.
RMI remains the largest component in the UK market. Our market
leading brands are positioned in the mid-premium RMI segment which
has remained relatively resilient in the period. Despite the well
reported reduction in new housebuilding activity, we continue to
take market share and there remains a significant shortage of homes
in the UK.
Whilst representing a smaller proportion of the business, UK
based export revenue was higher than the prior year, driven by
higher sales in Ireland, France, and the Middle East.
As a result of the above, and the improvements made to our brand
portfolio, UK underlying operating profit for the year was 14.7%
higher, increasing by GBP2.4m to GBP18.7m (2022: GBP16.3m), with
the operating margin increasing to 13.0% (2022: 11.4%). Operating
cash conversion was significantly ahead of the prior year,
supported by our continued and successful focus on working
capital.
Our UK business is well placed to continue growing market share
and winning new customers in our target market segments by
leveraging our strong new product development pipeline, Group
relationships and superior customer service.
NORCROS SOUTH AFRICA OPERATING REVIEW
In South Africa, Norcros delivered revenue of GBP57.7m (2022:
GBP77.1m), 11.0% lower on a constant currency basis due to
materially higher levels of energy rationing adversely impacting
consumer confidence and demand. All our operations, including our
retail stores, are equipped to handle energy interruptions and as a
result can and do remain open during energy 'loadshedding'. Our
ongoing focus on product development and customer service continued
to drive market share gains in the period.
TAL, our market leading adhesive business in South Africa,
posted a strong performance leveraging our brand strength, and our
leading technical support capabilities to grow share in the period.
Johnson Tiles and Tile Africa were negatively impacted by the
market slowdown, particularly in the new housebuilding sector,
where both have leading positions. As a result, both businesses saw
revenue behind the record prior year levels. House of Plumbing
revenue was in line with the previous year despite the challenging
market conditions, reflecting market share gains.
As a result of the above, underlying operating profit for the
year was GBP2.7m (2022: GBP5.7m), with the operating margin at 4.7%
(2022: 7.4%). Operating cash was below the prior year reflecting
the difficult trading conditions, partially offset by proactive
working capital management.
Our South African business is resilient and will continue to
focus on taking market share from weaker competitors. In addition,
the business will look to further advance its House of Plumbing
national roll out program. Going forward, we envisage energy supply
constraints to stabilise over time and benefit from higher levels
of private energy generation.
STRATEGIC PRIORITIES
In June this year, we communicated our strategic priorities,
namely, Portfolio Development, Organic Growth, Operational
Excellence and ESG. We have made early but meaningful progress in
all four areas in the first half of this year.
1. Portfolio Development
Norcros has, over the last ten years, successfully grown our
share of the bathroom and kitchen markets in our core geographies,
both organically and through carefully selected acquisitions. As
markets and categories develop, we will continue to assess the
performance of our individual brands and ensure that our capital
allocation is aligned accordingly.
During the period, the UK adhesives business was closed in line
with our communicated plan. We have also recently announced the
decision to reduce the capacity of our Johnson Tiles (UK) plant by
circa 50% in response to lower UK tile demand. Our most recent
acquisition, Grant Westfield, is performing well with strong new
channel growth. This again demonstrates our ability to introduce
acquired businesses to our blue-chip customer base, including in
this case, Wickes, Topps Tiles and Screwfix.
A core component of our strategy is consolidating what remain
attractive but fragmented bathroom and kitchen product markets
through targeted earnings accretive acquisitions. We have a
well-developed acquisition pipeline and we will continue to assess
strategically compelling opportunities.
2. Organic Growth
Our focus on driving market share growth in our businesses has
three underlying drivers, namely new product development
(increasingly in sustainable products), cross-selling and market
leading customer service. Our new product vitality index is 25%
(proportion of turnover from products launched in the last three
years) with standout launches in the period including:
o Triton launched ENVi(R), a world first in showering. The
ENVi(R) is the first of Triton's next generation 'behind the wall'
sustainable electric shower offering, including control and user
feedback on water and energy costs.
o Grant Westfield updated its Tile Collection and launched the
new Pure Collection. The business was nominated for two awards for
the Tile Collection (Best KBB Product at the BKU Awards and Best
Surface Product at the KBB Focus Awards).
o VADO launched the patented recessed Zone shower valve in
multiple finishes. Zone is the industry's first recessed all-flush
thermostatic valve with push button and temperature dial control,
the perfect solution for a minimal aesthetic with easy-to-clean
benefits.
