REG - Norcros PLC - Results for the year ended 31 March 2024
13/06/2024 07:00
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RNS Number : 2158S Norcros PLC 13 June 2024
13 June 2024
Norcros plc
Results for the year ended 31 March 2024
Robust performance in line with market expectations
Strong foundations in place to execute medium-term growth strategy
Norcros, a market-leading designer and supplier of high-quality bathroom and
kitchen products in the UK, Europe and South Africa markets, today announces
its results for the year ended 31 March 2024.
Financial summary
2024 2023 % change
2024 v 2023
Revenue £392.1m £441.0m (11.1%)
Revenue constant currency LFL(1) (6.0%)
Underlying operating profit(2) £43.2m £47.3m (8.7%)
Underlying operating profit margin (%) 11.0% 10.7% 0.3pp
Underlying profit before taxation(2) £36.4m £41.8m (12.9%)
Diluted underlying EPS(2) 32.1p 37.4p (14.2%)
Underlying operating cash flow(2) £56.4m £44.8m 25.9%
Operating profit £39.9m £27.5m 45.1%
Underlying net debt(2) (£37.3m) (£49.9m) 25.3%
Dividend per share 10.2p 10.2p -
1 LFL - Like for like after adjusting for the acquisition of Grant Westfield
and the closure of Norcros Adhesives
2 Definitions and reconciliations of alternative performance measures are
provided in note 5
Highlights
· Robust performance in a challenging environment:
o UK and Ireland - record underlying profit of £38.4m (2023: £37.2m) and
underlying operating profit margin of 13.6% (2023: 12.6%)
o South Africa - gradual market recovery post significant energy
interruptions; well placed to gain market share
· Strategy implementation driving market share gains and margin
accretion:
o Portfolio development - successful sale of Johnson Tiles UK (post-year
end) strengthens portfolio mix
o Organic growth - successful NPD, increased cross-selling and
market-leading service
o Operational excellence - collaboration driving benefits of scale
o ESG - strong regulatory drivers enhance our competitive advantage; SBTi
validation of carbon emissions targets
· Full year revenue of £392.1m (2023: £441.0m), 6.0% lower on a
constant currency LFL basis(1)
· Underlying operating profit(2) of £43.2m, 8.7% lower than prior
year (2023: £47.3m)
· Underlying operating margin of 11.0% (2023: 10.7%)
· Underlying net debt(2) of £37.3m (2023: net debt of £49.9m)
representing 0.8x net debt to underlying EBITDA(2)
· Underlying ROCE(2) of 16.4% (2023: 18.5%)
Medium-term strategic targets announced
· Organic growth at 2% - 3% above the market
· Group underlying operating profit margin to reach 15%
· Cash conversion greater than 90%
· Return on Capital Employed greater than 20%
· Delivery of SBTi-validated science-based emissions targets by 2028
Current trading
Group revenue in the two months to the end of May 2024 was encouragingly 2.2%
ahead on a constant currency like for like basis, adjusting for Johnson Tiles
UK and Norcros Adhesives (UK and Ireland +2.0%, SA +2.5%). Group revenue was
2.9% below the prior year comparator on a reported basis.
Although market conditions are likely to remain uncertain, the Group continues
to make further strategic progress and the Board's expectations for FY25
remain unchanged.
Thomas Willcocks, CEO, commented:
"I am delighted with the performance over this period and excited by the
significant opportunities that remain in the more resilient mid-premium market
segments that we hold leading positions in. Our strategy is building from a
position of strength and scale as we actively leverage the customer and
operational synergies within the Group."
There will be a presentation today at 9.30am for analysts at the offices of
Hudson Sandler, 25 Charterhouse Square, London, EC1M 6AE. The supporting
slides will be available in the investor section of the Norcros website at
www.norcros.com (http://www.norcros.com) later in the day.
Enquiries
Norcros plc Tel: 01625 547700
Thomas Willcocks, Chief Executive Officer
James Eyre, Chief Financial Officer
Hudson Sandler Tel: 0207 796 4133
Nick Lyon
Lucy Wollam-Coles
Notes to Editors
Norcros is a market-leading supplier of high-quality, sustainable bathroom and
kitchen products with operations primarily in the UK and Ireland and South
Africa.
In the UK and Ireland, Norcros operates under six brands: Triton, Merlyn,
Grant Westfield, VADO, Croydex, and Abode.
In South Africa, Norcros operates under four brands: Tile Africa, House of
Plumbing, TAL, and Johnson Tiles.
Norcros is headquartered in Wilmslow, Cheshire and employs around 2,100
people. The Company is listed on the London Stock Exchange. For further
information please visit the Company website: www.norcros.com
(http://www.norcros.com)
Chair's Statement
Results in line with market expectations
In my first year as Chair, I am pleased to report a robust performance for the
Group with underlying operating profit in line with market expectations,
despite challenging macro conditions. The strong operating profit performance
was supported by another year of excellent cash conversion, a key attribute of
our business.
The team has once again demonstrated the strength of our business model and,
especially, our ability to perform through the cycle. The focus on the more
resilient mid-premium positioning of our brands means that we are less
cyclical, which sets us apart from many other building product businesses.
Clear strategy
Our Capital Markets Event in May 2024 saw the launch of the Group's updated
strategy and the communication of new, ambitious, and deliverable medium-term
targets, outlined above. The business has successfully developed a position as
the number one bathroom and kitchen products business in the UK and Ireland,
and has proven growth accelerators that will advance the quality and the level
of the earnings going forward.
Thomas Willcocks summarises the updated strategy in his Chief Executive
Officer's Review below and for additional information I would encourage you to
watch the Capital Markets Event video on our website www.norcros.com
(http://www.norcros.com) where you will see and hear about our strategy,
including our key growth accelerators, from the talented team that are driving
our business forward at both a Group and brand level.
ESG
ESG is a broad and integral part of who we are and what we do, and underpins
our business strategy. We are proud of our history of environmental and social
leadership, our achievements in setting industry-leading standards with our
products, and the support we provide to the communities that we live and work
in. Our culture of putting in more than we take out ensures how we do things
is just as important as what we do.
The Board is committed to the key role that sustainability plays, and will
increasingly play, in our business strategy given changing consumer
preferences for the products they purchase and increasing regulatory drivers,
such as the Future Homes Standard in 2025. Of particular note, I want to
recognise and congratulate the team at Triton, our market-leading shower
brand, for being honoured with the King's Award for Enterprise in recognition
of its outstanding commitment to sustainable development. This is a fantastic
achievement and demonstrates our commitment to placing sustainability at the
core of our long-term business strategy.
Strength and depth of talent
Given our decentralised business model, we recognise the importance and
quality of the teams that are managing and growing each of our brands. On
behalf of the Board, I would like to specifically thank these teams both
individually and collectively for their efforts, which helped generate further
momentum on the Group's strategic objectives over the last 12 months.
