Preliminary Results

RNS Number : 8210F

Norcros PLC

21 June 2012

 



FOR IMMEDIATE RELEASE                                                                          21 June 2012

Norcros plc

Results for the year ended 31 March 2012

'Continuing to make progress'

Norcros ("Norcros" or "the Group"), the home consumer products group with operations primarily in the UK and South Africa, announces results for the year ended 31 March 2012.

Financial Summary

	2012 (52 weeks)	2011 (53 weeks)	% Change as reported	% change LFL weeks** and constant currency
Revenue	£200.3m	£196.1m	+2.1%	+5.6%
Underlying* operating profit	£12.1m	£11.7m	+3.5%	+5.7%
Underlying* profit before tax	£10.7m	£10.2m	+5.3%	+8.1%
Profit before tax	£9.4m	£7.5m	+25.3%	+30.6%
Underlying* earnings per share	1.9p	1.6p	+18.8%	n/a
Dividend per share	0.42p	0.36p	+16.7%	n/a

    *Underlying is before exceptional items and where relevant, before non cash finance costs and after attributable tax

**Adjustment to the previous period which covered 53 weeks compared to 52 weeks for this period

 Highlights

·    Group revenue increased by 5.6% on a constant currency like for like number of weeks basis

·    Group underlying operating profits increased by 5.7% on a constant currency like for like number of weeks basis

·    Exit of onerous legacy lease at Springwood Drive, Braintree at a cost of £7.8m but saving £3.3m per annum in future years

·    Completed bank refinancing, securing £51m bank facility on improved terms until October 2015

·    Sale of surplus land to WM Morrison Supermarkets plc subject to successful planning application for approximately £2.6m

·    The Board is recommending a final dividend of 0.28p per share in addition to the interim dividend of 0.14p per share, making a full year dividend of 0.42p, a 16.7% increase on last year

John Brown, Chairman, commented:

"I am pleased to report another strong performance by Norcros. Good underlying revenue growth was achieved in difficult markets, with underlying operating profit ahead of last year and margins maintained. Group revenue in the first two months of the current year is in line with expectations.

Our businesses continue to trade robustly in uncertain markets, and management will continue to drive the self help strategies that have proved successful over the last two years. The strength of our brands, our market positions, our customer relationships, and the encouraging operational improvements in the latter part of the year in both the South African and UK tiles businesses gives the Board confidence that unless markets deteriorate further, our businesses will continue to make progress in the coming year."

There will be a presentation today at 9.30 am for analysts at the offices of Hudson Sandler, 29 Cloth Fair, London, EC1A 7NN. The supporting slides will be available on the Norcros website at http://www.norcros.com/ later in the day.

ENQUIRIES

Norcros plc	Tel: [phone]
Nick Kelsall, Group Chief Executive
Martin Payne, Group Financial Director
Hudson Sandler	Tel: [phone]
Nick Lyon
Charlie Jack
Katie Matthews

Notes to Editors

-     Norcros is a leading supplier of high quality and innovative showers, ceramic wall and floor tiles and adhesive products with operations primarily in the UK and South Africa

-     In the UK, Norcros operates under three brands:

-   Triton Showers - Market leader in the manufacture and marketing of showers in the UK

-   Johnson Tiles - A leading manufacturer and supplier of ceramic tiles in the UK

-   Norcros Adhesives - Manufacturer of tile & stone adhesives, grouts and related products

-      In South Africa, Norcros operates under three brands:

-    Tile Africa - Chain of retail stores focused on ceramic and porcelain tiles, and associated products such as sanitary ware, showers and adhesives

-    Johnson Tiles South Africa - Manufacturer of ceramic and porcelain tiles

-    TAL - The leading manufacturer of ceramic, industrial and building adhesives

-      Norcros is headquartered in Wilmslow, Cheshire and employs around 1,600 people. The company is listed on the London Stock Exchange. For further information please visit the recently upgraded Company website: http://www.norcros.com/

Chairman's statement

I am pleased to report another strong performance by Norcros in the year to 31 March 2012. Good underlying revenue growth was achieved in difficult markets, with underlying operating profit ahead of last year and margins maintained.

During the year a major legacy leasehold property obligation at Springwood Drive was bought out on highly satisfactory terms, an agreement was entered into to sell an element of our surplus land to WM Morrison Supermarkets plc subject to planning permission and the Group's banking facilities were refinanced on normal banking terms in recognition of the Group's sound financial position.

The Group has made good progress during the last twelve months despite trading conditions that remain both difficult and uncertain. Many operational and financing issues have been successfully resolved, as a consequence of which the Board anticipates being able to move forward and consider the strategic growth opportunities open to the Group's businesses and its strong market positions.

