TIDMNXR
RNS Number : 4598F
Norcros PLC
12 November 2015
12 November 2015
Norcros plc
Results for the six months ended 30 September 2015
'Strong momentum within our businesses'
Norcros, the market leading supplier of innovative branded
showers, taps, bathroom accessories, tiles and adhesives, today
announces its results for the six months ended 30 September
2015.
Financial Summary
2015 2014 % change % change
as reported at constant
currency
----------------------- ---------- ---------- ------------- -------------
Revenue GBP118.7m GBP108.6m +9.3% +12.0%
----------------------- ---------- ---------- ------------- -------------
Underlying* operating
profit GBP9.9m GBP7.4m +34%
----------------------- ---------- ---------- ------------- -------------
Underlying* profit
before tax GBP9.4m GBP6.7m +40%
----------------------- ---------- ---------- ------------- -------------
Profit before tax GBP7.0m GBP6.3m +11%
----------------------- ---------- ---------- ------------- -------------
Underlying operating
cash flow** GBP13.3m GBP11.6m +15%
----------------------- ---------- ---------- ------------- -------------
Diluted underlying
EPS * 11.8p 8.1p +46%
----------------------- ---------- ---------- ------------- -------------
Net debt GBP29.2m GBP20.0m
----------------------- ---------- ---------- ------------- -------------
Interim dividend per
share 2.2p 1.85p +19%
----------------------- ---------- ---------- ------------- -------------
* Underlying is before IAS 19R administrative
expenses, acquisition related costs and
exceptional operating items and, where relevant,
before non-cash finance costs
** Underlying operating cash flow means cash
generated from continuing operations before
exceptional cash flows and pension fund
deficit recovery contributions
Restated for the 10:1 share consolidation
completed on 29 September 2015
Highlights
-- Strong first half performance
-- Revenue increased by 12.0% on a constant currency basis
-- Underlying operating profit increased by 34% to GBP9.9m
-- Underlying profit before tax increased by 40% to GBP9.4m
-- Profit before tax increased by 11% to GBP7.0m
-- Continued strong underlying operating cash generation: 104% of underlying EBITDA
-- Acquisition of Croydex completed on 25 June 2015
-- Diluted underlying earnings per share 46% higher at 11.8p
-- Interim dividend increased by 19% to 2.2p per share
Martin Towers, Chairman, commented:
"I am pleased to announce a strong set of results for the six
months ended 30 September 2015. Not only has the Group continued to
make excellent progress in its existing businesses, but it has
continued to advance towards its strategic targets with the
acquisition of Croydex at the end of June 2015.
With our strong brands, leading market positions and continued
self-help initiatives focused on market share gain the Group is
well positioned to make further progress. Given the strong first
half performance and momentum within our businesses, the Board now
expects the Group to achieve underlying operating profit marginally
ahead of market expectations for the year to 31 March 2016."
There will be a presentation today at 9.30 am for analysts at
the offices of Hudson Sandler, 29 Cloth Fair, London, EC1A 7NN. The
supporting slides will be available on the Norcros website at
http://www.norcros.com later in the day.
ENQUIRIES
Norcros plc Tel: 01625 547700
Nick Kelsall, Group Chief
Executive
Martin Payne, Group Finance
Director
Hudson Sandler Tel: 0207 796 4133
Nick Lyon
Charlie Jack
Katie Matthews
Notes to Editors
-- Norcros is a leading supplier of high quality and innovative
showers, taps, bathroom accessories, ceramic wall and floor tiles
and adhesive products with operations primarily in the UK and South
Africa.
-- Based in the UK, Norcros operates under five brands:
- Triton Showers - Market leader in the manufacture and
marketing of showers in the UK
- 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
- Johnson Tiles - A leading manufacturer and supplier of ceramic
tiles in the UK
- Norcros Adhesives - Manufacturer of tile & stone
adhesives, grouts and related products
-- Based in South Africa, Norcros operates under three brands:
- Tile Africa - Chain of retail stores focused on ceramic and
porcelain tiles, and associated products such as sanitary ware,
showers and adhesives
- Johnson Tiles South Africa - Manufacturer of ceramic and
porcelain tiles
- TAL - The leading manufacturer of ceramic and building
adhesives
-- Norcros is headquartered in Wilmslow, Cheshire and employs
around 1800 people. The Company is listed on the London Stock
Exchange. For further information please visit the Company website:
http://www.norcros.com/
Chairman's statement
I am pleased to announce a strong set of results for the six
months ended 30 September 2015. Not only has the Group continued to
make excellent progress in its existing businesses, but it has
continued to advance towards its strategic targets with the
acquisition of Croydex at the end of June 2015.
Market conditions in the UK continue to be mixed, with the trade
sector continuing to perform well driven by new house build and
commercial specifications, although RMI driven demand is muted and
retail markets generally remain challenging. In South Africa,
market conditions have been impacted by the recent slow-down in
China affecting the commodity sector which is a significant part of
the South African economy. However, the strong self-help culture
evident in all our businesses has continued to offset these
challenges and has been a key factor in delivering these strong
results.
Underlying operating profit rose by 34% to GBP9.9m (2014:
GBP7.4m) representing an improved margin of 8.3% (2014: 6.8%). UK
performance benefitted from the return to profitability of Johnson
Tiles UK following its manufacturing inefficiencies in the prior
year and the three month contribution from Croydex. South Africa
nearly doubled its underlying operating profit despite a weaker
Rand, driven by strong constant currency revenue growth and an
improvement in underlying profit performance in all three
businesses including a return to profitability at Johnson Tiles
South Africa.
Through a combination of strong underlying EBITDA and continued
prudent management of working capital, underlying operating cash
generation was GBP13.3m (2014: GBP11.6m), representing 104% of
underlying EBITDA (2014: 112%). This performance and a cash outflow
of GBP20.1m relating to the acquisition of Croydex left net debt at
GBP29.2m compared to GBP14.2m at 31 March 2015 and represents
leverage of 1.1 times underlying proforma EBITDA.
Acquisition of Croydex
As previously announced, the Group acquired 100% of the ordinary
share capital of Croydex Group Limited ("Croydex"), a market
leading, innovative designer, manufacturer and distributor of high
quality bathroom furnishings and accessories, on 25 June 2015. The
acquisition of Croydex is an important next step in the Group's
growth strategy to increase revenue to GBP420m by 2018 and follows
on from the very successful integration of the Vado business which
Norcros acquired in March 2013. The addition of the Croydex
business to the Group's existing portfolio has increased the
breadth of our product range in the bathroom segment and has
enabled the Group to offer an even broader array of complementary
bathroom products to our customers. Croydex will also benefit from
the global distribution channels, sourcing skills and strong
financial position of the enlarged Group. I am excited by the
prospects for Croydex within the Norcros Group and have been
impressed by the energy and enthusiasm of its management and
employees.
Results
Revenue for the six month period to 30 September 2015 at
GBP118.7m (2014: GBP108.6m) was 12.0% higher on a constant currency
basis compared to the prior year, and 9.3% on a Sterling reported
basis. Of this growth, 5.5% was attributable to a three month
contribution from Croydex. On a like for like basis excluding
Croydex, constant currency growth was 6.5% and 4.0% on a Sterling
reported basis.
Underlying operating profit rose by 34% to GBP9.9m (2014:
GBP7.4m) reflecting improvements in both the UK and South Africa
together with a three month contribution from Croydex.
Underlying profit before taxation increased by 40% to GBP9.4m
(2014: GBP6.7m) reflecting the higher underlying operating profit
and lower interest costs driven by improved margins offset by
increased borrowings due to the acquisition of Croydex in June
2015.
