TIDMNXR
RNS Number : 8846B
Norcros PLC
12 June 2019
12 June 2019
Norcros plc
Results for the year ended 31 March 2019
'The Group's tenth consecutive year of revenue and underlying
operating profit growth'
Norcros, a market leading supplier of high quality and
innovative bathroom and kitchen products, today announces its
results for the year ended 31 March 2019.
Financial Summary
2019 2018 % change % change
as reported at constant
currency
Revenue GBP331.0m GBP300.1m +10.3% +11.6%
-------------- -------------- ------------- -------------
Underlying operating profit* GBP34.4m GBP27.4m +25.5% +27.4%
-------------- -------------- ------------- -------------
Underlying profit before
taxation* GBP32.6m GBP26.3m +24.0%
-------------- -------------- ------------- -------------
Underlying diluted EPS* 31.7p 29.5p +7.5%
-------------- -------------- ------------- -------------
Underlying operating cash
flow* GBP39.8m GBP31.0m +28.4%
-------------- -------------- ------------- -------------
Operating profit GBP25.1m GBP19.6m +28.1%
-------------- -------------- ------------- -------------
Net debt GBP35.0m GBP47.1m
-------------- -------------- ------------- -------------
Dividend per share 8.4p 7.8p +7.7%
-------------- -------------- ------------- -------------
* Definitions of alternative performance measures are provided
in note 5.
Highlights
-- Tenth consecutive year of growth
-- Underlying operating profit up 25.5% at GBP34.4m (2018: GBP27.4m)
-- Group operating profit was GBP25.1m (2018: GBP19.6m)
-- Underlying ROCE at 18.2% (2018: 18.0%)
-- Full year dividend increased by 7.7% to 8.4p
-- Strong cash generation - net debt reduced by GBP12.1m to GBP35.0m
-- Acquisition of House of Plumbing completed on 1 April 2019
-- Group strategy - strong progress
Martin Towers, Chairman, commented:
"I am delighted to announce that Norcros has recorded another
year of growth despite the uncertain economic and political
backdrop in our two main markets. This reflects the resilience of
the Group's business model and the success of our acquisition
strategy. It also represents the Group's tenth consecutive year of
revenue and underlying operating profit growth, which is a
testament to the management team, the strategy and its highly
successful execution. Whilst market conditions are likely to remain
challenging, the Board is confident that these attributes will
continue to drive market outperformance leading to further progress
in the current year consistent with our strategic objectives."
There will be a presentation today at 9.30 am for analysts at
the offices of Hudson Sandler, 25 Charterhouse Square, London, EC1M
6AE. The supporting slides will be available on the Norcros website
at http://www.norcros.com later in the day.
Enquiries
Norcros plc Tel: 01625 547700
Nick Kelsall, Group Chief Executive
Shaun Smith, Group Finance Director
Hudson Sandler Tel: 0207 796 4133
Nick Lyon
Nelly Akpaka
Notes to Editors
Norcros is a market leading supplier of high quality and
innovative bathroom and kitchen products with operations primarily
in the UK and South Africa.
-- Based in the UK, Norcros operates under seven brands:
-- Triton - Market leader in the manufacture and marketing of showers in the UK
-- Merlyn - The UK and Ireland's No.1 supplier of shower
enclosures and trays to the residential, commercial and hospitality
sectors
-- Vado - A leading manufacturer and supplier of taps, mixer
showers, bathroom accessories and valves
-- Croydex - A market-leading, innovative designer, manufacturer
and distributor of high quality bathroom furnishings and
accessories
-- Abode - A leading niche designer and distributor of high
quality kitchen taps, bathroom taps, and kitchen sinks
-- Johnson Tiles - The leading manufacturer and supplier of ceramic tiles in the UK
-- Norcros Adhesives - Manufacturer of tile & stone adhesives, grouts and related products
-- Based in South Africa, Norcros operates under four brands:
-- Tile Africa - Chain of retail stores focused on ceramic and
porcelain tiles, and associated products such as sanitaryware,
showers and adhesives
-- Johnson Tiles South Africa - Manufacturer of ceramic and porcelain tiles
-- TAL - The leading manufacturer of ceramic and building adhesives
-- House of Plumbing - Market leading supplier of specialist plumbing materials
-- Norcros is headquartered in Wilmslow, Cheshire and employs
around 2,200 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
Overview
I am delighted to announce that Norcros has recorded another
year of growth despite the uncertain economic and political
backdrop in our two main markets. This reflects the resilience of
the Group's business model and the success of our acquisition
strategy. It also represents the Group's tenth consecutive year of
revenue and underlying operating profit growth, which is a
testament to the management team, the strategy and its highly
successful execution.
Group revenue for the year was GBP331.0m, 10.3% higher than the
prior year on a reported basis, 11.6% higher on a constant currency
basis and 2.3% higher on a like for like constant currency basis.
Underlying operating profit at GBP34.4m was 25.5% higher than the
prior year, mainly reflecting the full-year contribution from
Merlyn, the return to profitability of Johnson Tiles UK after the
restructuring implemented in April 2018 and the strong performance
at Triton. This has resulted in a 7.5% increase in underlying
diluted earnings per share to 31.7p (2018: 29.5p).
Acquisition of House of Plumbing
The Group announced on 16 January 2019 its acquisition in South
Africa of the House of Plumbing business which completed on 1 April
2019 for a total consideration of up to ZAR 215m (approximately
GBP12.1m). The acquisition, funded entirely from local cash
resources and existing facilities, is a further step in the Group's
strategy to expand its bathroom product portfolio and follows on
from a number of successful acquisitions, most recently that of
Merlyn, which performed strongly in the year. House of Plumbing
offers a range of complementary products and further reinforces the
Group's strong positions in the commercial and specification
segments of the market and will benefit from the additional
distribution channels, procurement experience and strong financial
position of the enlarged Group.
Brexit
The impact of Brexit on the Group remains an important
short-term consideration for our businesses with potential
consequences ranging from increases in cost prices, additional
tariffs, lower consumer confidence levels and supply chain
disruption. We have identified specific risks relevant to our
business and prepared mitigation plans which are well developed.
However, at this stage, whilst we are prepared, the high level of
uncertainty of both the financial and political implications of
Brexit make the success of mitigation activities difficult to
predict.
Dividend
The Board is recommending a final dividend for the year of 5.6p
(2018: 5.2p) per share. When combined with the interim dividend of
2.8p (2018: 2.6p) per share, which was paid on 11 January 2019,
this will make a total dividend for the year of 8.4p (2018: 7.8p)
per share, a 7.7% increase on the previous year.
Pension scheme
The net deficit relating to our UK defined benefit pension
scheme (as calculated under IAS 19R) has reduced to GBP31.6m at 31
March 2019 from GBP48.0m at 31 March 2018, primarily due to the
impact of the actual mortality rates experienced in the scheme.
We have reached agreement with the pension scheme Trustee on the
2018 actuarial valuation and on a new recovery plan. The actuarial
deficit at 1 April 2018 was GBP49.3m (2015: GBP73.5m) and
contributions of GBP3.25m per annum plus CPI will be payable for
the 6.5 years to 30 September 2025. The Company and the Trustee
regard this as an appropriate outcome. We remain confident that our
pension obligations continue to be appropriately funded and well
managed.
Governance
As Chairman, one of my primary responsibilities is to ensure
that the Group operates to the highest standards in all aspects of
governance and risk management. Our aim at Norcros is to manage a
growing business effectively, while ensuring that proper operating
procedures and internal controls are maintained at all times.
Transparency is central to this objective and you will find more
detail about our approach and progress over the last year in the
Corporate Governance section of the Report and Accounts 2019.
People
We regard our employees as our most valuable asset and in
recognition of this the Group aims to create an environment in
which they can see their careers develop. On behalf of the Board I
would like to once more thank the Group's employees who have helped
to deliver upon the Group's strategic objectives and in particular
for their dedication and contribution over the last twelve months.
I would also like to welcome the management team and employees of
the House of Plumbing business to the Group.
Strategy
The Group refreshed its "strategy for growth" at its successful
Analyst and Investor Day in April 2018 and launched the next phase
of its development, targeting further growth as part of its 2023
vision. This included an update of our strategic targets which are
set out in the Group Chief Executive's statement. I am pleased to
report that we have made good progress against these targets in the
year.
The Board believes that our focus on our 2023 vision of being a
leading supplier of bathroom and kitchen products in selected
geographies, offering strong brands, contemporary designs with a
reputation for quality, outstanding service and innovation will
continue to deliver improved and sustainable returns for our
shareholders.
Summary
The Group has delivered another robust performance in 2018/19
despite challenging market conditions. This demonstrates the
resilience of our Group with its market leading positions,
well-established brands, superior product and service offer and
strong financial position. In addition, through the acquisition of
the House of Plumbing business at the year-end the Group has taken
a further step in its growth strategy by expanding its bathroom
product portfolio and commercial and specification offer in South
Africa on the back of strong organic revenue growth in that market.
It is also particularly pleasing to note the strong performances of
both Merlyn, in its first full year since its acquisition in
November 2017, and Triton as well as the return to profitability of
Johnson Tiles UK following the restructuring of the business, as
announced in April 2018.