When I look at our broader management team, there is an excellent balance
between homegrown talent, as evidenced by our Chief Executive Officer and
Chief Financial Officer, and our ability to recognise and attract the very
best people outside of the Group. We continue to invest in our existing teams
and recruit exceptional new talent. In particular, we were pleased, at Group
level, to have welcomed Helen Gopsill, Chief People Officer, and Helene
Roberts, Managing Director of the UK and Ireland, to our senior Norcros
leadership team in the past year.
As we go about what we do every day, we are committed to ensuring a safe and
positive working environment within our open, collaborative and low-ego
culture.
Board changes
I would like to thank David McKeith, who retired in July 2023, for his
invaluable contribution to the Board over many years with Norcros. I am
pleased that Rebecca DeNiro will be joining the Board as an additional
Non-executive Director from 1 July 2024. Rebecca brings a wealth of relevant
experience in well-known consumer brands such as Dyson and Regatta and we are
delighted that she is as excited about the future of Norcros as we are.
Dividend
For the year ended 31 March 2024, the Board is recommending a final dividend
of 6.8p (2023: 6.8p) per share. When combined with the interim dividend of
3.4p (2023: 3.4p) per share, which was paid on 16 January 2024, this will make
a total dividend for the year of 10.2p (2023: 10.2p) per share, in line with
the previous year and maintaining an appropriate level of dividend cover.
Acting responsibly
The Board leads an ongoing program to ensure the highest standards of
corporate governance and integrity across the Group and has remained abreast
of developing governance standards. The Board's interaction and communication
with Executive Management is excellent and, as a result, the Board is well
placed to challenge, guide, and support the executive team in the delivery of
our growth strategy.
We continue to pay particular attention to the provision of a safe working
environment for our staff across all locations and to the empowerment of our
employees. The Board also acknowledge the benefits of diversity, including
gender and ethnicity, and is committed to setting an appropriate tone from the
top in all diversity and inclusion matters.
Looking to the future
The Group has delivered another robust performance despite the ongoing
economic challenges. The Board is confident that the ongoing implementation of
our strategic initiatives will continue to drive the development of the
business in line with its expectations in the year ahead.
Chief Executive Officer's Review
On behalf of the Norcros team, I am pleased to share my review for my first
full year as Chief Executive Officer of Norcros plc. Thanks to the passion of
our team and partners, we have collectively delivered another robust set of
results for the year.
As we have grown our market share, we have focused on the quality of our
businesses and earnings, growing faster and more efficiently together.
Importantly, our path forward is consciously focused on operating in a way
that contributes positively to the communities that we live and work in.
Building off a strong foundation
Over the last ten years, we have developed and delivered on our goal to
consolidate the fragmented bathroom and kitchen product markets we operate in,
reaching a point where we are the number one UK and Ireland bathroom and
kitchen products business and the second largest in South Africa. Our strategy
has been evenly balanced between organic and acquisitive growth, with the
Group developing key competencies in both areas.
I am delighted with the performance over this period and excited by the
significant opportunities that remain in the more resilient mid-premium market
segments that we hold leading positions in. Our strategy is building from a
position of strength and scale as we actively leverage the customer and
operational synergies within the Group.
The growth and development of the business comes, and will continue to come,
from four key and already 'in play' strategic initiatives:
· Portfolio development (including M&A)
· Organic growth (in-house design, collaboration and service)
· Operational excellence (efficiencies and service)
· ESG (a powerful choice for better living)
Portfolio development
The first important step was to review our portfolio, recognising that our
increasing focus on building a capital-light and higher operating margin
structure meant that we had businesses that would not form part of the Group's
future. Over the last 18 months, we have carefully completed the closure of
Norcros Adhesives and sold Johnson Tiles UK to the existing management team,
with this sale completing in May 2024. I am really pleased that we were able
to put a deal together that has seen the 123-year-old Johnson Tiles UK
business continue its journey under new ownership.
When considering potential acquisitions, we have a strong pipeline of
opportunities to which we will continue to apply our clear and rigorous
decision-making framework as we develop our capital-light and high operating
margin business.
Organic growth
Norcros drives ahead-of-market organic share growth by leveraging two
principal accelerators. The first is our agile in-house design capabilities
that ensure we have a reliable stream of high-quality and on-trend new
products coming into the market on a regular basis. These products are
increasingly leveraging the clear opportunities in sustainable living to take
market share. Our second driver comes from our scale and, especially, the
ability to cross sell through brand collaboration, as demonstrated by the
introduction of Grant Westfield to Wickes, Topps Tiles and Screwfix,
post-acquisition. Both accelerators incorporate significant opportunities that
we are actively pursuing and converting.
Operational excellence
Our scale allows us to access operational synergies not available to many of
our smaller competitors. Early but strong progress is being made in the Group,
helping to ensure improved service levels to our customers that are delivered
more efficiently. This is a key focus area for Norcros with investment in
systems, and warehousing and distribution efficiency projects that are now
underway at VADO and Grant Westfield; both are progressing to plan.
ESG - investing in our people, products and planet to drive our competitive
advantage
Our sustainability program is broadly grouped into three interrelated areas,
namely our people, our products and the world that we live and work in.
Our ESG credentials are a maturing and sustainable competitive differentiator.
We have made excellent progress over the last two years. In a structured and
measured manner, we are increasingly able to give our customers a powerful,
sustainable choice for better living. Increased investment in our people and
product development is driving clear market share gains, as demonstrated by
our Triton brand in particular. Further detail of what we are doing in this
area and how we are measuring this is explained in detail in our Annual Report
and Accounts.
We are also pleased to report that our emission targets have been validated
and approved by the Science Based Targets initiative (SBTi) in the period.
Norcros is committed to reach net zero greenhouse gas emissions across our
value chain by 2040 and we are making good progress to delivering our 2028
near-term targets.
As a team, we are fortunate to be able to build on what makes us great today
and leverage our strong, scale-based growth accelerators to unlock further
value.
A unique market leader
Norcros is the UK and Ireland's number one bathroom products group, with clear
differentiators from our smaller bathroom product peers. We have
market-leading bathroom and kitchen products, positioned in the more resilient
mid-premium segment of the market, with a design-led business that delivers
exceptional service across a blue chip customer base. Our capital-light and
cash-generative business model provides a quality of earnings and enhanced
margin profile. Our focused but decentralised business model is a key enabler;
we have the best talent in the market operating where it counts - in the
field. These exceptional teams focus on what sets their brands apart, namely
in-house product design, deep sourcing relationships and excellent customer
service. Our ability to do this day in and day out is demonstrated by our
exceptional product vitality levels, and our ability to not only retain, but
consistently grow, our customer base and market share.