Profit before taxation for the period was GBP7.0m (2014:
GBP6.3m), reflecting increased underlying profit before taxation,
higher exceptional operating income of GBP2.3m (2014: GBP0.3m)
primarily as a result of settlement in the period of a contractual
dispute with Morrisons relating to a previous agreement to sell
them freehold land in Tunstall, Stoke on Trent, offset by higher
non-underlying interest of GBP1.3m (2014: income of GBP0.6m) and
higher acquisition related costs of GBP2.6m (2014: GBP0.5m)
relating to the final year of the Vado earn out mechanism of
GBP1.3m and the costs of acquiring Croydex of GBP0.8m.
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Diluted underlying earnings per share were 46% higher at 11.8p
(2014: 8.1p restated for the 10:1 share consolidation), reflecting
improved underlying earnings.
Financial
We have continued to demonstrate strong cash conversion with
underlying operating cash generated in the period at GBP13.3m
(2014: GBP11.6m), representing 104% of underlying EBITDA for the
period (2014: 112%). There was a working capital outflow of GBP0.2m
in the period which compared to a GBP0.6m inflow in the prior
period. A pension deficit recovery payment of GBP1.1m (2014:
GBP1.0m) in the period (as part of the GBP2.0m plus CPI per annum
contribution agreed with the Trustee in 2013) and cash inflows
relating to exceptional items of GBP0.7m (2014: outflows of
GBP0.7m) resulted in net cash generated from continuing operations
at GBP12.9m (2014: GBP9.9m). Investment in capital expenditure in
the period amounted to GBP3.2m (2014: GBP3.4m) and has remained
consistent at 1.1 times depreciation.
Net debt increased in the six months to 30 September 2015 by
GBP15.0m to GBP29.2m principally as a result of the acquisition of
Croydex, which, including costs related to the acquisition of
GBP0.8m, resulted in a net cash outflow in the period of
GBP20.1m.
The gross deficit relating to our UK defined benefit pension
scheme as calculated under IAS 19R has improved slightly from a
deficit of GBP44.3m at 31 March 2015 to a deficit of GBP42.4m at 30
September 2015. The reduction in the deficit principally reflects
an increase in the discount rate to 3.8% net of a lower return on
scheme assets. During the previous year the plan undertook a number
of liability management exercises which resulted in the recognition
of a net settlement gain of GBP1.7m. A further gain of GBP0.4m has
been recognised in the period as a result of these exercises which
has been included within exceptional operating items.
Property
As highlighted in the Group's 2015 Annual Report, the
contractual dispute arising from the conditional sale of part of
the surplus land in Tunstall to a subsidiary of Wm Morrison
Supermarkets plc was settled on 15 May 2015. The Company has
recognised exceptional operating income of GBP1.9m in relation to
this settlement.
Dividend
The Board is declaring an interim dividend of 2.20p per share
reflecting the strong first half performance and its confidence in
the Group's future prospects. Taking into account the 10:1 share
consolidation which took place on 29 September 2015, this
represents an increase of 19% over the restated interim dividend
from the previous year of 1.85p per ordinary share. The dividend is
payable on 7 January 2016 to shareholders on the register on 4
December 2015. The shares will be quoted as ex-dividend on 3
December 2015.
Operating review
UK
For the six months ended 30 September 2015 total revenue in our
UK businesses was 9.8% ahead of the prior period at GBP79.9m (2014:
GBP72.8m). On a like for like basis excluding Croydex revenue of
GBP5.8m, total revenue increased by 1.8%. Underlying operating
profit at GBP8.0m was 25% higher than last year at GBP6.4m and
represents an improved return on sales of 10.0% (2014: 8.8%). The
trends in our UK markets seen in the prior year have continued into
the first half of this year, with good growth in the trade sector,
but a challenging retail sector.
Triton
Our market leading shower operation, Triton Showers, recorded
revenue growth of 3.1% for the six month period to 30 September
2015 to GBP26.2m (2014: GBP25.4m).
UK revenue for Triton was 1.9% higher than the prior year.
Revenue from the UK trade sector increased by 3.3% compared to the
prior year, with strong trading across major national merchants and
electrical wholesale customers and a much improved performance in
the specification sector, which has been a key area of focus for
the business. The retail sector however remains challenging,
principally due to weak consumer demand and the impact of product
range changes at some of the major DIY accounts. Notwithstanding
this, Triton still delivered marginally higher retail revenue
compared to the previous year. Triton has continued to invest
significantly in new product development and in product innovation
with the recent launch of the T80ZFF thermostatic electric shower
range which further strengthens our offer in the growing
thermostatic shower market.
Export markets account for 17% of Triton's overall revenue and
have continued to grow, increasing by 10.0% compared to the prior
year. The principal export market for Triton is Ireland, where a
revitalised new build and RMI sector has helped drive revenue
growth. Markets further afield, principally Latin America, continue
to be developed. We have invested in both new product development
and marketing including representation at a number of major trade
fairs in the region.
Triton has continued to generate strong cashflows and delivered
underlying operating profits which were marginally ahead of last
year.
Vado
Our leading manufacturer of taps, mixer showers, bathroom
accessories and valves, Vado, recorded revenue of GBP15.9m for the
period (2014: GBP14.8m), 7.4% higher than the prior year. UK
revenue was 16.7% higher than the prior year, with growth in both
the retail and trade segments. In the trade sector, we continue to
make strong progress in both residential and commercial
specifications, benefitting particularly from increased new private
housing programmes. In retail, we are beginning to see the benefits
of investing in the expansion of the sales team and were recently
recognised as tap brand of the year by BKU magazine in its
inaugural awards.
Export revenue, which accounts for approximately 30% of Vado
revenue, was 9.6% lower than the same period last year. This
performance reflects a mixed picture with lower revenue outside of
our major Middle East market held back by credit issues with a
number of sub-Saharan customers and a number of larger projects
last year not being repeated this year. However, in the Middle East
we grew revenue strongly in the first half of this year reflecting
more buoyant construction activity. We have recently increased our
presence in this market and established a directly employed
resource in the region to strengthen the Vado brand in the
important specification sector.
Underlying operating profits were ahead of the same period last
year driven largely by revenue growth.
Croydex
Croydex, our market-leading, innovative designer, manufacturer
and distributor of high quality bathroom furnishings and
accessories, which was acquired on 25 June 2015, recorded revenue
of GBP5.8m for the three month period since acquisition to 30
September 2015, in line with our expectations.
Whilst it was not under Group ownership for the full period,
revenue for the six months ended 30 September 2015 was GBP10.9m,
3.7% higher than the prior year. UK sales at GBP10.3m were in line
with the prior year with the challenging retail environment being
offset by growth in the trade sector. Export sales of GBP0.6m were
GBP0.4m higher than the prior period, reflecting the additional
focus employed to target growth outside the UK, with particular
success being achieved in Germany.
Operationally, Croydex has been integrated into the Norcros
group seamlessly, and the performance of the business since
acquisition has been highly encouraging, with the business
generating an underlying profit performance in line with the
Board's expectations.
Johnson Tiles
Our UK market leading ceramic tile manufacturer and a market
leader in the supply of both own manufactured and imported tiles,
Johnson Tiles, recorded revenue 4.5% lower than the same period
last year at GBP27.9m (2014: GBP29.2m).
UK revenue was 2.7% lower than the comparative period last year.
Excellent progress continues to be made in the trade segment with
revenue 5.0% higher, notwithstanding that last year included the
one-off benefit of the supply of ceramic poppies which formed the
main part of the World War I commemorations at the Tower of London.
Again, good progress has been made in the specification sector,
with projects completed in the period for Holiday Inn and Total
Fitness. In the retail sector, subdued demand in the DIY sector
generally combined with the withdrawal from some unprofitable
ranges resulted in revenues 9.6% lower than the prior year. Export
revenue was also 16.7% lower than the prior year principally
reflecting the combined impact of weak market conditions in France
and credit issues in the Middle East.