Whilst market conditions are likely to remain challenging, the
Board is confident that these attributes will continue to drive
market outperformance leading to further progress in the current
year consistent with our strategic objectives.
Group Chief Executive's Statement
Overview
The Group has achieved an important milestone in the year
recording an uninterrupted decade of year on year revenue and
underlying operating profit growth. Group revenue for the year
increased by 10.3% to GBP331.0m (2018: GBP300.1m) on a reported
basis, 11.6% on a constant currency basis, and 2.3% on a
like-for-like constant currency basis. Group underlying operating
profit was GBP34.4m, 25.5% higher than the GBP27.4m recorded in the
prior year. Group revenue and Group underlying operating profit
were GBP154.2m and GBP7.0m respectively in the year ended 31 March
2009.
Revenue in the UK was GBP228.1m for the year (2018: GBP200.6m)
up 13.7% on prior year principally reflecting the full year
contribution from Merlyn which has continued to perform strongly
since acquisition. On a like for like basis UK revenue was broadly
flat across the year having been 4.1% lower in the first half,
recovering strongly with a 3.8% increase in the second half. The
weaker first-half was largely due to significantly lower retail
revenue at Johnson Tiles UK, which was anticipated and mainly due
to the Kingfisher unified programme. Johnson Tiles apart, second
half UK like for like revenue increased by 5.0% compared to an
increase of 2.5% in the first half on the same basis. The strong
second half growth was driven by market share gains as new range
listings were secured benefiting from access to the Group's
extensive customer base and its strong financial position.
UK underlying operating profit for the year was 42.5% higher
than the prior year at GBP26.5m (2018: GBP18.6m) with an underlying
operating margin of 11.6% (2018: 9.3%). The improvement in profit
and margin in the year mainly reflected the full year contribution
from Merlyn, the return to profitability of Johnson Tiles after the
successful execution of the restructuring programme and the strong
performance at Triton.
Our South African business again delivered strong revenue growth
despite a challenging market and an uncertain political
environment. Revenue in South Africa of GBP102.9m (2018: GBP99.5m)
was 7.2% higher than the prior year on a constant currency basis
and 3.4% higher on a reported basis, continuing the strong
outperformance of recent years. In Johnson Tiles SA revenue growth
was driven by the focus on the independent customer base and the
strong new product programme supported by the increase in
manufacturing capacity. In TAL, developments in our flooring ranges
and preferred partner status in construction projects led to growth
ahead of the market. In Tile Africa, revenue growth benefitted from
the excellent progress made in the bathroom and tap category,
driven in part by access to the wider-group supply chain, and also
growth in the specification channel due to the "one-stop-shop"
business model that has been implemented.
South African underlying operating profit for the year was,
however, 10.2% lower at GBP7.9m (2018: GBP8.8m) including a GBP0.4m
adverse impact from a weaker Rand. Underlying profitability and
return on sales at 7.7% (2018: 8.8%) were lower than prior year
reflecting the impact of a planned and non-comparable plant
shutdown at Johnson Tiles South Africa to effect the plant capacity
increase in the first half of the year, competitive pricing
pressures on some volume lines and power rationing that impacted
production and revenue in the final quarter of the year.
Group underlying operating profit at GBP34.4m (2018: GBP27.4m)
was 25.5% higher than the prior year, with Group underlying
operating margins increasing to 10.4% (2018: 9.1%). Underlying
operating cash flow improved by 28.4% to GBP39.8m (2018: GBP31.0m)
reflecting the improved underlying operating profit and continued
focus on working capital management.
The Group has a strong balance sheet with net debt of GBP35.0m
(2018: GBP47.1m), and leverage of 0.8 times underlying EBITDA
(2018: pro forma 1.2 times).
On 16 January 2019 the Group announced the acquisition of House
of Plumbing, a market leading supplier of specialist plumbing
materials to the specification and commercial segment of the market
for a total consideration of up to ZAR 215m (approximately
GBP12.1m). The transaction completed on 1 April 2019 following
clearance from the South African Competition Authority. The
business operates from three branches in South Africa located in
Johannesburg (which is also where the head office is based),
Pretoria and Lephalale and employs 102 people, being led by an
experienced management team who are staying with the business. For
the year ended 30 April 2018, House of Plumbing's audited financial
statements showed revenue of ZAR 392m (approximately GBP22.1m),
EBITDA of ZAR 33m (approximately GBP1.9m) and profit before tax of
ZAR 34m (approximately GBP1.9m).
Strategy
In April 2018 we launched a refreshed strategy for growth and a
2023 vision for the Group, including an updated set of strategic
targets. During the year we have made good progress against the
strategic targets which were: to increase Group revenue to GBP600m
by 2023; to maintain revenue derived outside of the UK at
approximately 50% of Group revenue; and to sustain a pre-tax return
on underlying capital employed of more than 15% over the economic
cycle.
Group revenue in the current year has increased by 10.3% to
GBP331.0m with our progress against the strategic targets
reflecting the combination of acquisition driven growth of 9.2%,
underlying organic growth of 2.3% and currency headwinds of -1.2%.
A key factor in our strategy for revenue growth is the continued
innovation of our product offer, reflected in 34% of the year's
revenue (2018: 34%) being generated from products launched in the
previous 3 years.
On a Sterling reported basis, Group revenue derived outside of
the UK was 41.7% (2018: 44.3%), reflecting a full year of Merlyn's
sales which are mainly in the UK. On a pro-forma basis including
the House of Plumbing business and in constant currency terms, we
are much more closely in line with our target at 46.4%.
Along with our existing business portfolio all the recently
acquired businesses have made a significant contribution towards
the Group's underlying return on capital employed of 18.2% (2018:
18.0%), which is ahead of our strategic target.
The performance of the Merlyn business in its first full year
under Norcros ownership has been particularly pleasing. The
business has already benefited from being part of the wider Norcros
Group with further penetration of the specification channel being a
direct result. There are also several potential new business
opportunities being pursued in areas where Merlyn isn't currently
represented utilising the strong positions and customer
relationships enjoyed by other Group brands.
I am confident that we remain on track against our ambitious
2023 strategic targets. Looking forward, the combination of our
successful record of targeting, acquiring, integrating and
subsequently growing quality businesses within the Group, together
with our leading customer service, best in class quality and
innovative product development, gives me confidence that we will
continue to make progress against our strategic targets and create
value for our shareholders.
Summary and outlook
The Group has made good progress against its refreshed strategic
targets during the year.
Whilst the UK market remains challenging with the Brexit outcome
and the fragile political situation impeding activity levels, the
strong performance of Triton and Merlyn in combination with a
return to profitability of Johnson Tiles UK, together with the
further development and progress in our other UK brands provides
confidence that the business is well placed to capture further
growth opportunities as they arise.
Our South African business has continued to deliver revenue
growth, notwithstanding the political uncertainty and a challenging
economic environment. Whilst there have been some short-term
challenges which have impacted this year's profits the medium-term
outlook in South Africa remains positive.
The markets in which we operate in the UK and South Africa
remain highly fragmented and continue to provide excellent organic
and acquisitive growth opportunities. Our most recent acquisition
of the House of Plumbing business in South Africa is a good example
of the Group capitalising on growth opportunities, as we have
expanded our product offering to the important commercial and
specification segments as well as providing further opportunities
to drive growth through geographical expansion of this business and
also through our existing distribution channels.
With our leading market positions, portfolio of strong brands,
continued new product investment, experienced management team and
strong financial position, the Board remains confident that the
Group will continue to make further progress for the year ending 31
March 2020.
Business performance
2019 2018
GBPm GBPm
--------------------------------- ------ ------
Revenue 331.0 300.1
--------------------------------- ------ ------
Operating profit 25.1 19.6
IAS 19R administrative expenses 1.5 1.4
Acquisition related costs 3.8 4.3
Exceptional operating items 4.0 2.1
--------------------------------- ------ ------
Underlying operating profit 34.4 27.4
--------------------------------- ------ ------
2019 2018
GBPm GBPm
--------------------------------------------------- ------ ------
Revenue - UK 228.1 200.6
Revenue - South Africa 102.9 99.5
--------------------------------------------------- ------ ------
Revenue - Group 331.0 300.1
--------------------------------------------------- ------ ------
Underlying operating profit - UK 26.5 18.6
Underlying operating profit - South Africa 7.9 8.8
--------------------------------------------------- ------ ------
Underlying operating profit - Group 34.4 27.4
--------------------------------------------------- ------ ------
Underlying operating profit margin - UK 11.6% 9.3%
Underlying operating profit margin - South Africa 7.7% 8.8%
--------------------------------------------------- ------ ------
Underlying operating profit margin - Group 10.4% 9.1%
--------------------------------------------------- ------ ------
2019 2018
GBPm GBPm
------------------------------------------ ------ ------
Underlying operating profit 34.4 27.4
Depreciation and underlying amortisation 6.9 6.4
------------------------------------------ ------ ------
Underlying EBITDA 41.3 33.8
Net working capital movement (2.1) (2.8)
Share-based payments 1.2 0.9
Cash settlement of share options (0.6) (0.9)
------
Underlying operating cash flow 39.8 31.0
------------------------------------------ ------ ------
Business review - UK
In the UK revenue was 13.7% higher than the prior year at
GBP228.1m (2018: GBP200.6m), principally reflecting the full year
contribution from Merlyn which has continued to perform strongly
since acquisition. The full year like for like revenue (excluding
revenues from Merlyn) was broadly the same as the prior year
largely due to significantly lower retail revenues at Johnson
Tiles, which was anticipated and mainly due to the Kingfisher
unified programme. This mainly impacted the first half of the year
which saw like for like revenue decrease by 4.1%. The second half
performance was much improved reflecting revenue growth on a like
for like basis of 3.8% driven by market share gains as new range
listings were secured benefiting from access to the Group's
extensive customer base and its strong financial position.