In addition, we continue to build processes to enhance our
ability to cross-sell and leverage our extensive broad channel base
across our brands and to drive market share growth.
3. Operational Excellence
Norcros' commitment to customer service is core to what we do
every day. Our operational platforms, and especially the data,
required to ensure that our customers stay ahead as their routes to
market evolve and multiply, will remain key areas of focus and
investment.
Over the last six months, the Group has invested in new ERP and
Customer Service systems across several of our UK and SA
businesses. This ongoing and targeted investment in our operations
will continue to drive efficiency gains and further develop our
compelling service offering.
Additionally, we continued to drive our Group wide programme of
improvement of our warehousing and logistics capabilities. In the
period, we have made further investments to help drive operating
efficiencies, cost savings and enhance service levels.
4. Environment, Social and Governance
Norcros views corporate responsibility and sustainability
standards as a distinct source of competitive advantage. As set out
in our 2023 Annual Report, our key ESG focus areas are our people,
environment, innovative and sustainable products, and governance.
These themes underpin our strategic growth and operational
performance plans. Over the last two years, we have invested in our
ability to better measure the impact that we have across these
focus areas. Importantly, these measurements are being used to
prioritise our investment as we look to play our part in creating a
fairer and more sustainable world. Progress over the last six
months includes:
o Submitting our carbon emission targets for validation by the
Science Based Targets Initiative and completing our first
disclosure to the Climate Disclosure Project.
o Triton, Vado, Merlyn and Abode achieving Carbon Neutral
status. We recognise that carbon neutrality is a first of several
steps towards achieving our Net Zero target.
o Accelerating the launch of sustainable products, including
ENVi(R) (Triton) and Pure (Grant Westfield). Triton won the Planet
Mark Best Sustainability Campaign award for understanding its
responsibility and tackling it with authenticity.
o Leveraging our ability to measure and record our activities to
support our suppliers and customers in meeting their ESG
commitments. We have been awarded 'engaged supplier' status with
several customers helping cement our long term value in these
relationships.
o Our people focused ESG priority is accelerated talent and
DE&I development. We have appointed Helen Gopsill as Norcros
Chief People Officer to lead this.
o Investing meaningfully in the communities we live and work in,
including our flagship safe toilet initiative in South African
schools.
Investing in ESG is not only the right thing to do but makes
commercial sense and underpins our long-term strategic growth
plan.
SUMMARY
Norcros has developed a leading and growing position in the
bathroom and kitchen product markets and segments that we compete
in. The growth opportunities in these fragmented markets remains
significant. We are confident that our proven and evolving business
model positions us well to take advantage of these opportunities
and that we will continue our strong record of sustainable and
profitable growth.
Thomas Willcocks James Eyre
Chief Executive Officer Chief Financial Officer
16 November 2023
Condensed consolidated income statement
Six months to 30 September 2023
6 months 6 months
to to Year ended
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
---------------------------------------------- ------ --------------- -------------- -----------
Revenue 201.6 219.9 441.0
---------------------------------------------- ------ --------------- -------------- -----------
Underlying operating profit 21.4 22.0 47.3
IAS 19R administrative expenses (0.8) (1.0) (1.6)
Acquisition related costs 4 (3.9) (4.9) (8.4)
Exceptional operating items 4 (1.4) - (9.8)
---------------------------------------------- ------ --------------- -------------- -----------
Operating profit 15.3 16.1 27.5
Finance costs 7 (3.9) (2.3) (6.4)
IAS 19R finance credit 0.3 0.2 0.6
---------------------------------------------- ------ --------------- -------------- -----------
Profit before taxation 11.7 14.0 21.7
Taxation 6 (2.4) (3.0) (4.9)
---------------------------------------------- ------ --------------- -------------- -----------
Profit for the period attributable to equity
holders of the Company 9.3 11.0 16.8
---------------------------------------------- ------ --------------- -------------- -----------
Earnings per share attributable to equity
holders of the Company
Basic earnings per share:
From profit for the period 5 10.4p 12.6p 19.1p
---------------------------------------------- ------ --------------- -------------- -----------
Diluted earnings per share:
From profit for the period 5 10.3p 12.4p 18.8p
---------------------------------------------- ------ --------------- -------------- -----------
Weighted average number of shares for basic
earnings per share (millions) 5 89.2 87.1 88.1
---------------------------------------------- ------ --------------- -------------- -----------
Alternative performance measures
Underlying profit before taxation (GBPm) 3 18.1 19.9 41.8
Underlying earnings (GBPm) 3 14.1 15.8 33.5
Basic underlying earnings per share 5 15.8p 18.1p 38.0p
Diluted underlying earnings per share 5 15.6p 17.8p 37.4p
---------------------------------------------- ------ --------------- -------------- -----------
Condensed consolidated statement of comprehensive income
Six months to 30 September 2023
6 months 6 months
to to Year ended
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------------------------------- --------------- -------------- -----------
Profit for the period 9.3 11.0 16.8
-------------------------------------------------- --------------- -------------- -----------
Other comprehensive income and expense:
Items that will not subsequently be reclassified
to the Income Statement
Actuarial losses on retirement benefit
obligations (0.5) (9.4) (5.6)
Items that may be subsequently reclassified
to the Income Statement
Cash flow hedges - fair value gain/(loss)
in year net of taxation 1.7 2.8 (2.9)
Foreign currency translation adjustments (2.9) (2.4) (8.3)
-------------------------------------------------- --------------- -------------- -----------
Other comprehensive expense for the period (1.7) (9.0) (16.8)
-------------------------------------------------- --------------- -------------- -----------
Total comprehensive income for the period
attributable to equity holders of the
Company 7.6 2.0 -
-------------------------------------------------- --------------- -------------- -----------
Items in the statement are disclosed net of tax.