Results

The period under review consisted of 52 weeks compared to 53 weeks last year.

Group revenue increased by 2.1% to £200.3m (2011: £196.1m). On a like for like number of weeks constant currency basis this represents a 5.6% increase.

Underlying operating profit at £12.1m (2011: £11.7m) was 3.5% higher than the previous year and on a like for like number of weeks constant currency basis was 5.7% higher. Furthermore, operating margins were maintained at 6.0% (2011: 6.0%).

Underlying profit before taxation was £10.7m (2011: £10.2m), driven by higher underlying operating profits and lower financing costs.

Profit before tax at £9.4m (2011: £7.5m) was 25.3% higher than the previous year.

Basic earnings per share as reported were 33.3% higher at 1.6p (2011: 1.2p) and basic underlying earnings per share were 18.8% higher at 1.9p (2011: 1.6p).

Net cash generated from operations before the Springwood Drive exit costs of £7.8m was £13.8m (2011: £10.8m). Capital expenditure at £6.7m (2011: £6.3m) included the balance of investment in new capacity in Johnson Tiles UK, buffer systems in Johnson Tiles South Africa, a new adhesive plant in Durban, South Africa, and continued new product development expenditure in Triton Showers.

Net debt (before prepaid finance costs) at 31 March 2012 was £18.5m (2011: £12.4m) and increased principally as a result of the previously announced £7.8m buyout of the lease at Springwood Drive. This still left leverage as measured by net debt to EBITDA at just over one times with all banking covenants met with comfortable headroom.

The UK defined benefit pension scheme deficit calculated under IAS 19 increased to £18.7m (2011: £7.0m). Although asset values continued to increase, liabilities increased further driven by a significant reduction in the discount rate.

Dividend

The Board is recommending that the final dividend for the year be increased by 16.7% to 0.28p per share in addition to the interim dividend of 0.14p per share which was paid on 6 January 2012. This would make the total dividend for the year 0.42p per share, a 16.7% increase on the previous year. This final dividend, if approved at the Annual General Meeting, will be payable on 31 July 2012 to shareholders on the register on 29 June 2012. The shares will be quoted ex-dividend on 27 June 2012.

Employees

Continuing to drive strong results in the current economic climate is a testament to the commitment, dedication and talent of all our employees. On behalf of the Board I would like to thank everyone in the Group for their continued support.

Summary and outlook

Group revenue in the first two months of the current year is in line with expectations. Johnson Tiles UK and South Africa have started well, but Triton has been weaker.

Our businesses continue to trade robustly in uncertain markets and management will continue to drive the self help strategies that have proved successful over the last two years. The strength of our brands, our market positions, our customer relationships and the encouraging operational improvements in the latter part of the year in both the South African and UK tiles businesses gives the Board confidence that unless markets deteriorate further, our businesses will continue to make progress in the coming year.

J. E. Brown

Chairman

21 June 2012

Business review

UK

Revenue increased in the year by 2.4% to £116.8m (2011: £114.0m) or 4.3% on a like for like number of weeks basis. Selling price increases and strong cost control has helped mitigate significant energy cost increases in Johnson Tiles and has resulted in a 7.7% increase in underlying operating profit to £12.5m (2011: £11.6m). This represents an improved margin of 10.7% (2011: 10.2%) and is a creditable performance in challenging market conditions.

Triton Showers

Triton, the UK market leading domestic shower business, continued its strong performance with a year of improved profitability and cash generation, despite a 0.9% decline in revenue on a like for like number of weeks basis.

In the UK, revenue was 0.8% lower on a like for like number of weeks basis and in line with the market. After the challenging Christmas period previously reported, trading improved in the last two months of the year. Our strong brand, high quality leading products and excellent customer relationships helped us improve our market share in the retail sector and we had significant success in the specification sector with our thermostatic electric products, particularly the Safeguard range aimed at the care and retirement market.

Export revenue was 1.2% lower on a like for like number of weeks basis. The primary export market for Triton is Ireland and although lower than last year, this is a good result given the general economic conditions in this market.

Focus and attention on new product introduction continued with the launch in the final quarter of the year of the Triton T80z Fast Fit range, the most significant product launch for over ten years. The range boasts a new "swivel fit" feature for water inlet and a "swing fit" feature for electrical connections which increases installation flexibility and reduces installation time. The range has been extremely well received by installers and the trade sector. New product continues to be the lifeblood of the business and with further developments planned for the coming year, the business is well positioned to make further progress.

Underlying operating profits and margins were ahead of last year reflecting cost reduction initiatives and tight overhead control more than offsetting input cost increases in copper and plastics.