Recognising the central part that our people play in the Group's success, we
have placed increased emphasis on investing in our talent this year. This
investment has taken place at all levels and is a key driver in the
development of our market-leading teams. We are committed to being the
employer of choice in our markets and work hard to ensure that our Group
attracts and retains talented, diverse and inclusive teams.
We have, over the last year, strengthened our award-winning teams through
further investment and increased collaboration, and also brought in new talent
as needed. I am confident that we are successfully developing the talent and
leadership required to grow our business ahead of the market in the coming
years.
Norcros is different, and we are able to do what we do because of our
dedication to the design and service of branded products with a team of
remarkably skilled and committed people across our business. This anchors and
drives our business model; we never take this for granted.
Looking forward to the year ahead
The year ahead of us will be a year of further development and focused
implementation of our strategic objectives. A significant level of this
development will come from increased collaboration. Each of our brands is
formidable in its own right, but together they have proved that we are more
than the sum of our parts.
Underlying what we do is a deep understanding of our customers and end users.
Consumer insights help us understand not only what our customers and end users
want now, but also what they will need in the future. Our design and product
teams will continue to develop on-trend, high-quality and sustainable products
that our customers love to use and feel confident choosing. We all have a
sustainable choice, and we believe that doing the right thing is not only
right but will drive our business growth and profitability ahead of our
competitors in the years ahead.
To support the wider customer experience, we will focus on making it easier
for our suppliers, staff and customers to engage in a straightforward and
seamless manner, right through the product journey, through increased
investment in our processes and operations. This is a journey that has started
with promising and meaningful progress in the period.
The encouraging part of the year ahead is that all four key growth initiatives
are already up and running. There are no standing starts. Given the progress
we have already made, we are confident that we will make real advancement
towards our ambitious new medium-term targets in the year ahead as outlined
above.
To sum it all up
The Norcros business is not only about exceptional products and experiences,
but also about people, the places we live and work, and the way we interact
and engage with our communities and the environment. Putting these together
means that sustainability at the core of our business is not just a tagline;
it is fundamental to the way we operate. It is the right thing to do, and we
believe that it will help deliver the best possible return to our
shareholders.
We are committed to providing a powerful choice for better living, and I am
excited and confident about the journey ahead.
Business performance
2024 2023
£m £m
Revenue 392.1 441.0
Operating profit 39.9 27.5
IAS 19R administrative expenses 1.3 1.6
Acquisition related costs 4.3 8.4
Exceptional operating items (2.3) 9.8
Underlying operating profit 43.2 47.3
2024 2023
£m £m
Revenue - UK and Ireland 281.9 295.8
Revenue - South Africa 110.2 145.2
Revenue - Group 392.1 441.0
Underlying operating profit - UK and Ireland 38.4 37.2
Underlying operating profit - South Africa 4.8 10.1
Underlying operating profit - Group 43.2 47.3
Underlying operating profit margin - UK and Ireland 13.6% 12.6%
Underlying operating profit margin - South Africa 4.4% 7.0%
Underlying operating profit margin - Group 11.0% 10.7%
2024 2023
£m £m
Underlying operating profit 43.2 47.3
Depreciation of right of use assets 4.7 4.6
Lease costs (6.5) (6.4)
Depreciation and underlying amortisation (owned assets) 4.3 5.0
Underlying EBITDA (pre-IFRS 16) 45.7 50.5
Net working capital movement 3.3 (13.3)
IFRS 2 charge 0.9 1.2
Operating profit impact of IFRS 16 1.8 1.8
Depreciation of right of use assets 4.7 4.6
Underlying operating cash flow 56.4 44.8
2024 2023
Basic underlying earnings per share 32.4p 38.0p
Diluted underlying earnings per share 32.1p 37.4p
Business review - UK and Ireland
Our UK and Ireland business achieved revenue of £281.9m (2023: £295.8m),
representing a decrease of 4.7% on a reported basis, but delivered a record
level of underlying operating profit in the year. On a like for like basis,
adjusting for Grant Westfield (acquired 31 May 2022) and Norcros Adhesives
(closed in June 2023), revenue was 3.2% lower than the prior year. Reductions
in volume were broadly offset by price increases.
Repair, maintenance and improvement (RMI) activity remains the largest
component in the UK and Ireland bathroom market and our market-leading brands
are positioned in the mid-premium segment, which remained relatively resilient
throughout the year. Although we experienced a reduction in housebuilding
activity, there remains a significant shortage of homes in the UK and Ireland
and we continue to take share in this sector and are well placed for the
recovery. Representing a relatively small part of the UK and Ireland business,
export sales were slightly below the prior year.
Triton, Merlyn and Grant Westfield all performed strongly, further growing
their market-leading positions with well-received new product launches. As
noted at the half year, VADO's performance was impacted by delays in new
product launches. Encouragingly, VADO has taken the first important step
towards being able to offer a complete bathroom solution following the recent
launch of its Cameo collection, which includes bathroom furniture for the
first time. Cameo was introduced to customers at the Kitchen, Bedroom and
Bathroom (KBB) tradeshow event in March 2024, and was recognised as one of the
top innovative products there.
On 25 April 2024, the Group announced that it had entered into an agreement to
sell Johnson Tiles UK to its existing management team. The sale completed in
May 2024. Revenue of £31.1m (2023: £35.3m) and underlying operating profit
of £0.7m (2023: £0.5m) have been included in the underlying results for the
current and prior year. Further detail can be found in the Chief Financial
Officer's Review.
The UK and Ireland brands made significant investments in systems (including
ERP, supply chain and customer-facing digital systems) in the year.
Operational efficiency projects were also delivered through warehouse and
distribution changes, such as the move to a single warehouse location at VADO,
consolidating four warehouses into a single modern facility, driving
efficiencies.
Our market-leading product vitality again saw the business not only growing
share, but also being recognised by the industry, winning a number of
prestigious awards during the year. These included Triton's ENVi® shower
(Housebuilder Product's Best Kitchen and Bathrooms Product), Grant Westfield's
Multipanel Tile Collection (Ideal Home's Best Bathroom Surface Award) and the
Pronteau Scandi-X tap in Abode (Ideal Home's Best Hot Water Tap). Merlyn also
won a number of awards in recognition of the brand's outstanding customer
service and was recognised as Shower Brand Supplier of the Year from the
Fortis Buying Group.
Strong progress has also been made on our ESG strategy as we embed
sustainability initiatives to drive further competitive advantage. More detail
is included in the ESG section in our Annual Report and Accounts.
UK and Ireland underlying operating profit for the year was 3.2% higher than
the prior year, increasing by £1.2m to £38.4m, with the operating margin
increasing to 13.6% (2023: 12.6%). This was a record performance for the UK
and Ireland business. Operating cash conversion was significantly ahead of the
prior year, supported by our continued and successful focus on working capital
management.