Condensed consolidated balance sheet
At 30 September 2023
At At At
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
--------------------------------------- ------ --------------- -------------- -----------
Non-current assets
Goodwill 107.5 108.1 107.9
Intangible assets 56.6 68.0 59.2
Property, plant and equipment 24.3 30.3 24.8
Pension scheme asset 12 15.7 8.2 14.9
Right of use assets 17.9 21.4 20.0
--------------------------------------- ------ --------------- -------------- -----------
222.0 236.0 226.8
--------------------------------------- ------ --------------- -------------- -----------
Current assets
Inventories 97.2 112.7 103.9
Trade and other receivables 78.6 80.0 83.3
Derivative financial instruments - 5.3 -
Cash and cash equivalents 8 32.6 31.1 29.0
--------------------------------------- ------ --------------- -------------- -----------
208.4 229.1 216.2
--------------------------------------- ------ --------------- -------------- -----------
Current liabilities
Trade and other payables (91.9) (114.0) (99.2)
Lease liabilities (6.3) (5.7) (6.1)
Current tax liabilities (1.0) (1.9) (0.9)
Derivative financial instruments - - (2.0)
Provisions - - (4.5)
(99.2) (121.6) (112.7)
--------------------------------------- ------ --------------- -------------- -----------
Net current assets 109.2 107.5 103.5
--------------------------------------- ------ --------------- -------------- -----------
Total assets less current liabilities 331.2 343.5 330.3
--------------------------------------- ------ --------------- -------------- -----------
Non-current liabilities
Financial liabilities - borrowings 8 (79.2) (90.0) (78.9)
Lease liabilities (16.0) (19.7) (18.6)
Deferred tax liabilities 6 (14.7) (17.3) (15.0)
Other non-current liabilities (6.9) (0.5) (6.2)
Provisions (2.9) (1.5) (1.2)
--------------------------------------- ------ --------------- -------------- -----------
(119.7) (129.0) (119.9)
--------------------------------------- ------ --------------- -------------- -----------
Net assets 211.5 214.5 210.4
--------------------------------------- ------ --------------- -------------- -----------
Financed by:
Share capital 9 8.9 8.9 8.9
Share premium 47.6 47.6 47.6
Retained earnings and other reserves 155.0 158.0 153.9
--------------------------------------- ------ --------------- -------------- -----------
Total equity 211.5 214.5 210.4
--------------------------------------- ------ --------------- -------------- -----------
Condensed consolidated statement of cash flow
Six months to 30 September 2023
6 months 6 months
to to Year ended
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
------------------------------------------------- ------ -------------- -------------- -----------
Cash generated from operations 10 23.6 11.6 37.7
Income taxes paid (2.6) (4.3) (7.7)
Interest paid (3.3) (2.1) (5.5)
------------------------------------------------- ------ -------------- -------------- -----------
Net cash generated from operating activities 17.7 5.2 24.5
------------------------------------------------- ------ -------------- -------------- -----------
Cash flows from investing activities
Purchase of property, plant and equipment
and intangible assets (4.2) (3.3) (6.0)
Acquisition of subsidiary undertakings net
of cash acquired - (78.3) (78.3)
Net cash used in investing activities (4.2) (81.6) (84.3)
------------------------------------------------- ------ -------------- -------------- -----------
Cash flows from financing activities
Net proceeds from issue of ordinary share
capital - 18.1 18.1
Purchase of treasury shares (0.8) - -
Principal element of lease payments (2.3) (2.4) (4.6)
Drawdown of borrowings - 71.0 60.0
Dividends paid to the Company's shareholders (6.1) (6.1) (9.2)
------------------------------------------------- ------ -------------- -------------- -----------
Net cash (used in)/generated from financing
activities (9.2) 80.6 64.3
------------------------------------------------- ------ -------------- -------------- -----------