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, saw revenue increase by 8.7% on a like for like number of weeks basis.

In the UK sales grew by 10.2% reflecting our strong and growing presence in the retail sector driven by our product offering, logistics expertise and strong financial position which all helped us to outperform the market. Although the trade sector was a little more subdued during the year, our continued focus and investment in the architect and designer segment which started last year with a refurbishment of our Material Lab studio in Central London, the re-launch of the Absolute product portfolio and the launch of a dedicated swimming pool range has driven good revenue growth.  Projects won in the year include the work on the Olympic Village, Marks & Spencer, Premier Inn, Next, Legoland and Gleneagles Hotel. The demise of a key competitor, Pilkington Tiles, in the middle of 2010 means comparatives have become more challenging in the second half of the year but despite that this result is still a creditable performance.

Export sales declined 1.9% with supply issues constraining sales in the first half of the year. These issues are now largely resolved and export sales in the second half of the year were ahead of the prior year.

Following the commissioning of the new kiln in March 2011, operational problems were encountered in various parts of the plant which led to production inefficiencies and customer service issues in the mid part of the year. These problems were largely resolved in the final quarter and efficiency and service levels are now back to normal.

The business has experienced a 23% increase in energy costs versus last year which has adversely affected margins. Selling price increases and cost savings through headcount reduction were implemented during the second half of the year to help mitigate these impacts, albeit underlying operating profits were lower than the previous year.

Norcros Adhesives

Norcros Adhesives, our manufacturer and supplier of tile and stone adhesives and ancillary products, saw revenue grow by 17.3% in the year. Albeit from a relatively low base, this is another year of strong growth and still leaves a significant addressable market to gain further share.

Notable contract wins in the year include national specifications for Barratt Homes and David Wilson Homes as well as refurbishment projects at Asda, Next and H&M. To service this project demand, seven regional and one national distributor were appointed, further broadening our distribution base.

Investment in new products and plant continued in the year with the installation of a high speed powder bagging machine which has increased efficiency in this part of the plant by 40%. Capacity is now in place to accommodate significant further revenue growth with the business focus for this year to continue to broaden our account base and to leverage off the strong positions held by our other UK businesses in the retail sector.

South Africa

Revenue for the year grew 2.2% to £74.0m (2011: £72.4m) although on a constant currency like for like basis this represented a 9.7% increase. Both Tile Africa, our retail operation, and TAL, our adhesive business have made good progress in the year and delivered profitable results on the back of encouraging revenue growth. Johnson Tiles has however endured a challenging year with major plant restructuring and significant changes being made to the manufacturing management team, production processes and controls. As a consequence, our performance in South Africa in the first nine months of the year was materially impacted by manufacturing inefficiencies and, together with increased energy costs in the year, resulted in an overall underlying operating loss of £0.5m (2011: £0.2m profit). It is pleasing to report however that the difficult actions taken in the year have substantially improved performance in the final quarter of last year and the early part of the current year.

Tile Africa

Tile Africa, our leading retailer of wall and floor tiles, adhesive, showers, sanitaryware and bathroom fittings, saw revenue increase 4.8% on a constant currency like for like number of weeks basis. An improved product offer, continuing benefits from our store refit programme and operational improvements helped drive this out performance in what continues to be a difficult market.

Gross margins have been maintained despite an extremely competitive trading environment, benefiting from continued focus on underperforming stores and cost control, resulting in significantly improved profitability.

The store refit programme has continued with a further two stores upgraded to the Lifestyle model in the year leaving 20 of our 31 owned stores now upgraded. The store model continues to be refined as we look to maximise the return on our occupied space and some stores previously reported as converted now require some further enhancements.

Furthermore, two new franchise stores were opened in the year, Burgersfort, South Africa in October 2011 and Gaborone, Botswana in November 2011, bringing the total number of franchise stores to six. Of our 37 stores, 35 stores are located in South Africa and one each in Namibia and Botswana.

TAL Adhesives

TAL, our market leading adhesives business in South Africa, saw independent sector revenue grow 14.1% on a constant currency like for like number of weeks basis and helped it deliver another profitable year.

Our tile adhesive division had a particularly good year with market share growth in the retail and wholesale sectors driven by significant account wins in the growing retail DIY sector such as Builders Warehouse and Malls. Strong progress was also made in our export business with new customers gained in sub-Saharan Africa reflecting the success of our recently established export sales team.

As part of our strategy to leverage our customer relationships and move into complementary product streams, a new range of tiling tools was successfully launched into Builders Warehouse in the last quarter of the year. These have been well received in the market.