Operationally, the excellent progress made at the end of the
last financial year has been sustained throughout this first half
period. As a result of management actions manufacturing
efficiencies have significantly improved compared to the prior
period. This, together with the continued trade revenue growth,
have been key factors in delivering a solid underlying operating
profit performance for the period, a marked improvement over the
small operating loss recorded in the prior period.
Norcros Adhesives
Norcros Adhesives, our manufacturer and supplier of tile and
stone adhesives and ancillary products, once again demonstrated
excellent growth with revenue 20.6% higher at GBP4.1m (2014:
GBP3.4m). This performance principally reflects further development
of our distribution channels in the trade segment, as well as some
initial success in the retail DIY sector.
The business continues to develop innovative new products to
address the technical issues in fixing tiles to different types of
substrate, for example the launch of the Ultima8 B+ range, which
solves the problem of fixing tiles to bituminous surfaces.
Additionally, the business has continued to invest in future
growth, achieving the ISO 14001 accreditation for environmental
management, commencing the construction of a new training centre
and laboratory in the UK and establishing a local presence in the
Middle East to better capitalise on the opportunities in the
significant specification market in this region.
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This continued strong growth has delivered an underlying
operating profit performance ahead of the same period last
year.
South Africa
Once again our South African businesses reported another period
of double digit constant currency growth resulting in revenue 16.9%
higher than prior year on a constant currency basis. Reported
Sterling revenue was 8.4% higher at GBP38.8m (2014: GBP35.8m),
reflecting an 8% weaker Rand. Underlying operating profit at
GBP1.9m was 90% higher than the previous period (2014: GBP1.0m)
despite the weaker Rand adversely impacting reported profits by
GBP0.1m. This represents a significantly improved return on sales
of 4.9% (2014: 2.7%). All three businesses delivered an improvement
in local currency underlying operating profit performance.
Our South African operations have made further progress in the
first half of the year with all three businesses growing ahead of
the market as we continue to implement our strategy of growing our
brands through geographic expansion and range diversification.
Gross margins improved against the previous year, with the benefits
in our supply chain and production efficiencies delivering tangible
benefits over the period.
Johnson Tiles South Africa
Our tile manufacturing business, Johnson Tiles South Africa,
achieved independent sector revenue of GBP5.4m (2014: GBP5.2m),
12.5% higher than prior year on a constant currency basis, and 3.8%
higher on a reported Sterling basis.
Following the investment in two inkjet printers over the last
two years we have successfully enriched our product offer with the
launch of a number of additional inkjet ranges and a new
rectangular product format in response to market trends. An
improved product offer and a consistent manufacturing performance
have resulted in a marked improvement in performance.
As reported in our last annual report, Johnson Tiles South
Africa experienced some manufacturing disruption as a result of the
national electricity load-shedding programme. Consequently a new
standby diesel generator has been successfully installed in the
period which will significantly reduce the impact of being unable
to operate the manufacturing facility in the event of a power
outage.
Notwithstanding the disruption from load shedding prior to the
generator being installed, the business delivered an underlying
operating profit compared to a small underlying operating loss in
the prior period.
TAL
Our market leading adhesive business, TAL, delivered constant
currency independent sector revenue growth of 20.5% in the period,
or an 11.9% increase on a Sterling reported basis to GBP9.4m (2014:
GBP8.4m). This growth was achieved through market share gain in
domestic markets and through continued focus on growing sub-Saharan
export markets, as well as product range extensions, such as a new
2kg bag to its grout range and a new powdered bond range, both of
which have received a favourable market reaction.
In addition to the considerable growth in revenue, we have
continued to drive profitability through further improvements in
plant and procurement efficiencies. This has been reflected in a
stronger underlying operating profit performance than the prior
year.
Tile Africa
Revenue at our leading retailer of wall and floor tiles,
adhesives, showers, sanitaryware and bathroom fittings, Tile
Africa, increased by 16.5% on a constant currency basis compared to
the prior year, and by 8.1% on a Sterling reported basis to
GBP24.0m (2014: GBP22.2m).
Tile Africa currently operates from 29 stores and four
franchises, with a new store in Boksburg, Gauteng, expected to open
by the end of this financial year. The new CX format stores that we
developed to improve the overall retail customer experience, and
were showcased in the last Annual Report, have continued to perform
strongly, and consequently there are plans to retrofit this format
into further stores. The store at Lenasia has recently been
refitted as a factory outlet aimed at the emerging consumer
segments following on from the positive results achieved at the
existing store of this type in Silverton.
The improved CX store layout, together with benefits from our
increased focus on in-stock and on-display offering has been
reflected in market share gain and revenue growth, and in an
improved underlying operating profit compared to the prior
year.
Share consolidation
On 29 September 2015 the Company undertook an exercise to
consolidate its existing 1p ordinary shares into new 10p ordinary
shares, and the new shares began to be traded on the London Stock
Exchange on 30 September. The resolution permitting the Board to
effect the consolidation had been passed at the Company's AGM on 22
July. The Board considered it was important to reduce the number of
shares in issue to a level more appropriate for a company of
Norcros's size, and to make the shares more attractive to
investors, whilst having no effect on the relative holdings of
individual shareholders. Full details of the share consolidation
are provided on the Company's website www.norcros.com.
Summary and outlook
The Group has made a very pleasing start to the year, with each
of our businesses delivering an improvement in underlying operating
profit performance. As I have already highlighted, we took decisive
management action in our tiles businesses in both the UK and South
Africa to address the operational challenges of recent years and
now have a much stronger base from which to develop our medium term
growth plans. Whilst conditions in our UK retail and export markets
remain testing, we continue to capitalise on the demand
opportunities in the more positive trade sector where we continue
to perform strongly.
The acquisition of the Croydex business is a further step in
realising our strategic target of generating revenues of GBP420m by
2018 and importantly the business has already been smoothly
integrated into the Group.
With our strong brands, leading market positions and continued
self-help initiatives focused on market share gain the Group is
well positioned to make further progress. Given the strong first
half performance and momentum within our businesses, the Board now
expects the Group to achieve underlying operating profit marginally
ahead of market expectations for the year to 31 March 2016.
M. G. Towers
Chairman
12 November 2015
Condensed consolidated income statement
Six months to 30 September 2015
6 months to 6 months to Year ended
30 September 30 September 31 March
2015 2014* 2015*
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Continuing operations
Revenue 118.7 108.6 222.1
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Underlying operating profit 9.9 7.4 17.0
IAS 19R administrative expenses (0.8) (0.8) (1.7)
Acquisition related costs 4 (2.6) (0.5) (2.2)
Exceptional operating items 4 2.3 0.3 (2.5)
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Operating profit 8.8 6.4 10.6
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Finance costs 7 (1.1) (0.8) (1.4)
Exceptional finance costs 7 - (0.4) (0.4)
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Total finance costs 7 (1.1) (1.2) (1.8)
Finance income 7 - 1.6 3.3
IAS 19R finance cost (0.7) (0.5) (1.1)
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Profit before taxation 7.0 6.3 11.0
Taxation 6 (1.6) (1.6) (2.9)
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Profit for the period from continuing operations 5.4 4.7 8.1
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Profit for the period from discontinued operations - 0.1 0.1
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Profit for the period 5.4 4.8 8.2
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----------------------------------------------------------------------- ----- ------------ ------------ ----------
Earnings per share attributable to the owners of the Company
Basic earnings per share:
From continuing operations 5 9.0p 8.0p 13.6p
From discontinued operations 5 - 0.2p 0.2p
----------------------------------------------------------------------- ----- ------------ ------------ ----------
From profit for the period 5 9.0p 8.2p 13.8p
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Diluted earnings per share:
From continuing operations 5 8.7p 7.7p 13.1p
From discontinued operations 5 - 0.2p 0.2p
----------------------------------------------------------------------- ----- ------------ ------------ ----------
From profit for the period 5 8.7p 7.9p 13.3p
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Weighted average number of shares for basic earnings per share
(millions) 5 60.1 59.0 59.2
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Non-GAAP measures
Underlying profit before taxation (GBPm) 3 9.4 6.7 15.8
Underlying earnings (GBPm) 3 7.3 5.0 13.0
Basic underlying earnings per share 5 12.2p 8.4p 21.9p
Diluted underlying earnings per share 5 11.8p 8.1p 21.1p
----------------------------------------------------------------------- ----- ------------ ------------ ----------
* The results of previous periods have been restated where
required to reflect the revised presentation of acquisition related
costs and the 10:1 share consolidation completed on 29 September
2015.