Net increase in cash and cash equivalents 4.3 4.2 4.5
Cash and cash equivalents at beginning of
the period 29.0 27.4 27.4
Exchange movements on cash and cash equivalents (0.7) (0.5) (2.9)
------------------------------------------------- ------ -------------- -------------- -----------
Cash and cash equivalents at end of the period 32.6 31.1 29.0
------------------------------------------------- ------ -------------- -------------- -----------
Alternative performance measures
Underlying operating cash flow 3 27.4 16.1 44.8
---------------------------------- ----- ----- -----
Condensed consolidated statements of changes in equity
Six months to 30 September 2023 (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 2023 8.9 47.6 (0.1) (1.4) (21.1) 176.5 210.4
Comprehensive income:
Profit for the period - - - - - 9.3 9.3
Other comprehensive income/(expense):
Actuarial loss on retirement
benefit obligations - - - - - (0.5) (0.5)
Fair value gain on currency
hedges - - - 1.7 - - 1.7
Foreign currency translation
adjustments - - - (2.9) - (2.9)
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Total other comprehensive
income/(expense) - - - 1.7 (2.9) (0.5) (1.7)
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Transactions with owners:
Purchase of treasury shares - - (0.8) - - - (0.8)
Dividends paid - - - - - (6.1) (6.1)
Value of employee services - - - - - 0.4 0.4
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
At 30 September 2023 8.9 47.6 (0.9) 0.3 (24.0) 179.6 211.5
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Six months to 30 September 2022 (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 2022 8.1 30.3 (0.1) 1.5 (12.8) 173.3 200.3
Comprehensive income:
Profit for the period - - - - - 11.0 11.0
Other comprehensive income/(expense):
Actuarial loss on retirement
benefit obligations - - - - - (9.4) (9.4)
Fair value gain on currency
hedges - - - 2.8 - - 2.8
Foreign currency translation
adjustments - - - - (2.4) - (2.4)
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Total other comprehensive
income/(expense) - - - 2.8 (2.4) (9.4) (9.0)
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Transactions with owners:
Shares Issued 0.8 17.3 - - - - 18.1
Dividends paid - - - - - (6.1) (6.1)
Value of employee services - - - - - 0.2 0.2
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
At 30 September 2022 8.9 47.6 (0.1) 4.3 (15.2) 169.0 214.5
-------------------------------------- --------- --------- ----------- --------- ------------ ---------- ------
Year ended 31 March 2023 (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 2022 8.1 30.3 (0.1) 1.5 (12.8) 173.3 200.3
Comprehensive income:
Profit for the year - - - - - 16.8 16.8
Other comprehensive income:
Actuarial loss on retirement
benefit obligations - - - - - (5.6) (5.6)
Fair value loss on cash flow
hedges - - - (2.9) - - (2.9)
Foreign currency translation
adjustments - - - - (8.3) - (8.3)
------------------------------ --------- --------- ----------- --------- ------------ ---------- -------
Total other comprehensive
expense - - - (2.9) (8.3) (5.6) (16.8)
------------------------------ --------- --------- ----------- --------- ------------ ---------- -------
Transactions with owners:
Shares issued 0.8 17.3 - - - - 18.1
Dividends paid - - - - - (9.2) (9.2)
Value of employee services - - - - - 1.2 1.2
------------------------------ ---------
At 31 March 2023 8.9 47.6 (0.1) (1.4) (21.1) 176.5 210.4
------------------------------ --------- --------- ----------- --------- ------------ ---------- -------
Notes to the accounts
Six months to 30 September 2023
1. Accounting policies
General information
The principal activity of Norcros plc ("the Company") and its
subsidiaries (together "the Group") is the provision of design led,
high quality 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 16 November 2023 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 2023 has been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
Authority and with IAS 34, 'Interim financial reporting'.