A new tile adhesive plant was opened in Durban, Natal, in September 2011 and is now fully commissioned. Our manufacturing presence in Durban has helped offset increased distribution costs due to higher fuel costs and allowed us to grow our share of this market.

The key focus in the coming year will be to further grow market share both in and outside of South Africa, continuing to broaden our product offer and expanding our geographical spread.

Johnson Tiles South Africa

Johnson Tiles South Africa has had a number of key successes in the retail sector this year with independent sector revenue increasing 34.7% on a constant currency like for like number of weeks basis.

Major new supply contracts have been secured with Builders Warehouse and other retailers during the year, with an improved and high quality product offering helping win the business. Another key factor in this success has been the adoption of our strategy of importing complementary tile products to create a "one-stop shop" for larger retailers, a strategy that has proved extremely successful in Johnson Tiles UK with our leading DIY customers.

In October 2011 a new manufacturing management team was put in place following an increasing number of operational issues that were constraining the financial performance of the business in the first half. It is encouraging to report that significant improvements have been seen in the final quarter of the year, and have continued into the early part of the current year. High levels of downtime and poor quality output driven by inadequate preventative maintenance programmes as well as sub-optimal operating practices have been addressed and capital expenditure on buffer systems and refurbishment of presses were implemented during the year.

In addition, energy costs increased by 25% against the previous year and, together with increases in raw material prices, has added further pressure on margins. Although the improved operational performance in the last quarter has fed through into financial performance in the last quarter, the business still recorded a loss for the year.

With a highly motivated management team, and encouraged by the commercial successes in the year and recent improvements in operational performance, the focus is on completing the transformation of Johnson Tiles South Africa into a profitable business.

Rest of the World

Australia

With building approvals down 15% compared to the previous year, the Australian market has proved particularly difficult this year. Against that backdrop, Johnson Tiles Australia has performed relatively well, with revenue in the year reducing 1.7% to £9.5m (2011: £9.7m) or 7.1% lower on a constant currency like for like number of weeks basis.

A change in channel focus in the year towards higher margin direct specification business with builders, developers, architects and supply and fix accounts has been successful and this, along with a major overhaul of the product range and a strong Australian Dollar reducing import costs, have all contributed to a return to profitability with underlying operating profit at £0.1m (2011: £0.1m loss).

As noted in last year's report, the option to relocate the business and release cash from the freehold site in Melbourne was investigated, but with the weak Australian property market, the Board decided to re‑assess the position when property markets recover.

Group summary

With our leading brands and market positions, high quality and innovative products, strong customer relationships, talented people and successful self help initiatives our businesses continue to make progress in extremely difficult markets. The encouraging operational improvements in both our UK and South African tile manufacturing businesses in the final quarter of the year provide a solid platform to deliver a further improvement in financial performance in the current year.

We have continued to invest in our businesses through this protracted economic downturn and succeeded in growing market share, all of which leaves the Group well placed to capitalise on any recovery in our markets.

Financial review

Revenue

Group revenues increased on a reported basis by 2.1% or by £4.2m to £200.3m (2011: £196.1m). The underlying increase on a constant currency like for like number of weeks basis was 5.6% reflecting the translation impact of the South African Rand and Australian Dollar against Sterling and a 53 week period last year. The Group recorded increases in revenue in its UK businesses of 4.3% on a like for like number of weeks basis and an increase on a constant currency like for like number of weeks basis in South Africa of 9.7%. On the same basis revenue fell in Australia by 7.1%.

Underlying operating profit

Underlying operating profit, as reported, increased by 3.5% to £12.1m (2011: £11.7m) and on a constant currency basis by 5.7% (2011 restated to constant currency: £11.4m). Our UK businesses continued their strong performance with underlying operating profits of £12.5m against £11.6m last year despite the continuing tough market conditions. Our South African business made an underlying loss of £0.5m against a profit of £0.2m last year. The challenging year endured by Johnson Tiles in South Africa was the major reason for the disappointing result. In Australia an underlying operating profit of £0.1m compares to an equivalent loss in the prior year. Overall operating margins were stable at 6.0%.

Exceptional items and operating profit

Net exceptional items were £nil in the year with £0.5m of restructuring costs being offset by £0.5m of other benefits.

Operating profit was £12.1m (2011: £10.6m).

Finance costs

Finance costs decreased to £3.1m from £3.4m in 2011 reflecting better interest rates achieved following the Group's refinancing in September 2011. In addition a charge of £1.2m for exceptional finance costs has been made relating to the immediate write-off of finance costs from the previous financing which were due to be fully amortised by October 2012.