Condensed consolidated statement of comprehensive income
Six months to 30 September 2015
6 months to 6 months to Year ended
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------------------------------------------- ------------ ------------ ----------
Profit for the period 5.4 4.8 8.2
-------------------------------------------------------------------------- ------------ ------------ ----------
Other comprehensive income and expense:
Items that will not subsequently be reclassified to the income statement
Actuarial gains/(losses) on retirement benefit obligations 1.6 (14.8) (18.8)
Items that may be subsequently reclassified to the income statement
Foreign currency translation adjustments (6.0) (1.2) (0.6)
-------------------------------------------------------------------------- ------------ ------------ ----------
Other comprehensive expense for the period (4.4) (16.0) (19.4)
-------------------------------------------------------------------------- ------------ ------------ ----------
Total comprehensive income/(expense) for the period 1.0 (11.2) (11.2)
-------------------------------------------------------------------------- ------------ ------------ ----------
Attributable to equity shareholders arising from
Continuing operations 1.0 (11.4) (11.4)
Discontinued operations - 0.2 0.2
-------------------------------------------------------------------------- ------------ ------------ ----------
1.0 (11.2) (11.2)
------------------------------------------------------------------------- ------------ ------------ ----------
Items in the statement are disclosed net of tax.
Condensed consolidated balance sheet
At 30 September 2015
At At At
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
-------------------------------------- ----- ------------ ------------ ---------
Non-current assets
Goodwill 29.5 22.0 22.2
Intangible assets 12.2 4.8 4.7
Property, plant and equipment 37.5 36.8 37.6
Investment properties - 4.3 -
Derivative financial instruments 15 - 0.2 -
Deferred tax assets 6 11.2 14.1 13.8
-------------------------------------- ----- ------------ ------------ ---------
90.4 82.2 78.3
-------------------------------------- ----- ------------ ------------ ---------
Current assets
Inventories 56.3 51.0 52.2
Trade and other receivables 43.6 42.1 40.5
Derivative financial instruments 15 1.0 - 2.1
Cash and cash equivalents 7.8 4.5 5.6
108.7 97.6 100.4
-------------------------------------- ----- ------------ ------------ ---------
Current liabilities
Trade and other liabilities (60.5) (54.1) (54.9)
Derivative financial instruments 15 (0.3) (0.8) (1.0)
Current tax liabilities (1.4) (1.7) (1.3)
Financial liabilities - borrowings 8 (4.5) (4.1) (1.4)
(66.7) (60.7) (58.6)
-------------------------------------- ----- ------------ ------------ ---------
Net current assets 42.0 36.9 41.8
-------------------------------------- ----- ------------ ------------ ---------
Total assets less current liabilities 132.4 119.1 120.1
-------------------------------------- ----- ------------ ------------ ---------
Non-current liabilities
Financial liabilities - borrowings 8 (32.5) (20.4) (18.4)
Pension scheme liability 12 (42.4) (40.6) (44.3)
Other non-current liabilities (2.1) (1.5) (1.4)
Provisions (3.2) (3.7) (3.3)
-------------------------------------- ----- ------------ ------------ ---------
(80.2) (66.2) (67.4)
-------------------------------------- ----- ------------ ------------ ---------
Net assets 52.2 52.9 52.7
-------------------------------------- ----- ------------ ------------ ---------
Financed by:
Ordinary share capital 9 6.1 5.9 6.0
Share premium 1.0 0.9 1.0
Retained earnings and other reserves 45.1 46.1 45.7
-------------------------------------- ----- ------------ ------------ ---------
Total equity 52.2 52.9 52.7
-------------------------------------- ----- ------------ ------------ ---------
Condensed consolidated statement of cash flow
(MORE TO FOLLOW) Dow Jones Newswires
November 12, 2015 02:01 ET (07:01 GMT)
Six months to 30 September 2015
6 months to 6 months to Year ended
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
Notes GBPm GBPm GBPm
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Cash generated from operations 10 12.9 10.0 16.2
Income taxes paid (0.6) (0.2) (0.5)
Interest paid (0.5) (0.7) (1.3)
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Net cash generated from operating activities 11.8 9.1 14.4
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Cash flows from investing activities
Proceeds from sale of investment property - - 6.1
Proceeds from sale of property, plant and equipment - 0.4 0.4
Purchase of investment property - - (0.9)
Purchase of property, plant and equipment (3.2) (3.4) (7.0)
Acquisition of subsidiary undertakings net of cash acquired (20.5) (0.3) (0.5)
Disposal of subsidiary undertakings net of cash divested - 3.8 3.8
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Net cash (used in)/generated from investing activities (23.7) 0.5 1.9
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Cash flows from financing activities
Net proceeds from issue of ordinary share capital - - 0.2
Drawdown/(repayment) of borrowings 14.0 (10.1) (12.1)
Costs of raising debt finance - (0.7) (0.7)
Dividends paid to equity shareholders (2.2) (2.0) (3.1)
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Net cash generated from/(used in) financing activities 11.8 (12.8) (15.7)
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Net (decrease)/increase in cash at bank and in hand and bank overdrafts (0.1) (3.2) 0.6
Cash at bank and in hand and bank overdrafts at beginning of the period 4.2 3.7 3.7
Exchange movements on cash and bank overdrafts (0.8) (0.1) (0.1)
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Cash at bank and in hand and bank overdrafts at end of the period 3.3 0.4 4.2
------------------------------------------------------------------------------ ------------ ------------ ----------
Non-GAAP measures
Underlying operating cash flow 3 13.3 11.6 22.9
----------------------------------------------------------------------- ----- ------------ ------------ ----------
Condensed consolidated statements of changes in equity
Six months to 30 September 2015 (unaudited)
Ordinary Retained
share Share Treasury Translation earnings/
capital premium reserve reserve (losses) Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------------- -------- ------- -------- ----------- --------- -----
At 31 March 2015 6.0 1.0 (0.1) (9.1) 54.9 52.7
Comprehensive income:
Profit for the period - - - - 5.4 5.4
Actuarial gain on retirement benefit obligations - - - - 1.6 1.6
Other comprehensive expense:
Foreign currency translation adjustments - - - (6.0) - (6.0)
Total other comprehensive (expense)/ income - - - (6.0) 7.0 1.0
------------------------------------------------- -------- ------- -------- ----------- --------- -----
Transactions with owners:
Dividends paid - - - - (2.2) (2.2)
Share option schemes and warrants 0.1 - (0.1) - 0.7 0.7
------------------------------------------------- -------- ------- -------- ----------- --------- -----
At 30 September 2015 6.1 1.0 (0.2) (15.1) 60.4 52.2
------------------------------------------------- -------- ------- -------- ----------- --------- -----
Six months to 30 September 2014 (unaudited)
Ordinary Retained
share Share Treasury Translation earnings/
capital premium reserve reserve (losses) Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------------- -------- ------- -------- ----------- --------- ------
At 31 March 2014 5.8 0.9 - (8.5) 67.3 65.5
Comprehensive income:
Profit for the period - - - - 4.8 4.8
Other comprehensive expense:
Actuarial loss on retirement benefit obligations - - - - (14.8) (14.8)
Foreign currency translation adjustments - - - (1.2) - (1.2)
------------------------------------------------- -------- ------- -------- ----------- --------- ------
Total other comprehensive expense - - - (1.2) (14.8) (16.0)
------------------------------------------------- -------- ------- -------- ----------- --------- ------
Transactions with owners:
Dividends paid - - - - (2.0) (2.0)
Share option schemes and warrants 0.1 - (0.1) - 0.6 0.6
------------------------------------------------- -------- ------- -------- ----------- --------- ------
At 30 September 2014 5.9 0.9 (0.1) (9.7) 55.9 52.9
------------------------------------------------- -------- ------- -------- ----------- --------- ------
