REG - Norcros PLC - Results for the year ended 31 March 2017 <Origin Href="QuoteRef">NXR.L</Origin> - Part 2
14/06/2017 07:05
- Part 2: For the preceding part double click ID:nRSN9985Ha
1.8 (0.1)
Cash at bank and in hand and bank overdrafts at the beginning of the year 3.1 4.2
Exchange movements on cash and bank overdrafts 1.7 (1.0)
Cash at bank and in hand and bank overdrafts at the end of the year 6.6 3.1
Consolidated statement of changes in equity
Year ended 31 March 2017
Ordinarysharecapital£m Sharepremium£m Treasuryreserve£m Translationreserve£m Retainedearnings£m Total equity£m
At 1 April 2015 6.0 1.0 (0.1) (9.1) 54.9 52.7
Comprehensive income:
Profit for the year - - - - 13.0 13.0
Other comprehensive expense:
Actuarial loss on retirement benefit obligations - - - - (9.7) (9.7)
Foreign currency translation adjustments - - - (6.1) - (6.1)
Total other comprehensive expense - - - (6.1) (9.7) (15.8)
Transactions with owners:
Shares issued 0.1 0.1 (0.1) - - 0.1
Dividends paid - - - - (3.6) (3.6)
Share option schemes and warrants - - 0.2 - 1.0 1.2
At 31 March 2016 6.1 1.1 - (15.2) 55.6 47.6
Comprehensive income:
Profit for the year - - - - 8.5 8.5
Other comprehensive income/(expense):
Actuarial loss on retirement benefit obligations - - - - (5.2) (5.2)
Foreign currency translation adjustments - - - 8.5 - 8.5
Total other comprehensive income/(expense) - - - 8.5 (5.2) 3.3
Transactions with owners:
Shares issued - - - - - -
Dividends paid - - - - (4.2) (4.2)
Share option schemes and warrants - - - - 1.4 1.4
At 31 March 2017 6.1 1.1 - (6.7) 56.1 56.6
Notes to the preliminary statement
Year ended 31 March 2017
1. Basis of preparation
Norcros plc ("the Company") and its subsidiaries (together "the Group")
principal activities are the development, manufacture and marketing of home
consumer products in the UK and South Africa. The Company is a public limited
company which is listed on the London Stock Exchange market of listed
securities and is incorporated and domiciled in the UK. The address of its
registered office is Ladyfield House, Station Road, Wilmslow, SK9 1BU.
The financial information presented in this preliminary announcement is
extracted from, and is consistent with, the Group's audited financial
statements for the year ended 31 March 2017. The financial information set out
above does not constitute the Company's statutory financial statements for the
periods ended 31 March 2017 or 31 March 2016 but is derived from those
financial statements. Statutory financial statements for 2017 will be
delivered following the Company's annual general meeting. The auditors have
reported on those financial statements; their report was unqualified and did
not contain a statement under section 498(2) or (3) of the Companies Act 2006.
The Group's results have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the EU.
Restatement
The Group operates two cash-pooling arrangements in respect of its operations
based in the UK and South Africa in order to maximise the efficiency of its
treasury function. Under each facility, the Group and its bankers have a
legal right to offset certain balances, which from time to time may be in an
overdraft or positive funds position. In view of this, the Group previously
offset the balances in an overdraft and positive funds position in determining
the presentation of cash and borrowings in the Group Balance Sheet.
In March 2016, the IFRS Interpretations Committee (IFRIC) issued an agenda
decision regarding the treatment of offsetting and
cash-pooling arrangements in accordance with IAS 32: 'Financial instruments:
Presentation'. This provided additional guidance
on when bank overdrafts in cash-pooling arrangements would meet the
requirements for offsetting in accordance with IAS 32.
Following this additional guidance, the Group has reviewed its cash-pooling
arrangements and has revised its presentation of
bank overdrafts resulting in £30.9m of bank overdrafts being reported in
borrowings, with a corresponding increase in cash. The comparative figures at
31 March 2016 have also been restated with an additional £19.6m of bank
overdrafts being reported in borrowings. Consequently, borrowings within
current liabilities have increased by this amount to £22.4m, with a
corresponding increase in cash from £5.9m, as previously reported, to £25.5m.
The Group has considered the requirements of IAS 8 in respect of changes in
accounting policies and the requirement to present
a Balance Sheet as at the start date of the comparative period. As the change
in accounting policy has no impact on the Group's
reported profit, or the net assets of the Group, the Group does not therefore
consider the adjustment to be material to require the
presentation of an additional Balance Sheet. The impact on the opening
comparative period, being as at 1 April 2015, would
have been to increase both cash and short-term deposits and borrowings by
£17.5m.
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 (being the Board) assesses performance and allocates
resources based on geography and accordingly segments have been determined on
this basis. Corporate costs are allocated to segments on the basis of external
turnover.