Other finance income of £1.6m (2011: £0.1m) relate to our UK defined benefit pension scheme. The large credit reflects the year on year movements in expected rates of return and pension scheme assets, liabilities and discount rates.

Profit before tax

Underlying profit before tax was £10.7m (2011: £10.2m) reflecting the increased underlying operating profit and reduced finance costs noted above.

The Group reported profit before tax of £9.4m (2011: £7.5m).

Taxation

A taxation charge of £nil has arisen for 2012 (2011: £0.8m). This is principally driven by the recognition in the year of certain UK deferred tax assets which has offset the charge for UK corporation tax.

Earnings per share

Underlying earnings per share amounted to 1.9p (2011: 1.6p). Basic earnings per share was 1.6p (2011: 1.2p).

Dividends

As previously announced it is the Board's intention to undertake a progressive dividend policy subject to the Group's earnings, cash flow and balance sheet position. As such the Board is recommending a final dividend of 0.28p per share, which, together with the interim dividend of 0.14p, makes a total dividend of 0.42p in respect of the year ended 31 March 2012.

Pension schemes

The Group contributed £2.2m into its UK defined benefit pension scheme during the year (2011: £2.1m). This included £1.0m additional contribution as part of the 2009 deficit recovery plan.

The total charge in respect of defined benefit schemes to operating expenses (excluding exceptional credits) in the Consolidated Income Statement was £1.5m (2011: £1.3m).

The gross defined benefit pension scheme valuation on the UK scheme showed a deficit of £18.7m compared to a deficit of £7.0m last year. The higher deficit mostly reflects the increase in liabilities due to a reduced discount rate of 4.95% from 5.5% last year.

The Group's contributions to its defined contribution pension schemes were £1.1m (2011: £1.0m).

Cash flow and financial position

Key cash flow components and movement in Group net debt	2012	2011
	£m	£m
Cash flow from operations (before lease surrender costs)	13.8	10.8
Lease surrender costs	(7.8)	-
Net interest paid	(1.6)	(1.0)
Taxation	(0.6)	(0.6)
Free cash flow available for investment	3.8	9.2
Issue of share capital	0.2	-
Capital expenditure	(6.7)	(6.3)
Dividends	(2.2)	(0.7)
Proceeds from sale of shares in investments	-	4.4
Other items including other disposal proceeds, foreign exchange, rolled up interest and amortised financing costs	(2.3)	(1.3)
Movement in net debt	(7.2)	5.3
Opening net debt	(10.6)	(15.9)
Closing net debt	(17.8)	(10.6)

Although cash flow from operations reduced to £6.0m from £10.8m in the previous year this included £7.8m of lease surrender costs to exit the onerous lease at Springwood Drive, Braintree. This lease exit will save the Group annualised cash costs of £3.3m. Excluding this one off item the Group's cash generation of £13.8m is a significant improvement on last year reflecting the Group's increased profitability and control over working capital. Net cash generated after tax and interest was £3.8m (2011: £9.2m). The table above sets out the key cash flow components and the movement in Group net debt.

The Group's net interest payments have increased as no interest has been received on loans to associates which have previously been fully impaired.

The Group's working capital increased by only £0.4m in the year (2011: increase of £1.0m). This reflects management's continuing actions to tightly control working capital in the current economic conditions.

Capital expenditure of £6.7m includes the final payments for the investment in a new kiln and inkjet machine in Johnson Tiles, buffer stock equipment and store refurbishments in South Africa and new product development at Triton Showers.

In the previous year the Group received £4.4m from the sale of R.J. Beaumont & Co Pty Ltd.

Bank funding

Following a re-financing in September 2011 the Group has available a revolving credit facility of £51.0m of which £30.0m is available as cash drawings. This facility expires in October 2015 and is currently subject to a margin of 1.5% above LIBOR.

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: John Brown (Chairman), Nick Kelsall (Group Chief Executive), Martin Payne (Group Finance Director), David Hamilton (Director and Company Secretary), Les Tench (Non-executive Director), Martin Towers (Non-executive Director) and Vijay Aggarwal (Non-executive Director).