Underlying operating profit grew by GBP7.9m to GBP26.5m (2018:
GBP18.6m) with an operating margin of 11.6% (2018: 9.3%). This
mainly reflected a full year contribution from Merlyn combined with
the return to profitability of Johnson Tiles UK following the
successful restructuring of the business during the year and a
strong performance from Triton.
Triton
Revenue at Triton, the UK's market leader in showers, was 7.2%
higher than the previous year at GBP56.6m (2018: GBP52.8m)
reflecting growth in our UK and export markets. The strength and
awareness of the Triton brand alongside a multi-channel
distribution approach ensured its strong and sustained leadership
position was maintained.
In the UK, revenue was 7.7% higher than the prior year, with
retail sector customers growing strongly despite challenging market
conditions with continued structural changes affecting many major
customers. From a product perspective, Triton achieved an all-time
company record market share for electric showers; as well as
achieving market share growth in mixer and pumped showers. In
addition to revenue growth Triton has been shortlisted in the 'Best
Bathroom Product' category of the annual BMJ (Builders Merchants
Journal) Awards, as voted for by its trade customers.
Export revenue growth continued, finishing 5.1% higher than the
previous year reflecting the success of the product offer and the
strength of the brand in Ireland, Triton's main international
market.
New product innovation remains key to Triton's ongoing market
leadership strategy and sales of products launched in the last 3
years contributed 39.3% of current year revenue (2018: 29.4%).
During the year Triton introduced a number of innovative new mixer
showers and accessories, building on leading positions and growing
share in both categories. The H(2) OST digital mixer shower was
shortlisted for the EKBB Business, Best Bathroom Innovation. A
further example of innovation was the recent award of the
prestigious Quiet Mark approval, an international award associated
with the UK Noise Abatement Society, for several of Triton's new
innovative showers. Noise reduction is a growing trend across
appliance sectors and Triton will continue to push the boundaries
of noise reduction across its next generation of products.
During the year, Triton continued to innovate in its marketing
activity, building on the '# See you first thing Britain' campaign.
Activity included marketing to consumers and Triton's wide trade
installer base using a variety of media through national radio,
social media, viral video and blogging, press and PR activity in
Home Interest and Trade magazines and targeted installer / trade
exhibitions. At the same time Triton is targeting its future
installer base through Triton engineers visiting a number of
further education colleges and conducting training sessions with
trade apprentices.
Underlying operating profit was higher than last year reflecting
the higher revenue combined with the continued focus on cost and
efficiency offsetting increased commodity prices and adverse
currency fluctuations. The business was again highly cash
generative in the year.
Merlyn
Merlyn, the UK and Ireland's No. 1 supplier of shower enclosures
and trays to the residential, commercial and hospitality sectors
performed strongly and recorded revenue of GBP39.5m (2018:
GBP11.7m), growth of 13.8% on the previous year including the
period prior to Norcros ownership. The business provides a quality
product offering and customer centric service with the brand well
placed to benefit from the growing emphasis on bathrooms and the
premiumisation trend within the home.
Trade sector revenue grew by 18.7% with the specification
channel being the main driver. The business won two major supplier
awards from Barratt plc and Neville Lumb in addition to securing
solus supply agreements with Bloor Homes and Jones Homes. Outside
of specification, new business was gained with Travis Perkins on
their own brand iflo range, which offset destocking by
Wolseley.
UK retail revenue grew 6.7% from the full prior year, driven by
the rollout of new product ranges, in addition to strong revenue
growth with independent retailers and buying groups. Merlyn's
customer credentials were further enhanced by the winning of five
best supplier awards from the independent retail sector.
Export revenue grew by 32% on the full prior year with Ireland
representing the majority of revenue. The Irish market continued to
recover mainly in the Dublin region whilst the French market also
recorded good growth.
New product development remains a core component of the Merlyn
growth strategy and this has continued in the current year. Eight
new products were successfully launched including: Arysto Quad,
Series 6 Frameless, Arysto 6, Arysto 8, Series 8 Shower Wall,
Series 8 Frameless Pivot and Merlyn Black. There are also several
products in the pipeline and future development, which includes the
next generation of shower trays, that are being further influenced
by insights gained from customer surveys to ensure customer needs
are being met.
Merlyn has continued to invest in its workforce in the current
year, with additional sales resource to target the specification
and housebuilder segments, and in customer service and training.
Merlyn achieved ISO14001:2015, ISO9001: 2015 and ISO45001: 2018 in
the period, further enhancing its quality credentials.
As a relatively new acquisition considerable work has been
undertaken on pursuing synergies from wider Norcros Group
relationships, with several initiatives including new accounts and
procurement savings in progress. We expect to secure meaningful
benefits from some of these initiatives as they are progressed.
Merlyn contributed an underlying operating profit and cash
generation in line with the Board's expectations.
Vado
Vado, our leading manufacturer of taps, mixer showers, bathroom
accessories and valves, recorded revenue of GBP41.4m for the year
(2018: GBP42.9m), 3.5% lower than the prior year with growth in the
UK being more than offset by lower revenues in export markets.
Despite this, the continued focus and investment in new product
development and recovery in its export markets are expected to
drive growth this year.
UK revenue grew by 5.5% with growth on the prior year being
achieved in both retail and trade channels. Vado continued to enjoy
success in the trade channel, growing revenue with major
housebuilder clients. The growth rate also increased in the retail
sector with strong performances in the existing client base being
augmented with some new customer wins. The successful roll out of
market leading point of sale material also continues to yield
positive results whilst the award of an OEM supply contract from
the Fortis Buying Group is expected to further accelerate this
growth in the coming financial year.
Export revenue declined by 26.2% on the prior year with several
un-connected specific country issues impacting revenue in the year.
Softer market conditions in East Africa, changes to product
certification standards in Saudi Arabia, customer liquidity issues
in major West African distributors, and unrepeated prior year
project work in New Zealand and Sri Lanka all impacted
performance.
Following the launch of the Sensori range in July 2018, growth
continued in the digital showering category with revenue
significantly up on prior year. Vado continues to drive new product
development with two further major product launches planned for the
first half of this year which will re-enforce Vado's position at
the forefront of market trends.
A supplier partnership quality improvement project was piloted
in two of Vado's largest suppliers and yielded significant results
in production efficiency and reduction of waste. This programme
will be rolled out across the entire supply base throughout the
coming financial year. Optical Character Recognition software
implemented in the business this year also continued to drive
operational efficiencies.
Notwithstanding the implementation of a number of cost reduction
initiatives, the decline in overall revenue resulted in operating
profits being lower than the previous year. Cash generation
remained strong in the year.
Croydex
Croydex a market leading innovator, designer and manufacturer of
high-quality bathroom accessories, furnishings and shower products
recorded revenues of GBP21.7m for the year (2018: GBP24.2m) 10.3%
lower than achieved in the prior year. This was principally due to
the challenging UK retail environment and specifically the
disruption following the change of ownership of one of its main
customers. The business continues to develop its innovative product
range and diversify its geographies and customer base further to
ensure it is well positioned to grow this year.
UK revenue fell 8.5% on prior year, primarily driven by the
retail sector and the performance and subsequent change in
ownership of the Homebase Bunnings business, a major customer of
Croydex. The withdrawal of trade credit insurance meant that
trading was negligible in the second quarter as the Group actively
reduced its exposure. Trading recommenced on a significantly
reduced credit limit in the second half, albeit at lower levels
than the comparable period.
Revenue in the UK Trade sector however grew strongly by 8.1%
driven by outperformance in the National Merchants and growth from
Screwfix, which along with confirmed future listings and category
rollouts in both Screwfix and Toolstation should drive increased
revenue in this channel going forward.
Export revenue declined by 19% in the year due to a decline in
European revenue based on significant prior year rollouts into the
German DIY market not being repeated. The export business has
however continued to evolve with the further development of our
online export presence and digital content in our e-commerce export
channels with Croydex branded listings going live during the year
in Amazon and Wayfair across the US.
New product development, positively influenced by the many IP
protected products, continues to drive growth with revenue from
products launched in the last three years contributing 41.4% of
revenue (2018: 48.1%). Customer bespoke and market specific
products are a significant contributor to new product launches.
During the year Croydex launched the Metlex commercial product
range comprising 140 new products together with bespoke products to
meet the McCarthy & Stone and Churchill Retirement
specifications and demand from the private house builder sector.
Specific promotional products were also created for key retailers
including B&Q, Wickes, and Toom Baumarkt in Germany and Home
Depot in the US.
Underlying operating profit was below last year due to the
reduction in UK and export revenue. Cash generation remained strong
in the year.