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 2023, which has been prepared in accordance
with IFRS as adopted by the UK. The Annual Report and Accounts was
approved by the Board on 14 June 2023 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 2023.
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 40 to 44 in the 2023 Annual Report, which is available on
the Group's website (www.norcros.com). The principal risks stated
were: pandemics (including Covid-19), 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 technology and cyber security 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
2023.
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
2023 (unaudited)
--------------------------------- ------
South
UK Africa Group
Notes GBPm GBPm GBPm
--------------------------------- ------ -------- --------- --------
Revenue 143.9 57.7 201.6
--------------------------------- ------ -------- --------- --------
Underlying operating profit 18.7 2.7 21.4
IAS 19R administrative expenses (0.8) - (0.8)
Acquisition related costs 4 (3.8) (0.1) (3.9)
Exceptional operating items 4 (1.4) - (1.4)
Operating profit 12.7 2.6 15.3
--------------------------------- ------ -------- --------- --------
Finance costs (net) (3.6)
--------------------------------- ------ -------- --------- --------
Profit before taxation 11.7
Taxation 6 (2.4)
--------------------------------- ------ -------- --------- --------
Profit for the period 9.3
--------------------------------- ------ -------- --------- --------
Net debt 8 (46.6)
--------------------------------- ------ -------- --------- --------
6 months to 30 September
2022 (unaudited)
--------------------------------- ------
South
UK Africa Group
Notes GBPm GBPm GBPm
--------------------------------- ------ -------- --------- --------
Revenue 142.8 77.1 219.9
--------------------------------- ------ -------- --------- --------
Underlying operating profit 16.3 5.7 22.0
IAS 19R administrative expenses (1.0) - (1.0)
Acquisition related costs 4 (4.8) (0.1) (4.9)
Operating profit 10.5 5.6 16.1
--------------------------------- ------ -------- --------- --------
Finance costs (net) (2.1)
--------------------------------- ------ -------- --------- --------
Profit before taxation 14.0
Taxation 6 (3.0)
--------------------------------- ------ -------- --------- --------
Profit for the period 11.0
--------------------------------- ------ -------- --------- --------
Net debt 8 (58.9)
--------------------------------- ------ -------- --------- --------
Year ended 31 March 2023
(audited)
--------------------------------- ------
South
UK Africa Group
Notes GBPm GBPm GBPm
--------------------------------- ------ -------- --------- --------
Revenue 295.8 145.2 441.0
--------------------------------- ------ -------- --------- --------
Underlying operating profit 37.2 10.1 47.3
IAS 19R administrative expenses (1.6) - (1.6)
Acquisition related costs 4 (8.2) (0.2) (8.4)
Exceptional operating items 4 (9.8) - (9.8)
Operating profit 17.6 9.9 27.5
--------------------------------- ------ -------- --------- --------
Finance costs (net) (5.8)
--------------------------------- ------ -------- --------- --------
Profit before taxation 21.7
Taxation 6 (4.9)
--------------------------------- ------ -------- --------- --------
Profit for the period 16.8
--------------------------------- ------ -------- --------- --------
Net debt 8 (49.9)
--------------------------------- ------ -------- --------- --------
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
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 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 net (debt)/cash 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 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
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------------------------- --------------- -------------- -----------
Profit before taxation 11.7 14.0 21.7
Adjusted for:
IAS 19R administrative expenses 0.8 1.0 1.6
Acquisition related costs 3.9 4.9 8.4
Exceptional operating items 1.4 - 9.8
Amortisation of costs of raising finance 0.3 0.2 0.3
Discounting of contingent consideration 0.3 - 0.6
IAS 19R finance income (0.3) (0.2) (0.6)
-------------------------------------------- --------------- -------------- -----------
Underlying profit before taxation 18.1 19.9 41.8
Taxation attributable to underlying profit
before taxation (4.0) (4.1) (8.3)
-------------------------------------------- --------------- -------------- -----------
Underlying earnings 14.1 15.8 33.5
-------------------------------------------- --------------- -------------- -----------
(b) Underlying EBITDA
6 months 6 months
to to Year ended
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
---------------------------------------------- --------------- -------------- -----------
Operating profit 15.3 16.1 27.5
Adjusted for:
IAS 19R administrative expenses 0.8 1.0 1.6
Acquisition related costs 3.9 4.9 8.4
Exceptional operating items 1.4 - 9.8
---------------------------------------------- --------------- -------------- -----------
Underlying operating profit 21.4 22.0 47.3
Depreciation and amortisation (owned assets) 2.1 2.5 5.0
Depreciation of leased assets 2.2 2.4 4.6
Lease costs (3.1) (3.3) (6.4)
---------------------------------------------- --------------- -------------- -----------
Underlying EBITDA (pre-IFRS 16) 22.6 23.6 50.5
---------------------------------------------- --------------- -------------- -----------
Condensed Consolidated Statement of Cash Flow
Underlying operating cash flow
6 months 6 months
to to Year ended
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Cash generated from continuing operations
(note 10) 23.6 11.6 37.7
Adjusted for:
Cash flows from exceptional items and acquisition
related costs 1.8 2.6 3.3
Pension fund deficit recovery contributions 2.0 1.9 3.8
--------------------------------------------------- --------------- -------------- -----------
Underlying operating cash flow 27.4 16.1 44.8
--------------------------------------------------- --------------- -------------- -----------
4. Acquisition related costs and exceptional operating items
An analysis of acquisition related costs is shown below.