Year ended 31 March 2015 (audited)
Ordinary Retained
share Share Treasury Translation earnings/
capital premium reserve reserve (losses) Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------------- -------- ------- -------- ----------- --------- ------
At 31 March 2014 5.8 0.9 - (8.5) 67.3 65.5
Comprehensive income:
Profit for the year - - - - 8.2 8.2
Other comprehensive expense:
Actuarial loss on retirement benefit obligations - - - - (18.8) (18.8)
Foreign currency translation adjustments - - - (0.6) - (0.6)
------------------------------------------------- -------- ------- -------- ----------- --------- ------
Total other comprehensive expense - - - (0.6) (18.8) (19.4)
------------------------------------------------- -------- ------- -------- ----------- --------- ------
Transactions with owners:
Shares issued 0.2 0.1 (0.1) - - 0.2
Dividends paid - - - - (3.1) (3.1)
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November 12, 2015 02:01 ET (07:01 GMT)
Share option schemes and warrants - - - - 1.3 1.3
------------------------------------------------- -------- ------- -------- ----------- --------- ------
At 31 March 2015 6.0 1.0 (0.1) (9.1) 54.9 52.7
------------------------------------------------- -------- ------- -------- ----------- --------- ------
Notes to the accounts
Six months to 30 September 2015
1. Accounting policies
General information
The Company is a public limited company which is listed on the
London Stock Exchange and incorporated and domiciled in the UK.
This condensed consolidated interim financial information was
approved for issue on 12 November 2015. This condensed consolidated
financial information does not comprise statutory accounts within
the meaning of Section 434 of the Companies Act 2006.
This condensed consolidated interim financial information has
been neither audited nor reviewed.
Basis of preparation
This condensed consolidated interim financial information for
the six months to 30 September 2015 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 2015, 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 18 June 2015 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 2015.
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.
New standards, amendments to standards and interpretations
The following new standards, amendments to standards or
interpretations are mandatory for the first time for the financial
year beginning 1 April 2015.
The Group has adopted the following new standards, amendments
and interpretations now applicable. None of these standards and
interpretations has had any material effect on the Group's results
or net assets.
Applicable for
financial years
Standard or interpretation Content beginning on or after
-------------------------------------- ----------------- ---------------------
Amendment to IAS 19 (revised) Employee benefits 1 April 2015
Annual improvements to IFRSs 2010-2012 Various 1 April 2015
Annual improvements to IFRSs 2011-2013 Various 1 April 2015
-------------------------------------- ----------------- ---------------------
The following standards, amendments and interpretations are not
yet effective and have not been adopted early by the Group:
Applicable for
financial years
Standard or interpretation Content beginning on or after
--------------------------------- ----------------------------------------------------- ---------------------
Amendment to IFRS 10 Consolidated financial statements 1 April 2016
Amendment to IFRS 11 Joint arrangements 1 April 2016
Amendment to IFRS 12 Disclosure of interests in other entities 1 April 2016
IFRS 14 Regulatory deferral accounts 1 April 2016
Amendment to IAS 1 Presentation of financial statements 1 April 2016
Amendment to IAS 16 Property, plant and equipment 1 April 2016
Amendment to IAS 27 Separate financial statements 1 April 2016
Amendment to IAS 28 Investments in associates and joint ventures 1 April 2016
Amendment to IAS 38 Intangible assets 1 April 2016
Amendment to IAS 41 Agriculture 1 April 2016
Annual improvements to IFRSs 2014 Various 1 April 2016
IFRS 15 Revenue from contracts with customers 1 April 2018
IFRS 9 Financial instruments: classification and measurement 1 April 2018
--------------------------------- ----------------------------------------------------- ---------------------
None of these standards or interpretations is expected to have a
material impact on the Group.
Risks and uncertainties
The principal strategic level risks and uncertainties affecting
the Group, together with the approach to their mitigation, remain
as set out on pages 24 to 27 in the 2015 Annual Report, which is
available on the Group's website (www.norcros.com).
In summary the Group's principal risks and uncertainties
are:
-- key commercial relationships;
-- accounting for customer rebates and other trade promotional spend;
-- competition;
-- reliance on production facilities;
-- staff retention and recruitment;
-- foreign currency exchange risk;
-- interest rate risk;
-- pension scheme management;
-- energy price risk;
-- additional capital requirements to fund ongoing operations;
-- performance against banking covenants;
-- changing consumer preferences;
-- overseas operations; and
-- acquisition risk.
The Chairman's Statement in this condensed consolidated interim
financial information includes comments on the outlook for the
remaining six months of the financial year.
Forward-looking statements
This condensed consolidated interim financial information
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 judgments
The preparation of condensed consolidated interim financial
information requires management to make judgments, 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 judgments 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
2015.
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.
Continuing operations -
6 months to 30 September 2015 (unaudited)
---------------------------------------------
South
UK Africa Group
Notes GBPm GBPm GBPm
---------------------------------- ----- ------------- -------------- --------------
Revenue 79.9 38.8 118.7
---------------------------------- ----- ------------- -------------- --------------
Underlying operating profit 8.0 1.9 9.9
IAS 19R administrative expenses (0.8) - (0.8)
Acquisition related costs 4 (2.6) - (2.6)
Exceptional operating items 4 2.3 - 2.3
---------------------------------- ----- ------------- -------------- --------------
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November 12, 2015 02:01 ET (07:01 GMT)
Operating profit 6.9 1.9 8.8
---------------------------------- ----- ------------- -------------- --------------
Finance costs (net) (1.8)
---------------------------------- ----- ------------- -------------- --------------
Profit before taxation 7.0
Taxation 6 (1.6)
---------------------------------- ----- ------------- -------------- --------------
Profit from continuing operations 5.4
---------------------------------- ----- ------------- -------------- --------------
Net debt 10 (29.2)
---------------------------------- ----- ------------- -------------- --------------
Continuing operations -
6 months to 30 September 2014 (unaudited)*
----------------------------------------------
South
UK Africa Group
Notes GBPm GBPm GBPm
---------------------------------- ----- ------------- --------------- --------------
Revenue 72.8 35.8 108.6
---------------------------------- ----- ------------- --------------- --------------
Underlying operating profit 6.4 1.0 7.4
IAS 19R administrative expenses (0.8) - (0.8)
Acquisition related costs 4 (0.5) - (0.5)
Exceptional operating items 4 0.3 - 0.3
---------------------------------- ----- ------------- --------------- --------------
Operating profit 5.4 1.0 6.4
---------------------------------- ----- ------------- --------------- --------------
Finance costs (net) (0.1)
---------------------------------- ----- ------------- --------------- --------------
Profit before taxation 6.3
Taxation 6 (1.6)
---------------------------------- ----- ------------- --------------- --------------
Profit from continuing operations 4.7
---------------------------------- ----- ------------- --------------- --------------
Net debt 10 (20.0)
---------------------------------- ----- ------------- --------------- --------------
* The results have been restated to reflect the revised
presentation of acquisition related costs.