Our UK and Ireland business is well placed to continue growing market share
and winning new customers in our target market segments by leveraging our
strong new product development pipeline, scale-based collaboration and
superior customer service.
Business review - South Africa
Our South African business delivered revenue of £110.2m (2023: £145.2m),
12.3% lower on a constant currency basis, as macroeconomic uncertainties
impacted consumer confidence in the year. This was a resilient performance
despite challenging and sustained national energy supply interruptions which
impacted at a time when consumers, world-wide and in South Africa, were
already struggling with cost of living pressures.
The business, run by a highly experienced team, reacted early and decisively
ensuring that the business was able to work through the challenges at hand.
Whilst the energy interruptions have improved to more manageable levels, the
impact that they had on consumers and the new build cycle will take longer to
unwind. The business remained profitable and is well positioned to benefit
from what we expect will be a gradual recovery. The underlying growth drivers,
in what is a meaningful market, remain. These include a young and growing
population, a diversified economy and a shortage of housing.
New product development remains a key focus with encouraging vitality rates
across our South African business, particularly in Johnson Tiles SA with
extensive investment in new product designs, finishes and size formats in the
year. Tile Africa's brand strength resulted in key account wins across a
variety of sectors, mainly with new housing developers, hospitality (hotels)
and automotive showrooms. TAL, our market-leading adhesive business in South
Africa, continues to benefit from the development of internal and external
waterproofing products, with year on year growth and ongoing new product
development. House of Plumbing opened their first new store as part of a wider
national rollout in Cape Town. These initiatives are underpinning our organic
growth focus.
As with our UK and Ireland brands, we are investing in driving operational
efficiencies and improved service levels through targeted investments in our
infrastructure and systems, starting with a new ERP system for Tile Africa
that is expected to go live in the first half of the current financial year.
In line with the rest of the business, sustainability is a core strategic
driver for our South African business, and there are a number of
environmentally-focused initiatives in progress. Further detail is included in
the ESG section in our Annual Report and Accounts.
As a result of the market challenges, underlying operating profit decreased to
£4.8m (2023: £10.1m), with the underlying operating margin at 4.4% (2023:
7.0%). Operating cash conversion was ahead of the prior year due to early
self-help interventions in working capital as the market slowed. Our South
African business remains in a strong competitive position and is well placed
to gain market share in its respective markets as conditions gradually
improve. We anticipate energy supply constraints to further stabilise, driven
by the investment of private energy generation, and expect to benefit from the
improved levels of consumer confidence in due course.
Chief Financial Officer's Review
2024 2023
£m £m
Revenue 392.1 441.0
Underlying operating profit 43.2 47.3
IAS 19R administrative expenses (1.3) (1.6)
Acquisition related costs (4.3) (8.4)
Exceptional operating items 2.3 (9.8)
Operating profit 39.9 27.5
Net finance costs (7.3) (5.8)
Profit before taxation 32.6 21.7
Taxation (5.8) (4.9)
Profit for the year 26.8 16.8
Revenue
Group revenue at £392.1m (2023: £441.0m) decreased by 11.1% on a reported
basis and by 6.0% on a constant currency like for like basis after adjusting
for Grant Westfield, acquired on 31 May 2022, and Norcros Adhesives, closed in
June 2023.
Underlying operating profit
Underlying operating profit decreased by 8.7% to £43.2m (2023: £47.3m). Our
UK and Ireland businesses delivered a record performance with an underlying
operating profit of £38.4m (2023: £37.2m), and our South African businesses
recorded an underlying operating profit of £4.8m (2023: £10.1m). Group
underlying operating profit margin was 11.0% (2023: 10.7%).
Acquisition related costs
A cost of £4.3m (2023: £8.4m) has been recognised in the year with the
majority of the cost relating to intangible asset amortisation of £6.5m
(2023: £6.2m). A credit of £3.0m has been reflected, representing a release
of an element of deferred contingent consideration resulting from the
acquisition of Grant Westfield.
Exceptional operating items
An exceptional operating credit of £2.3m (2023: charge of £9.8m) has been
recognised in the year.
2024 2023
£m £m
Restructuring costs (1.7) (4.8)
Reversal of impairment 4.0 -
Impairment - (5.0)
2.3 (9.8)
Restructuring costs
The £1.7m (2023: £4.8m) exceptional restructuring costs relate to Johnson
Tiles UK moving to a single kiln operation in the first half of the year and
the move to a single site in VADO.
Sale of Johnson Tiles UK and reversal of impairment
The sale of Johnson Tiles UK completed in May 2024. This completed after the
year end at a consideration lower than the carrying value of the assets of the
business. In the next financial year, we expect to recognise a non-cash
exceptional cost of circa £20m. The cash costs associated with the
transaction are expected to be less than £1m.
A £4.0m credit has been recognised in the year relating to the reversal of
previous impairments on land and buildings. The Johnson Tiles UK site in
Stoke-on-Trent has been professionally valued in the year at a level exceeding
its carrying value. As a result, previous impairments, less an amount of
subsequent depreciation, have been reversed. This site has been retained
following the post-year end sale of Johnson Tiles UK.
Revenue in the year of £31.1m, representing approximately 8% of Group revenue
(2023: £35.3m), and the underlying operating profit in the year of £0.7m
(2023: £0.5m) have been included in the underlying results for the current
and prior year.
Finance costs
2024 2023
£m £m
Interest payable on bank borrowings 5.2 3.7
Interest on lease liabilities 1.6 1.8
Amortisation of costs of raising debt finance 0.4 0.3
Discounting of deferred contingent consideration 0.9 0.6
Finance costs 8.1 6.4
IAS 19R finance credit (0.8) (0.6)
Net finance costs 7.3 5.8
Net finance costs for the year of £7.3m compares to £5.8m in 2023. This
movement is mainly due to the increase in Bank of England base rates in the
UK, partially offset by a reducing net debt.
The Group has recognised a £0.8m IAS 19R interest credit in respect of the UK
defined benefit pension scheme surplus (2023: credit of £0.6m) due to this
accounting surplus throughout the year.
Underlying profit before tax
Underlying profit before tax was £36.4m (2023: £41.8m), mainly reflecting
the decrease in underlying operating profit noted above, and increased
interest costs.
Taxation
The tax charge for the year of £5.8m (2023: £4.9m) represents an effective
tax rate for the year of 17.8% (2023: 22.6%). The decrease in the effective
tax rate mainly relates to the increased proportion of taxable profits in the
UK and Ireland compared to South Africa.
The standard rates of corporation tax in the UK, South Africa and Ireland in
the period were 25% (2023: 19%), 27% (2023: 27%) and 12.5% (2023: 12.5%)
respectively.