Continuing operations - year ended 31 March 2017
UK£m SouthAfrica£m Group£m
Revenue 182.3 88.9 271.2
Underlying operating profit 17.4 6.4 23.8
IAS 19R administrative expenses (2.0) - (2.0)
Acquisition related costs (2.7) - (2.7)
Exceptional operating items (2.3) - (2.3)
Operating profit 10.4 6.4 16.8
Finance costs (net) (5.3)
Profit before taxation 11.5
Taxation (3.0)
Profit for the year from continuing operations 8.5
Net debt (23.2)
Segmental assets 197.2 66.9 264.1
Segmental liabilities (188.2) (19.3) (207.5)
Additions to property, plant and equipment 4.6 3.3 7.9
Depreciation 4.3 2.1 6.4
Revenues of £31.9m (2016: £31.4m) are derived from a single customer. These
revenues are attributable to the UK segment.
Continuing operations - year ended 31 March 2016
UK£m SouthAfrica£m Group£m
Revenue 163.0 72.9 235.9
Underlying operating profit 17.2 4.1 21.3
IAS 19R administrative expenses (1.7) - (1.7)
Acquisition related costs (5.2) - (5.2)
Exceptional operating items 2.3 - 2.3
Operating profit 12.6 4.1 16.7
Finance costs (net) (1.3)
Profit before taxation 15.4
Taxation (2.4)
Profit for the year from continuing operations 13.0
Net debt (32.5)
Segmental assets 182.7 49.7 232.4
Segmental liabilities (168.9) (15.9) (184.8)
Additions to property, plant and equipment 3.8 2.4 6.2
Loss on disposal of property, plant and equipment (0.1) - (0.1)
Depreciation 3.8 1.7 5.5
3. Acquisition related costs and exceptional operating items
An analysis of acquisition related costs and exceptional operating items is
shown below:
Acquisition related costs 2017£m 2016£m
Deferred remuneration1 0.4 2.5
Intangible asset amortisation2 1.2 0.9
Staff costs and advisory fees3 1.1 1.8
2.7 5.2
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 intangible assets recognised
following certain recent acquisitions.
3. Costs of maintaining an in-house acquisitions department and
professional advisory fees incurred in connection with the Group's business
combination activities.
Exceptional operating items 2017£m 2016£m
Restructuring costs1 2.3 -
Legal claim2 - (1.9)
Pension scheme settlement gain3 - (0.4)
2.3 (2.3)
1. As recently announced, the Group commenced a restructuring of its UK
tiles business in March 2017 at a cost of £2.3m in order to increase
manufacturing flexibility and reduce inventory.
2. A legal claim relating to the land at the Highgate site in Tunstall, UK,
was settled in the previous year. Under the terms of the settlement with Wm
Morrison Supermarkets plc, the Group received a payment of £2.0m. Costs in
connection with the claim were £0.1m.
3. In 2015 the Group undertook a number of liability management exercises
in connection with its principal UK defined benefit pension scheme. Whilst the
main reduction in the net deficit of £1.7m arose in 2015, a further £0.4m
reduction arose in 2016.
4. Finance income and costs
2017£m 2016£m
Finance costs
Interest payable on bank borrowings 0.9 0.9
Amortisation of costs of raising debt finance 0.2 0.2
Movement on fair value of derivative financial instruments 2.2 -
Finance costs 3.3 1.1
Finance income
Movement on fair value of derivative financial instruments - (1.2)
Net finance costs/(income) 3.3 (0.1)
5. 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 before tax associated with those items listed as being excluded from underlying profit before taxation
Underlying earnings Underlying profit before tax less underlying taxation
Underlying capital employed Capital employed adjusted for business combinations where relevant and the average impact of exchange rate movements
Underlying operating margin Underlying operating profit expressed as a percentage of revenue
Underlying return on capital employed (ROCE) Underlying operating profit expressed as a percentage of the average of opening and closing underlying capital employed
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
EBITDA EBITDA is a measure commonly used by investors and financiers to assess business performance and is derived from operating profit before depreciation and amortisation
Underlying EBITDA Underlying EBITDA reflects EBITDA as adjusted for IAS 19R administrative expenses, acquisition related costs and exceptional operating items
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
Pro-forma EBITDA An annualised EBITDA figure used for the purpose of calculating banking covenant ratios
Pro-forma leverage Net debt expressed as a ratio of pro-forma EBITDA
Underlying profit and 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 the annual bonus and long-term incentives earned by the
Directors. Underlying ROCE is one of the Group's strategic key performance
indicators and is therefore provided so that shareholders can assess the
Group's performance in relation to its strategic targets. Underlying EBITDA
and underlying operating cash flow are also used internally by the Directors
in order to assess the Group's cash generation. 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