Abode
Abode, a leading designer and distributor of high-quality hot
water taps, bathroom brassware, kitchen taps and sinks, recorded
revenue of GBP16.2m for the period (2018: GBP12.8m), 26.6% higher
than the prior year. The business has successfully positioned
itself in the market after prior year investment in new product
introductions and sales resource resulting in a number of
significant new account wins reflected in the current year
growth.
The business grew revenues across trade, retail and export
sectors, with the branded kitchen sink and taps business continuing
to expand rapidly into the UK retail and trade channels. Following
substantial investment in new product introductions in 2018, the
retail footprint for the brand has been expanded greatly, with over
900 showroom displays across the UK & Ireland, including John
Lewis stores. The Pronteau hot water tap, first introduced in 2016,
continues to grow in scale and has benefitted from range extensions
and enhancements made during the year.
The private label operations serviced by Abode also performed
well during the year as a result of capturing range expansion
opportunities along with the ongoing success of new product designs
and finishes.
Underlying operating profit and cash performance was
significantly ahead of last year, reflecting the strong revenue
growth.
Johnson Tiles
Johnson Tiles, the UK market leading ceramic tile manufacturer
and a market leader in the supply of both own manufactured and
imported tiles, recorded revenue of GBP41.4m (2018: GBP47.1m),
12.1% lower than prior year.
UK retail revenue was 20.7% lower than the previous year. First
half revenues declined 35.7%, driven by the impact of the
Kingfisher unification programme, whilst second half revenues were
in line with last year, with further reductions at Kingfisher being
offset by growth in Wickes largely reflecting the introduction of
Rigid Luxury Vinyl Tile, a new and exciting product opportunity for
the company.
UK trade sector revenue was 7.3% lower than the prior year, with
first half revenues down 11.6% driven by the withdrawal from the
supply of marginal cheap white tiles and the continued soft social
housing market as expenditure continued to be diverted away from
bathroom refurbishments. Second half revenues recovered to be 2.7%
lower and encouragingly ahead of the first half due to growth in
the commercial specification channel and a slowing in the rate of
decline in social housing activity levels.
The Johnson Tiles customer focused service model, coupled with
market leading specification expertise has led to good progress in
the house builder and specification market. This has resulted in
gaining specifications to supply a number of major contracts
including: Royal Wharf in London, Trinity Way in Manchester,
Tottenham Hotspur's new stadium, Hilton Garden Inn in Stoke,
Albert's restaurant in Manchester, Shell Petroleum petrol stations
nationwide, Costa Coffee nationwide, Asda and Yo Sushi. In
addition, the business continued to supply a number of national
house builders including Barratt David Wilson, Persimmon Charles
Church, Redrow and St Modwen.
Export revenues were in line with last year. First half revenues
were down 8%, largely a result of slower sales into Leroy Merlin in
France whilst second half sales were up 9.5% driven by growth in
the Middle East and the launch of new product ranges into Bauhaus
in Germany.
As previously reported, a major restructuring programme was
implemented at the start of the period. Through exiting low margin
business and cutting overhead costs, margins have improved and the
business has returned to profitability from loss-making in the
previous year resulting in a significant turnaround in performance
in the year.
The benefits of the restructuring combined with improvements in
customer service levels, improved focus with investment in new
product programmes and the winning of new business following the
administration of the British Ceramic Tile business should ensure
that this level of operating performance is sustained.
Norcros Adhesives
Revenue at Norcros Adhesives, our UK manufacturer and supplier
of tile and stone adhesives and ancillary products, was 24.2%
higher at GBP11.3m (2018: GBP9.1m) continuing the significant
growth from the prior year.
UK revenue was 11.1% higher than last year, reflecting growth in
Wickes, Travis Perkins and Screwfix, the latter reflecting the
launch of the new 'No Nonsense' grouts and adhesives range. Growth
in fixer sales and in the new "Resilient" channel which continues
to gain traction, was offset by a softer performance in
distribution accounts. Revenues to B&Q Tradepoint were
marginally above last year, and are expected to see further growth
this year as several new lines have been secured.
Our Middle East operation continues to gain momentum with
revenue more than doubling in the period as we secured some major
projects in the region including the Bahrain International Airport,
Mansion Villas, Meydan Hotel and Viceroy Dubai. During the final
quarter the business won the contract to supply the prestigious
Mall of Oman project which will be an important element of the
2019/20 growth plan.
Norcros Adhesives has reinforced its environmental credentials
through successfully renewing both its ISO9001 and ISO14001
accreditations to the latest standards, maintaining the Gold
Standard from the Supply Chain Sustainability School (partnered
with Barratts) and winning an industry award from The Tile
Association relating to the best environmental initiative for the
third successive year.
The business made a small operating loss in the period
reflecting additional operating costs associated with the
significant revenue growth, including increased investment in sales
and marketing resource, new business and product development and
new business systems. This business is expected to return to
profitability in the 2019/2020 financial year.
Business review - South Africa
Our South African business delivered a resilient performance in
a challenging trading environment. Following a period of political
and policy uncertainty, both in South Africa and internationally,
South Africa has experienced lower levels of public and private
sector investment which contributed to the country slipping into a
technical recession in the first half of the year. Despite this,
revenue for the year grew 7.2% on a constant currency basis
continuing the outperformance of recent years. The Rand depreciated
against Sterling during the year with the average exchange rate
3.6% weaker at ZAR 17.95 (2018: ZAR 17.32), resulting in full year
reported revenue 3.4% ahead of prior year at GBP102.9m (2018:
GBP99.5m). Revenue growth slowed in the fourth quarter as the
country experienced a rolling programme of power rationing that
impacted our production and revenues across the business.
Underlying operating profit for the year was 10.2% lower at
GBP7.9m (2018: GBP8.8m) including a GBP0.4m adverse impact from the
weaker Rand. The underlying reduction in profitability of GBP0.5m
principally reflected the impact of a planned and non-comparable
plant shutdown at Johnson Tiles South Africa in the first half of
the year which enabled a necessary expansion of capacity and plant
upgrade programme and the impact of the fourth quarter power
rationing. The return on sales of 7.7% was 1.1% lower than the
previous year.
On 1 April 2019, Norcros South Africa completed the acquisition
of House of Plumbing. House of Plumbing is a market leading
supplier of specialist plumbing materials focused on the
specification and commercial segments of the market. This
acquisition complements the Group's strong positions and enhances
our product offer to the important commercial and specification
segments, where we have been successfully building our
business.
Johnson Tiles South Africa
Johnson Tiles South Africa, our tile manufacturing business,
recorded revenue of GBP15.0m (2018: GBP12.6m), 19.0% higher on a
reported basis and 23.0% higher on a constant currency basis. This
growth reflected the successful investment in additional capacity
and plant improvements in the first half of the year and also the
strong new product programme that drove revenue growth from the
independent customer base, through both retail and commercial
channels, with good growth into the private housebuilder segment.
Operating profit in the year was lower than the prior year mainly
due to the impact of power rationing, the planned factory shutdown
and pricing pressure in the private housing segment.
Tile Africa
Tile Africa, our leading retailer of wall and floor tiles,
adhesives, showers, sanitaryware and bathroom fittings, recorded
revenue of GBP63.9m (2018: GBP62.7m) 1.9% higher on a reported
basis and 5.6% higher on a constant currency basis. The business
continued to benefit from excellent growth in the bathroom and tap
categories, driven in part by access to the wider-group supply
chain.
Tile Africa supplied a number of prestigious projects during the
year including The Houghton Hotel, Vincent Park Shopping Centre and
Steyn City Aquatics Centre, further consolidating its strong
position in the commercial and specification market. Tile Africa is
starting to secure both the tile and bathroom specifications on
projects with this ability to offer a full basket of alternative
wall and floor coverings, including luxury vinyl and laminates, and
bathroom products helping to drive ongoing and sustainable market
share growth.
Tile Africa opened a new store in Polokwane North, upgraded the
Pietermaritzburg and Polokwane South stores during the period and
closed the Pinetown store which had reached the end of its lease.
Tile Africa currently has 32 owned stores and two franchise stores
and is planning to open one new store in this current financial
year.
Good management of the cost base saw the business grow operating
profit on the prior year.
TAL
Our market leading adhesive business in South Africa, TAL,
recorded revenue of GBP24.0m (2018: GBP24.2m), 0.8% lower on a
reported basis, 3.0% higher on a constant currency basis. TAL made
robust progress in driving ahead-of-market growth through further
developing its flooring range which helped to lessen the impact of
lower sales in neighbouring countries, particularly in
Zimbabwe.
TAL was the preferred partner in a number of major construction
projects during the year, including the 3,500m(2) Deloitte Head
Office in Johannesburg, the 45,000m(2) Pearls Luxury Apartment
Complex in Durban, and the 28,000m(2) FNB Office Block in
Johannesburg. TAL has a market leading position in the tile
adhesive market reflecting its product quality and technical
expertise and is driving further growth this year by widening the
offering to cover the fixing of alternative floor and wall
coverings.
Our TAL business experienced above-inflation increases in the
cost of a number of key raw materials that impacted margins. Good
management and directed investment in our manufacturing facilities
and related overheads saw the business grow operating profit in the
year with cash conversion remaining strong.