Continuing operations -
Year ended 31 March 2015 (audited)
---------------------------------------
South
UK Africa Group
Notes GBPm GBPm GBPm
------------------------------------------------ ------ ----------- ------------ ------------
Revenue 149.1 73.0 222.1
------------------------------------------------ ------ ----------- ------------ ------------
Underlying operating profit 13.8 3.2 17.0
IAS 19R administrative expenses (1.7) - (1.7)
Acquisition related costs 4 (2.2) - (2.2)
Exceptional operating items 4 (2.3) (0.2) (2.5)
------------------------------------------------ ------ ----------- ------------ ------------
Operating profit 7.6 3.0 10.6
------------------------------------------------ ------ ----------- ------------ ------------
Finance income (net) 0.4
------------------------------------------------ ------ ----------- ------------ ------------
Profit before taxation 11.0
Taxation 6 (2.9)
------------------------------------------------ ------ ----------- ------------ ------------
Profit for the year from continuing operations 8.1
------------------------------------------------ ------ ----------- ------------ ------------
Net debt 10 (14.2)
------------------------------------------------ ------ ----------- ------------ ------------
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. Non-GAAP measures
Condensed Consolidated Income Statement
6 months to 6 months to Year ended
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
--------------------------------------------------------------- ------------ ------------ ----------
Profit before taxation from continuing operations 7.0 6.3 11.0
Adjusted for:
IAS 19R administrative expenses 0.8 0.8 1.7
Acquisition related costs 2.6 0.5 2.2
Exceptional operating items (2.3) (0.3) 2.5
Amortisation of costs of raising debt finance 0.1 0.1 0.1
Amortisation of costs of raising debt finance - exceptional - 0.4 0.4
Net movement on fair value of derivative financial instruments 0.5 (1.6) (3.3)
Discount on property lease provisions - - 0.1
IAS 19R finance cost 0.7 0.5 1.1
--------------------------------------------------------------- ------------ ------------ ----------
Underlying profit before taxation 9.4 6.7 15.8
Taxation attributable to underlying profit before taxation (2.1) (1.7) (2.8)
--------------------------------------------------------------- ------------ ------------ ----------
Underlying earnings 7.3 5.0 13.0
--------------------------------------------------------------- ------------ ------------ ----------
The Directors believe that underlying profit before taxation and
underlying earnings provide shareholders with additional useful
information on the underlying performance of the Group. Underlying
profit before taxation is defined as profit before taxation, IAS
19R administrative expenses, acquisition related costs, exceptional
operating items, exceptional finance costs, 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.
6 months to 6 months to Year ended
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------------------------- ------------ ------------ ----------
Operating profit from continuing operations 8.8 6.4 10.6
Adjusted for:
Depreciation 2.9 3.0 6.0
IAS 19R administrative expenses 0.8 0.8 1.7
Acquisition related costs 2.6 0.5 2.2
Exceptional operating items (2.3) (0.3) 2.5
-------------------------------------------- ------------ ------------ ----------
Underlying EBITDA 12.8 10.4 23.0
-------------------------------------------- ------------ ------------ ----------
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EBITDA is a measure commonly used by investors and financiers to
assess business performance. Underlying EBITDA has been provided
which reflects EBITDA as adjusted for IAS 19R administrative
expenses, acquisition related costs and exceptional operating
items. The Directors consider that these measures provide
shareholders with additional useful information on the performance
of the Group.
Condensed Consolidated Statement of Cash Flow
6 months to 6 months to Year ended
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
----------------------------------------------------------------------------- ------------ ------------ ----------
Cash generated from continuing operations (note 10) 12.9 9.9 16.1
Adjusted for:
Cash (inflows)/outflows from exceptional items and acquisition related costs (0.7) 0.7 4.7
Pension fund deficit recovery contributions 1.1 1.0 2.1
----------------------------------------------------------------------------- ------------ ------------ ----------
Underlying operating cash flow 13.3 11.6 22.9
----------------------------------------------------------------------------- ------------ ------------ ----------
Underlying operating cash flow is defined as cash generated from
continuing operations before cash outflows from exceptional items
and pension fund deficit recovery contributions.
The Directors believe that underlying operating cash flow
provides shareholders with additional useful information on the
underlying cash generation of the Group.
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
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
--------------------------------- ------------ ------------ ----------
Acquisition related costs
Deferred remuneration(1) 1.2 0.3 1.1
Intangible asset amortisation(2) 0.3 0.2 0.3
Staff costs and advisory fees(3) 1.1 - 0.8
--------------------------------- ------------ ------------ ----------
2.6 0.5 2.2
--------------------------------- ------------ ------------ ----------
1 Consideration payable to the former shareholders of Vado and
Croydex which 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 the acquisitions of Vado and Croydex.
3 Costs of maintaining an in-house acquisitions department and
professional advisory fees incurred in connection with the Group's
business combination activities. In the 6 months to 30 September
2015 this included GBP0.8m in connection with the acquisition of
Croydex.
6 months to 6 months to Year ended
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------------ ------------ ------------ ----------
Exceptional operating items
Legal claim(1) (1.9) 0.1 0.3
Pension scheme settlement gain(2) (0.4) - (1.7)
Profit on disposal of surplus property(3) - (0.4) (0.4)
Sheffield lease surrender(4) - - 2.5
Loss on disposal of property portfolio(5) - - 1.5
Restructuring costs(6) - - 0.3
(2.3) (0.3) 2.5
------------------------------------------ ------------ ------------ ----------
1 The legal claim relating to the land at the Highgate site in
Tunstall, UK was settled in the period. Under the terms of the
settlement with Wm Morrison Supermarkets plc the Group received a
payment of GBP2.0m. Costs in connection with the claim of GBP0.1m
were incurred in the period (2014: GBP0.1m).
2 The Group implemented a liability management exercise in the
previous year in connection with its principal UK defined benefit
pension scheme. This resulted in a further settlement gain of
GBP0.4m being recognised in the period in addition to the GBP1.7m
gain in the previous year.
3 A profit of GBP0.4m was generated in the previous year
following the sale of a small parcel of land in Braintree, UK.
4 In the previous year the Group exited its onerous lease in
connection with the Orgreave Drive, Sheffield property at a cost of
GBP2.5m.
5 The Group's remaining surplus freehold property portfolio was
sold to Clowes Developments (UK) Ltd in March 2015 for net proceeds
of GBP6.1m, leading to a loss on disposal of GBP1.5m.
6 Restructuring costs related to redundancies and asset
write-downs as a result of restructuring initiatives throughout the
Group's business units.
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 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.
As described in note 9, on 29 September 2015 the Company
consolidated its existing ordinary shares of 1p each into new
ordinary shares of 10p each. In order to effect fair comparison,
the comparative figures for share numbers and earnings per share
have been restated to reflect the impact of the share
consolidation.