Consolidated Income Statement
(a) Underlying profit before taxation and underlying earnings
2017£m 2016£m
Profit before taxation from continuing operations 11.5 15.4
Adjusted for:
- IAS 19R administrative expenses 2.0 1.7
- acquisition related costs (see note 3) 2.7 5.2
- exceptional operating items (see note 3) 2.3 (2.3)
- amortisation of costs of raising finance 0.2 0.2
- net movement on fair value of derivative financial instruments 2.2 (1.2)
- IAS 19R finance cost 2.0 1.4
Underlying profit before taxation 22.9 20.4
Taxation attributable to underlying profit before taxation (5.3) (3.1)
Underlying earnings 17.6 17.3
(b) Underlying EBITDA
2017£m 2016£m
Operating profit from continuing operations 16.8 16.7
Adjusted for:
- depreciation 6.4 5.5
- IAS 19R administrative expenses 2.0 1.7
- acquisition related costs (see note 3) 2.7 5.2
- exceptional operating items (see note 3) 2.3 (2.3)
Underlying EBITDA 30.2 26.8
Consolidated Cash Flow Statement
(a) Underlying operating cash flow
2017£m 2016£m
Cash generated from continuing operations (see note 7) 25.5 18.5
Adjusted for:
- cash flows from exceptional items and acquisition related costs (see note 7) 1.8 (0.2)
- pension fund deficit recovery contributions (see note 7) 2.5 2.1
Underlying operating cash flow 29.8 20.4
Consolidated Balance Sheet
(a) Underlying capital employed
2017£m 2016£m
Net assets 56.6 47.6
Adjusted for:
- pension scheme liability (net of associated tax) 52.0 45.7
- cash and cash equivalents (37.5) (25.5)
- financial liabilities - borrowings 60.7 58.0
Capital employed 131.8 125.8
- foreign exchange adjustment (3.5) 4.0
Underlying capital employed 128.3 129.8
6. Earnings per share
Basic and diluted earnings per share
Basic EPS is calculated by dividing the profit attributable to shareholders by
the weighted average number of ordinary shares in issue during the year,
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. At 31
March 2017 the potential dilutive ordinary shares amounted to 2,042,900 (2016:
1,639,137) as calculated in accordance with IAS 33.
The calculation of EPS is based on the following profits and numbers of
shares:
2017£m 2016£m
Profit for the year 8.5 13.0
2017Number 2016Number
Weighted average number of shares for basic earnings per share 61,098,476 60,590,559
Share options and warrants 2,042,900 1,639,137
Weighted average number of shares for diluted earnings per share 63,141,376 62,229,696
2017 2016
Basic earnings per share:
From profit for the year 13.9p 21.4p
Diluted earnings per share:
From profit for the year 13.4p 20.8p
Basic and diluted underlying earnings per share
Basic and diluted underlying earnings per share has also been provided which
reflects underlying earnings from continuing operations divided by the
weighted average number of shares set out above.
2017£m 2016£m
Underlying earnings (see note 5) 17.6 17.3
2017 2016
Basic underlying earnings per share 28.8p 28.5p
Diluted underlying earnings per share 27.8p 27.8p
7. Consolidated cash flow statement
(a) Cash generated from operations
The analysis of cash generated from operations is given below:
Continuing operations
2017£m 2016£m
Profit before taxation 11.5 15.4
Adjustments for:
- IAS 19R administrative expenses included in the Income Statement 2.0 1.7
- acquisition related costs included in the Income Statement 2.7 5.2
- exceptional items included in the Income Statement 2.3 (2.3)
- finance costs included in the Income Statement 3.3 1.1
- finance income included in the Income Statement - (1.2)
- IAS 19R finance cost included in the Income Statement 2.0 1.4
- cash flows from exceptional items and acquisition related costs (1.8) 0.2
- depreciation 6.4 5.5
- pension fund deficit recovery contributions (2.5) (2.1)
- loss on disposal of property, plant and equipment - 0.1
- share-based payments 1.4 1.2
Operating cash flows before movement in working capital 27.3 26.2
Changes in working capital:
- increase in inventories (5.1) (7.2)
- increase in trade and other receivables (3.7) (4.9)
- increase in trade and other payables 7.0 4.4
Cash generated from operations 25.5 18.5
(b) Outflow related to exceptional items and acquisition related costs
This includes expenditure charged to exceptional provisions relating to
onerous lease costs, acquisition related costs (excluding deferred
remuneration) and other business rationalisation and restructuring costs.
(c) Analysis of net debt
Net cash and current borrowings£m Non-current borrowings£m Net debt£m
At 1 April 2015 4.2 (18.4) (14.2)
Cash flow (0.1) (17.0) (17.1)
Other non-cash movements - (0.2) (0.2)
Exchange movement (1.0) - (1.0)
At 31 March 2016 3.1 (35.6) (32.5)
Cash flow 1.8 6.0 7.8
Other non-cash movements - (0.2) (0.2)
Exchange movement 1.7 - 1.7
At 31 March 2017 6.6 (29.8) (23.2)
Other non-cash movements principally relate to the movement in the costs of
raising debt finance in the year.
This information is provided by RNS
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