Financial overview
2019 2018
GBPm GBPm
--------------------------------- ------ ------
Revenue 331.0 300.1
--------------------------------- ------ ------
Underlying operating profit 34.4 27.4
IAS 19R administrative expenses (1.5) (1.4)
Acquisition related costs (3.8) (4.3)
Exceptional operating items (4.0) (2.1)
--------------------------------- ------ ------
Operating profit 25.1 19.6
Net finance income/(costs) 0.3 (6.1)
------
Profit before taxation 25.4 13.5
Taxation (6.0) (3.6)
--------------------------------- ------ ------
Profit for the year 19.4 9.9
--------------------------------- ------ ------
Revenue
Group revenue at GBP331.0m (2018: GBP300.1m) increased by 10.3%
on a reported basis, 11.6% on a constant currency basis, and 2.3%
on a constant currency like for like(1) basis.
Underlying operating profit
Underlying operating profit increased by 25.5% to GBP34.4m
(2018: GBP27.4m). Our UK businesses delivered underlying operating
profit of GBP26.5m (2018: GBP18.6m), and our South African
businesses generated an underlying operating profit of GBP7.9m
(2018: GBP8.8m). On a constant currency basis, the reduction in
underlying operating profit in the South African businesses was
GBP0.5m. Group underlying operating profit margin was 10.4% (2018:
9.1%).
IAS 19R administrative costs
These costs represent the costs incurred by the Trustee of
administering the UK pension schemes and are reflected in the
Income Statement under IAS 19R. Costs of GBP1.5m have increased by
GBP0.1m on prior year (2018: GBP1.4m).
Acquisition related costs
A cost of GBP3.8m (2018: GBP4.3m) has been recognised in the
year and is analysed as follows:
2019 2018
GBPm GBPm
--------------------------------- ---- -----
Deferred remuneration 0.2 (0.3)
Intangible asset amortisation 3.5 2.2
Staff costs and advisory fees(2) 0.1 2.4
--------------------------------- ---- -----
3.8 4.3
--------------------------------- ---- -----
1. Like for like is defined as constant currency (2018 at 2019
monthly average rates) impact being GBP3.5m and excluding Merlyn
revenue of GBP39.5m in 2019 (2018: GBP11.7m).
2. Professional and advisory fees incurred in connection with
the Group's business combination activities and the costs of
maintaining the in-house acquisitions department. During the year
to 31 March 2019 the costs of the in-house acquisitions department
of GBP0.4m have been recognised in underlying operating profit.
Previously they were excluded from underlying operating profit.
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. There
is a net charge of GBP0.2m in the year, compared to a net GBP0.3m
income in the prior year, due to the release of an
overprovision.
Exceptional operating items
A net exceptional operating charge of GBP4.0m (2018: GBP2.1m)
has been recognised this year.
2019 2018
GBPm GBPm
--------------------------------------- ----- -----
Onerous property lease provision costs 3.0 -
GMP equalisation costs 1.0 -
Restructuring costs - 2.1
--------------------------------------- ----- -----
4.0 2.1
--------------------------------------- ----- -----
Exceptional costs of GBP3.0m were incurred in the year to
increase the provision in relation to an onerous and surplus legacy
property lease following the reappraisal of the likely future cash
flows. The property is the only remaining legacy lease the company
has which will expire in June 2022.
Exceptional past service costs of GBP1.0m were estimated in
relation to a recent UK High Court ruling that trustees of UK
defined benefit pension schemes must equalise guaranteed minimum
pensions. The past service cost increases the pension
liability.
The prior year exceptional restructuring charge of GBP2.1m
related to a restructuring programme at Johnson Tiles UK announced
in April 2018.
Net finance costs
Net finance income for the year of GBP0.3m compare to a GBP6.1m
cost in 2018, the improvement mainly due to the movement in the
fair value of foreign exchange contracts reflecting income in the
year of GBP3.6m (2018: GBP3.1m cost). Bank interest payable of
GBP1.8m (2018: GBP1.1m) was higher than the previous year due to an
increased level of debt following the Merlyn acquisition.
In addition, the Group has recognised a GBP1.3m interest cost in
respect of the pension scheme liability (2018: GBP1.6m) which
reduced by GBP0.3m principally reflecting the lower deficit at the
start of the year.
Profit before tax
Underlying profit before tax was GBP32.6m (2018: GBP26.3m),
reflecting the increased underlying operating profit of GBP7.0m
noted above. Underlying profit before tax is reconciled as shown
below:
2019 2018
GBPm GBPm
-------------------------------------------------- ----- -----
Profit before taxation from continuing operations 25.4 13.5
Adjusted for:
- IAS 19R administrative expenses 1.5 1.4
- acquisition related costs (see note 3) 3.8 4.3
- exceptional operating items (see note 3) 4.0 2.1
- amortisation of costs of raising finance 0.2 0.3
- net movement on fair value of derivative
financial instruments (3.6) 3.1
- IAS 19R finance cost 1.3 1.6
-------------------------------------------------- ----- -----
Underlying profit before taxation 32.6 26.3
-------------------------------------------------- ----- -----
Taxation
The tax charge for the year of GBP6.0m (2018: GBP3.6m)
represents an effective tax rate for the year of 23.6% (2018:
26.7%). This reduction in effective tax rate is mainly due to a
lower proportion of the Group's taxable profits being generated in
South Africa and the lower non-deductible acquisition related costs
incurred in the current year.
The standard rates of corporation tax in the UK and South Africa
were 19% (2018: 19%) and 28% (2018: 28%) respectively.
Dividends
As previously announced, it is the Board's intention to continue
a progressive yet prudent dividend policy subject to the Group's
earnings, cash flow and balance sheet position. As such the Board
is recommending a final dividend of 5.6p (2018: 5.2p) per share,
which, if approved, together with the interim dividend of 2.8p
(2018: 2.6p), makes a total dividend of 8.4p (2018: 7.8p) in
respect of the year ended 31 March 2019.
This final dividend, if approved at the Annual General Meeting,
will be payable on 2 August 2019 to shareholders on the register on
21 June 2019. The shares will be quoted ex-dividend on 20 June
2019.
Norcros plc operates a Dividend Reinvestment Plan (DRIP). If a
shareholder wishes to use the DRIP the latest date to elect for
this in respect of this final dividend is 6 July 2019.
Balance Sheet
The Group's balance sheet is summarised below.
2019 2018
GBPm GBPm
-------------------------------------------------- ------- -------
Property, plant and equipment 42.3 45.0
Goodwill and intangible assets 94.9 98.9
Deferred tax 0.8 4.0
Net current assets excluding cash and borrowings 61.0 58.0
Pension scheme liability (31.6) (48.0)
Other non-current assets and liabilities (6.7) (6.2)
Cash and borrowings (35.0) (47.1)
-------------------------------------------------- ------- -------
Net assets 125.7 104.6
-------------------------------------------------- ------- -------
Total net assets increased by GBP21.1m to GBP125.7m (2018:
GBP104.6m).
Property, plant and equipment reduced by GBP2.7m overall, and
included additions of GBP5.8m (2018: GBP7.5m). The depreciation and
underlying amortisation charge was GBP6.9m (2018: GBP6.4m) and
exchange differences were GBP2.4m (2018: GBP0.1m). The disposals in
the year had no impact on net book value which was the same in the
prior year.
The deferred tax asset reduced by GBP3.2m to GBP0.8m (2018:
GBP4.0m). The decrease mainly relates to a reduction in the
deferred tax asset of GBP2.8m reflecting the current year actuarial
gains in the pension plan.
Pension schemes
On an IAS 19R accounting basis the gross defined benefit pension
scheme valuation of the UK scheme showed a deficit of GBP31.6m
compared to a deficit of GBP48.0m last year. Whilst the value of
scheme assets reduced by GBP3.2m in the year, the value of the
liabilities fell by GBP19.6m, which was primarily due to the impact
of experience adjustments on the actual mortality rates experienced
in the scheme.
The triennial actuarial valuation for the Group's UK defined
benefit pension scheme completed in March 2015 showed a deficit of
GBP73.5m (2012: GBP61.9m) representing an 84% funding level (2012:
85%). The deficit recovery plan for that valuation was agreed with
the scheme Trustee, with a cash contribution of GBP2.5m per annum
starting in April 2016, and increasing with CPI, for a period of
ten years.
In line with the above agreement the Group made deficit recovery
contributions of GBP2.6m (2018: GBP2.5m) into its UK defined
benefit pension scheme during the year.
We have reached agreement with the pension scheme Trustee on the
2018 actuarial valuation and on a new deficit recovery plan. The
actuarial deficit at 1 April 2018 was GBP49.3m (2015: GBP73.5m)
representing an 89% funding level and contributions of GBP3.25m per
annum plus CPI will be payable for the 6.5 years to 30 September
2025. The Company and the Trustee regard this as an appropriate
outcome. The 2018 valuation has been recently submitted to the
Pensions Regulator.
The Group's contributions to its defined contribution pension
schemes were GBP3.6m (2018: GBP3.5m).
Cash flow and net debt
Net debt reduced by GBP12.1m in the year to GBP35.0m (2018:
GBP47.1m). A summary of the movement in net debt is shown
below.