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
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
--------------------------------------------------- ------------ ------------ ----------
Profit for the period from continuing operations 5.4 4.7 8.1
Profit for the period from discontinued operations - 0.1 0.1
--------------------------------------------------- ------------ ------------ ----------
Profit for the period 5.4 4.8 8.2
--------------------------------------------------- ------------ ------------ ----------
6 months to 6 months to Year ended
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
Number Number
Number (restated) (restated)
----------------------------------------------------------------- ------------ ------------ -----------
Weighted average number of shares for basic earnings per share 60,126,284 58,959,370 59,223,135
Share options and warrants 1,902,048 2,159,547 2,303,299
Weighted average number of shares for diluted earnings per share 62,028,332 61,118,917 61,526,434
----------------------------------------------------------------- ------------ ------------ -----------
6 months to 6 months to Year ended
30 September 30 September 31 March
2015 2014 2015
(unaudited) (audited)
(unaudited) (restated) (restated)
----------------------------- ------------ ------------ -----------
Basic earnings per share:
From continuing operations 9.0p 8.0p 13.6p
From discontinued operations - 0.2p 0.2p
----------------------------- ------------ ------------ -----------
From profit for the period 9.0p 8.2p 13.8p
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----------------------------- ------------ ------------ -----------
Diluted earnings per share:
From continuing operations 8.7p 7.7p 13.1p
From discontinued operations - 0.2p 0.2p
----------------------------- ------------ ------------ -----------
From profit for the period 8.7p 7.9p 13.3p
----------------------------- ------------ ------------ -----------
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
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------------------------- ------------ ------------ ----------
Underlying earnings for the period (note 3) 7.3 5.0 13.0
-------------------------------------------- ------------ ------------ ----------
6 months to 6 months to Year ended
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
-------------------------------------- ------------ ------------ ----------
Basic underlying earnings per share 12.2p 8.4p 21.9p
Diluted underlying earnings per share 11.8p 8.1p 21.1p
-------------------------------------- ------------ ------------ ----------
6. Taxation
Taxation comprises:
6 months to 6 months to Year ended
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------------------------------- ------------ ------------ ----------
Current
UK taxation 0.5 0.5 0.4
Deferred
Origination and reversal of temporary differences 1.1 1.1 2.5
-------------------------------------------------- ------------ ------------ ----------
Taxation 1.6 1.6 2.9
-------------------------------------------------- ------------ ------------ ----------
Current tax expense is recognised based on management's estimate
of the weighted average annual income tax rate expected for the
full financial year.
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. Deferred tax is calculated in full on
temporary differences under the liability method.
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
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------------------------------------- ------------ ------------ ----------
Deferred tax asset at the beginning of the period 13.8 11.6 11.6
Charged to the income statement (1.1) (1.1) (2.5)
(Charged)/credited to statement of comprehensive income (0.4) 3.7 4.7
Acquisitions (see note 13) (0.8) - -
Exchange movement (0.3) (0.1) -
-------------------------------------------------------- ------------ ------------ ----------
Deferred tax asset at the end of the period 11.2 14.1 13.8
-------------------------------------------------------- ------------ ------------ ----------
At At At
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
----------------------------------------------- ------------ ------------ ---------
Accelerated capital allowances 2.6 2.9 2.7
Tax losses 2.5 3.8 3.3
Other timing differences (2.4) (0.7) (1.1)
Deferred tax asset relating to pension deficit 8.5 8.1 8.9
----------------------------------------------- ------------ ------------ ---------
11.2 14.1 13.8
----------------------------------------------- ------------ ------------ ---------
7. Finance income and costs
6 months to 6 months to Year ended
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
----------------------------------------------------------- ------------ ------------ ----------
Finance costs
Interest payable on bank borrowings 0.5 0.7 1.2
Amortisation of costs of raising debt finance 0.1 0.1 0.1
Movement on fair value of derivative financial instruments 0.5 - -
Unwind of discount on property lease provisions - - 0.1
----------------------------------------------------------- ------------ ------------ ----------
Finance costs 1.1 0.8 1.4
----------------------------------------------------------- ------------ ------------ ----------
Exceptional finance costs(1) - 0.4 0.4
----------------------------------------------------------- ------------ ------------ ----------
Total finance costs 1.1 1.2 1.8
----------------------------------------------------------- ------------ ------------ ----------
Finance income
Movement on fair value of derivative financial instruments - (1.6) (3.3)
----------------------------------------------------------- ------------ ------------ ----------
Total finance income - (1.6) (3.3)
----------------------------------------------------------- ------------ ------------ ----------
1 Following the refinancing of the Group's banking facilities in
July 2014, the unamortised costs relating to the previous facility
were written off in full.
8. Borrowings
At At At
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
--------------------------------- ------------ ------------ ---------
Non-current
Bank borrowings (unsecured):
- bank loans 33.0 21.0 19.0
- less: costs of raising finance (0.5) (0.6) (0.6)
--------------------------------- ------------ ------------ ---------
Total non-current 32.5 20.4 18.4
--------------------------------- ------------ ------------ ---------
Current
Bank borrowings (unsecured):
- bank overdrafts 4.5 4.1 1.4
--------------------------------- ------------ ------------ ---------
Total borrowings 37.0 24.5 19.8
--------------------------------- ------------ ------------ ---------
The fair value of bank loans equals their carrying amount as
they bear interest at floating rates.
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The repayment terms of borrowings are as follows:
At At At
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
----------------------------------------------------- ------------ ------------ ---------
Not later than one year 4.5 4.1 1.4
----------------------------------------------------- ------------ ------------ ---------
After more than one year:
- between one and two years - - -
- later than two years and not later than five years 33.0 21.0 19.0
- costs of raising finance (0.5) (0.6) (0.6)
----------------------------------------------------- ------------ ------------ ---------
32.5 20.4 18.4
----------------------------------------------------- ------------ ------------ ---------
Total borrowings 37.0 24.5 19.8
----------------------------------------------------- ------------ ------------ ---------
In July 2014 the Group agreed an unsecured GBP70m revolving
credit facility with a GBP30m accordion facility with Lloyds Bank
plc, Barclays Bank plc and HSBC Bank plc. The banking facility is
in force for five years to July 2019.
Net debt
The Group's net debt is calculated as follows:
At At At
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
-------------------------- ------------ ------------ ---------
Cash and cash equivalents (7.8) (4.5) (5.6)
Total borrowings 37.0 24.5 19.8
-------------------------- ------------ ------------ ---------
Net debt 29.2 20.0 14.2
-------------------------- ------------ ------------ ---------
9. Called up share capital
At At At
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
--------------------------------------- ------------ ------------ ---------
Issued and fully paid
60,995,930 ordinary shares of 10p each 6.1 - -
594,917,377 ordinary shares of 1p each - 5.9 6.0
--------------------------------------- ------------ ------------ ---------
Total 6.1 5.9 6.0
--------------------------------------- ------------ ------------ ---------
Following the approval by shareholders of the consolidation of
1p ordinary shares into ordinary shares of 10p at the Annual
General Meeting of the Company held on 22 July 2015, the Company
duly completed the share capital consolidation with a record date
of 29 September 2015. As a result of the consolidation, the
ordinary shares of 1p each were amended to new ordinary shares of
10p each. The share consolidation had no impact on the value of the
Company's issued and fully paid share capital.