Dividends
Although underlying earnings have reduced in the year to £28.8m (2023:
£33.5m), the Board recommends a final dividend of 6.8p per share (2023:
6.8p). This, combined with the interim dividend of 3.4p per share (2023:
3.4p), results in a total dividend of 10.2p per share (2023: 10.2p). The total
dividend is equivalent to a dividend cover of 3.1 times, slightly lower than
the year ended 31 March 2023 (3.7 times). The cash cost of the total dividend
is £9.1m.
This final dividend, if approved at the Annual General Meeting, will be
payable on 2 August 2024 to shareholders on the register on 28 June 2024. The
shares will be quoted ex-dividend on 27 June 2024. 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 12 July
2024.
Cash flow and net debt
Underlying operating cash flow was £11.6m higher than in the prior year at
£56.4m (2023: £44.8m).
2024 2023
£m £m
Underlying operating profit 43.2 47.3
Depreciation and underlying amortisation (owned assets) 4.3 5.0
Depreciation of right of use assets 4.7 4.6
Lease costs (6.5) (6.4)
Underlying EBITDA (pre-IFRS 16) 45.7 50.5
Net working capital movement 3.3 (13.3)
IFRS 2 charge add-back 0.9 1.2
Lease costs 6.5 6.4
Underlying operating cash flow 56.4 44.8
Underlying operating cash conversion 123% 89%
The main driver of the improvement in underlying operating cash flow was the
continued focus on working capital. Underlying operating cash conversion in
the year was 123% of underlying EBITDA (2023: 89%).
The Group ended the year with net debt of £37.3m (2023: net debt of £49.9m)
on a pre-IFRS 16 basis. This represents a leverage of 0.8 times underlying
EBITDA (2023: 1.0 times). Net debt inclusive of IFRS 16 lease liabilities was
£59.5m (2023: £74.6m).
Balance sheet
The Group's balance sheet is summarised below.
2024 2023
£m £m
Property, plant and equipment 28.1 24.8
Right of use assets 18.0 20.0
Goodwill and intangible assets 161.2 167.1
Deferred tax (13.4) (15.0)
Net current assets excluding cash and borrowings 77.1 80.6
Pension scheme surplus 16.5 14.9
Lease liabilities (22.2) (24.7)
Other non-current assets and liabilities (5.6) (7.4)
Net debt (37.3) (49.9)
Net assets 222.4 210.4
Total net assets increased by £12.0m to £222.4m (2023: £210.4m). Net
current assets (excluding cash and borrowings) decreased by £3.5m, largely
reflecting the reduction in working capital in the year.
Property, plant and equipment increased by £3.3m to £28.1m and included a
reversal of a previous land and building impairment of £4.0m and additions of
£6.2m (2023: £5.4m). The depreciation charge was £4.0m (2023: £4.9m) and
foreign exchange losses were £1.1m (2023: loss of £1.7m) relating to assets
held in South Africa. Disposals of £1.2m of assets were reflected in the year
as part of the closure of Norcros Adhesives. Other movements totalled £0.6m.
Right of use assets decreased by £2.0m to £18.0m (2023: £20.0m), primarily
reflecting net additions of £3.7m, offset by right of use depreciation of
£4.7m (2023: £4.6m) and exchange losses of £0.8m (2023: loss of £1.5m).
The deferred tax liability decreased by £1.6m to a liability of £13.4m
(2023: liability of £15.0m). The decrease is primarily the result of the
amortisation of acquired intangible assets and actuarial losses on the pension
scheme.
Pension schemes
On an IAS 19R accounting basis, the gross defined benefit pension scheme
valuation of the UK scheme showed a surplus of £16.5m compared to a surplus
of £14.9m last year. The present value of scheme liabilities decreased by
£10.0m, primarily due to benefit payments made in the year offset by a
decrease in the discount rate to 4.85% (31 March 2023: 4.90%). The value of
scheme assets decreased by £8.4m, largely due to benefit payments made in the
year.
As agreed at the 2021 triennial valuation, additional contributions are £3.8m
per annum from 1 April 2022 to March 2027 (increasing with CPI, capped at 5%,
each year). The additional contributions in the current year were £4.0m. The
2024 triennial valuation is underway.
The Group's contributions to its defined contribution pension schemes were
£3.9m (2023: £4.0m).
Funding and liquidity
The Group extended its multicurrency revolving credit facility by a further
year in the period. The Group has committed banking facilities of £130m (plus
a £70m uncommitted accordion) with a maturity date of the facility of October
2027.
Principal risks and uncertainties
Risk management remains a priority for the Group to help sustain the success
of the business in the future. There is a range of potential risks and
uncertainties which could have a material impact on the Group's performance.
The objective of our risk management framework is to support the business in
meeting its strategic and operational objectives through the identification,
monitoring and mitigation of risks within clearly defined risk appetite levels
for each risk category.
The Board has carried out a robust assessment of the principal risks and taken
them into consideration when assessing the long-term viability of the Company.
The principal risks are listed below and they do not comprise all the risks
that the Group may face, and are not listed in any order of priority. In
recent years, several of our principal risks were impacted by the COVID-19
global pandemic. The perceived risk from such pandemics has now diminished to
such an extent that it is no longer deemed to be a principal risk. We do,
however, continue to assess the potential impact and likelihood of another
pandemic in our risk registers.
· Strategic risks include the risks associated with future
acquisitions.
· Environmental, Social and Governance (ESG) risks include the risks
associated with stakeholder requirements and reporting requirements.
· People risks include the risks associated with staff retention and
recruitment. The Board's paramount concern as regards our people is to keep
them safe.
· Commercial risks include risks associated with market conditions,
the loss of key customers and competition.
· Operational risks include the risks associated with the reliance on
production facilities and the loss of a key supplier.
· Financial risks include the risks associated with exchange rates,
maintaining a suitable level of funding and liquidity and those associated
with managing the defined benefit pension scheme.
· Information technology and cyber security risks include the risk of
reliance on automated processes and systems and the increasing sophistication
of cyber-crime.
Further details on the principal risks including detailed descriptions and
mitigating actions are presented in the Annual Report and 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 UK-adopted
international accounting standards, 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;
· 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; and
· There have been no significant individual related party
transactions during the year.
Directors: Steve Good (Board Chair and Non-Executive Director), Thomas
Willcocks (Chief Executive Officer), James Eyre (Chief Financial Officer),
Alison Littley (Non-Executive Director) and Stefan Allanson (Non-Executive
Director).