Underlying operating cash flow was GBP8.8m higher than in the
prior year at GBP39.8m (2018: GBP31.0m). Overall underlying cash
conversion in the year was 96.4% of underlying EBITDA (2018:
91.7%).
Cash generated from operating activities was GBP11.8m higher
than the previous year at GBP35.3m, largely due to the GBP8.8m
improvement in underlying operating cash flows and the GBP3.1m
reduction in outflows from exceptional items and acquisition
related costs. Cash flows from exceptional items and acquisition
related costs in the current year primarily relate to costs of the
restructuring at Johnson Tiles, whilst in the prior year they
mainly relate to the Merlyn acquisition in addition to Johnson
Tiles restructuring costs.
2019 2018
GBPm GBPm
---------------------------------------------------------- ------ ------
Underlying operating cash flow 39.8 31.0
Cash flows from exceptional items and acquisition related
costs (1.9) (5.0)
Pension fund deficit recovery contributions (2.6) (2.5)
---------------------------------------------------------- ------ ------
Cash flow generated from operations 35.3 23.5
Net interest paid (1.8) (1.1)
Taxation (4.6) (4.9)
---------------------------------------------------------- ------ ------
Net cash generated from operating activities 28.9 17.5
Capital expenditure (5.6) (7.7)
Proceeds on disposal of property, plant and equipment 0.1 -
Acquisitions (2.1) (59.1)
Dividends (6.4) (5.0)
Share transactions (0.9) 30.1
Other items (1.9) 0.3
---------------------------------------------------------- ------ ------
Movement in net debt 12.1 (23.9)
Opening net debt (47.1) (23.2)
---------------------------------------------------------- ------ ------
Closing net debt (35.0) (47.1)
---------------------------------------------------------- ------ ------
Acquisition expenditure of GBP2.1m mainly relates to the payment
of deferred consideration. In the previous year, the expenditure of
GBP59.1m relates primarily to the acquisition of Merlyn.
Capital expenditure at GBP5.6m (2018: GBP7.7m) included a plant
upgrade and capacity expansion programme for Johnson Tiles SA. We
further invested in the retail portfolio in Tile Africa, major
items included the new store at Polokwane North and other store
upgrades, mainly at Pietermaritzburg and Polokwane South. In the
UK, we continued to invest in operational improvements, new product
programmes and development, including an upgrade of our digital
printing capability at Johnson Tiles.
Bank funding
The Group increased the amount of its committed banking
facilities to GBP120m (plus a GBP30m accordion) at the time of the
Merlyn acquisition in November 2017. The maturity date was
originally November 2021 with an option to extend for a further
year. The Group exercised this option in the current year and has
extended the maturity date of the facility to November 2022.
New Accounting Standards
IFRS 16, the new accounting standard for leases replacing IAS
17, will have a material impact on Norcros's accounts in the year
to March 2020. While it does not change the underlying nature of
our business, from an accounting perspective, it recognises leased
assets as 'right of use' assets held on the balance sheet and
classifies future lease liabilities as a financial liability. An
assessment of the impact on the 2019/20 opening balance sheet has
been performed which estimates the financial lease liability and
corresponding right of use asset at GBP27m. Based on this
assessment the differential between the lease cost under IAS 17 and
depreciation under IFRS 16 will give rise to an estimated increase
in underlying operating profit of GBP0.3m and an estimated decrease
in underlying profit before tax of GBP1.5m in the year to 31 March
2020. The impact assessment does not take into account any leases
acquired or entered into after the 31 March 2019. The interim
accounts for the period ending 30 September 2019 will be prepared
on an IFRS 16 basis.
During 2018, IFRS 9 (Financial instruments) and IFRS 15 (Revenue
from contracts with customers) were adopted, with an immaterial
impact on the Group's accounts.
Responsibility Statement
Each of the directors, whose names and functions are listed
below, confirms that, to the best of their knowledge:
The consolidated financial statements, prepared in accordance
with the applicable United Kingdom law and in conformity with IFRS,
as adopted by the European Union, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Group and the undertakings included in the consolidation taken as a
whole; and
The business review includes a fair review of the development
and performance of the business and the position of the Group and
the undertakings included in the consolidation taken as a
whole.
Directors: Martin Towers (Chairman), Nick Kelsall (Group Chief
Executive), Shaun Smith (Group Finance Director), David McKeith
(Non-Executive Director), Jo Hallas (Non-Executive Director) and
Alison Littley (Non-Executive Director).
Nick Kelsall
Group Chief Executive
Shaun Smith
Group Finance Director
Consolidated income statement
Year ended 31 March 2019
2019 2018
Notes GBPm GBPm
-------------------------------------------------- ----- ----- -----
Continuing operations
Revenue 2 331.0 300.1
-------------------------------------------------- ----- ----- -----
Underlying operating profit 34.4 27.4
IAS 19R administrative expenses (1.5) (1.4)
Acquisition related costs 3 (3.8) (4.3)
Exceptional operating items 3 (4.0) (2.1)
-------------------------------------------------- ----- ----- -----
Operating profit 25.1 19.6
Finance costs 4 (2.0) (4.5)
Finance income 4 3.6 -
IAS 19R finance cost (1.3) (1.6)
-------------------------------------------------- ----- ----- -----
Profit before taxation 25.4 13.5
Taxation (6.0) (3.6)
-------------------------------------------------- ----- ----- -----
Profit for the year from continuing operations 19.4 9.9
-------------------------------------------------- ----- ----- -----
Earnings per share attributable to equity holders
of the Company
Basic earnings per share:
From profit for the year 6 24.2p 14.5p
-------------------------------------------------- ----- ----- -----
Diluted earnings per share:
From profit for the year 6 23.9p 14.1p
-------------------------------------------------- ----- ----- -----
Weighted average number of shares for basic
earnings per share (millions) 80.2 68.0
Alternative performance measures
-------------------------------------------------- ----- ----- -----
Underlying profit before taxation (GBPm) 5 32.6 26.3
Underlying earnings (GBPm) 5 25.7 20.6
Basic underlying earnings per share 6 32.1p 30.3p
Diluted underlying earnings per share 6 31.7p 29.5p
-------------------------------------------------- ----- ----- -----
Consolidated statement of comprehensive income
Year ended 31 March 2019
2019 2018
GBPm GBPm
-------------------------------------------------- ----- ----
Profit for the year 19.4 9.9
--------------------------------------------------- ----- ----
Other comprehensive income and expense:
Items that will not subsequently be reclassified
to the Income Statement
Actuarial gains on retirement benefit obligations 14.6 12.6
Items that may be subsequently reclassified to
the Income Statement
Foreign currency translation adjustments (6.2) 0.4
--------------------------------------------------- ----- ----
Other comprehensive income for the year 8.4 13.0
--------------------------------------------------- ----- ----
Total comprehensive income for the year 27.8 22.9
--------------------------------------------------- ----- ----
Items in the statement are disclosed net of tax.