10. Consolidated Cash Flow Statements
(a) Cash generated from continuing operations
6 months to 6 months to Year ended
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------------------------------------------------ ------------ ------------ ----------
Profit before taxation 7.0 6.3 11.0
Adjustments for:
- IAS 19R administrative expenses included in the above 0.8 0.8 1.7
- acquisition related costs included in the above 2.6 0.5 2.2
- exceptional operating items included in the above (2.3) (0.3) 2.5
- cash inflows/(outflows) from exceptional items and acquisition related costs 0.7 (0.7) (4.7)
- depreciation 2.9 3.0 6.0
- pension fund deficit recovery plan contributions (1.1) (1.0) (2.1)
- loss on disposal of property, plant and equipment - - 0.1
- total finance costs 1.1 1.2 1.8
- finance income - (1.6) (3.3)
- IAS 19R finance cost 0.7 0.5 1.1
- share-based payments 0.7 0.6 1.3
------------------------------------------------------------------------------ ------------ ------------ ----------
Operating cash flows before movements in working capital 13.1 9.3 17.6
Changes in working capital:
- increase in inventories (4.4) (1.4) (2.0)
- increase in trade and other receivables (1.0) (0.8) (1.4)
- increase in payables 5.2 2.8 1.9
------------------------------------------------------------------------------ ------------ ------------ ----------
Cash generated from continuing operations 12.9 9.9 16.1
------------------------------------------------------------------------------ ------------ ------------ ----------
Cash flows from exceptional items 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) Cash generated from discontinued operations
6 months to 6 months to Year ended
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
--------------------------------------------------------- ------------ ------------ ----------
Profit before taxation - - -
Adjustments for:
- depreciation - - -
--------------------------------------------------------- ------------ ------------ ----------
Operating cash flows before movements in working capital - - -
Changes in working capital:
- decrease in inventories - 0.4 0.4
- increase in trade and other receivables - (0.1) (0.1)
- decrease in payables - (0.2) (0.2)
--------------------------------------------------------- ------------ ------------ ----------
Cash generated from discontinued operations - 0.1 0.1
--------------------------------------------------------- ------------ ------------ ----------
Cash generated from operations 12.9 10.0 16.2
--------------------------------------------------------- ------------ ------------ ----------
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(c) Analysis of net debt
Cash included within Cash and
assets held-for-sale overdrafts Debt Total
GBPm GBPm GBPm GBPm
------------------------- -------------------- ---------- ------ ------
At 1 April 2014 0.5 3.2 (30.6) (26.9)
Cash flow (0.5) 1.1 12.1 12.7
Other non-cash movements - - 0.1 0.1
Exchange movement - (0.1) - (0.1)
------------------------- -------------------- ---------- ------ ------
At 31 March 2015 - 4.2 (18.4) (14.2)
------------------------- -------------------- ---------- ------ ------
At 1 April 2014 0.5 3.2 (30.6) (26.9)
Cash flow (0.5) (2.7) 10.1 6.9
Other non-cash movements - - 0.1 0.1
Exchange movement - (0.1) - (0.1)
------------------------- -------------------- ---------- ------ ------
At 30 September 2014 - 0.4 (20.4) (20.0)
------------------------- -------------------- ---------- ------ ------
At 1 April 2015 - 4.2 (18.4) (14.2)
Cash flow - (0.1) (14.0) (14.1)
Other non-cash movements - - (0.1) (0.1)
Exchange movement - (0.8) - (0.8)
------------------------- -------------------- ---------- ------ ------
At 30 September 2015 - 3.3 (32.5) (29.2)
------------------------- -------------------- ---------- ------ ------
11. Dividends
A final dividend in respect of the year ended 31 March 2015 of
GBP2.2m (0.375p per 1p ordinary share) was paid on 29 July 2015. On
12 November 2015 the Board declared an interim dividend in respect
of the year ended 31 March 2016 of GBP1.3m (2.2p per 10p ordinary
share). This dividend will be paid on 7 January 2016 and is not
reflected in this condensed consolidated interim financial
information.
12. Retirement benefit obligations
(a) Pension costs
Norcros Security Plan
The Norcros Security Plan (the "Plan"), the principal UK pension
scheme of Norcros plc 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 valuation used for IAS 19R disclosures has been produced by
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 2015. Scheme assets are stated at their
market value at 30 September 2015.
(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
2015 2014 2015
--------------------- ------------ ------------ --------
Discount rate 3.80% 3.90% 3.30%
Inflation rate (RPI) 3.00% 3.05% 2.90%
Inflation (CPI) 2.00% 2.05% 1.90%
Salary increases 2.25% 3.30% 2.15%
--------------------- ------------ ------------ --------
The amounts recognised in the Condensed Consolidated Balance
Sheet are determined as follows:
At At At
30 September 30 September 31 March
2015 2014 2015
(unaudited) (unaudited) (audited)
GBPm GBPm GBPm
------------------------------------ ------------ ------------ ---------
Total market value of scheme assets 367.8 385.0 397.0
Present value of scheme liabilities (410.2) (425.6) (441.3)
------------------------------------ ------------ ------------ ---------
Pension deficit (42.4) (40.6) (44.3)
------------------------------------ ------------ ------------ ---------
13. Business combinations
On 25 June 2015, the Group acquired 100% of the ordinary share
capital of Croydex Group Limited ("Croydex"), a market leading,
innovative designer, manufacturer and distributor of high quality
bathroom furnishings and accessories. The acquisition of Croydex is
an important next step in the Group's growth strategy to increase
revenue to GBP420m by 2018 and follows on from the very successful
integration of the Vado business, which Norcros acquired in March
2013. Adding the Croydex business to the Group's existing portfolio
will increase the breadth of our product range in the bathroom
segment and enable the Group to offer an even broader range of
complementary bathroom products to our customers. Croydex will also
benefit from the global distribution channels, sourcing skills and
strong financial position of the enlarged Group. Croydex is
incorporated in England and is based in Andover, Hampshire.
The following table summarises the consideration paid for
Croydex and the provisional fair value of the assets acquired and
the liabilities assumed:
GBPm
------------------------- -----
Consideration
Cash 20.8
Deferred consideration 1.1
------------------------- -----
21.9
------------------------ -----
GBPm
--------------------------------------------------- ---------
Recognised amounts of identifiable assets and liabilities
Intangible assets 7.9
Property, plant and equipment 1.6
Inventories 2.8
Trade and other receivables 5.0
Cash 3.5
Trade and other payables (5.7)
Current tax liabilities (0.2)
Deferred tax liability (0.8)
Total identifiable net assets 14.1
--------------------------------------------------- ---------
Goodwill 7.8
Total 21.9
--------------------------------------------------- ---------
Due to the proximity of the acquisition date to the date of this
interim statement it has not been possible for the Group to
finalise the fair values of Croydex's assets and liabilities. The
provisional fair value adjustments reflect the preliminary
assessment of the value of acquired intangible assets of GBP7.9m,
the revaluation of the leasehold property of GBP0.9m, and a
deferred tax liability of GBP1.0m mainly arising from the
recognition of acquired intangible assets. A full review of the
fair values of the identifiable assets and liabilities will take
place over the coming months with the expectation that a revised
position will be presented in the Group's Annual Report for the
year ended 31 March 2016.
In most business combinations there is an element of cost which
cannot be allocated against the individual assets and liabilities
acquired. This residual amount is recognised as goodwill and is
supported by a number of factors which do not meet the criteria
required for them to be treated as intangible assets. In this case
the most significant elements relate to Croydex's unique product
portfolio and its knowledgeable workforce. It is not expected at
this stage that any of the goodwill will be deductible for tax
purposes.
The fair value of trade and other receivables is GBP5.0m, which
includes trade receivables with a fair value of GBP4.6m. The gross
contractual amount for trade receivables due is GBP4.8m, of which
GBP0.2m is expected to be uncollectible.
Costs relating to the transaction of GBP0.8m have been expensed
to the Consolidated Income Statement and included within
acquisition related costs.
The deferred consideration of GBP1.1m is unconditional and will
be paid in the year ended 31 March 2019. As part of the
transaction, a long-term incentive scheme has been put in place for
the Croydex Managing Director which is dependent on the financial
performance of Croydex over the next three years. The maximum
amount and current expectation is that GBP0.9m will be payable
under this scheme which will be treated as deferred remuneration
and included within acquisition related costs in the Consolidated
Income Statement.
The revenue included in the Condensed Consolidated Statement of
Comprehensive Income since 25 June 2015 contributed by Croydex was
GBP5.8m. Over the same period, Croydex contributed profit after tax
of GBP0.6m. Had Croydex been consolidated from the beginning of the
period, the Condensed Consolidated Statement of Income would have
shown pro-forma revenue of GBP123.7m and pro-forma profit after tax
of GBP5.6m.
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