6 months 6 months
to to Year ended
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
---------------------------------- --------------- -------------- -----------
Acquisition related costs
Intangible asset amortisation(1) 3.3 3.1 6.2
Advisory Fees(2) 0.1 1.5 1.4
Deferred remuneration(3) 0.5 0.3 0.8
3.9 4.9 8.4
---------------------------------- --------------- -------------- -----------
1 Non-cash amortisation charges in respect of acquired intangible assets.
2 Professional advisory fees incurred in connection with the
Group's business combination activities.
3 Deferred consideration payable to the divisional employees of
the acquired business is required to be treated as remuneration,
and, accordingly, is expensed to the Income Statement as incurred
over the period of the related agreement.
6 months 6 months
to to Year ended
30 September 30 September 31 March
2023 2023 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
----------------------------- --------------- -------------- -----------
Exceptional Operating Items
Restructuring costs1 1.4 - 4.8
Impairment(2) - - 5.0
1.4 - 9.8
----------------------------- --------------- -------------- -----------
1 The exceptional restructuring cost in the current year relates
to the aforementioned restructuring in Johnson Tiles. In the prior
year, exceptional restructuring costs of GBP4.8m were incurred in
relation to the restructuring programme implemented at Norcros
Adhesives. This GBP4.8m represented a provision for the costs
associated with closure including the write down of current and
non-current asset values and costs such as redundancy.
2 As a result of demand uncertainty, the Johnsons Tiles tangible
and right of use assets were impaired in the prior year with a
non-cash impairment charge of GBP5.0m recognised as an exceptional
item in the income statement.
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
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
----------------------- --- --------------- -------------- -----------
Profit for the period 9.3 11.0 16.8
---------------------------- --------------- -------------- -----------
6 months 6 months
to to Year ended
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
Number Number Number
--------------------------------------- --- --------------- -------------- -----------
Weighted average number of shares for
basic earnings per share 89,170,488 87,121,128 88,129,432
Share options 1,370,636 1,443,078 1,370,679
-------------------------------------------- --------------- -------------- -----------
Weighted average number of shares for
diluted earnings per share 90,541,124 88,564,206 89,500,111
-------------------------------------------- --------------- -------------- -----------
6 months 6 months
to to Year ended
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
----------------------------- ---- --------------- --------------- -----------
Basic earnings per share:
From profit for the period 10.4p 12.6p 19.1p
----------------------------------- --------------- --------------- -----------
Diluted earnings per share:
From profit for the period 10.3p 12.4p 18.8p
----------------------------------- --------------- --------------- -----------
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
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------ ---- --------------- -------------- -----------
Underlying earnings for the period
(note 3) 14.1 15.8 33.5
------------------------------------------ --------------- -------------- -----------
6 months 6 months
to to Year ended
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
--------------------------------------- ---- --------------- -------------- -----------
Basic underlying earnings per share 15.8p 18.1p 38.0p
Diluted underlying earnings per share 15.6p 17.8p 37.4p
--------------------------------------------- --------------- -------------- -----------
6. Taxation
Taxation comprises:
6 months 6 months
to to Year ended
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
--------------------------------------------------- --------------- -------------- -----------
Current
UK taxation 1.1 1.3 1.8
Overseas taxation 1.6 2.0 4.6
Prior year adjustment - - (0.7)
--------------------------------------------------- --------------- -------------- -----------
Total current taxation 2.7 3.3 5.7
--------------------------------------------------- --------------- -------------- -----------
Deferred
Origination and reversal of temporary differences (0.3) (0.3) (0.8)
--------------------------------------------------- --------------- -------------- -----------
Total tax charge 2.4 3.0 4.9
--------------------------------------------------- --------------- -------------- -----------
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% and this
rate increase is reflected in the above estimates.