Consolidated balance sheet
At 31 March 2019
2019 2018
GBPm GBPm
-------------------------------------- ------ -------
Non-current assets
Goodwill 56.3 56.6
Intangible assets 38.6 42.3
Property, plant and equipment 42.3 45.0
Deferred tax assets 0.8 4.0
--------------------------------------- ------ -------
138.0 147.9
-------------------------------------- ------ -------
Current assets
Inventories 79.5 74.9
Trade and other receivables 62.5 64.4
Derivative financial instruments 0.3 -
Cash and cash equivalents 27.2 25.8
--------------------------------------- ------ -------
169.5 165.1
-------------------------------------- ------ -------
Current liabilities
Trade and other payables (79.6) (77.0)
Derivative financial instruments - (3.3)
Current tax liabilities (1.7) (1.0)
Financial liabilities - borrowings (3.8) (8.5)
--------------------------------------- ------ -------
(85.1) (89.8)
-------------------------------------- ------ -------
Net current assets 84.4 75.3
--------------------------------------- ------ -------
Total assets less current liabilities 222.4 223.2
--------------------------------------- ------ -------
Non-current liabilities
Financial liabilities - borrowings (58.4) (64.4)
Pension scheme liability (31.6) (48.0)
Other non-current liabilities (0.9) (1.3)
Provisions (5.8) (4.9)
--------------------------------------- ------ -------
(96.7) (118.6)
-------------------------------------- ------ -------
Net assets 125.7 104.6
--------------------------------------- ------ -------
Financed by:
Share capital 8.0 8.0
Share premium 29.9 29.7
Retained earnings and other reserves 87.8 66.9
--------------------------------------- ------ -------
Total equity 125.7 104.6
--------------------------------------- ------ -------
Consolidated cash flow statement
Year ended 31 March 2019
2019 2018
Notes GBPm GBPm
------------------------------------------------------- ----- ------ ------
Cash generated from operations 7 35.3 23.5
Income taxes paid (4.6) (4.9)
Interest paid (1.8) (1.1)
------------------------------------------------------- ----- ------ ------
Net cash generated from operating activities 28.9 17.5
------------------------------------------------------- ----- ------ ------
Cash flows from investing activities
Purchase of property, plant and equipment and
intangible assets (5.6) (7.7)
Proceeds on disposal of property, plant and equipment 0.1 -
------------------------------------------------------- ----- ------ ------
Acquisition of subsidiary undertakings (including
payment of deferred consideration) net of cash
acquired (2.1) (59.1)
------------------------------------------------------- ----- ------ ------
Net cash used in investing activities (7.6) (66.8)
------------------------------------------------------- ----- ------ ------
Cash flows from financing activities
Proceeds from issue of ordinary share capital 0.2 32.1
Costs of equity issue - (1.6)
Purchase of treasury shares (1.1) (0.4)
Costs of raising debt finance (0.2) (0.6)
(Repayment)/drawdown of borrowings (6.0) 35.0
Dividends paid to the Company's shareholders (6.4) (5.0)
------------------------------------------------------- ----- ------ ------
Net cash (used in)/generated from financing activities (13.5) 59.5
------------------------------------------------------- ----- ------ ------
Net increase in cash at bank and in hand and bank
overdrafts 7.8 10.2
Cash at bank and in hand and bank overdrafts at
the beginning of the year 17.3 6.6
Exchange movements on cash and bank overdrafts (1.7) 0.5
------------------------------------------------------- ----- ------ ------
Cash at bank and in hand and bank overdrafts at
the end of the year 23.4 17.3
------------------------------------------------------- ----- ------ ------
Consolidated statement of changes in equity
Year ended 31 March 2019
Ordinary
share Share Treasury Translation Retained Total
capital premium reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------- -------- ------- -------- ----------- -------- ------
At 1 April 2017 6.1 1.1 - (6.7) 56.1 56.6
Comprehensive income:
Profit for the year - - - - 9.9 9.9
Other comprehensive income:
Actuarial gain on retirement
benefit obligations - - - - 12.6 12.6
Foreign currency translation
adjustments - - - 0.4 - 0.4
-------------------------------------- -------- ------- -------- ----------- -------- ------
Total other comprehensive
income - - - 0.4 12.6 13.0
-------------------------------------- -------- ------- -------- ----------- -------- ------
Transactions with owners:
Shares issued 1.9 28.6 - - - 30.5
Dividends paid - - - - (5.0) (5.0)
Purchase of treasury shares - - (0.4) - - (0.4)
Cash-settled share options - - - - (0.9) (0.9)
Equity-settled share options - - 0.4 - (0.4) -
Value of employee services - - - - 0.9 0.9
-------------------------------------- -------- ------- -------- ----------- -------- ------
At 31 March 2018 8.0 29.7 - (6.3) 73.2 104.6
Comprehensive income:
Profit for the year - - - - 19.4 19.4
Other comprehensive income/(expense):
Actuarial gain on retirement
benefit obligations - - - - 14.6 14.6
Foreign currency translation
adjustments - - - (6.2) - (6.2)
-------------------------------------- -------- ------- -------- ----------- -------- ------
Total other comprehensive
income - - - (6.2) 14.6 8.4
-------------------------------------- -------- ------- -------- ----------- -------- ------
Transactions with owners:
Shares issued - 0.2 - - - 0.2
Dividends paid - - - - (6.4) (6.4)
Purchase of treasury shares - - (1.1) - - (1.1)
Settlement of share option
schemes - - 0.8 - (1.4) (0.6)
Value of employee services - - - - 1.2 1.2
-------------------------------------- -------- ------- -------- ----------- -------- ------
At 31 March 2019 8.0 29.9 (0.3) (12.5) 100.6 125.7
-------------------------------------- -------- ------- -------- ----------- -------- ------
Notes to the preliminary statement
Year ended 31 March 2019
1. Basis of preparation
The principal activities of Norcros plc ("the Company") and its
subsidiaries (together "the Group") are the design, manufacture and
distribution of a range of high quality and innovative bathroom and
kitchen products mainly in the UK and South Africa. The Company is
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 2019. The
financial information set out above does not constitute the
Company's statutory financial statements for the periods ended 31
March 2019 or 31 March 2018 but is derived from those financial
statements. Statutory financial statements for 2019 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.
2. Segmental reporting
Continuing operations - year ended 31 March 2019
South
UK Africa Group
GBPm GBPm GBPm
----------------------------------------------- ------- ------ -------
Revenue 228.1 102.9 331.0
----------------------------------------------- ------- ------ -------
Underlying operating profit 26.5 7.9 34.4
IAS 19R administrative expenses (1.5) - (1.5)
Acquisition related costs (3.8) - (3.8)
Exceptional operating items (4.0) - (4.0)
----------------------------------------------- ------- ------ -------
Operating profit 17.2 7.9 25.1
----------------------------------------------- ------- ------ -------
Finance income (net) 0.3
----------------------------------------------- ------- ------ -------
Profit before taxation 25.4
Taxation (6.0)
----------------------------------------------- ------- ------ -------
Profit for the year from continuing operations 19.4
----------------------------------------------- ------- ------ -------
Net debt (35.0)
----------------------------------------------- ------- ------ -------
Segmental assets 236.9 70.6 307.5
Segmental liabilities (166.0) (15.8) (181.8)
Additions to property, plant and equipment 2.9 2.9 5.8
Depreciation 4.4 2.2 6.6
----------------------------------------------- ------- ------ -------
Continuing operations - year ended 31 March 2018
South
UK Africa Group
GBPm GBPm GBPm
----------------------------------------------- ------- ------ -------
Revenue 200.6 99.5 300.1
----------------------------------------------- ------- ------ -------
Underlying operating profit 18.6 8.8 27.4
IAS 19R administrative expenses (1.4) - (1.4)
Acquisition related costs (4.3) - (4.3)
Exceptional operating items (2.1) - (2.1)
----------------------------------------------- ------- ------ -------
Operating profit 10.8 8.8 19.6
----------------------------------------------- ------- ------ -------
Finance costs (net) (6.1)
----------------------------------------------- ------- ------ -------
Profit before taxation 13.5
Taxation (3.6)
----------------------------------------------- ------- ------ -------
Profit for the year from continuing operations 9.9
----------------------------------------------- ------- ------ -------
Net debt (47.1)
----------------------------------------------- ------- ------ -------
Segmental assets 239.4 73.6 313.0
Segmental liabilities (189.0) (19.4) (208.4)
Additions to property, plant and equipment 4.9 2.6 7.5
Depreciation 4.2 2.2 6.4
----------------------------------------------- ------- ------ -------
The split of revenue by geographical destination of the customer
is below:
2019 2018
GBPm GBPm
-------------- ----- -----
UK 198.2 171.8
Africa 104.9 102.2
Rest of World 27.9 26.1
-------------- ----- -----
331.0 300.1
-------------- ----- -----
No one customer had revenue over 10% of total Group revenue.
3. Acquisition related costs and exceptional operating items
An analysis of acquisition related costs and exceptional
operating items is shown below:
2019 2018
Acquisition related costs GBPm GBPm
--------------------------------- ---- -----
Deferred remuneration(1) 0.2 (0.3)
Intangible asset amortisation(2) 3.5 2.2
Advisory fees and staff costs(3) 0.1 2.4
--------------------------------- ---- -----
3.8 4.3
--------------------------------- ---- -----
1 In accordance with IFRS 3R, a proportion of the deferred
consideration payable to the former shareholders of certain
acquired businesses is required to be treated as remuneration, and,
accordingly, is expensed to the Income Statement as incurred.
2 Non-cash amortisation charges in respect of acquired intangible assets.
3 Professional and advisory fees incurred in connection with the
Group's business combination activities and the costs of
maintaining the in-house acquisitions department. During the year
to 31 March 2019 the costs of the in-house acquisitions department
of GBP0.4m have been recognised in underlying operating profit.
Previously they were excluded from underlying operating profit.
2019 2018
Exceptional operating items GBPm GBPm
------------------------------------------ ----- -----
Onerous property lease provision costs(1) 3.0 -
GMP equalisation costs(2) 1.0 -
Restructuring costs(3) - 2.1
------------------------------------------ ----- -----
4.0 2.1
------------------------------------------ ----- -----
1. Exceptional costs of GBP3.0m were incurred in the year to
increase the provision in relation to an onerous and surplus legacy
property lease following the reappraisal of the likely future cash
flows. The property is the only remaining legacy lease the company
has which will expire in June 2022.
2. Exceptional past service costs of GBP1.0m were estimated in
relation to a recent UK High Court ruling that trustees of UK
defined benefit pension schemes must equalise guaranteed minimum
pensions. The past service cost increases the pension
liability.
3. The prior year exceptional restructuring charge of GBP2.1m
related to a restructuring programme at Johnson Tiles UK announced
in April 2018.