Thomas Willcocks
Chief Executive Officer
James Eyre
Chief Financial Officer
Consolidated income statement
Year ended 31 March 2024
Notes 2024 2023
£m £m
Continuing operations
Revenue 2 392.1 441.0
Underlying operating profit 43.2 47.3
IAS 19R administrative expenses (1.3) (1.6)
Acquisition related costs 3 (4.3) (8.4)
Exceptional operating items 3 2.3 (9.8)
Operating profit 39.9 27.5
Finance costs 4 (8.1) (6.4)
IAS 19R finance credit 0.8 0.6
Profit before taxation 32.6 21.7
Taxation (5.8) (4.9)
Profit for the year attributable to equity holders of the Company 26.8 16.8
Earnings per share attributable to equity holders of the Company
Basic earnings per share:
From profit for the year 6 30.1p 19.1p
Diluted earnings per share:
From profit for the year 6 29.8p 18.8p
Weighted average number of shares for basic earnings per share (m) 89.0 88.1
Alternative performance measures
Underlying profit before taxation (£m) 5 36.4 41.8
Underlying earnings (£m) 5 28.8 33.5
Basic underlying earnings per share 6 32.4p 38.0p
Diluted underlying earnings per share 6 32.1p 37.4p
Consolidated statement of comprehensive income
Year ended 31 March 2024
2024 2023
£m £m
Profit for the year 26.8 16.8
Other comprehensive income and expense:
Items that will not subsequently be reclassified to the Income Statement
Actuarial losses on retirement benefit obligations (1.4) (5.6)
Items that may be subsequently reclassified to the Income Statement
Cash flow hedges - fair value gain/(loss) in year 1.0 (2.9)
Foreign currency translation of foreign operations (5.3) (8.3)
Other comprehensive expense for the year (5.7) (16.8)
Total comprehensive result for the year attributable to equity holders of the 21.1 -
Company
Items in the statement are disclosed net of tax.
Consolidated balance sheet
At 31 March 2024
2024 2023
£m £m
Non-current assets
Goodwill 107.3 107.9
Intangible assets 53.9 59.2
Property, plant and equipment 28.1 24.8
Deferred tax asset 0.7 -
Pension scheme asset 16.5 14.9
Right of use assets 18.0 20.0
224.5 226.8
Current assets
Inventories 97.4 103.9
Trade and other receivables 72.6 83.3
Cash and cash equivalents 30.8 29.0
200.8 216.2
Current liabilities
Trade and other payables (89.1) (99.2)
Lease liabilities (6.3) (6.1)
Current tax liabilities (2.5) (0.9)
Derivative financial instruments (0.6) (2.0)
Provisions (0.7) (4.5)
(99.2) (112.7)
Net current assets 101.6 103.5
Total assets less current liabilities 326.1 330.3
Non-current liabilities
Financial liabilities - borrowings (68.1) (78.9)
Lease liabilities (15.9) (18.6)
Deferred tax liabilities (14.1) (15.0)
Other non-current liabilities (4.6) (6.2)
Provisions (1.0) (1.2)
(103.7) (119.9)
Net assets 222.4 210.4
Financed by:
Share capital 8.9 8.9
Share premium 47.6 47.6
Retained earnings and other reserves 165.9 153.9
Total equity 222.4 210.4
Consolidated cash flow statement
Year ended 31 March 2024
Note 2024 2023
£m £m
Cash generated from operations 7 49.0 37.7
Income taxes paid (5.6) (7.7)
Interest paid (6.8) (5.5)
Net cash generated from operating activities 36.6 24.5
Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets (7.3) (6.0)
Acquisition of subsidiary undertakings net of cash acquired - (78.3)
Net cash used in investing activities (7.3) (84.3)
Cash flows from financing activities
Proceeds from issue of ordinary share capital - 18.1
Purchase of treasury shares (0.8) -
Costs of raising debt finance (0.2) -
Principal element of lease payments (4.9) (4.6)
Drawdown of borrowings 18.0 114.0
Repayment of borrowings (29.0) (54.0)
Dividends paid to the Company's shareholders (9.1) (9.2)
Net cash (used in)/generated from financing activities (26.0) 64.3
Net increase in cash and cash equivalents 3.3 4.5
Cash and cash equivalents at the beginning of the year 29.0 27.4
Exchange movements on cash and cash equivalents (1.5) (2.9)
Cash and cash equivalents at the end of the year 30.8 29.0
Consolidated statement of changes in equity
Year ended 31 March 2024
Ordinary Share Treasury Hedging Translation Retained Total
share premium reserve reserve reserve earnings equity
capital £m £m £m £m £m £m
£m
At 1 April 2022 8.1 30.3 (0.1) 1.5 (12.8) 173.3 200.3
Comprehensive income:
Profit for the year - - - - - 16.8 16.8
Other comprehensive income:
Actuarial loss on retirement benefit obligations - - - - - (5.6) (5.6)
Fair value loss on cash flow hedges - - - (2.9) - - (2.9)
Foreign currency translation adjustments - - - - (8.3) - (8.3)
Total other comprehensive expense for the year - - - (2.9) (8.3) (5.6) (16.8)
Transactions with owners:
Shares issued 0.8 17.3 - - - - 18.1
Dividends paid - - - - - (9.2) (9.2)
Value of employee services - - - - - 1.2 1.2
At 31 March 2023 8.9 47.6 (0.1) (1.4) (21.1) 176.5 210.4
Comprehensive income:
Profit for the year - - - - - 26.8 26.8
Other comprehensive expense:
Actuarial loss on retirement benefit obligations - - - - - (1.4) (1.4)
Fair value gain on cash flow hedges - - - 1.0 - - 1.0
Foreign currency translation adjustments - - - - (5.3) - (5.3)
Total other comprehensive income/(expense) for the year - - - 1.0 (5.3) (1.4) (5.7)
Transactions with owners:
Purchase of treasury shares - - (0.8) - - - (0.8)
Dividends paid - - - - - (9.1) (9.1)
Settlement of share option schemes - - 1.1 - - (1.2) (0.1)
Value of employee services - - - - - 0.9 0.9
At 31 March 2024 8.9 47.6 0.2 (0.4) (26.4) 192.5 222.4
Notes to the preliminary statement
Year ended 31 March 2024
1. Basis of preparation
Norcros plc (the Company), and its subsidiaries (together the Group), is a
market-leading designer and supplier of high-quality bathroom and kitchen
products in the UK, Europe and South African markets.
The Company is a public limited company which is listed on the premium segment
of 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 statement is extracted
from, and is consistent with, the Group's audited financial statements for the
year ended 31 March 2024. The financial information set out above does not
constitute the Company's statutory financial statements for the periods ended
31 March 2024 or 31 March 2023 but is derived from those financial statements.
Statutory financial statements for 2024 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 UK-adopted
International Accounting Standards and with the accounting policies set out in
the Annual Report and Accounts consistently applied to all periods.
Going concern
In adopting the going concern basis for preparing the financial statements,
the Directors have considered the Group's business activities and the
principal risks and uncertainties including current macroeconomic factors in
the context of the current operating environment.