N. P. Kelsall

Group Chief Executive

M. K. Payne

Group Finance Director

Consolidated income statement

Year ended 31 March 2012

2012			2011
Notes		£m	£m
Continuing operations
Revenue	2	200.3	196.1
Operating profit		12.1	10.6
Underlying* operating profit		12.1	11.7
Exceptional operating items	3	-	(1.1)
Operating profit		12.1	10.6
Finance costs	4	(3.1)	(3.4)
Exceptional finance costs	3	(1.2)	-
Total finance costs		(4.3)	(3.4)
Finance income	4	-	0.2
IAS 19 finance income		1.6	0.1
Profit before taxation		9.4	7.5
Taxation		-	(0.8)
Profit for the year		9.4	6.7
Earnings per share attributable to equity holders of the Company
From continuing operations:
Basic earnings per share	6	1.6p	1.2p
Diluted earnings per share	6	1.6p	1.2p
Weighted average number of shares for basic earnings per share (millions)	6	577.2	577.0
Non-GAAP measures:
Underlying* profit before taxation (£m)	5	10.7	10.2
Underlying* earnings (£m)	5	11.1	9.4
Basic underlying* earnings per share	6	1.9p	1.6p
Diluted underlying* earnings per share	6	1.9p	1.6p

* Underlying is defined as before exceptional items and, where relevant, amortisation of costs of raising finance, movement on fair value of derivative financial instruments, discounting of property lease provisions and finance costs relating to pension schemes, less attributable taxation.

Consolidated statement of comprehensive income and expense

Year ended 31 March 2012

2012			2011
		£m	£m
Profit for the year		9.4	6.7
Other comprehensive income:
Actuarial (losses)/gains on retirement benefit obligations		(10.6)	0.7
Foreign currency translation adjustments		(5.3)	1.4
Other comprehensive (expense)/income for the year		(15.9)	2.1
Total comprehensive (expense)/income for the year		(6.5)	8.8

Items in the statement are disclosed net of tax.

Consolidated balance sheet

At 31 March 2012

2012			2011
		£m	£m
Non-current assets
Goodwill		23.4	23.9
Property, plant and equipment		44.8	49.1
Investment properties		5.4	5.5
Deferred tax assets		6.4	2.2
80.0			80.7
Current assets
Inventories		45.5	42.3
Trade and other receivables		40.7	42.6
Derivative financial instruments		-	0.4
Pension scheme asset		0.6	1.4
Cash and cash equivalents		2.9	7.7
		89.7	94.4
Current liabilities
Trade and other payables		(50.6)	(50.6)
Derivative financial instruments		(0.4)	(1.8)
Current tax liabilities		(1.1)	(0.9)
Financial liabilities - borrowings		(0.4)	(3.1)
(52.5)			(56.4)
Net current assets		37.2	38.0
Total assets less current liabilities		117.2	118.7
Non-current liabilities
Financial liabilities - borrowings		(20.3)	(15.2)
Pension scheme liability		(18.7)	(7.0)
Other non-current liabilities		(1.7)	(1.8)
Provisions		(5.4)	(15.3)
(46.1)			(39.3)
Net assets		71.1	79.4
Financed by:
Share capital		5.8	19.2
Share premium		0.2	86.8
Retained earnings/(deficit) and other reserves		65.1	(26.6)
Total equity		71.1	79.4

N. P. Kelsall                                         M. K. Payne

Group Chief Executive                         Group Finance Director

Consolidated cash flow statement

Year ended 31 March 2012

2012			2011
Notes		£m	£m
Cash generated from operations	7	6.0	10.8
Income taxes paid		(0.6)	(0.6)
Interest received		-	0.7
Interest paid		(1.6)	(1.7)
Net cash generated from operating activities		3.8	9.2
Cash flows from investing activities
Proceeds from disposal of investments		-	4.4
Purchase of property, plant and equipment		(6.7)	(6.3)
Net cash used in investing activities		(6.7)	(1.9)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital		0.2	-
Repayment of borrowings		(17.0)	(3.0)
Capitalised finance costs		(0.8)	-
Drawdown of borrowings		21.0	-
Dividends paid to Company's shareholders		(2.2)	(0.7)
Net cash generated from/(used in) financing activities		1.2	(3.7)
Net (decrease)/increase in cash at bank and in hand and bank overdrafts		(1.7)	3.6
Cash at bank and in hand and bank overdrafts at beginning of the year		4.6	1.1
Exchange movements on cash and bank overdrafts		(0.4)	(0.1)
Cash at bank and in hand and bank overdrafts at end of the year		2.5	4.6