4. Finance costs and income
2019 2018
GBPm GBPm
----------------------------------------------------------- ----- -----
Interest payable on bank borrowings (1.8) (1.1)
Amortisation of costs of raising debt finance (0.2) (0.3)
Movement on fair value of derivative financial instruments - (3.1)
----------------------------------------------------------- ----- -----
Finance costs (2.0) (4.5)
----------------------------------------------------------- ----- -----
Movement on fair value of derivative financial instruments 3.6 -
----------------------------------------------------------- ----- -----
Net Finance income/(costs) 1.6 (4.5)
----------------------------------------------------------- ----- -----
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 Operating profit before IAS 19R administrative
profit expenses, acquisition related costs and exceptional
operating items
------------------------- ------------------------------------------------------
Underlying profit Profit before taxation before IAS 19R administrative
before taxation expenses, acquisition related costs, exceptional
operating items, amortisation of costs of raising
finance, net movement on fair value of derivative
financial instruments, discounting of property
lease provisions and finance costs relating to
pension schemes
------------------------- ------------------------------------------------------
Underlying taxation Taxation on underlying profit before tax
------------------------- ------------------------------------------------------
Underlying earnings Underlying profit before tax less underlying taxation
------------------------- ------------------------------------------------------
Underlying capital Capital employed adjusted for business combinations
employed where relevant and the average impact of exchange
rate movements
------------------------- ------------------------------------------------------
Underlying operating Underlying operating profit expressed as a percentage
margin of revenue
------------------------- ------------------------------------------------------
Underlying return Underlying operating profit expressed as a percentage
on capital employed of the average of opening and closing underlying
(ROCE) capital employed
------------------------- ------------------------------------------------------
Basic underlying earnings Underlying earnings divided by the weighted average
per share number of shares for basic earnings per share
------------------------- ------------------------------------------------------
Diluted underlying Underlying earnings divided by the weighted average
earnings per share number of shares for diluted earnings per share
------------------------- ------------------------------------------------------
Underlying EBITDA Underlying EBITDA is derived from underlying operating
profit before depreciation and amortisation.
------------------------- ------------------------------------------------------
Underlying operating Cash generated from continuing operations before
cash flow cash outflows from exceptional items and acquisition
related costs and pension fund deficit recovery
contributions
------------------------- ------------------------------------------------------
Pro-forma underlying An annualised underlying EBITDA figure used for
EBITDA the purpose of calculating banking covenant ratios
------------------------- ------------------------------------------------------
Pro-forma leverage Net debt expressed as a ratio of pro-forma underlying
EBITDA
------------------------- ------------------------------------------------------
Underlying profit and underlying earnings per share measures
provide shareholders with additional useful information on the
underlying performance of the Group. This is because these measures
are those principally used by the Directors to assess the
performance of the Group and are used as the basis for calculating
the level of 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
2019 2018
GBPm GBPm
----------------------------------------------------------- ----- -----
Profit before taxation from continuing operations 25.4 13.5
Adjusted for:
- IAS 19R administrative expenses 1.5 1.4
- acquisition related costs (see note 3) 3.8 4.3
- exceptional operating items (see note 3) 4.0 2.1
- amortisation of costs of raising finance 0.2 0.3
- net movement on fair value of derivative financial
instruments (3.6) 3.1
- IAS 19R finance cost 1.3 1.6
----------------------------------------------------------- ----- -----
Underlying profit before taxation 32.6 26.3
----------------------------------------------------------- ----- -----
Taxation attributable to underlying profit before taxation (6.9) (5.7)
----------------------------------------------------------- ----- -----
Underlying earnings 25.7 20.6
----------------------------------------------------------- ----- -----
(b) Underlying EBITDA
2019 2018
GBPm GBPm
-------------------------------------------- ---- ----
Operating profit from continuing operations 25.1 19.6
Adjusted for:
- depreciation and amortisation 6.9 6.4
- IAS 19R administrative expenses 1.5 1.4
- acquisition related costs (see note 3) 3.8 4.3
- exceptional operating items (see note 3) 4.0 2.1
-------------------------------------------- ---- ----
Underlying EBITDA 41.3 33.8
-------------------------------------------- ---- ----
Consolidated Cash Flow Statement
(a) Underlying operating cash flow
2019 2018
GBPm GBPm
-------------------------------------------------------- ---- ----
Cash generated from operations (see note 7) 35.3 23.5
Adjusted for:
- cash flows from exceptional items and acquisition
related costs (see note 7) 1.9 5.0
- pension fund deficit recovery contributions (see note
7) 2.6 2.5
-------------------------------------------------------- ---- ----
Underlying operating cash flow 39.8 31.0
-------------------------------------------------------- ---- ----
Consolidated Balance Sheet
(a) Underlying capital employed and underlying return on capital
employed
2019 2018
GBPm GBPm
--------------------------------------------------- ------ ------
Net assets 125.7 104.6
Adjusted for:
- pension scheme liability (net of associated tax) 26.3 39.9
- cash and cash equivalents (27.2) (25.8)
- financial liabilities - borrowings 62.2 72.9
--------------------------------------------------- ------ ------
Capital employed 187.0 191.6
Foreign exchange adjustment 1.8 (1.7)
Adjustment for acquisitions - (16.9)
--------------------------------------------------- ------ ------
Underlying capital employed 188.8 173.0
--------------------------------------------------- ------ ------
Average underlying capital employed 188.7 151.8
--------------------------------------------------- ------ ------
Underlying return on capital employed 18.2% 18.0%
--------------------------------------------------- ------ ------
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 2019 the potential dilutive ordinary
shares amounted to 985,038 (2018: 1,778,436) as calculated in
accordance with IAS 33.
The calculation of EPS is based on the following profits and
numbers of shares:
2019 2018
GBPm GBPm
-------------------- ---- ----
Profit for the year 19.4 9.9
-------------------- ---- ----
2019 2018
Number Number
------------------------------------------------------- ---------- ----------
Weighted average number of shares for basic earnings
per share 80,154,891 68,043,628
Share options 985,038 1,778,436
------------------------------------------------------- ---------- ----------
Weighted average number of shares for diluted earnings
per share 81,139,929 69,822,064
------------------------------------------------------- ---------- ----------
2019 2018
---------------------------- ----- -----
Basic earnings per share:
From profit for the year 24.2p 14.5p
---------------------------- ----- -----
Diluted earnings per share:
From profit for the year 23.9p 14.1p
---------------------------- ----- -----
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.
2019 2018
GBPm GBPm
--------------------------------- ---- ----
Underlying earnings (see note 5) 25.7 20.6
--------------------------------- ---- ----
2019 2018
-------------------------------------- ----- -----
Basic underlying earnings per share 32.1p 30.3p
Diluted underlying earnings per share 31.7p 29.5p
-------------------------------------- ----- -----
7. Consolidated cash flow statement
(a) Cash generated from operations
The analysis of cash generated from operations is given
below:
Continuing operations
2019 2018
GBPm GBPm
------------------------------------------------------------- ----- -----
Profit before taxation 25.4 13.5
Adjustments for:
- IAS 19R administrative expenses included in the Income
Statement 1.5 1.4
- acquisition related costs included in the Income Statement 3.8 4.3
- exceptional items included in the Income Statement 4.0 2.1
- finance costs included in the Income Statement (1.6) 4.5
- IAS 19R finance cost included in the Income Statement 1.3 1.6
- cash flows from exceptional items and acquisition
related costs (1.9) (5.0)
- settlement of share options (0.6) (0.9)
- depreciation and underlying amortisation 6.9 6.4
- pension fund deficit recovery contributions (2.6) (2.5)
- share-based payments 1.2 0.9
------------------------------------------------------------- ----- -----
Operating cash flows before movement in working capital 37.4 26.3
Changes in working capital:
- increase in inventories (7.6) (0.5)
- decrease in trade and other receivables 0.1 4.8
- increase/(decrease) in trade and other payables 5.4 (7.1)
------------------------------------------------------------- ----- -----
Cash generated from operations 35.3 23.5
------------------------------------------------------------- ----- -----
(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 Non-current
borrowings borrowings Net debt
GBPm GBPm GBPm
------------------------- ----------- ----------- --------
At 1 April 2017 6.6 (29.8) (23.2)
Cash flow 10.2 (34.4) (24.2)
Other non-cash movements - (0.2) (0.2)
Exchange movement 0.5 - 0.5
------------------------- ----------- ----------- --------
At 31 March 2018 17.3 (64.4) (47.1)
Cash flow 7.8 6.2 14.0
Other non-cash movements - (0.2) (0.2)
Exchange movement (1.7) - (1.7)
------------------------- ----------- ----------- --------
At 31 March 2019 23.4 (58.4) (35.0)
------------------------- ----------- ----------- --------
Other non-cash movements principally relate to the movement in
the costs of raising debt finance in the year.
8. Post balance sheet event
On 1 April 2019, Norcros South Africa (Proprietary) Limited
acquired the entire issued share capital of RAP Plumbing Supplies
(Proprietary) Limited, trading as House of Plumbing ("House of
Plumbing"), a private company owned by the directors and a number
of other employees and private investors that is a market leading
supplier of specialist plumbing materials. The initial
consideration will be ZAR 172m (approximately GBP9.7m*) on a debt
and cash free and normalised working capital basis. A further ZAR
43m (approximately GBP2.4m*) earn-out may be payable in the year
ending 31 March 2022 on achievement of EBITDA and cash targets.
For the year ended 30 April 2018, House of Plumbing's audited
financial statements showed revenue of ZAR 392m (approximately
GBP22.1m*), EBITDA of ZAR 33m (approximately GBP1.9m*) and profit
before tax of ZAR 34m (approximately GBP1.9m*). As at 30 April 2018
the business had gross assets of ZAR 112m (approximately GBP6.3m*).
It is anticipated that there will be Goodwill arising on the
acquisition.
*Exchange rate of 17.7 ZAR/GBP
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UAVBRKNANAAR
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