The Group, in acknowledging its TCFD requirements, has also considered
climate risks in the financial statements. A going concern financial
assessment was developed on a bottom-up basis by taking the output of the
annual budgeting process built up by individual businesses and then subjected
to review and challenge by the Board. The financial model was then stress
tested by modelling the most extreme but plausible scenario, that being a
global pandemic similar in nature to COVID-19. This has been based on the
actual impact of the COVID-19 pandemic on the Group, which, at its peak, saw a
revenue reduction of 25% on the prior year over a six-month period. The
scenario also incorporates management actions the Group has at its disposal,
including a number of cash conservation and cost reduction measures including
capital expenditure reductions, dividend decreases and restructuring
activities.
The Group continues to exhibit sufficient and prudent levels of liquidity
headroom against our key banking financial covenants during the 12-month
period under assessment. Reverse stress testing has also been applied to the
financial model, which represents a further decline in sales compared with the
reasonable worst case. Such a scenario, and the sequence of events which could
lead to it, is considered to be implausible and remote.
As a result of this detailed assessment, the Board has concluded that the
Company is able to meet its obligations when they fall due for a period of at
least 12 months from the date of this report. For this reason, the Company
continues to adopt the going concern basis for preparing the Group financial
statements. In forming this view, the Board has also concluded that no
material uncertainty exists in its use of the going concern basis of
preparation.
2. Segmental reporting
Year ended 31 March 2024
UK and Ireland South Group
£m Africa £m
£m
Revenue 281.9 110.2 392.1
Underlying operating profit 38.4 4.8 43.2
IAS 19R administrative expenses (1.3) - (1.3)
Acquisition related costs (4.1) (0.2) (4.3)
Exceptional operating items 2.3 - 2.3
Operating profit 35.3 4.6 39.9
Finance costs (7.3)
Profit before taxation 32.6
Taxation (5.8)
Profit for the year 26.8
Net debt excluding lease liabilities (37.3)
Segmental assets 334.6 90.7 425.3
Segmental liabilities (171.8) (31.1) (202.9)
Additions to tangible, intangibles and right of use assets 7.2 4.1 11.3
Depreciation and amortisation 10.9 4.6 15.5
Year ended 31 March 2023
UK and Ireland South Group
£m Africa £m
£m
Revenue 295.8 145.2 441.0
Underlying operating profit 37.2 10.1 47.3
IAS 19R administrative expenses (1.6) - (1.6)
Acquisition related costs (8.2) (0.2) (8.4)
Exceptional operating items (9.8) - (9.8)
Operating profit 17.6 9.9 27.5
Finance costs (5.8)
Profit before taxation 21.7
Taxation (4.9)
Profit for the year 16.8
Net debt excluding lease liabilities (49.9)
Segmental assets 340.5 102.5 443.0
Segmental liabilities (195.6) (37.0) (232.6)
Additions to goodwill 47.7 - 47.7
Additions to tangible and right of use assets 5.9 3.7 9.6
Depreciation and amortisation 10.8 5.0 15.8
The split of revenue by geographical destination of the customer is below:
2024 2023
£m £m
UK and Ireland 251.0 262.0
Africa 111.4 147.5
Rest of World 29.7 31.5
392.1 441.0
No one customer had revenue over 10% of total Group revenue (2023: none).
3. Acquisition related costs and exceptional operating items
An analysis of acquisition related costs and exceptional operating items is
shown below:
Acquisition related costs 2024 2023
£m £m
Intangible asset amortisation1 6.5 6.2
Advisory fees(2) 0.2 1.4
Deferred contingent consideration(3) (3.0) -
Deferred remuneration(4) 0.6 0.8
4.3 8.4
1 Non-cash amortisation charges in respect of acquired intangible
assets.
2 Professional advisory fees incurred in connection with the Group's
business combination activities.
3 Relates to the release of an element of deferred contingent
consideration resulting from the acquisition of Grant Westfield.
4 In accordance with IFRS 3, a proportion of the deferred contingent
consideration is treated as remuneration, and, accordingly, is expensed to the
Income Statement as incurred. In the current year this represents a cost of
£0.6m (2023: £0.8m) in relation to the Grant Westfield acquisition.
Exceptional operating items 2024 2023
£m £m
Restructuring costs1 1.7 4.8
Reversal of impairment2 (4.0) -
Impairment3 - 5.0
(2.3) 9.8
1 The exceptional restructuring cost charge in the current year of
£1.7m was incurred in relation to restructuring programs at Johnson Tiles UK
and the move to new premises at VADO. In the prior year exceptional
restructuring costs of £4.8m were incurred in relation to the restructuring
program implemented at Norcros Adhesives.
2 The reversal of previous land and buildings impairments of the
Johnson Tiles UK site, following an independent valuation.
3 As a result of demand uncertainty, the Johnson Tiles UK tangible and
right of use assets were impaired in the prior year with a non-cash impairment
charge of £5.0m recognised as an exceptional item in the Income Statement.
4. Finance costs
2024 2023
£m £m
Interest payable on bank borrowings 5.2 3.7
Interest on lease liabilities 1.6 1.8
Discounting of deferred contingent consideration 0.9 0.6
Amortisation of costs of raising debt finance 0.4 0.3
Finance costs 8.1 6.4
5. Alternative performance measures
The Group makes use of a number of alternative performance measures to assess
business performance and provide additional useful information to
shareholders. Such alternative performance measures should not be viewed as a
replacement of, or superior to, those defined by Generally Accepted Accounting
Principles (GAAP). Definitions of alternative performance measures used by the
Group and, where relevant, reconciliations from GAAP-defined reporting
measures to the Group's alternative performance measures are provided below.
The alternative performance measures used by the Group are:
Measure Definition
Underlying operating profit Operating profit before IAS 19R administrative expenses, acquisition related
costs and exceptional operating items.
Underlying profit before taxation Profit before taxation before IAS 19R administrative expenses, acquisition
related costs, exceptional operating items, amortisation of costs of raising
finance, discounting of deferred contingent consideration, 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 employed Capital employed on a pre-IFRS 16 basis adjusted for business combinations
where relevant to reflect the assets in both the opening and closing capital
employed balances, and the average impact of exchange rate movements.
Underlying operating margin Underlying operating profit expressed as a percentage of revenue.
Underlying return on capital employed (ROCE) Underlying operating profit on a pre-IFRS 16 basis expressed as a percentage
of the average of opening and closing underlying capital employed.
Basic underlying earnings per share Underlying earnings divided by the weighted average number of shares for basic
earnings per share.
Diluted underlying earnings per share Underlying earnings divided by the weighted average number of shares for
diluted earnings per share.