Consolidated statement of changes in equity

Year ended 31 March 2012

Ordinary		Capital			Retained
share		redemption	Share	Translation	earnings/
capital		reserve	premium	reserve	(losses)	Total
£m		£m	£m	£m	£m	£m
At 1 April 2010	19.2	-	86.8	9.7	(44.5)	71.2
Comprehensive income:
Profit for the year	-	-	-	-	6.7	6.7
Other comprehensive income:
Actuarial gain on retirement benefit obligations	-	-	-	-	0.7	0.7
Foreign currency translation adjustments	-	-	-	1.4	-	1.4
Total other comprehensive income	-	-	-	1.4	0.7	2.1
Transactions with owners:
Dividends paid	-	-	-	-	(0.7)	(0.7)
Share option schemes and warrants	-	-	-	-	0.1	0.1
At 31 March 2011	19.2	-	86.8	11.1	(37.7)	79.4
Comprehensive income:
Profit for the year	-	-	-	-	9.4	9.4
Other comprehensive income:
Actuarial loss on retirement benefit obligations	-	-	-	-	(10.6)	(10.6)
Foreign currency translation adjustments	-	-	-	(5.3)	-	(5.3)
Total other comprehensive income	-	-	-	(5.3)	(10.6)	(15.9)
Transactions with owners:
Purchase of own shares	(13.4)	13.4	-	-	-	-
Capital re-organisation	-	(13.4)	(86.8)	-	100.2	-
Shares issued	-	-	0.2	-	-	0.2
Dividends paid	-	-	-	-	(2.2)	(2.2)
Share option schemes and warrants	-	-	-	-	0.2	0.2
At 31 March 2012	5.8	-	0.2	5.8	59.3	71.1

Following the July 2011 AGM the Company repurchased its 148,754,684 9p deferred shares for a nominal value. The value of these shares, being £13.4m, was placed in a capital redemption reserve. Immediately following this transaction the Company cancelled its share premium account and capital redemption reserve.

Notes to the preliminary statement

Year ended 31 March 2012

1. Basis of preparation

Norcros plc ("the Company") and its subsidiaries (together "the Group") principal activities are the development, manufacture and marketing of home consumer products in the UK, South Africa and the Rest of the World. The Company is a public limited company which is listed on the London Stock Exchange market of listed securities 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 2012. The financial information set out above does not constitute the Company's statutory financial statements for the periods ended 31 March 2012 or 31 March 2011 but is derived from those financial statements. Statutory financial statements for 2012 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

The Group operates in three main geographical areas: UK, South Africa and the Rest of the World. All inter-segment transactions are made on an arm's length basis. The chief operating decision maker (being the Board) assesses performance and allocates resources based on geography as each segment has similar economic characteristics, complementary products, distribution channels and regulatory environments.

Continuing operations - year ended 31 March 2012

South			Rest of
UK		Africa	the World	Group
£m		£m	£m	£m
Revenue	116.8	74.0	9.5	200.3
Underlying operating profit/(loss)	12.5	(0.5)	0.1	12.1
Exceptional operating items	-	(0.5)	0.5	-
Operating profit/(loss)	12.5	(1.0)	0.6	12.1
Finance costs				(3.1)
Exceptional finance costs				(1.2)
IAS 19 finance income				1.6
Profit before taxation				9.4
Taxation				-
Profit from continuing operations				9.4
Net debt				(17.8)
Segmental assets	104.4	57.1	8.2	169.7
Segmental liabilities	(82.2)	(15.0)	(1.4)	(98.6)
Capital expenditure	2.7	2.7	-	5.4
Depreciation	3.9	2.3	0.1	6.3

Revenues of £32.9m (2011: £29.6m) are derived from a single customer. These revenues are attributable to the UK segment.

Continuing operations - year ended 31 March 2011

South			Rest of
UK		Africa	the World	Group
£m		£m	£m	£m
Revenue	114.0	72.4	9.7	196.1
Underlying operating profit/(loss)	11.6	0.2	(0.1)	11.7
Exceptional operating items	(3.8)	-	2.7	(1.1)
Operating profit	7.8	0.2	2.6	10.6
Finance costs				(3.4)
Finance income				0.2
IAS 19 finance income				0.1
Profit before taxation				7.5
Taxation				(0.8)
Profit from continuing operations				6.7
Net debt				(10.6)
Segmental assets	107.6	60.7	6.8	175.1
Segmental liabilities	(75.6)	(15.6)	(4.5)	(95.7)
Capital expenditure	6.3	1.6	-	7.9
Depreciation	3.9	2.6	0.1	6.6

3. Exceptional items

2012		2011
Exceptional operating items	£m	£m
Impairment of associate's carrying value and related costs1	0.5	-
Past service pension credit2	-	0.4
Restructuring costs3	(0.5)	-
Property provisions4	-	(4.2)
Profit on disposal of investments5	-	2.7
	-	(1.1)
Exceptional finance costs
Write-off of capitalised costs of raising debt finance6	(1.2)	-

1 In 2009 the carrying value of the Group's Greek associate was fully impaired together with associated costs including the mark to market value of the related cross currency swap. This swap has now matured and other associated costs paid. The cost of settling the cross currency swap was £0.5m lower than initially estimated.