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
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------------------------------- --------------- -------------- -----------
Deferred tax liability at the beginning of
the period (15.0) (9.4) (9.4)
Credited to the Consolidated Income Statement 0.3 0.3 0.8
Credited to other comprehensive income - 2.5 2.7
Deferred tax liability recognised on acquisition - (10.7) (9.1)
Deferred tax liability at the end of the period (14.7) (17.3) (15.0)
-------------------------------------------------- --------------- -------------- -----------
6 months 6 months
to to Year ended
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------------------- --------------- -------------- -----------
Accelerated capital allowances (0.4) (0.1) (0.4)
Other timing differences 3.0 1.3 3.2
Deferred tax liability relating to intangible
assets (13.4) (16.5) (14.1)
Deferred tax liability relating to pension
surplus (3.9) (2.0) (3.7)
------------------------------------------------- --------------- -------------- -----------
Deferred tax liability at the end of the period (14.7) (17.3) (15.0)
------------------------------------------------- --------------- -------------- -----------
7. Finance costs
6 months 6 months
to to Year ended
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Finance costs
Interest payable on bank borrowings 2.5 1.2 3.7
Interest on lease liabilities 0.8 0.9 1.8
Amortisation of costs of raising debt finance 0.3 0.2 0.3
Discounting of deferred consideration 0.3 - 0.6
Finance costs 3.9 2.3 6.4
----------------------------------------------- --------------- -------------- -----------
8. Borrowings
At At At
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
---------------------------------- --------------- -------------- -----------
Non-current
Bank borrowings (unsecured):
- bank loans 80.0 91.0 80.0
- less: costs of raising finance (0.8) (1.0) (1.1)
---------------------------------- --------------- -------------- -----------
Total borrowings 79.2 90.0 78.9
---------------------------------- --------------- -------------- -----------
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
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
Not later than one year - - -
------------------------------ --------------- -------------- -----------
After more than one year:
- between one and two years - - -
- between two and five years 80.0 91.0 80.0
- costs of raising finance (0.8) (1.0) (1.1)
------------------------------ --------------- -------------- -----------
Total borrowings 79.2 90.0 78.9
------------------------------ --------------- -------------- -----------
The Group has a multicurrency GBP130m revolving credit facility
(plus a GBP70m uncommitted accordion facility) with four lenders.
The facility has a maturity date of October 2026 with a further
one-year extension option available to October 2027.
Net debt
The Group's net debt is calculated as follows:
At At At
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
--------------------------- --------------- -------------- -----------
Cash and cash equivalents 32.6 31.1 29.0
Total borrowings (79.2) (90.0) (78.9)
--------------------------- --------------- -------------- -----------
Net debt (46.6) (58.9) (49.9)
--------------------------- --------------- -------------- -----------
9. Called up share capital
At At At
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------------------ --------------- -------------- -----------
Issued and fully paid
89,274,204 (September 2022: 89,271,813, March
2023: 89,274,204) ordinary shares of 10p each 8.9 8.9 8.9
------------------------------------------------ --------------- -------------- -----------
In the prior year 8,088,700 ordinary shares were issued as an
equity placing ahead of the Grant Westfield acquisition resulting
in a share premium of GBP17.2m. 133,078 ordinary shares of 10p were
also 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
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
----------------------------------------------- --- --------------- -------------- -----------
Profit before taxation 11.7 14.0 21.7
Adjustments for:
- IAS 19R administrative expenses included
in the Income Statement 0.8 1.0 1.6
- acquisition related costs included
in the Income Statement 3.9 4.9 8.4
- exceptional operating items included
in the Income Statement 1.4 - 9.8
- cash flows from exceptional items and
acquisition related costs (1.8) (2.6) (3.3)
- depreciation of property, plant and
equipment 2.0 2.4 4.9
- underlying amortisation 0.1 0.1 0.1
- depreciation of right of use assets 2.2 2.4 4.6
- finance costs included in the Income
Statement 3.9 2.3 6.4