Underlying EBITDA Underlying EBITDA is derived from underlying operating profit before
depreciation and amortisation excluding the impact of IFRS 16 in line with our
banking covenants.
Underlying operating cash flow Cash generated from continuing operations before cash outflows from
exceptional items and acquisition related costs and pension fund deficit
recovery contributions.
Underlying net debt/cash Underlying net debt/cash is the net of cash, capitalised costs of raising
finance and total borrowings. IFRS 16 lease commitments are not included in
line with our banking covenants.
Pro-forma underlying EBITDA An annualised underlying EBITDA figure used for 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
2024 2023
£m £m
Profit before taxation 32.6 21.7
Adjusted for:
- IAS 19R administrative expenses 1.3 1.6
- IAS 19R finance income (0.8) (0.6)
- acquisition related costs (see note 3) 4.3 8.4
- exceptional operating items (see note 3) (2.3) 9.8
- amortisation of costs of raising finance 0.4 0.3
- discounting of deferred contingent consideration 0.9 0.6
Underlying profit before taxation 36.4 41.8
Taxation attributable to underlying profit before taxation (7.6) (8.3)
Underlying earnings 28.8 33.5
(b) Underlying operating profit and EBITDA (pre-IFRS 16)
2024 2023
£m £m
Operating profit 39.9 27.5
Adjusted for:
- IAS 19R administrative expenses 1.3 1.6
- acquisition related costs (see note 3) 4.3 8.4
- exceptional operating items (see note 3) (2.3) 9.8
Underlying operating profit 43.2 47.3
Adjusted for:
- depreciation and amortisation (owned assets) 4.3 5.0
- depreciation of leased assets 4.7 4.6
- lease costs (6.5) (6.4)
Underlying EBITDA (pre-IFRS 16) 45.7 50.5
Consolidated Cash Flow Statement
(a) Underlying operating cash flow
2024 2023
£m £m
Cash generated from operations (see note 7) 49.0 37.7
Adjusted for:
- cash flows from exceptional items and acquisition related costs (see note 7) 3.4 3.3
- pension fund deficit recovery contributions 4.0 3.8
Underlying operating cash flow 56.4 44.8
Consolidated Balance Sheet
(a) Underlying capital employed and underlying return on capital employed
2024 2023
£m £m
Net assets 222.4 210.4
Adjusted for:
- pension scheme asset (net of associated tax) (12.4) (11.2)
- right of use assets (IFRS 16) (18.0) (20.0)
- lease liabilities (IFRS 16) 22.2 24.7
- cash and cash equivalents (30.8) (29.0)
- financial liabilities - borrowings 68.1 78.9
251.5 253.8
Foreign exchange adjustment (1.9) 1.3
Adjustment for acquisitions - 58.2
Underlying capital employed 249.6 313.3
Average underlying capital employed 251.7 246.3
Underlying operating profit (pre-IFRS 16) 41.4 45.5
Underlying return on capital employed 16.4% 18.5%
6. 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 2024 the potential dilutive ordinary shares amounted to 811,567 (2023:
1,370,679) as calculated in accordance with IAS 33.
The calculation of EPS is based on the following profits and numbers of
shares:
2024 2023
£m £m
Profit for the year 26.8 16.8
2024 2023
Number Number
Weighted average number of shares for basic earnings per share 89,003,947 88,129,432
Share options 811,567 1,370,679
Weighted average number of shares for diluted earnings per share 89,815,514 89,500,111
2024 2023
Basic earnings per share:
From profit for the year 30.1p 19.1p
Diluted earnings per share:
From profit for the year 29.8p 18.8p
Basic and diluted underlying earnings per share
Basic and diluted underlying earnings per share have also been provided which
reflects underlying earnings from continuing operations divided by the
weighted average number of shares set out above.
2024 2023
£m £m
Underlying earnings (see note 5) 28.8 33.5
2024 2023
Basic underlying earnings per share 32.4p 38.0p
Diluted underlying earnings per share 32.1p 37.4p
7. Consolidated cash flow statement
(a) Cash generated from operations
The analysis of cash generated from operations is given below:
Continuing operations
2024 2023
£m £m
Profit before taxation 32.6 21.7
Adjustments for:
- IAS 19R administrative expenses included in the Income Statement 1.3 1.6
- acquisition related costs included in the Income Statement 4.3 8.4
- exceptional items included in the Income Statement (2.3) 9.8
- finance costs included in the Income Statement 8.1 6.4
- IAS 19R finance credit included in the Income Statement (0.8) (0.6)
- cash flows from exceptional items (3.4) (3.3)
- depreciation of property, plant and equipment 4.0 4.9
- underlying amortisation 0.3 0.1
- depreciation of right of use asset 4.7 4.6
- pension fund deficit recovery contributions (4.0) (3.8)
- IFRS 2 charges 0.9 1.2
Operating cash flows before movement in working capital 45.7 51.0
Changes in working capital:
- decrease/(increase) in inventories 2.9 (3.0)
- decrease/(increase) in trade and other receivables 9.3 (3.1)
- decrease in trade and other payables (8.9) (7.2)
Cash generated from operations 49.0 37.7
(b) Analysis of underlying net cash/(debt)
Cash Current Non-current Underlying
£m borrowings borrowings net cash/(debt)
£m £m £m
At 31 March 2022 27.4 - (18.8) 8.6
Cash flow 4.5 - (60.0) (55.5)
Non-cash finance costs - - (0.1) (0.1)
Exchange movement (2.9) - - (2.9)
At 31 March 2023 29.0 - (78.9) (49.9)
Cash flow 3.3 - 11.0 14.3
Non-cash finance costs - - (0.2) (0.2)
Exchange movement (1.5) - - (1.5)
At 31 March 2024 30.8 - (68.1) (37.3)
Non-cash finance costs relate to the movement in the costs of raising debt
finance in the year.
8. Events after the reporting period
On 25 April 2024, the Group announced that following a strategic review, it
had entered into an agreement to sell the trade and assets of the Johnson
Tiles UK division to Johnson Tiles Limited, a new company incorporated and run
by the former divisional management team.
Consideration for the sale was £1.0m, with a further modest earn-out
dependent on the future equity value of the business, with both payable in
April 2028.
The sale was completed on 19 May 2024 after the conclusion of the customary
employee consultation period.
Given the proximity of the sale to the balance sheet date, the Group have not
fully assessed tangible fixed asset and working capital values transferred,
but estimate the loss on disposal, to be accounted for in the year to 31 March
2025, to be approximately £20m, plus associated professional fees of less
than £1m.
The Johnson Tiles land and buildings were not transferred as part of the sale
and following an independent valuation, an impairment reversal of £4.0m has
been recognised in the financial statements for the year to 31 March 2024. The
group has also entered into an agreement to lease the site to Johnson Tiles
Limited on an arm's length basis.
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