2 The pension credit related to the impact of changes in pensioners' benefits in the UK defined benefit pension scheme.

3 Restructuring costs related to redundancies, asset write-downs and consultancy costs following the implementation of a programme of restructuring initiatives throughout the Group's business units.

4 The provision to cover the Group's onerous property leases was increased by £4.2m last year, of which £2.0m related to the Springwood Drive property and £2.2m to the remaining three UK onerous property leases.

5 Profit on disposal of the Group's 25% investment in R.J. Beaumont & Co Pty Ltd.

6 Following the refinancing of the Group's banking facilities in September 2011, £1.2m of costs relating to the previous banking arrangement have been written off.

4. Finance income and costs

2012		2011
£m		£m
Finance costs
Interest payable on bank borrowings	1.4	1.5
Amortisation of costs of raising debt finance	0.7	1.2
Movement on fair value of derivatives	0.7	-
Discount on property lease provisions	0.3	0.7
Total finance costs	3.1	3.4
Finance income
Movement on fair value of derivative financial instruments	-	(0.2)
Total finance income	-	(0.2)
Net finance costs	3.1	3.2

5. Non-GAAP measures

2012		2011
£m		£m
Profit before taxation	9.4	7.5
Adjusted for:
- exceptional operating items	-	1.1
- amortisation of costs of raising finance	1.9	1.2
- net movement on fair value of derivative financial instruments	0.7	(0.2)
- discount on property lease provisions	0.3	0.7
- IAS 19 finance income	(1.6)	(0.1)
Underlying profit before taxation	10.7	10.2
Taxation attributable to underlying profit before taxation	0.4	(0.8)
Underlying earnings	11.1	9.4

Underlying profit before taxation is defined as profit before taxation, exceptional items, amortisation of costs of raising finance, movement on fair value of derivative financial instruments, discounting of property lease provisions and finance costs relating to pension schemes. The Directors believe that underlying profit before taxation and underlying earnings provide shareholders with additional useful information on the underlying performance of the Group.

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 2012 the potential dilutive ordinary shares amounted to 2,383,527 (2011: 116,155) as calculated in accordance with IAS 33.

The calculation of EPS is based on the followings profits and numbers of shares:

2012		2011
£m		£m
Basic and diluted:
- earnings for the year	9.4	6.7
- underlying earnings for the year	11.1	9.4

2012		2011
Number		Number
Weighted average number of shares for basic earnings per share	577,231,925	577,025,912
Share options and warrants	2,383,527	116,155
Weighted average number of shares for diluted earnings per share	579,615,452	577,142,067

	2012	2011
Basic earnings per share	1.6p	1.2p
Diluted earnings per share	1.6p	1.2p
Basic underlying earnings per share	1.9p	1.6p
Diluted underlying earnings per share	1.9p	1.6p

7. Consolidated cash flow statements

(a) Cash generated from operations

2012		2011
£m		£m
Profit before taxation	9.4	7.5
Adjustments for:
- exceptional items included in the income statement	-	1.1
- cash flows from exceptional costs	(11.1)	(5.9)
- depreciation	6.3	6.6
- difference between pension charge and contributions	(0.7)	(0.8)
- (profit)/loss on disposal of property, plant and equipment	(0.4)	0.1
- finance costs	4.3	3.4
- finance income	-	(0.2)
- other finance income	(1.6)	(0.1)
- share-based payments	0.2	0.1
Operating cash flows before movement in working capital	6.4	11.8
Changes in working capital:
- increase in inventories	(5.9)	(4.2)
- decrease/(increase) in trade and other receivables	2.1	(4.2)
- increase in trade and other payables	3.4	7.4
Cash generated from operations	6.0	10.8

(b) Outflow related to exceptional items

This includes expenditure charged to exceptional provisions relating to onerous lease costs and business rationalisation and restructuring including severance and other employee costs.

(c) Analysis of net debt

Net		Net
cash		debt	Total
£m		£m	£m
At 1 April 2010	1.1	(17.0)	(15.9)
Cash flow	3.6	3.0	6.6
Other non-cash movements	-	(1.2)	(1.2)
Exchange movement	(0.1)	-	(0.1)
At 31 March 2011	4.6	(15.2)	(10.6)
Cash flow	(1.7)	(4.0)	(5.7)
Other non-cash movements	-	(1.1)	(1.1)
Exchange movement	(0.4)	-	(0.4)
At 31 March 2012	2.5	(20.3)	(17.8)

Other non-cash movements relate to an increase in transaction costs of £0.8m (2011: £nil) following the refinancing of bank debt in September 2011 less amortisation charged for the year of £1.9m (2011: £1.2m).

 

END

 

 

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