REG - Norcros PLC - Interim Results
11/11/2021 07:00
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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 ended Six months ended Six months ended % change 2021 Vs. 2019 % change constant
30 September 2021 30 September 2020 30 September 2019 currency 2021 Vs. 2019 LFL(3)
26 Weeks 26 Weeks 27 Weeks(2)
Revenue £200.9m £135.3m £181.2m 10.9% 18.4%
Underlying operating profit(1) £22.0m £12.8m £17.4m 26.4%
Underlying profit before taxation(1) £20.9m £10.7m £15.6m 34.0%
Diluted underlying EPS(1) 20.0p 10.6p 15.1p 32.5%
Operating profit £19.2m £7.4m £14.3m 34.3%
Underlying net cash/(debt)(1) £1.0m (£7.3m) (£41.1m)
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 £22.0m; an increase of 26.4%
compared to 2019
· Balance sheet remains very strong with £1.0m 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 (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
(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 £130.8m (2020:
£93.7m, 2019: £115.6m), 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 £70.1m
(2020: £41.6m, 2019: £65.6m), 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 £22.0m for the
period (2020: £12.8m, 2019: £17.4m) 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 £200.9m (2020: £135.3m, 2019:
£181.2m) (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 £22.0m (2020: £12.8m, 2019: £17.4m)
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 £19.2m (2020: £7.4m, 2019: £14.3m) principally
reflecting the increase in underlying operating profit. Acquisition related
costs of £1.9m (2020: £2.1m, 2019: £2.2m) relate to acquired intangible
amortisation. IFRS 19R administration expenses were £0.9m (2020: £0.9m,
2019: £0.9m) in the period.
Underlying profit before taxation was £20.9m (2020: £10.7m, 2019: £15.6m)
reflecting the increase in underlying operating profit and a decrease in bank
interest costs (2021: £0.3m, 2020: £1.2m, 2019: £0.9m) due to a reduction
in bank borrowings in the period. The application of IFRS 16 has reduced
underlying profit before taxation by £0.1m (2020: £0.4m, 2019: £0.6m). IFRS
16 interest costs in the period on lease liabilities were £0.8m (2020:
£0.9m, 2019: £0.9m).
Profit before taxation was £17.7m (2020: £3.4m, 2019: £13.3m). During the
period there were no exceptional costs (2020: £2.4m, 2019: nil). In prior
periods the fair value financial derivative gains and losses were taken to the
income statement (2020: £1.3m loss, 2019: £1.3m 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 £8.0m (2020:
£37.6m, 2019: £20.0m) reflecting a working capital outflow of £19.3m (2020:
£19.9m inflow, 2019: £3.1m 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 £2.5m in the first
half (2020: £0.9m, 2019: £3.1m), reflecting a return to pre-COVID-19 levels.
Financial Position
Group net cash (pre-IFRS 16) was £1.0m at the half year (31 March 2021:
£10.5m 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 £22.7m (31 March 2021: £13.7m). 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 £120m RCF financing facility.
Pension Scheme
The gross deficit relating to our UK defined benefit pension scheme as
calculated under IAS 19R has reduced from £18.3m at 31 March 2021 to £6.1m.
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 £3.3m 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 £130.8m (2020: £93.7m,
2019: £115.6m), 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 £17.0m (2020: £10.8m,
2019: £12.5m), 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 £30.9m (2020: £23.3m, 2019: £24.5m), 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™ 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 £29.1m (2020: £18.1m,
2019: £21.9m), 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 £22.4m (2020: £16.1m, 2019:
£21.1m), 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 £14.2m (2020: £10.1m, 2019: £11.7m), 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 £9.3m for the
first half (2020: £6.5m, 2019: £8.6m), 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 £17.6m (2020: £14.0m, 2019: £21.5m), 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 £7.3m (2020:
£5.6m, 2019: £6.3m), 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 £70.1m (2020:
£41.6m, 2019: £65.6m), 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 £5.0m (2020: £2.0m, 2019: £4.9m) 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 £8.2m (2020: £4.8m, 2019: £8.3m), 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 £11.3m (2020:
£7.9m, 2019: £12.6m) 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 £37.8m
(2020: £21.5m, 2019: £31.7m), 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 £12.8m
(2020: £7.4m, 2019: £13.0m), 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
Notes 6 months to 6 months to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
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 (£m) 3 20.9 10.7 30.6
Underlying earnings (£m) 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 to 6 months to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
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
Notes At At At
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
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
Notes 6 months to 6 months to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
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 Hedging Reserve Translation Retained Total
share premium Treasury £m reserve earnings £m
capital £m reserve £m £m
£m £m
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 Hedging Reserve Translation Retained Total
share premium Treasury £m reserve earnings £m
capital £m reserve £m £m
£m £m
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 Hedging Reserve Translation Retained Total
share premium Treasury £m reserve earnings £m
capital £m reserve £m £m
£m £m
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
(http://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.
Notes 6 months to 30 September 2021 (unaudited)
UK South Group
£m Africa £m
£m
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
Notes 6 months to 30 September 2020 (unaudited)
UK South Group
£m Africa £m
£m
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)
Notes Year ended 31 March 2021 (audited)
UK South Group
£m Africa £m
£m
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 share Underlying earnings divided by the weighted average number of shares for basic
earnings per share
Diluted underlying earnings per share Underlying earnings divided by the 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 to 6 months to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
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 to 6 months to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
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 to 6 months to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
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 to 6 months to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
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 to 6 months to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
Exceptional operating items
COVID-19 related restructuring(1) - 2.4 3.8
- 2.4 3.8
1. Exceptional costs of £2.4m were incurred in the period ended 30
September 2020 in relation to COVID-19 related restructuring programmes across
the Group comprising of £2.0m in cash costs and £0.4m of non-cash costs.
£3.8m of COVID-19 related restructuring costs were incurred in the year ended
31 March 2021 comprising of £2.3m in cash costs and £1.5m 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 to 6 months to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
Profit for the period 13.3 2.5 15.0
6 months to 6 months 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 to 6 months 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 to 6 months to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
Underlying earnings for the period (note 3) 16.5 8.6 25.1
6 months to 6 months 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 to 6 months to Year ended
30 September 30 September 31 March
2020 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
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 to 6 months to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
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 to 6 months to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
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 to 6 months to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
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)
£m £m £m
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)
£m £m £m
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 £120m revolving credit facility with a £30m
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)
£m £m £m
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)
£m £m £m
Issued and fully paid
80,975,309 (September 2020: 80,571,654, March 2021: 80,855,464) ordinary 8.1 8.1 8.1
shares of 10p each
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 to 6 months to Year ended
30 September 30 September 31 March
2021 2020 2021
(unaudited) (unaudited) (audited)
£m £m £m
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 and current borrowings Non-current borrowings Underlying net cash/ Lease Liabilities Net debt
(debt)
£m £m
£m £m
£m
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 £6.6m (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)
£m £m £m
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
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