- pension fund deficit recovery contributions (2.0) (1.9) (3.8)
- IAS 19R finance income included in
the Income Statement (0.3) (0.2) (0.6)
- IFRS2 Charges 0.4 0.2 1.2
---------------------------------------------------- --------------- -------------- -----------
Operating cash flows before movements
in working capital 22.3 22.6 51.0
Changes in working capital:
- decrease/(increase) in inventories 4.2 (8.3) (3.0)
- decrease/(increase) in trade and other
receivables 3.1 0.1 (3.1)
- decrease in trade and other payables (6.0) (2.8) (7.2)
---------------------------------------------------- --------------- -------------- -----------
Cash generated from operations 23.6 11.6 37.7
---------------------------------------------------- --------------- -------------- -----------
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 debt
Net cash Underlying
and current Non-current net cash/ Lease Net
borrowings borrowings (debt) Liabilities debt
GBPm GBPm GBPm GBPm GBPm
-------------------------- ------------- ------------ -------------
At 1 April 2023 29.0 (78.9) (49.9) (24.7) (74.6)
Cash flow 4.3 - 4.3 3.1 7.4
Non-cash finance costs - (0.3) (0.3) (0.8) (1.1)
Other non-cash movements - - - (0.8) (0.8)
Exchange movements (0.7) - (0.7) 0.9 0.2
At 30 September 2023 32.6 (79.2) (46.6) (22.3) (68.9)
-------------------------- -------------
Net cash Underlying
and current Non-current net cash/ Lease Net
borrowings borrowings (debt) Liabilities debt
GBPm GBPm GBPm GBPm GBPm
-------------------------- ------------- ------------ -------------
At 1 April 2022 27.4 (18.8) 8.6 (24.0) (15.4)
Cash flow 4.2 (71.0) (66.8) 3.3 (63.5)
Non-cash finance costs - (0.2) (0.2) (0.9) (1.1)
Other non-cash movements - - - (4.3) (4.3)
Exchange movements (0.5) - (0.5) 0.5 -
At 30 September 2022 31.1 (90.0) (58.9) (25.4) (84.3)
-------------------------- -------------
Net cash Underlying
and current Non-current net cash/ Lease Net
borrowings borrowings (debt) Liabilities debt
GBPm GBPm GBPm GBPm GBPm
-------------------------- ------------- ------------ -------------
At 1 April 2022 27.4 (18.8) 8.6 (24.0) (15.4)
Cash flow 4.5 (60.0) (55.5) 6.4 (49.1)
Non-cash finance costs - (0.1) (0.1) (1.8) (1.9)
Other non-cash movements - - - (7.2) (7.2)
Exchange movements (2.9) - (2.9) 1.9 (1.0)
-------------------------- ------------- ------------ ----------- ------------- -------
At 31 March 2023 29.0 (78.9) (49.9) (24.7) (74.6)
-------------------------- ------------- ------------ ----------- ------------- -------
11. Dividends
A final dividend in respect of the year ended 31 March 2023 of
GBP6.1m (6.8p per 10p ordinary share) was paid on 4 August
2023.
On 16 November 2023, the Board declared an interim dividend in
respect of the year ended 31 March 2024 of 3.4p per 10p ordinary
share. This dividend is payable on 16 January 2024 to shareholders
on the register on 1 December 2023 and is not reflected in this
condensed consolidated interim financial information. The shares
will be quoted ex-dividend on 30 November 2023. 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 21 December 2023.
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, 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 2023. Scheme assets are stated at their
market value at 30 September 2023.
(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
2023 2022 2023
---------------------- -------------- -------------- ----------
Discount rate 5.60% 5.25% 4.90%
Inflation rate (RPI) 3.30% 3.55% 3.25%
Inflation (CPI) 2.60% 2.75% 2.55%
Salary increases 2.85% 3.00% 2.80%
---------------------- -------------- -------------- ----------
The amounts recognised in the Condensed Consolidated Balance
Sheet are determined as follows:
At At At
30 September 30 September 31 March
2023 2022 2023
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------- --------------- --------------- -----------
Total market value of scheme assets 275.4 287.3 299.9
Present value of scheme liabilities (259.7) (279.1) (285.0)
------------------------------------- --------------- --------------- -----------
Pension surplus 15.7 8.2 14.9
------------------------------------- --------------- --------------- -----------
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 2024.
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
149 to 152 of the Group's 2023 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
2023 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
Thomas Willcocks James Eyre
Chief Executive Officer Chief Financial Officer
16 November 2023
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END
IR DDBDBDDBDGXU
(END) Dow Jones Newswires
November 16, 2023 02:00 ET (07:00 GMT)
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